Electrohome Announces Third Quarter Results
August 27, 2003

Highlights

• Electrohome Limited - The third quarter addressed a number of issues and as a result there are substantial changes to our results versus prior periods. With only a minority interest (26%) in Fakespace and due to Robotel's insolvency, there is no longer a consolidation of operations therefore comparable figures are relatively meaningless.
  
  Fakespace Systems Inc. - Fakespace completed its merger with Mechdyne Corporation effective April 1, 2003. Electrohome is the second largest shareholder in the merged company with a 26% equity position. As a result of the transaction, Electrohome booked a one-time dilution gain of approximately $0.7 million in the third quarter. Electrohome now accounts for this investment on an equity basis (ie: investment in Fakespace on the balance sheet and investment income on the operating statement) rather than consolidating results as had been the case previously.
  
  
• Robotel - During the quarter, Robotel received notice from its bank imposing additional conditions on renewal of its credit facilities, which Robotel was incapable of meeting and was therefore declared insolvent. On June 6, 2003 Robotel's bank formally appointed an interim receiver. As a result, Electrohome has incurred a loss in the third quarter of this year in the amount of $2.8 million. Robotel's results have been restated as discontinued operations.

Management Discussion and Analysis

Third Quarter Results

A loss of $2.6 million for the quarter compares to a loss of $0.6 million last year. Income items for the current quarter include a dilution gain resulting from the Fakespace merger of $0.7 million and other income of $0.2 million. Expenses for the quarter included a $2.8 million loss on the write down of Robotel, an investment loss of $0.2 million based on the Company's prorata share of Fakespace results, administration expense of $0.2 million, a loss from discontinued operations of $0.1 million, amortization of $0.1 million and interest expense of $0.1 million.

Year-To-Date Results

 Year-to-date results include the consolidation of Fakespace's operation for the first six months of the year and the third quarter results as an investment loss only. Year-to-date revenues of $6.5 million were $3.1 million lower than last year as last year included nine months of revenues. A gross profit for the six months of $2.8 million was $0.4 million lower than last year due to the lower volume. Operating expenses and other items are generally not comparable as there are nine full months of consolidated Fakespace results included in last year's figures.

A year-to-date loss of $3.4 million compares to a loss of $2.8 million last year. Current year results include a number of one-time items including a $2.8 million write down of Robotel, a $0.9 million gain on settlement of a lawsuit and a $0.7 million gain on dilution associated with the Fakespace merger.

Liquidity and Capital Resources On April 30, 2003 Electrohome completed a $2.0 million subordinated mortgage financing, with the funds being provided by Electrohome's Chairman, CEO and controlling shareholder, Mr. John A. Pollock, and another member of his family. The loans are secured by a subordinated mortgage on the Electrohome's facility in Kitchener, Ontario and bear interest at prime plus 5.25% per annum, payable monthly, with the principal amount repayable on April 30, 2006. Electrohome applied $600,000 of the proceeds to pay down a portion of its first mortgage with a financial institution, and the remaining $1,400,000 will be used to assist funding some of Electrohome's cash requirements.

Cash increased $0.7 million during the third quarter of fiscal 2003. Cash was provided by an increase in long-term debt ($2.0 million) and by operations ($0.8 million). Cash was used to repay a long-term debt ($0.7 million) and was further reduced by no longer consolidating Fakespace ($1.4 million).

Cash increased $0.8 million during the third quarter of fiscal 2002. Cash was provided from an increase in long-term debt ($1.5 million) and from ongoing operations ($0.6 million). Cash was used by discontinued operations ($1.2 million) and to reduce long-term debt ($0.1 million).

For the nine months ended June 30, 2003, cash increased $0.6 million. Cash was provided by an increase in long-term debt ($2.0 million) and from operations ($2.1 million). Cash was reduced by no longer consolidating Fakespace ($1.4 million) and was used to reduce long-term debt ($1.0 million), to repay a debenture ($1.0 million) and by other items ($0.1 million).

For the nine months ended June 30, 2002, cash decreased $1.6 million. Cash was provided from an increase in long-term debt ($1.5 million) and the issue of shares ($0.1 million). Cash was used to fund ongoing operations ($1.7 million), discontinued operations ($1.1 million), to reduce long-term debt ($0.3 million) and to purchase fixed assets ($0.1 million).

Outlook
Electrohome continues to own a 26% interest in the newly merged Fakespace Systems Inc., which is the largest international company exclusively in the advanced visualization marketplace and a small minority interest in Immersion Studios Inc., which produces specialty digital interactive cinema software and hardware. Electrohome also owns its 300,000 sq. ft. facility in Kitchener, Ontario, most of which is leased to external tenants.

Going forward, Electrohome should benefit from its prorata share of results from Fakespace as well as from facility rental income and royalties for the use of the Electrohome name. The company will continue to incur administrative costs and finance charges. There are also some potential one-time income opportunities which could have a positive impact on future results

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