ZENN Motor Company
TSX VENTURE : ZNN

ZENN Motor Company

May 27, 2009 08:36 ET

ZENN Motor Company Reports Second Quarter 2009 Results

TORONTO, ONTARIO--(Marketwire - May 27, 2009) - ZENN Motor Company Inc. ("ZMC" or the "Company") (TSX VENTURE:ZNN) a leading developer of zero emission transportation solutions and technologies, today announced its financial results for the three and six months ended March 31, 2009. All amounts are expressed in Canadian dollars unless otherwise indicated.

For the three and six months ended March 31, 2009 gross revenues were $391,227 and $936,619, respectively (2008 - $740,748 and $1,641,172, respectively).

Net losses for the three and six month periods were $1,973,015 or $(0.05) per share and $3,759,387 or $(0.11) per share compared with net losses of $1,837,940 or $(0.06) per share and $3,515,602 or $(0.12) per share for the corresponding periods in the prior year.

At March 31, 2009 the Company had working capital of $12,373,427 including cash, cash equivalents and short-term investments totaling $10,804,427 compared to $15,068,689 and $14,686,100, respectively, at September 30, 2008.

"Revenue in the quarter reflects the general malaise of the auto industry." said Ian Clifford, CEO of the Company. "Fortunately, the Company's strong balance sheet allowed us to continue to invest and make progress in a number of key areas, such as the development of the ZENNergy™ drivetrain and cityZENN™ projects which are integral parts of the Company's strategy, especially with the planned commercialization of EEStor's energy storage technology."

"On May 21, 2009 the Company confirmed EEStor's permittivity test results which exceeded the target level stipulated in our Technology Agreement with EEStor by over 21 percent," said Clifford. "The permittivity milestone is significant for the Company as it gives us a clearer line of sight to the delivery of a production quality Electrical Energy Storage Unit (EESU) from EEStor. According to EEStor, the EESU is expected to outperform every chemical battery on the market in terms of energy density, charge time, cost, and overall performance. In addition to our exclusive automotive applications, our equity position in EEStor gives our shareholders a stake in the many potential mass applications EEStor can pursue such as powering portable consumer electronics, improving the performance of renewable energy sources such as wind and solar generation, and increasing the efficiency and stability of power grids around the world. The milestone not only triggers a payment of US$700,000 under our Technology Agreement but also the Company's investment option in EEStor and we are currently assessing the opportunity to increase our equity position to the maximum extent possible."

"We believe that the widespread interest by consumers, governments and manufacturers in environmentally friendly, sustainable and cost-effective solutions bodes well for the future of the EV industry and the role that ZMC can play," said Clifford.

Additional Information

Readers are encouraged to read the Company's unaudited consolidated financial statements for the three and six months ended March 31, 2009 and the corresponding Management's Discussion and Analysis both 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 zero emission transportation solutions and technologies for markets around the world. Driven by quality, ingenuity and a philosophy of social responsibility, the ZMC team is redefining what is possible in both urban and business fleet transportation.

The ZENN™ (Zero Emission No Noise) provides an excellent alternative transportation solution for environmentally conscious drivers who want to dramatically reduce their operating costs and free themselves from dependence on oil. The current ZENN low speed vehicle is perfect for urban commuters and commercial fleets such as resorts, gated communities, airports, college and business campuses, municipalities, and parks and is sold through a network of retailers across the United States and directly by the Company in Quebec.

The planned commercialization and implementation of the ultra capacitor being developed by ZENN Motor Company's strategic partner EEStor, Inc., is expected to enable future ZMC vehicles and ZENNergy™ drivetrain powered vehicles to travel at speeds and distances similar to internal combustion powered vehicles but at a fraction of the cost and with zero emissions!

Forward-looking Statement

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 claimed by EEStor 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 a viable ZENNergy Drivetrain or cityZENN solution 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.



