Amerigon (ARGN)

Results of Operations Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Product Revenues.    Product revenues for 2004 were $32,710,000 as compared with product revenues of $29,042,000 for 2003. This increase of $3,668,000, or 13%, is primarily due to the addition of our CCS product as an option since the fourth quarter of 2003 on the Cadillac Escalade ESV and Nissan Fuga (a counterpart to the Nissan Cima) and the effect of a full year of production for vehicles which added the CCS product as an option during 2003, including the Mercury Monterey, Cadillac XLR, Cadillac DeVille, Hyundai Equus and Nissan Cima vehicle lines. During 2004, unit shipments rose to 503,000 units compared with 446,000 units for 2003.

Cost of Sales.    Cost of sales increased to $24,209,000 in 2004 (74%, as a percentage of sales) from $23,002,000 in 2003 (79%, as a percentage of sales). This increase of $1,207,000, or 5%, reflects a 13% increase in related revenues offset partially by a favorable change in the mix of products sold.

Net Research and Development Expenses.    Net research and development expenses decreased to $2,226,000 in 2004 from $2,487,000 in 2003. This $261,000 decrease was due primarily to an increase in reimbursement for development efforts of our BSST subsidiary for 2004 compared with 2003 (see Note 16 of the Consolidated Financial Statements) and lower prototype costs associated with our next generation of CCS design.

Selling, General and Administrative Expenses.    Selling, general and administrative expenses increased to $5,489,000 in 2004 compared to $5,110,000 in 2003. This $379,000 increase is net of a $676,000 charge in 2003 relating to the VPA (see Note 11 of the Consolidated Financial Statements). Excluding this charge, the increase in SG&A was $1,055,000 and reflected projected payment of an earnings-based management bonus of $540,000, the commencement of cash compensation to the Board of Directors of $146,000 and higher wages and benefits associated with headcount added to support domestic, Asian and European marketing efforts of approximately $400,000.

Interest Expense.    We had no interest expense for 2004 compared with $69,000 for 2003. The decrease resulted from having no outstanding borrowing under our credit line during the 2004, compared with an average outstanding balance of $821,000 during 2003.

19

Table of Contents

Results of Operations Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

Revenues.    Revenues for 2004 were $32,710,000 as compared with revenues of $29,042,000 for 2003. This increase of $3,668,000, or 13%, is primarily due to the addition of our CCS product as an option since the fourth quarter of 2003 on the Cadillac Escalade ESV and Nissan Fuga (a counterpart to the Nissan Cima) and the effect of a full year of production for vehicles which added the CCS product as an option during 2003, including the Mercury Monterey, Cadillac XLR, Cadillac DeVille, Hyundai Equus and Nissan Cima vehicle lines. During 2004, unit shipments rose to 503,000 units compared with 446,000 units for 2003.

Cost of Sales.    Cost of sales increased to $24,209,000 in 2004 (74%, as a percentage of sales) from $23,002,000 in 2003 (79%, as a percentage of sales). This increase of $1,207,000, or 5%, reflects a 13% increase in related revenues offset partially by a favorable change in the mix of products sold.

Research and Development Expenses.    Research and development expenses decreased to $2,226,000 in 2004 from $2,487,000 in 2003. This $261,000 decrease was due primarily to an increase in reimbursement for development efforts of our BSST subsidiary for 2004 compared with 2003 (see Note 16 of the Consolidated Financial Statements) and lower prototype costs associated with our next generation of CCS design.

Selling, General and Administrative Expenses.    Selling, general and administrative expenses increased to $5,489,000 in 2004 compared to $5,110,000 in 2003. This $379,000 increase is net of a $676,000 charge in 2003 relating to the VPA (see Note 11 of the Consolidated Financial Statements). Excluding this charge, the increase in SG&A was $1,055,000 and reflected projected payment of an earnings-based management bonus of $540,000, the commencement of cash compensation to the Board of Directors of $146,000 and higher wages and benefits associated with headcount added to support domestic, Asian and European marketing efforts of approximately $400,000.

Interest Expense.    We had no interest expense for 2004 compared with $69,000 for 2003. The decrease resulted from having no outstanding borrowing under our credit line during the 2004, compared with an average outstanding balance of $821,000 during 2003.