According to Mackie Research:

Growth Through JVs Is More Likely

DETAILS – EFL Announces MOU With Major Asian Conglomerate

This morning, Electrovaya announced that it has entered into a MOU with a major
Asian conglomerate. It is our understanding that it is one of the largest companies
operating in Asia which provides marketing, financial and trading services and has interests in the automotive, energy, chemicals industries on a global scale.

IMPACT – Positions EFL To Capitalize On Large Opportunities

Electrovaya has significant opportunities in the automotive, grid storage and backup power industries that could result in material contracts in 2H/2013 or early 2014 (see February 19th note). We believe that the best way to secure and deliver on these opportunities is through Joint Venture (JV) and licensing agreements. Therefore, we view the MOU announcement from today in a positive light. The MOU contemplates a relationship that includes:

- Minority Equity Interest in EFL of up to 10% which should improve the Company’s balance sheet.

- Marketing and procurement of EFL’s batteries for the opportunities discussed above.

We believe that the support of this large Asian conglomerate should allow EFL to be considered for opportunities that it could not compete for on its own.

JV and equity interest in a battery manufacturing plant in India. Ideally, EFL would
transfer its technology into a new company that would receive funding from JV
partners to build manufacturing plants in Asia. In return, EFL would receive an
upfront payment for the transfer of its technology and royalty payments on the sale of lithium ion batteries.

Procurement of the raw materials and/or facilities necessary for production of
lithium ion batteries. We note that this Asian conglomerate sells chemicals that are used in EFL’s batteries so a JV agreement could result in supply security and cost efficiencies.

A LOOK AHEAD – Progress On MOU

The Asian company has been performing its due diligence on EFL for the last 6
months. The specific agreements and financial terms for the potential partnership are still under negotiation and are expected to be finalized in 2H/2013. We have reduced our discount rate assumption from 15% to 14% as we are more confident of EFL’s growth prospects through JV and licensing agreements which results in our target price increasing to $0.70/sh from $0.55/sh, previously. We maintain our HOLD rating.