Revenue Plunges for Li-Battery Innovator Electrovaya

Electrovaya Inc. announced that revenue in its most recent quarter decreased by 60.4% or $900,000 to $588,000 from $1,488,000 for the quarter ended December 31, 2004. During the same period, loss from operations, before interest, taxes, foreign exchange and amortization decreased by 40,000 or 3.8% to $1,016,000 compared to $1,056,000 in the same quarter in the prior year. The decrease in total revenue primarily resulted from a reduction in aerospace revenue.

Revenue less Direct Manufacturing Costs was a loss of $39,000 for the three months ended December 31, 2005, compared to a profit of $24,000 or 1.61% of revenue for the three months ended December 31, 2004. Research and development expenses, net of investment tax credits, increased by $27,000 or 5.9% to $488,000 for the quarter ended December 31, 2005 from $461,000 for the same three month period in 2004 due primarily to an increase in material utilization and consulting fees.

During the three month period ended December 31, 2005, the Company received $219,000 of cash contributions from Technology Partnerships Canada (TPC), compared to $312,000 received during the three months ended December 31, 2004. For the quarters ended December 31, 2005 and 2004, sales and marketing expenses were $174,000 and $274,000 respectively. The $100,000 decrease was primarily due to decreased salaries, advertising and trade show costs compared to the same quarter in the prior year.

General and administrative expenses decreased by $123,000 to $534,000 for the quarter ended December 31, 2005 compared to $657,000 for the same period in the prior year. The decrease primarily reflects a decrease in salaries and consulting fees.

Quarterly net losses improved from $1,952,000 to $1,193,000, or by $759,000 or 38.9%, compared to the same quarter in the prior year due to lower operating costs and reduced amortization expense. The loss per share for the quarter was $0.02, compared to $0.03 for the quarter ending December 31, 2004.

As of December 31, 2005, the Company had $11.4 million in cash, cash equivalents, and short-term investments, a decrease of $0.8 million compared to $12.2 million as at September 30, 2005 and a decrease of $2.1 million compared to $13.5 million as at December 31, 2004.