Enova Systems Announces Results for the Fiscal Year Ended December 31, 2005.

TORRANCE, Calif. -- Enova Systems, Inc. (OTCBB:ENOV) (AIM:ENV) (AIM:ENVS), today announced its results for the fiscal year ended December 31, 2005.

2005 Highlights:

--Revenue totaled $6.1 million in 2005 compared to $2.6 million in 2004

--Loss from operations $2.1 million compared to $3.4 million in 2004

--Admission to AIM Market of the London Stock Exchange raising net $18.0 million

FINANCIAL SUMMARY TABLE
           (US Dollars, in thousands, except per share data)

                                    For the year to December 31

                                         2005             2004

Revenue                                 6,084            2,554
Gross Profit                               83              315
Other income (expenses)                 1,464             (447)
Loss from operations                   (2,127)          (3,382)
                           ------------------------------------
Net loss                               (2,127)          (3,382)
                           ------------------------------------

Basic and diluted net loss
 per share                             $(0.18)          $(0.38)

Weighted-average number of
 shares in issue                   11,664,320        8,831,893

Edwin Riddell, the Company's President and CEO said, "During 2005, the Company experienced an increase in production revenues. We believe our development and market penetration initiatives are proving successful. By defining our market focus, the Company has been able to better identify potential opportunities.

"We continue to pursue privately and governmental funded development programs. This allows us to increase our revenue base, form new alliances with major OEMs and participate in the latest trends in alternative fuel technologies. The increase in R&D revenues for the year ended December 31, 2005 is primarily due to renewed customer requirements after a slow year in 2004.

"The Company continues to receive greater recognition from both governmental and private industry with regards to both commercial and military application of its hybrid drive systems and fuel cell power management technologies. Although the Company believes that current negotiations with several parties may result in development and production contracts during 2006 and beyond, there are no assurances that such additional agreements will be realized."

Review of Operations

During 2005, the Company continued to advance its technologies and products for greater market penetration for 2006 and beyond. We continue to develop independently and in conjunction with the Hyundai-Enova Innovative Technology Center (ITC) progress on several fronts to produce commercially available heavy-duty, series and parallel hybrid drive systems.

During the year ended December 31, 2005, we continued to develop and produce electric and hybrid electric drive systems and components for First Auto Works of China, Ford Motor Company (Ford), Hyundai Motor Car, US Military, Wrightbus and Eneco of the United Kingdom, Tomoe of Japan, and several other domestic and international vehicle and bus manufacturers. We also were successful in introducing our technology to companies such as Concurrent Technology Corporation (CTC), PUES (Tokyo Research and Development), Volvo/Mack and Navistar (International Truck and Engine, IC Corporation). The continued relationships, in addition to our newest customers, helped Enova surpass, since Enova's inception, the manufacturing of its 900th system. Our various electric and hybrid-electric drive systems, power management and power conversion systems are being used in applications including Class 8 trucks, train locomotives, transit buses and industrial vehicles as well as in non-transportation applications such as fuel-cell management and power management systems, including the EDO minesweeper. Enova has furthered its development and production of systems for both mobile and stationary fuel cell powered systems with major companies such as Ford and Hydrogenics, a fuel cell developer in Canada.

For the year ended December 31, 2005, the following customers each accounted for more than ten percent (10%) of the Company's total revenues:

Customer                                       Percent
----------------------------------------------------------
    Tomoe Electro Mechanical Engineering & Mfg.      49.3%

    Hyundai Motor Company                            12.5%

Medium and Heavy-Duty Drive Systems - Buses, Trucks, Vans and Other Industrial Vehicle Applications

Enova's primary market focus centers on both series and parallel medium and heavy-duty drive systems for multiple vehicle and marine applications. We believe series-hybrid and parallel hybrid medium and heavy-duty drive system sales offer Enova the greatest return on investment in both the short and long term. Although this market sector has developed more slowly than anticipated, management believes that this area will see significant growth over the next several years. As the Company penetrates more market areas, we are continually refining and optimizing both our market strategy and our product line to maintain our leading edge in power management and conversion systems for mobile applications.