ZENN Motor Company Inc.
Consolidated Balance Sheets

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Mar. 31 2009 Sep. 30 2008
$ $
(unaudited) (audited)
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Assets
Current
Cash and cash equivalents 6,004,427 7,686,100
Short-term investments 4,800,000 7,000,000
Accounts receivable 227,246 80,069
Inventory 2,419,138 1,958,233
Prepaid expenses and sundry assets 615,027 599,309
------------------------------------
14,065,838 17,323,711
Property and equipment 292,886 362,413
Development costs 639,300 389,207
Rental deposits 96,988 98,552
EEStor Technology Rights 1,510,145 1,510,145

Investment in EEStor, Inc. 2,857,815 2,857,815
------------------------------------
19,462,972 22,541,843
------------------------------------
------------------------------------

Liabilities
Current
Accounts payable and accrued liabilities 1,692,410 2,078,969
Contingent loss on purchase commitments - 176,053
------------------------------------
1,692,410 2,255,022
------------------------------------

Shareholders' Equity
Capital stock 43,062,403 41,863,409
Contributed surplus 1,442,015 1,322,066

Warrant capital 240,441 316,255
Deficit (26,974,297) (23,214,909)
------------------------------------
17,770,562 20,286,821
------------------------------------
19,462,972 22,541,843
------------------------------------
------------------------------------


ZENN Motor Company Inc.
Consolidated Statements of Operations and Deficit
For the three and six months ended March 31
(unaudited)

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Three Months Six Months
------------------------------------------------------
2009 2008 2009 2008
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$ $ $ $
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Gross revenue 391,227 740,748 936,619 1,641,172
Provision for rebates 115,266 94,026 166,422 299,594
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Net revenue 275,961 646,722 770,197 1,341,578

Cost of sales 291,356 606,024 880,455 1,267,701
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Gross profit (loss) (15,395) 40,698 (110,258) 73,877

Expenses
Marketing and promotion 376,727 506,046 813,716 979,966
Engineering and
development 276,165 176,651 485,610 333,692
General and
administrative 1,298,413 1,157,589 2,423,856 2,281,238
Inventory write-down - 59,366 - 59,366
Foreign exchange loss
(gain) 25,103 (15,773) 4,196 (28,210)
Amortization 44,639 32,550 89,047 66,873
------------------------------------------------------
2,021,047 1,916,429 3,816,425 3,692,925
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Loss from operations (2,036,442) (1,875,731) (3,926,683) (3,619,048)
Interest income 63,428 37,791 167,295 103,446
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Net loss for the
period (1,973,015) (1,837,940) (3,759,388) (3,515,602)

Deficit, beginning of
period (25,001,282) (17,153,948) (23,214,909) (15,476,286)
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Deficit, end of
period (26,974,297) (18,991,888) (26,974,297) (18,991,888)
------------------------------------------------------
------------------------------------------------------

Loss per share, basic
and diluted (0.06) (0.06) (0.11) (0.12)
Weighted average
number of shares
outstanding 34,057,793 29,073,636 33,843,092 29,941,436



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

----------------------------------------------------------------------------
Three Months Six Months
------------------------------------------------------
2009 2008 2009 2008
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$ $ $ $
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Cash flows from (to)
operating activities
Net loss for period (1,973,015) (1,837,940) (3,759,388) (3,515,602)
Add items not
affecting cash flow
Amortization 44,639 32,550 89,047 66,873
Stock based
compensation 263,713 196,390 520,630 362,195
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(1,664,663) (1,609,000) (3,149,711) (3,086,534)

Changes in non-cash
working capital
Accounts receivable (10,420) (47,455) (147,180) (90,082)
Inventory 115,894 (466,272) (460,905) (213,219)
Prepaid expenses
and other assets 85,302 1,146 (15,716) 19,546
Accounts payable and
accrued liabilities (89,464) 64,059 (562,610) (112,094)
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(1,563,351) (2,057,522) (4,336,122) (3,482,383)
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Cash flow from (to)
investing activities
Short-term investments 425,000 - 2,200,000 -
Development costs (100,254) (28,795) (250,093) (46,579)
Purchase of property,
plant and equipment (10,109) (2,507) (25,610) (31,897)
Sale of property,
plant and equipment 6,090 - 6,090 -
Rental deposits (8,136) - 1,564 9,215
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312,591 (31,302) 1,931,951 (69,261)
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Cash flow from (to)
financing activities
Exercise of options
and warrants 715,000 841,718 722,498 931,474
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715,000 841,718 722,498 931,474
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Increase (decrease)
in cash during period (535,760) (1,247,106) (1,681,673) (2,620,170)

Cash and cash
equivalents at
beginning of period 6,540,187 4,848,193 7,686,100 6,221,257
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Cash and cash
equivalents at end
of period 6,004,427 3,601,087 6,004,427 3,601,087
------------------------------------------------------
------------------------------------------------------

Consists of:

Cash 819,588 2,097,546 819,588 2,097,546
Cash equivalents 5,184,839 1,503,541 5,184,839 1,503,541
------------------------------------------------------
6,004,427 3,601,087 6,004,427 3,601,087
------------------------------------------------------
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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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