ZENN Motor Company
TSX VENTURE : ZNN

ZENN Motor Company

February 25, 2010 18:00 ET

ZENN Motor Company Reports First Quarter 2010 Results

TORONTO, ONTARIO--(Marketwire - Feb. 25, 2010) - ZENN Motor Company Inc., ("ZMC" or the "Company") (TSX VENTURE:ZNN) a leading enabler of zero emission transportation solutions, today announced its financial results for the three months ended December 31, 2009. All amounts are expressed in Canadian dollars unless otherwise indicated.

For the three months ended December 31, 2009, gross revenue was $980,891, an increase from $545,392 in the corresponding 2008 period. Net loss for the three month period was $1,846,389 or $(0.05) per share compared with a net loss of $1,786,420 or $(0.05) per share in the corresponding period in the prior year.

At December 31, 2009 the Company had working capital of $8,200,118 including cash, cash equivalents and short-term investments totaling $9,387,128 compared to $9,655,369 and $10,143,540, respectively, at September 30, 2009.

"Our transition from being a car manufacturer to a supplier to Original Equipment Manufacturers, including the closure of our Saint-Jerome production facility, remains on track. Our sales performance in the quarter helped reduce inventories and our cash position remains strong" stated Ian Clifford, Chief Executive Officer. "I must commend our Saint-Jerome team for their continued professionalism and commitment during this process."

"We continue to focus our energies and resources on our ZENNergy™ technologies and solutions" stated Clifford. "We remain excited about the ZENNergy strategy and eagerly anticipate fulfilment of the final milestone of our Technology Agreement, namely the third party verification of a production quality Electrical Energy Storage Unit (EESU), which is an integral part of our ZENNergy strategy."

Additional Information

Readers are encouraged to read the Company's unaudited consolidated financial statements for the three months ended December 31, 2009 and the corresponding Management's Discussion and Analysis. Additional information is available in the Company's Annual Information Form (AIF) dated January 28, 2010, all of which have been filed on SEDAR at www.sedar.com and posted on the Company's website at www.ZENNcars.com.

About ZENN Motor Company Inc.

ZENN Motor Company, Toronto, Canada, is dedicated to being a global leader in enabling zero emission transportation technologies and solutions for markets around the world. Driven by quality, ingenuity and a philosophy of social responsibility, the ZMC team is redefining what is possible in the electrification of transportation.

ZENNergy technologies and solutions, to be powered by EEStor's electrical energy storage units (EESU) are expected to enable OEM and Tier 1 partners to deliver advanced electric transportation solutions to their customers. The Company has a Technology Agreement with EEStor that provides certain exclusive and non-exclusive rights to purchase and deploy EEStor's EESU technology, which rights are detailed in the Company's AIF.

Forward-looking Statements

Certain statements in this release, other than statements of historical fact, may include forward-looking information that involves various risks and uncertainties that face the Company; such statements may contain such words as "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions, and may be based on management's current assumptions and expectations related to all aspects of the automotive industry, consumer demand for zero emission transportation solutions and the global economy. Risks and uncertainties that may face the Company include, but are not restricted to: the EEStor energy storage technology may not be successfully commercialized at all, in a manner providing the features and benefits expected while under development, or on a timely basis or the Company may not be able to successfully incorporate this technology into its current or proposed products; the Company could fail in its efforts to develop viable ZENNergy technologies and solutions or do so on a timely basis; steps taken by the Company to protect its proprietary rights may not be adequate or third parties may infringe or misappropriate the Company's proprietary rights; the Company has a history of losses from operations and may not be able to obtain financing, if and when required, to fund future expenditures for general administrative activities, including sales and marketing and research and development, expansion, strategic acquisitions or investment opportunities or to respond to competitive pressures; competitors may develop products which offer greater benefits to consumers, have greater market appeal or are more competitively priced than those offered by the Company; the Company may be exposed to product liability claims which exceed insurance policy limits; the Company is dependent on the ability and experience of a relatively small number of key personnel;
new products introduced by the Company may not be accepted in the market or to the extent projected; new laws and regulations may be enacted or existing ones may be applied or governmental action may be taken in a manner which could limit or curtail the production or sale of the Company's products; and the Company may be negatively affected by reduced consumer spending due to the uncertainty of economic and geopolitical conditions. These risks and uncertainties may cause actual results to differ from information contained in this release, when estimates and assumptions have been used to measure and report results. There can be no assurance that any statements of forward-looking information contained in this release will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. These and all subsequent written and oral statements containing forward-looking information are based on the estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice. Except as required by applicable laws, the Company assumes no obligation to update forward-looking statements should circumstances or management's estimates or opinions change. Readers are cautioned not to place undue reliance on any statements of forward looking information that speak only as of the date of this release. Additional information identifying risks and uncertainties relating to the Company's business are contained under the heading "Risk Factors" in ZMC's current Annual Information Form and its other filings with the various Canadian securities regulators which are available online at www.sedar.com.