In Japan, Tomoe Electro-Mechanical Engineering and Manufacturing, Inc. has entered into a development and production contract with Enova for eight battery-electric locomotives for the Singapore Land Transport Authority (LTA) for service vehicles for the Seoul Mass Rapid Transit (SMRT) Circle Line system for maintenance, repair, shunting and recovery of passenger trains. Over the last several years, Enova successfully integrated its HybridPower (TM) drive systems into Tomoe's heavy-duty Isuzu dump truck application, three passenger trams and a mine tunnel crawler. The hybrid drive train components were delivered in late 2005 at Tomoe's Japan-based facilities. Enova anticipates the total contract to exceed US$3 million over the life of the contract. This latest market penetration in Asia enhances not only Enova's alliances with both Tomoe and HHI, but also advances Enova's hybrid-electric technologies in high voltage power management components. As part of this contract, Enova will develop a high voltage charging system to enable the locomotive to receive a direct battery charge from the high voltage rail. Tomoe and Enova continue to develop other commercial and industrial applications for our drive systems including potential light rail applications. During the first quarter of 2005, Tomoe issued a purchase order for three post transmission parallel hybrid drive systems for another train project in South Korea.

In 2005, Enova Systems delivered a Post Transmission 80kW Hybrid Drive 4200 series truck to International Truck and Engine (International). This is in addition to the delivery of the, as represented by IC Corporation, nation's first functional Hybrid Drive school bus that was delivered to International in January of 2006. Both the truck and bus are currently being evaluated at International's Fort Wayne Technical Center. International and IC Corporation claims to be a leading manufacturer of medium duty trucks and school buses, with approximately 40% of the medium duty truck build and approximately 60% of the school bus build in North America.

Additionally in 2005, Enova's Post Transmission system was also integrated into a US Air Force "refueler" vehicle built by Volvo/Mack Truck Corporation. Enova, via Concurrent Technologies Corporation (CTC), also supplied its 120kW hybrid drive system to the US Air Force for a Fuel Cell Hybrid "TUG" vehicle. In 2005, First Auto Works (FAW) of China ordered an additional five HybridPower 120kW drive systems. These units have been delivered. Additionally, FAW introduced its Hybrid City Bus, which is powered by Enova's 80kW Parallel Hybrid Drive System. FAW is China's largest vehicle manufacturer, producing in excess of 900,000 vehicles annually.

In 2005, we continued our work with Tsinghua University of China and their fuel cell bus development program. China intends to use hybrid-electric buses to shuttle athletes and guests at the 2008 Beijing Summer Olympics and the 2010 World's Expo in Shanghai. China is seeking up to 1,000 full-size hybrid-electric buses to support these global events.

Wrightbus, one of the largest low-floor bus manufacturers in the United Kingdom, continues to purchase our diesel genset-powered, series hybrid drive systems for their medium and large bus applications. Wrightbus ordered two additional 120kW drive systems in 2005. Six of Enova's systems provided to Wrightbus, have been integrated into six Hybrid Buses, which are currently being evaluated in London's public bus fleet.

Eneco of the United Kingdom, a vehicle integrator which utilizes Enova's HybridPower 120kW drive systems in its hybrid bus applications, purchased 21 120kW systems in 2005.

EcoPower Technology of Italy continued to purchase components for its hybrid electric drive systems during 2005 for service and maintenance parts for its fleet of buses powered by HybridPower(TM) 120kW drive systems. Since our teaming with EcoPower, we have sold 47 drive systems forming one of the largest fleets of hybrid buses in the world. EcoPower is one of the largest integrators of medium size transit buses for the European shuttle bus market, with key customers in five Italian cities, namely Turin, Genoa, Brescia, Ferrara and Vicenza.

MTrans of Malaysia has integrated two of our standard HybridPower 120kW drive system into a hybrid 10-meter bus with a Capstone microturbine as its power source. This drive system is currently on demonstration in Hong Kong, PRC.

Additionally, we are in discussions with other bus manufacturers and industrial, commercial and military vehicle manufacturers regarding the purchase of our heavy-duty, high performance, 120kW and 240kW drive systems in 2005. There are no assurances, however, that these discussions will result in any sales of the HyrbidPower 240kW or 120kW drive systems.

