ZENN Motor Company

ZENN Motor Company

January 28, 2010 18:52 ET

ZENN Motor Company Reports Fiscal 2009 Year End Results

TORONTO, ONTARIO--(Marketwire - Jan. 28, 2010) - ZENN Motor Company Inc. ("ZMC" or the "Company") (TSX VENTURE:ZNN) a leading developer of zero emission transportation solutions, today announced its financial results for the three months and year ended September 30, 2009. All amounts are expressed in Canadian dollars unless otherwise indicated.

For the fourth quarter and year ended September 30, 2009, gross revenue was $653,972 and $1,970,507, respectively, compared with $915,003 and $3,533,480, respectively in the prior year. The Company recorded a provision for rebates relating to prospective marketing programs in the three month period and year in the amounts of $328,604 and $574,675, respectively, compared with $175,000 and $489,574, respectively, in the prior year's periods. Unit sales fell in the fourth quarter and year to 35 and 94, respectively, from 56 and 246 in the comparable prior year's periods.

Net loss for the three months and year ended September 30, 2009 was $3,753,671 and $10,089,127 or $(0.10) and $(0.29) per share, respectively, compared with a net loss of $2,312,728 and $7,738,623 or $(0.07) and $(0.25) per share, respectively, for the corresponding prior year periods. The net loss for 2009 includes a writedown of inventory of $1,033,029 related to terminating production of the ZENN LSV and a writeoff of deferred costs of $389,207 related to the Company's decision not to commercialize the cityZENN™.

At September 30, 2009, the Company had working capital of $9,655,369, including cash and temporary investments of $10,143,540, compared to working capital of $15,068,689, including cash and temporary investments of $14,686,100, as at September 30, 2008.

"2009 was both a challenging year and an exciting year for the Company," stated Ian Clifford, Chief Executive Officer. "There is no question that the economic turmoil had a profound effect on this year's results; unit sales declined and it required increasingly greater incentives to attain what results there were."

"Through all the challenges however, there have been some significant achievements that we believe bode well for the Company. In the year, we had EEStor release their permittivity results which was well received, we were able to raise capital in an extremely unstable and challenging market environment and we increased our equity investment in EEStor," said Clifford.

"We have also refined the focus of our energies and resources where we believe they will optimize shareholder value. To this end, as previously announced, we have decided not to bring the cityZENN to market as a commercial product and to cease production of the ZENN LSV in 2010. Instead, the Company's strategic focus going forward will be on its ZENNergy™technologies and solutions, designed to capitalize on the unique characteristics expected of EEStor's capacitor-based energy storage technology. We are excited about the ZENNergy strategy; it builds on our experience from the cityZENN project and the ZENN LSV and is complementary to many electric vehicle initiatives being undertaken today by OEMs and Tier 1 suppliers in the automotive and specialty vehicle industries."

