Electrovaya 1Q Results

For the quarter ending December 31, 2007, the company's revenue was almost the same as for the corresponding quarter last year, down modestly from $502,000 to $495,000.

For the year 2007, the company displayed revenues of $2.3 million (U.S.D.), which is down 30% from 2006 revenues and down 64% from 2005 revenues. The company points to a reduction in services and consumer electronics revenue as the reason. Also in 2005, they had introduced a new product (PowerPad® 300) and had service revenues from NASA and the Canadian Space Agency.

The company does much of its business in American dollars, but most of its labor is paid in Canadian dollars, and the weak American dollar has effectively increased the company's labor costs. The company does not do any currency hedging to lessen these effects.

Electrovaya has four main products:

1. Lithium-ion rechargeable batteries, mainly for the notebook market.
2. Scribbler® Tablet PC's.
3. Aerospace and defense contracts.
4. Electric vehicles.

On January 23, 2008, Electrovaya announced that it is launching the Maya-300, a zero emission electric car. It has a range of up to 120 miles on Electrovaya's Lithium-Ion SuperPolymer® battery technology, which utilizes battery separator films from ExxonMobil. The battery also has Electrovaya's intelligent battery management system (iBMS) to provide optimal performance, while also protecting the battery. The top speed of the Maya-300 is either 25 or 35 mph - electronically regulated, as per state regulations. The company intends to market this car in America, but given the tank-sized vehicles on American roads, Electrovaya's glorified golf cart will be useful in retirement communities and not much more.

Electric vehicles are an interesting thing for the company to be involved with. Since the company is relatively small and vehicles are not neither their forte nor their focus, one might be tempted to question the logic of the company pursuing this. However, a look at their stock price chart reveals that this electric car may be been a stroke of "evil" genius, producing a publicity coup.

On the day the car was announced, January 23, the stock price jumped over 24% from the closing the previous day, from 49 to 61 cents a share.

Also, Electrovaya exhibited its zero emission car technology at the CleanTech Forum in Toronto from October 24 to 26. During these three days, the stock price grew 52%, from 42 cents a share to 64 cents a share. And if you include the few days before and after, then the stock grew from 28 cents a share to 88 cents a share, more than tripling!

Investors seem to have been enthused by the exhibition and the announcement of the car. However, obviously Electrovaya used a chassis provided from some other manufacturer for the car, so let's not get too excited.

The Maya-300 is not the company's first electric car, by the way. In 2003, the company showcased its Maya 100 electric SUV prototype, based on a converted Suzuki. In 2005, the company announced that the car would be marketed in Norway by Miljobil Innovasjon AS, but as far as I know this has not come to fruition, although in April 2007, Electrovaya licensed its battery technology to Miljobil.

Electrovaya is a company in its early stages. The company spends more on research than its revenue, and it has never produced its main product, lithium-ion batteries, in vast quantities. The company's focus is on lithium-ion batteries for notebooks, but how can Electrovaya compete against major battery manufacturers, which can outspend them on research and undercut their prices through economies of scale?

More growing pains should be expected for this company. With a market cap of $37 million weighed against company gross revenues of about half a million, investors obviously have high hopes for the company, but the stock may be overvalued at this time.