Light-Duty Drive Systems and Fuel Cell Technologies - Automobiles and Delivery Vehicles

The High Voltage Energy Converter (HVEC) development program with Ford Motor Company for their fuel cell vehicle was essentially completed in 2003. This converter is a key component in Ford's Focus Fuel Cell Vehicle (FCV) which utilizes the Ballard fuel cell system. It converts high voltage power from the fuel cell into a lower voltage for use by the drive system and electronic accessories. Ford currently is evaluating thirty vehicles utilizing Enova's technology throughout the United States, Canada, and Germany. Enova's fuel cell enabling components continue to be part of the proposed fleets of fuel cell vehicles being utilized by both Ford Motor Company -- the Ford Focus FCV -- and Hyundai Motor Company -- the Hyundai Tucson fuel cell hybrid electric vehicle -- in response to the U.S. Department of Energy's solicitation, entitled "Controlled Hydrogen Fleet and Infrastructure Demonstration and Validation Project." This government-funded project will last over five years, evaluating the economic and performance feasibility of fuel cell vehicles and infrastructure across the U.S. In 2005, we delivered sixteen additional converters to Hyundai. Furthermore, an additional 16 units are scheduled for delivery in 2006.

The Company will continue to explore new applications for this versatile technology in both mobile and stationary systems.

Research and Development Programs

We continue to aggressively pursue government and commercially sponsored development programs for both ground and marine heavy-duty drive system applications.

Our development contract with EDO Corporation of New York for the design and fabrication of a high voltage DC-DC power conversion system utilizing a Capstone microturbine as the primary power source for the U.S. Navy unmanned minesweeper project also continued to progress during 2005. The electronics package will include Enova's advanced power components including a new, enhanced 50V, 700A DC-DC power converter, our Battery Care Unit and Hybrid Control Unit which will power the minesweeper's electromagnetic detection system. Our power management and conversion system will be used to provide on-board power to other accessories on the platform.

The all-electric Hyundai Santa Fe SUV demonstration project in Honolulu, Hawaii was completed in 2005. Fast-charging capabilities and performance will be the primary focus of this continued evaluation. This is a continuation of the State of Hawaii and Hyundai Motor Company's program for pure electric vehicle performance.

In the fourth quarter of 2004, Enova completed the design and integration of its 120kW drive system with a Capstone microturbine into a MB4 tow tractor for the U.S. Air Force through a contract with the Volpe National Transportation Systems Center. The objectives of this program include the integration of microturbine technology into the hybrid electric tow tractor, field testing and evaluation of the benefits of microturbine technology in a hybrid electric vehicle, integration of grid-charging technology, DC-DC converter, a data acquisition system into an electric tow tractor, and validation of the technology effect on the original system and performance. During 2004, the program generated $165,000 in revenues for Enova. There is a potential for other upgrades of this type and we anticipate entering into more of these contracts in 2005 with the U.S. Air Force. There can be no assurances at this time, however, that such contracts will be realized.

We also commenced a program with Hydrogenics to integrate a HybridPower 120kW hybrid drive system into a step-van for Purolator as a hydrogen fuel cell hybrid vehicle. In integrating this new system, we utilized several new power management systems, including our dual 8kW inverter and our Mobile Fuel Cell Generator that utilizes our High Voltage Converters. This fuel cell vehicle application utilized a Hydrogenics 20kW fuel cell power generation module, underscoring our technologies' ability to optimize fuel cell performance across a range of fuel cell products. The program is in its final stage of evaluation. As a result of this program, we have also commenced a similar fuel cell step van conversion program for HCATT and the U.S. Air Force.

In 2005, we commenced integration of a fuel cell powered step-van similar to the aforementioned Hydrogenics program for HCATT and the U.S. Air Force.

We intend to establish new development programs with the Hawaii Center for Advanced Transportation Technologies in mobile and marine applications as well as other state and federal government agencies as funding becomes available.