Additional Information

Readers are encouraged to read the Company's audited consolidated financial statements for the years ended September 30, 2009 and 2008, the corresponding Management's Discussion and Analysis and 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 technology 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
  Sep. 30 2009   Sep. 30 2008
  $   $
  Cash and cash equivalents 2,543,540     7,686,100  
  Temporary investments 7,600,000     7,000,000  
  Accounts receivable 118,601     80,069  
  Inventory 552,074     1,958,233  
  Prepaid expenses and other assets 482,611     599,309  
  11,296,826     17,323,711  
Property, plant and equipment 237,876     362,413  
Development costs -     389,207  
Rental deposits 13,358     98,552  
EEStor technology rights 2,303,275     1,510,145  
Investment in EEStor, Inc. 8,674,771     2,857,815  
  22,526,106     22,541,843  
  Accounts payable and accrued liabilities 1,641,457     2,078,969  
  Contingent loss on purchase commitment -     176,053  
  1,641,457     2,255,022  
Shareholders' Equity          
Capital stock 52,009,481     41,863,409  
Contributed surplus 1,946,725     1,322,066  
Warrant capital 232,479     316,255  
Deficit (33,304,036 )   (23,214,909 )
  20,884,649     20,286,821  
  22,526,106     22,541,843  
ZENN Motor Company Inc.
Consolidated Statements of Operations and Deficit
For the three months and year ended September 30
  Three Months 12 Months
  (unaudited) (audited)
  2008   2008   2009   2008
  $   $   $   $
Gross revenue 653,972     915,003     1,970,507     3,533,480  
  Provision for rebates (328,604 )   (175,000 )   (574,675 )   (489,574 )
Net revenue 325,368     740,003     1,395,832     3,043,906  
Cost of sales 497,522     871,812     1,673,403     3,072,616  
Gross profit (172,154 )   (131,809 )   (277,571 )   (28,710 )
  Marketing and promotion 404,217     641,837     1,673,522     2,267,111  
  Engineering and development 987,164     281,841     1,940,716     770,735  
  General and administrative 1,123,780     956,122     4,802,747     4,383,311  
  Write-down of inventory 1,033,029     275,986     1,424,001     335,353  
  Foreign exchange loss (gain) 6,818     (58,121 )   17,771     (74,064 )
  Contingent loss on                      
  purchase commitments -     176,053     -     176,053  
  Amortization 42,340     36,610     175,770     142,814  
  3,597,348     2,310,328     10,034,527     8,001,313  
Loss before undernoted (3,769,502 )   (2,442,137 )   (10,312,098 )   (8,030,023 )
Interest income 15,831     129,409     222,971     291,400  
Net loss for the period (3,753,671 )   (2,312,728 )   (10,089,127 )   (7,738,623 )
Deficit, beginning of period (29,550,365 )   (20,902,181 )   (23,214,909 )   (15,476,286 )
Deficit, end of period (33,304,036 )   (23,214,909 )   (33,304,036 )   (23,214,909 )
Loss per share, basic and diluted (0.10 )   (0.07 )   (0.29 )   (0.25 )
ZENN Motor Company Inc.
Consolidated Statements of Cash Flows
For the year ended September 30 (audited)
  2009   2008
  $   $
Cash flows from operating activities          
  Net loss for period (10,089,127 )   (7,738,623 )
  Add items not affecting cash flow          
    Amortization 175,770     142,814  
    Stock based compensation 1,029,407     738,841  
    Deferred development cost written off 389,207     -  
  (8,494,743 )   (6,856,968 )
  Changes in non-cash working capital          
    Accounts receivable (38,532 )   192,877  
    Inventory 1,406,159     (515,371 )
    Prepaid expenses and other assets 116,698     42,752  
    Accounts payable and accrued liabilities (437,512 )   444,033  
  Contingent loss on purchase commitment (176,053 )   176,053  
  (7,623,983 )   (6,516,624 )
Cash flows from investing activities          
  Purchase of short term investments (600,000 )   (7,000,000 )
  Development costs -     (389,207 )
  Purchase of property and equipment (51,233 )   (152,180 )
  Rental deposits -     (7,232 )
  Repayment of rental deposit 85,194     9,215  
  Investment in EEStor, Inc. (5,816,956 )   -  
  Acquisition of EEStor technology marketing rights (793,130 )   -  
  (7,176,125 )   (7,539,404 )
Cash flow from financing activities          
  Exercise of warrants 1,181,403     -  
  Issue of shares, net of costs 8,476,145     15,520,871  
  9,657,548     15,520,871  
Increase (decrease) in cash and cash equivalents during          
period (5,142,560 )   1,464,843  
Cash and cash equivalents at beginning of period 7,686,100     6,221,257  
Cash and cash equivalents at end of period 2,543,540     7,686,100  
Consisting of:          
  Cash 1,543,780     1,602,576  
  Short term investments 999,760     6,083,524  
  2,543,540     7,686,100  

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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