Electro Energy Reports First Quarter 2008 Results

cylindrical battery Electro Energy Inc. (NASDAQ: EEEI), a leading provider of advanced battery technologies and associated systems, today announced results for the first quarter ended March 31, 2008. Consolidated net revenue for the three months ended March 31, 2008 was $762,336 compared with $799,681 for the same period of 2007. Net revenue from services was $638,335 in the first quarter of 2008 compared with $721,703 in 2007. Research and development ("R&D") expenses for the first quarter of 2008 were $258,126, or 33.9% of total net revenue, compared with $403,824, or 50.5% of total net revenue in 2007, a decrease of $145,698, or 36%. The decrease in R&D expenses is the result of lower costs for advanced wafer cell battery development with In-Q-Tel under a stock purchase agreement completed in 2007 and lower costs related to plug-in hybrid vehicle ("PHEV") battery development. Interest expense for the three months ended March 31, 2008 was $449,491 compared with $487,143 in 2007, a decrease of $37,652 or 8%. The decrease in interest expense reflects the $110,000 late registration penalties recorded in the 2007 related to the 8.5% Senior Secured Convertible Notes redeemed on December 7, 2007, partially offset by an increase in the amount of outstanding senior secured convertible notes at a higher coupon rate. The amortization of deferred debt discount and deferred financing costs was $896,552 and $101,196, respectively, in the first quarter of 2008 compared with $76,478 and $87,107, respectively, in the first quarter of 2007 as a result of the higher deferred debt discount and deferred financing costs associated with the 10% Notes. For the three months ended March 31, 2008, the net loss was $3,888,096, or $0.14 per basic and diluted share, compared with $2,860,752, or $0.13 per basic and diluted share in 2007. During the three months ended March 31, 2008, the Company recorded dividends of $165,693 on the Series B Convertible Preferred Stock and the net loss available to common stockholders for the first quarter of 2008 was $4,053,789 or $0.14 per basic and diluted share compared with $2,860,752 or $0.13 per share in 2007. Michael E. Reed, President and CEO of Electro Energy, said, "Our first quarter revenue was weaker than the prior year. However, our order backlog grew during this period as a result of the first phase of the $5 million Kiowa helicopter battery order we previously announced. The amount of future financings will be directly related to our success in generating product revenue for our 18650 cells. We believe that our ongoing requirements to raise additional capital are consistent with those of companies that are in a similar early stage of development." Conference Call The Company will hold a conference call Friday, May 16, 2008 at 10 a.m. Eastern Time. Interested participants should call (866) 541-8090 when calling within the United States or (706) 758-0055 when calling internationally. Please use passcode 47697570. The playback of the conference will be available commencing two hours after the completion of the call and will be available for 30 days. To listen to the playback, please call (800) 642-1687 when calling within the United States or (706) 645-9291 when calling internationally. About Electro Energy Inc. Electro Energy Inc., headquartered in Danbury, Connecticut, was founded in 1992 to develop, manufacture and commercialize high-powered, rechargeable bipolar wafer cell nickel-metal hydride batteries for use in a wide range of applications. Its Colorado Springs operation is AS9100/ISO9001 certified and supplies aerospace-grade high quality nickel cadmium batteries and components for satellites, aircraft and other specialty applications. EEEI is also developing high power lithium rechargeable batteries utilizing the Company's proprietary bipolar wafer cell design. EEEI owns significant manufacturing assets near Gainesville, Florida for rechargeable lithium ion 18650 cylindrical cells, other than statements of fact, included in this release, including, without limitation, statements regarding potential future plans and objectives of the companies, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, among other things, the following: general economic and business conditions; competition; unexpected changes in technologies and technological advances; ability to commercialize and manufacture products; results of experimental studies; research and development activities; changes in, or failure to comply with, governmental regulations; and the ability to obtain adequate financing in the future.