Corporate Matters

During 2005, our recapitalization initiatives were successful. We entered into an agreement with a placement agent relating to the sale of 5,300,000 new shares of our common stock, after the 1 for 45 reverse stock split which took place during the year. We received approximately $18,000,000 of net proceeds from the offering. The Company believes that we have the operating resources to continue our market penetration efforts.

The reorganization of senior management continued in 2005. During the fourth quarter of 2005, both our Chief Financial Officer, Larry Lombard, and our Chief Operating Officer, Edward Moore, resigned to seek other opportunities. Their resignations were not the results of any disagreements with the Company. In the first quarter of 2006, we appointed John Dexter as our new Director of Operations and Planning. In the absence of a financial executive at the end of 2005, and to facilitate the year end financial reporting process, we have relied on increased involvement from Edwin Riddell, Chief Executive Officer, as well as the services of qualified Certified Public Accountants as management consultants.

Financial Review

Net sales of $6,084,000 for the twelve months ended December 31, 2005 increased by $3,530,000 or 138% from $2,554,000 during the same period in 2004. The increase in sales was a result of Enova's expanding research and development initiatives with Hyundai Motor Company (HMC) as well as the production associated with the Tomoe Machinery contract. In 2005, sales attributable to the Tomoe production contract were about $3,000,000. Additionally, sales related to the HMC development project were approximately $758,000.

Cost of sales consists of component and material costs, direct labor costs, integration costs and overhead related to manufacturing our products. Product development costs incurred in the performance of engineering development contracts for the U.S. Government and private companies are charged to cost of sales for this contract revenue. During 2005, our trend of establishing new customers and strengthening current alliances with customers, such as Tomoe and MTrans in the heavy-duty drive system market, continued. Our new customers continue to require additional integration and support services to customize, integrate and evaluate our products. We believe these costs to be initial, one-time costs for these customers and anticipate similar costs to be incurred with respect to new customers as we gain additional market share. Customers who have been using our products over one year do not incur these same type of initial costs. Cost of sales for the year ended December 31, 2005 increased 3,762,000, or 168%, from $2,239,000 for the year ended December 31, 2004. This increase is primarily attributable to the increase in sales for the year and the scrapping of $376,000 of raw materials that were no longer usable.

Research and development expenses consist primarily of personnel, facilities, equipment and supplies for our research and development activities. Non-funded development costs are reported as research and development expense. Research and development expense decreased in 2005 to $804,000 from $925,000 for the same period in 2004, a decrease of $121,000, or 13%. During 2005, externally funded research and development from partners such as FAW, Mack/Volvo, Hyundai, and the U.S. Government offset the costs of development for new products in the areas of mobile and stationary power management and conversion, thereby reducing the need for internal funding. We believe that this trend is continuing. Programs included our new parallel hybrid drive systems, our diesel generation engine/motor system for our heavy-duty drive systems, and upgrades and improvements to our current power conversion and management components. Additionally, we continued to enhance our technologies to be more universally adaptable to the requirements of our current and prospective customers. By modifying our software and firmware, we believe we should be able to provide a more comprehensive, adaptive and effective solution to a larger base of customers and applications. We will continue to research and develop new technologies and products, both internally and in conjunction with our alliance partners and other manufacturers as we deem beneficial to our global growth strategy.

Selling, general and administrative expenses consist primarily of personnel and related costs of sales and marketing employees, consulting fees and expenses for travel, trade shows and promotional activities, and personnel and related costs for general corporate functions, including finance, accounting, strategic and business development, human resources and legal. Selling, general and administrative expenses increased by $545,000 at 2005 from 2004 levels due to increased headcount and the associated increases in wages, health and workers compensation insurance, and taxes of approximately $279,000, and from a $266,000 increase in the allowance for doubtful accounts. For the year ended December 31, 2005, these expenses totaled $2,870,000, up from $2,325,000 for the similar period in 2004. This represents an 23% increase in these expenses. We are continually reviewing operations to control overhead costs and increase operational efficiencies.

For the year ended December 31, 2005, interest and financing fees shifted to a net other income of $13,000 from a net expense of $255,000. The change is a result of the Company's comparatively higher cash balance at 2005 and the associated interest revenue as well as a $50,000 gain on a foreign currency transaction in the United Kingdom. The comparatively higher cash balance was the result of the equity offering that occurred in the third quarter of 2005.

