TheEEStory.com

chitown wrote:

management's discussion:
http://www.theeestory.com/files/zenn_quarterly_...

quarterly financials:
http://www.theeestory.com/files/zenn_quarterly_...

Damn, that's a strong balance sheet for a spec company. Plenty of cash for the short term. What do you make of the inventory . . .

Perhaps this is why the stock dropped....

Y_Not? wrote:

...

Damn, that's a strong balance sheet for a spec company. Plenty of cash for the short term. What do you make of the inventory . . .

This report is post milestone ($700k US) but pre EEStor investment ($5m US). Subtract $5m from cash and you see why ZMC needed to raise an additional CA $9.3m in a hurry. Run the numbers and ZMC should have enough cash on hand to place orders for 1,000s of EESU-52 in 2010Q1.

tvillars wrote:

Y_Not? wrote:

...

Damn, that's a strong balance sheet for a spec company. Plenty of cash for the short term. What do you make of the inventory . . .

This report is post milestone ($700k US) but pre EEStor investment ($5m US). Subtract $5m from cash and you see why ZMC needed to raise an additional CA $9.3m in a hurry. Run the numbers and ZMC should have enough cash on hand to place orders for 1,000s of EESU-52 in 2010Q1.

Yes, I see that. I think delivery of a single production EESU would astronomically increase their ability to borrow money on very favorable terms should the need arise. Of course, it all ultimately comes back to the missing EESU . . . but Zenn's cash position is open to the interpretation that they're positioning for the final milestone payment and first order. Naysayers may interpret it differently, of course, but hey.

"EEStor may at any time, secure additional financing from other sources diluting the Company’s equity interest."

This statement, which I am sure is standard, leaves open the possibility that the original investors who passed when Zenn made their equity investment still have the right to opt in.

Bro,

It is a standard statement, but I am sure, absent an amendment to the existing investor agreements, that the option for them to invest additional funds has passed. They had 30 days to do it at a specified price. They chose not to invest in CS under that option. End of story.

No big deal if they do issue some more stock. It's all about the EESU. If Zenn gets a production prototype and need a little cash to get going, there will be no problem getting it at fovorable terms.

Page 7
"The increase in costs year over year reflects the increased number of engineering staff, facilities costs and a significant increase in contracted services and materials related to the development of ZENNergy drivetrains for the cityZENN, conversion/retrofits and a next generation LSV."

Zenn is investing with the prospect of getting the EESU.
Naysayers will say:
- They are doing this to keep the fake going
or
- They are dumb enough to believe so.

(I needed to spit it out before they do it)
Personally, I believe they believe and I'm sure they know more than we do, which makes them not dumb.
THe future will tell.

bottom of page 7 is interesting too:
<<
In the three months ended June 30, 2009, the Engineering group re-evaluated a number of Lithium based power-packs for inclusion in its solutions. As a result of these efforts, the Company does not see Lithium as an economically viable power source for its offerings, particularly with the progressed state of development of the EESU as indicated by EEStor.
>>

I don't get that one I have to admit.
If the permittivity announcement was in April, why as late as June were they evaluating Lithium ?

pchamp5 wrote:

bottom of page 7 is interesting too:
<<
In the three months ended June 30, 2009, the Engineering group re-evaluated a number of Lithium based power-packs for inclusion in its solutions. As a result of these efforts, the Company does not see Lithium as an economically viable power source for its offerings, particularly with the progressed state of development of the EESU as indicated by EEStor.
>>

I don't get that one I have to admit.
If the permittivity announcement was in April, why as late as June were they evaluating Lithium ?

It reads like they were seriously thinking of running with lithium ion while waiting for the EESU.

Maybe they started the re-evaluation before permittivity.

Either way, it's good they've dumped it if it displays their confidence in the imminent arrival of an EESU.

Damn, did I really just use that word?

A lot of people dumping their stock today. High volume.

pchamp5 wrote:

In the three months ended June 30, 2009, the Engineering group re-evaluated a number of Lithium based power-packs for inclusion in its solutions. As a result of these efforts, the Company does not see Lithium as an economically viable power source for its offerings, particularly with the progressed state of development of the EESU as indicated by EEStor.

it would be prudent to keep Lithium on the table,
considering EEStor's track record of delays, but
I see this paragraph as a very bullish affirmation
that instead of hedging their bets on EEStor with
Lithium, that Zenn is EEjumping in with both feet.

I wish I could buy some ZNNMF at $4usd today,
but my trading funds are otherwise engaged...

As they should.

RmW wrote:

A lot of people dumping their stock today. High volume.

I found some new previously un-confirmed news:

The ZENNergy drivetrain is the core powertrain for the cityZENN project and a lower voltage version is intended to be the solution for LSV and lower speed applications.

So the first delivery might not be a 600v 15kwh but rather a "At least" 15kwh and unknown (less then 600v) unit.
*Shrug* at least its something.

And a typo: EEStor EESUU.

"We tried some lithium packs and thought they sucked compared to EEStor" ;)

Engineering group re-evaluated a number of Lithium based power-packs for inclusion in its solutions. As a result of these efforts, the Company does not see Lithium as an economically viable power source for its offerings, particularly with the progressed state of development of the EESU as indicated by EEStor.