Information contained in this release relating to EEStor, Inc. or the energy storage technology being developed by EEStor has not been reviewed by EEStor and EEStor does not assume any responsibility for the accuracy or completeness of such information.



ZENN Motor Company Inc.
Consolidated Balance Sheets

---------------------------------------------------------------------------
Dec. 31 2009 Sep. 30 2009
$ $
(unaudited) (audited)
---------------------------------------------------------------------------

Assets
Current
Cash and cash equivalents 1,787,128 2,543,540
Temporary investments 7,600,000 7,600,000
Accounts receivable 25,132 118,601
Inventory 252,801 552,074
Prepaid expenses and other assets 439,766 482,611
------------- -----------
10,104,827 11,296,826
Property, plant and equipment 219,552 237,876
Rental deposits 21,533 13,358
EEStor technology rights 2,303,275 2,303,275
Investment in EEStor, Inc. 8,674,771 8,674,771
------------- -----------
21,323,958 22,526,106
------------- -----------
------------- -----------

Liabilities
Current
Accounts payable and accrued liabilities 1,904,709 1,641,457
------------- -----------
1,904,709 1,641,457
Shareholders' Equity
Capital stock 52,182,586 52,009,481
Contributed surplus 2,216,563 1,946,725
Warrant capital 170,525 232,479
Deficit (35,150,425) (33,304,036)
------------- -----------
19,419,249 20,884,649
------------- -----------
21,323,958 22,526,106
------------- -----------
------------- -----------



ZENN Motor Company Inc.

Consolidated Statements of Operations and Deficit
For the three months ended December 31
(unaudited)


---------------------------------------------------------------------------
2009 2008
$ $
---------------------------------------------------------------------------

Gross revenue 980,891 545,392
Provision for rebates (391,387) (51,156)
------------- -----------
Net revenue 589,504 494,236

Cost of sales 525,611 589,099
------------- -----------

Gross profit 63,893 (94,863)

Expenses
Marketing and promotion 342,840 436,989
Engineering and development 451,357 209,445
General and administrative 1,093,191 1,125,485
Foreign exchange loss (gain) (1,830) (20,903)
Amortization 36,650 44,408
------------- -----------
1,922,208 1,795,424
------------- -----------

Loss before undernoted (1,858,315) (1,890,287)
Interest income 11,926 103,867
------------- -----------

Net loss for the period (1,846,389) (1,786,420)

Deficit, beginning of period (33,304,036) (23,214,909)
------------- -----------

Deficit, end of period (35,150,425) (25,001,329)
------------- -----------
------------- -----------

Loss per share, basic and diluted (0.05) (0.05)



ZENN Motor Company Inc.
Consolidated Statements of Cash Flows
For the three months ended December 31
(unaudited)

---------------------------------------------------------------------------
2009 2008
---- ----
$ $
---------------------------------------------------------------------------

Cash flows from operating activities
Net loss for period (1,846,389) (1,786,420)
Add items not affecting cash flow
Amortization 36,650 44,408
Stock based compensation 256,882 256,917
------------- -----------
(1,552,857) (1,485,095)
Changes in non-cash working capital
Accounts receivable 93,469 (136,752)
Inventory 299,273 (576,799)
Prepaid expenses and other assets (42,324) (101,018)
Accounts payable and accrued liabilities 263,251 (473,151)
------------- -----------
(939,188) (2,772,815)
------------- -----------

Cash flows from investing activities
Purchase of short term investments - 1,775,000
Development costs - (149,839)
Purchase of property and equipment (18,323) (15,457)
Rental deposits 76,993 9,700
------------- -----------
58,670 1,619,404
------------- -----------
Cash flow from financing activities
Exercise of options and warrants 124,106 7,498
------------- -----------
124,106 7,498
------------- -----------

Increase (decrease) in cash and cash
equivalents during period (756,412) (1,145,913)

Cash and cash equivalents at beginning
of period 2,543,540 7,686,100
------------- -----------
Cash and cash equivalents at end
of period 1,787,128 6,540,187
------------- -----------
------------- -----------


Cash and cash equivalents consists of:
Cash 1,037,316 388,462
Short term investments 749,812 6,151,725
------------- -----------
1,787,128 6,540,187
------------- -----------
------------- -----------


Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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