In 2005, we charged off approximately $376,000 of our inventory relating to obsolete and slow-moving raw materials. We believe that the relatively slight fluctuation in the inventory balances compared to the increased sales volume illustrates Enova's continuing efforts to monitor and control inventory utilization.

In December 2005, the Company was informed by the Credit Managers Association of California that $1,011,000 of principal and $447,000 accrued interest under the secured note payable had been disclaimed and extinguished by the beneficiaries of such principal amount. The extinguishment resulted from the resolution of a substantially aged negotiation regarding consideration paid in settlement of the principal amount. The company has recognized a gain on the extinguishment of the principal and associated accrued interest. The Company evaluated this transaction under the guidance set forth in SFAS 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," and noted that the extinguishment of these liabilities were consistent with the guidance.

In October 2005, the Company agreed to a settlement on the unsecured 10% note payable. In exchange for immediate payment of the full principal balance of $120,000, the beneficiary of the note agreed to forgive the entire accrued interest balance of $111,000. The company has recognized a gain on the extinguishment of the associated accrued interest. The Company evaluated this transaction under the guidance set forth in SFAS 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," and noted that the extinguishment of these liabilities were consistent with the guidance.

BALANCE SHEETS
                                                      December 31,
US Dollars                                           2005 and 2004
----------------------------------------------------------------------
                                ASSETS
                                                    2005         2004
                                             ------------ ------------

Current assets
   Cash and cash equivalents                 $16,187,000   $1,575,000
   Accounts receivable, net                    2,173,000      552,000
   Inventories and supplies, net               1,016,000    1,036,000
   Prepaid expenses and other current assets     182,000      304,000
                                             ------------ ------------

      Total current assets                    19,558,000    3,437,000

Property and equipment, net                      576,000      387,000
Equity method investment                       1,649,000    1,768,000
Other assets                                     190,000      296,000
                                             ------------ ------------
Total assets                                 $21,973,000   $5,888,000
                                             ============ ============


                 LIABILITIES AND STOCKHOLDERS' EQUITY

US Dollars
----------------------------------------------------------------------

                                                    2005         2004
                                             ------------ ------------

Current liabilities
   Accounts payable                           $1,396,000      $66,000
   Deferred revenues                                   -      392,000
   Line of credit                                      -      229,000
   Accrued payroll and related expense           195,000      194,000
   Other accrued expenses                        302,000       13,000
   Current portion of notes payable               42,000      166,000
   Current portion of capital lease
    obligations                                        -        6,000
                                             ------------ ------------

      Total current liabilities                1,935,000    1,066,000

Accrued interest payable                       1,113,000    1,378,000
Notes payable, net of current portion          2,321,000    3,341,000
                                             ------------ ------------

      Total liabilities                       $5,369,000   $5,785,000
                                             ------------ ------------


                       STATEMENTS OF OPERATIONS
            For the Years Ended December 31, 2005 and 2004

US Dollars
----------------------------------------------------------------------
                                                    2005         2004
                                             ------------ ------------

Net revenues
   Research and development contracts         $1,555,000   $1,070,000
   Production                                  4,529,000    1,484,000
                                             ------------ ------------
       Total net revenues                      6,084,000    2,554,000
                                             ------------ ------------

Cost of revenues
   Research and development contracts          1,188,000      499,000
   Production                                  4,813,000    1,627,000
   Writedown Ford Think program inventory              -      113,000
                                             ------------ ------------
       Total cost of revenues                  6,001,000    2,239,000
                                             ------------ ------------
Gross profit                                      83,000      315,000
                                             ------------ ------------

Operating expenses
   Research & development                        804,000      925,000
   Asset impairment                                    -            -
   Selling, general & administrative           2,870,000    2,325,000
                                             ------------ ------------
       Total operating expenses                3,674,000    3,250,000
                                             ------------ ------------
Other income and (expense)
   Interest and financing fees, net               13,000     (255,000)
   Equity in losses of equity method investee   (118,000)    (192,000)
   Debt extinguishment                         1,011,000            -
   Interest extinguishment                       558,000            -
                                             ------------ ------------
       Total other income and (expense)        1,464,000     (447,000)
                                             ------------ ------------
Loss from operations                          (2,127,000)  (3,382,000)

