Mr. Richard Halka reports

ELECTROVAYA REPORTS FINANCIAL RESULTS FOR Q1 2017

Electrovaya Inc. is releasing its financial results for the fiscal quarter ending Dec. 31, 2016. All numbers are in U.S. dollars.

Financial highlights

This reporting quarter, first quarter (Q1) of fiscal year (FY) 2017 (fourth quarter (Q4) of calendar year (CY) 2016), was part of the transition period as the company and its OEM (original equipment manufacturer) partners develop new products and markets based on the company's lithium-ion batteries:

• Q1 2017 revenue is $1.1-million ($1.4-million (Canadian)) for the quarter ended Dec. 31, 2016, compared with Q1 2016 revenue of $8.2-million ($10.8-million (Canadian)).
• The net loss for Q1 2017 is $2.4-million ($3.2-million (Canadian)), compared with the net profit for Q1 2016 of $3.3-million ($4.3-million (Canadian)).
• Cash and restricted cash totalled $5.4-million ($7.1-million (Canadian)) as at Dec. 31, 2016, compared with $3.3-million ($4.3-million (Canadian)) at Dec. 31, 2015.
• Inventory is $17.9-million ($23.5-million) as at Dec. 31, 2016, as compared with $9.8-million ($12.9-million (Canadian)) for Dec. 31, 2015.

Business highlights

The business focus is on industrial applications where the lithium-ion battery is extensively used and requires high performance. Some of these industrial sectors where the company is focusing have been announced earlier and they are:

• Battery assemblers: miscellaneous sales of cells and modules; certain battery assemblers use the company's products and those relationships continue;
• Materials handling sector sales to OEM: Electrovaya works on a multiyear master service agreement (MSA) with an NYSE Fortune 1000 OEM continues. A second major OEM in the materials handling sector has now started trials with the Electrovaya battery;
• Materials handling sector sales directly to the end-user: Electrovaya announced on Nov. 14, 2016, battery products for the forklift materials handling market which can be delivered directly to the forklift user and is a drop-in replacement for the user's lead acid battery. Trials are now under way with multiple users in this sector;
• Electric bus sector: A number of analysts have identified the electric bus sector as an important application for lithium-ion batteries. Electric buses work multiple shifts and are usually diesel powered. Cities are planning to move away from having polluting diesel fleets and replace them with full electric buses. Growth in this business is in Asia and Europe. Electrovaya is working in this sector with an OEM battery assembler and that development work is continuing;
• Residential energy storage sector: Certain jurisdictions are showing interest in this niche sector. Electrovaya has clients and module based products in this sector;
• Electric-mobility and electric delivery truck sector: Electric delivery trucks are an attractive sector for full electric vehicles. Electric delivery trucks work eight to 12 hours a day and usually operate in the inner core of cities with frequent stops. There are strong incentives to move from petrol- and diesel-powered vehicles to full electric. Electrovaya believes this is an important industrial sector, and, as earlier announced, Electrovaya is working with an OEM in this sector. Development work on this project is continuing. Electrovaya has started working with other companies in this electromobility sector and, as announced earlier, is working with another Fortune 1000 NYSE company where Electrovaya is designing the complete battery system for integration into the OEM's off-road electric vehicle;
• Utility and grid connected systems: The system for ConEdison will have cells with the Separion ceramic embedded separator to give longer-cycle life and higher safety to the system.

Other business developments

Other business developments in Q1 FY 2017 are:

• Personnel: Murray Pickrem joined the company as director of sales, United States. Mr. Pickrem has extensive experience in sales in the materials handling sector. Additionally, the company is adding more senior staff with experience in engineering, project management and NPI (new product introduction), and also augmenting its sales team in Germany and North America.
• Trade shows, expositions and financial conferences: Electrovaya presented its technology in key trade shows, including Euro Bus Expo in the United Kingdom and Cargo Logistics in Vancouver, B.C. (February, 2017). In the financial sector, Electrovaya spoke at the Barclays Energy Revolution Conference in December, 2016, Exane BNP Paribas's Disruptive Technology in December, 2016, and also attended the Roth New Industrial Conference in New York in December, 2016. Electrovaya presented at the German Batterie Forum in Berlin and at the Canadian Power Finance Conference in Toronto, both in January, 2017.

Technology developments

Electrovaya's research group continues to develop technology in a number of areas:

• Cell energy density: A continuous development program is under way to increase the energy density of its cells, and in August, 2016, a 44Ah cell was announced, which increased the energy density of the 40Ah cell announced earlier in November, 2015. A road map for continual increase in energy density is an important research objective for Electrovaya and the next-generation cell with higher energy density is expected to be launched in calendar year 2018.
• Safety: Safety is becoming an important challenge in lithium-ion batteries and a key differentiating factor with customers. Next-generation lithium-ion cells with higher energy density have greater propensity for safety incidents. Electrovaya's ceramic separator, Separion, is an important technology for enhancing safety.
• Systems design and NPI: Large efforts continue in this area as the demand for complete systems in different applications needs different engineering system design and optimized performance parameters.

Commenting on the results, Electrovaya executive vice-president and chief financial officer Richard Halka stated: "In Q1 FY 2017, we have not seen the impact on revenue from our 2016 initiatives. As indicated under the business highlights significant progress is being made, however, the anticipated volume production has not yet occurred as OEMs continue to refine their end market products. This has delayed the orders but we are still confident in achieving growth in 2017."

"Q1 FY 2017 is part of the transition period for Electrovaya, and we expect to be able to build on relationships, new products and new industrial market sectors in CY 2017," said Dr. Sankar Das Gupta, chair and chief executive officer, Electrovaya.

In FY 2016, the company's long-term board member, Dr. Bernard Fleet, PhD, DSc, FRSC, passed away. Electrovaya is very pleased that Prof. Carolyn Hansson, CM, FRSC, FCAE, has joined the board of directors of the company.

The company's complete Q1 2017 financial statements, and its management discussion and analysis, for the quarter ended Dec. 31, 2016, and annual information form, for the year ended Sept. 30, 2016, are available on SEDAR and on the company's website.

Conference call details

The company will hold a conference call on Tuesday, Feb. 14, 2017, at 8 a.m. Eastern Time, to discuss the Q1 FY 2017 results for the period ended Dec. 31, 2016, and to provide a business update.

Conference ID:  13655385

United States and Canada toll-free:  877-407-8291

International:  1-201-689-8345

To help ensure that the conference begins in a timely manner, please dial in 10 minutes prior to the start of the call.

For those unable to participate in the conference call, a replay will be available for two weeks beginning on Feb. 14, 2017, through Feb. 28, 2017. To access the replay, the U.S. dial-in number is 877-660-6853 and the non-U.S. dial-in number is 1-201-612-7415. The replay conference ID is 13655385.

About Electrovaya Inc.

Electrovaya designs, develops and manufactures proprietary lithium-ion superpolymer batteries, battery systems and battery-related products for energy storage, clean electric transportation and other specialized applications. Electrovaya, through its fully owned subsidiary, Litarion GmbH, also produces cells, electrodes and Separion ceramic separators, and has manufacturing capacity of about 500 megawatt-hours per year. Electrovaya is a technology-focused company with extensive IP. Headquartered in Ontario, Canada, Electrovaya has production facilities in Canada and Germany with customers around the globe.

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