Net loss                                     $(2,127,000) $(3,382,000)
                                             ============ ============

Basic loss and diluted loss per share             $(0.18)      $(0.38)
                                             ============ ============
   Restated for effects of reverse stock
    split - see note 10


Weighted-average number of
    shares outstanding                        11,664,320    8,831,893
                                             ============ ============


                       STATEMENTS OF CASH FLOWS
            For the Years Ended December 31, 2005 and 2004

US Dollars
----------------------------------------------------------------------


                                                    2005         2004
                                             ------------ ------------

Cash flows from operating activities

 Net loss                                    $(2,127,000) $(3,382,000)

 Adjustments to reconcile net loss
  to net cash used by operating activities
  Debt extinguishment                         (1,011,000)           -
  Interest extinguishment                       (558,000)           -
  Depreciation and amortization                  304,000      376,000
  Provision for asset impairment                       -            -
  Equity in losses of equity method investee     118,000      192,000
  Issuance of common stock for services          158,000       89,000
  Issuance of common stock for bonuses           109,000            -
  (Increase) decrease in
      Accounts receivable                     (1,651,000)     281,000
      Inventory  and supplies                     20,000      570,000
      Note receivable - related party                  -        8,000
      Prepaid expenses and other current
       assets                                    122,000     (226,000)
      Other assets                                (2,000)           -
  Increase (decrease) in
      Accounts payable                         1,330,000     (702,000)
      Accrued expenses                           290,000      (11,000)
      Deferred revenues                         (392,000)     392,000
      Accrued interest payable                   293,000      256,000
                                             ------------ ------------
Net cash used by operating activities         (2,997,000)  (2,157,000)
                                             ------------ ------------

Cash flows from investing activites
     Purchases of property and equipment       $(384,000)   $(174,000)
                                             ------------ ------------
Net cash used in investing activities           (384,000)    (174,000)
                                             ------------ ------------

Cash flows from financing activities
    Net increase from line of credit                  $-     $109,000
    Payment on notes payable and
     capital lease obligations                  (368,000)     (33,000)
    Proceeds from notes payable                        -       40,000
    Net Proceeds from sales of common stock   18,361,000    2,450,000
    Offering costs                                     -            -
    Proceeds from exercise of stock options            -      783,000
    Payments on stock notes receivable                 -       27,000
                                             ------------ ------------
Net cash provided by financing activities     17,993,000    3,376,000
                                             ------------ ------------

Net increase (decrease) in cash and           14,612,000    1,045,000
    cash equivalents                         ------------ ------------


Cash and cash equivalents, beginning of year   1,575,000      530,000
                                             ------------ ------------


Cash and cash equivalents, end of year       $16,187,000   $1,575,000
                                             ============ ============

About Enova Systems, Inc.

Enova Systems is a leading supplier of efficient, environmentally- friendly digital power components and systems products. The Company's core competencies are focused on the development and commercialization of power management and conversion systems for mobile and stationary applications. Enova applies unique 'enabling technologies' in the areas of alternative energy propulsion systems for light and heavy-duty vehicles as well as power conditioning and management systems for distributed generation systems. The Company develops, designs and produces drive systems and related components for electric, hybrid-electric, and fuel cell powered vehicles. For further information, contact Enova Systems directly, or visit its Web site at http://www.enovasystems.com.

This news release contains forward-looking statements relating to Enova Systems and its products that are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "could," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology and statements about industry trends and Enova's future performance, operations and products. These forward looking statements are subject to and qualified by certain risks and uncertainties. These and other risks and uncertainties are detailed from time to time in Enova Systems' periodic filings with the Securities and Exchange Commission, including but not limited to Enova's annual report on Form 10-K for the year ended December 31, 2005. This forward-looking information should be considered only in connection with the aforementioned risk factors. Enova assumes no obligation to update such forward-looking statements.