Zenn shares skid as economy, oil prices dent sales
Fri Aug 14, 2009 11:56am EDT

* Q3 loss of C$0.08/shr vs loss C$0.06/shr

* Revenue down 61 percent at C$379,916

* Sold 19 low-speed vehicles in quarter vs year-earlier 67

* Shares fall as much as 17.6 pct on TSX Venture Exchange

TORONTO, Aug 14 (Reuters) - Shares of Zenn Motor Co (ZNN.V: Quote, Profile, Research, Stock Buzz) tumbled as much as 17.6 percent on Friday after the maker of electric cars reported a deeper quarterly loss and a big drop in revenue as the weak economy and low oil prices cut into sales of its zero-emission vehicles.

The company lost C$2.6 million ($2.4 million), or 8 Canadian cents a share in its third quarter ended June 30, compared with C$1.9 million, or 6 Canadian cents a share, a year earlier.

Revenue fell 61.1 percent to C$379,916 from C$977,305.

Two analysts had forecast an average loss of C$2.1 million with revenue flat from a year earlier, according to Reuters Estimates.

Zenn's shares were down 64 Canadian cents, or 12.8 percent, at C$4.35 on the Toronto Venture Exchange on Friday morning, after falling as low as C$4.11.

The company said it sold 19 of its low-speed, short-range cars in the quarter, compared to 67 in the 2008 quarter.

Another headwind for the company has been the strength of the Canadian dollar versus the U.S. dollar, which it said caused it to take a charge against operations of C$390,972 to adjust the carrying value of its inventory.

Zenn's low-speed car is a true electric vehicle in that it does not have a gasoline-powered generator as do the plug-in hybrids planned for release next year by large automakers. These include Toyota Motor Co's (7203.T: Quote, Profile, Research, Stock Buzz) plug-in Prius and General Motors Co's [GM.UL] Chevy Volt.

Zenn said that buyer motivations in the market for its low-speed vehicles are characterized as a discretionary spend, driven by high oil prices or environmental awareness.

The cars, which have a top speed of about 40 km/h (25 mph) are typically used in controlled-access areas such as campuses, parks or retirement communities, where speeds are lower than on public roads

"The current North American environment however is characterized by relatively low oil prices, limited consumer credit and confidence, reduced discretionary spending and low prices for conventional automobiles that provide full automotive functionality and are relatively fuel efficient," the company said in a release.

Zenn has an exclusive license with EEStor, a privately owned Texas company that is working on developing a battery that it says will be able to power a highway-capable four-door sedan for 400 km (250 miles) without recharging.

During the quarter, Zenn invested about US$5 million in EEStor, giving it about a 10.7 percent equity interest.

"This investment gives our shareholders a stake in the many potential mass applications of EEStor's technology including 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," said Ian Clifford, Zenn's chief executive. ($1=$1.09 Canadian) (Reporting by John McCrank; editing by Rob Wilson)

tvillars wrote:

This report is post milestone ($700k US) but pre EEStor investment ($5m US). Subtract $5m from cash and you see why ZMC needed to raise an additional CA $9.3m in a hurry. Run the numbers and ZMC should have enough cash on hand to place orders for 1,000s of EESU-52 in 2010Q1.

Looks like burn rate is about $2M a quarter. They can survive 4 more quarters ...

pchamp5 wrote:

Page 7
"The increase in costs year over year reflects the increased number of engineering staff, facilities costs and a significant increase in contracted services and materials related to the development of ZENNergy drivetrains for the cityZENN, conversion/retrofits and a next generation LSV."

Zenn is investing with the prospect of getting the EESU.

Yes, and I'm glad to see they're finally doing that. There are some things that I expect to happen before delivery of EESUs, and that's one of them. The fact that this hadn't happened before is something I took as a fairly strong sign that ZMC knew darn well that EEStor was nowhere near EESU delivery.

Other things I expect to see before delivery are a real website for EEStor, and someone hired to be EEStor's PR flack.

But one thing that has not happenned is any kind of tooling.

Property and equipment 265,091 362,413

This should also remove any suspicion that a production line is being built at Zenn (either for EESU or for Zenneregy).

evnow wrote:

But one thing that has not happenned is any kind of tooling.

Property and equipment 265,091 362,413

This should also remove any suspicion that a production line is being built at Zenn (either for EESU or for Zenneregy).

Nor should they. They need to sign agreements with manufacturers to get the ball rolling, and slap their Zennergy label on it. In a few years once they're rolling in cash, they can think about buying up some manufacturing companies if that's the direction they want to take it.

Thanks everyone for parsing that quarterly report! I can sit here on my lazy ass and get the salient points here.....

Drew

Ian has a very good business cents so to say. Get the Essu in the hands of car manufacturer's hands at the assembly line with the Zennergy drive, and you will not need to spend very much money for tooling. Let the manufactures do the hard part and let Zenn be the warehouse for the "complete" Zennergy drives. Then concentrate on third party conversions with cars, trucks, golfcarts,... good business model. With minimal investment and maximum gain.

Finally read the current MDA. Just a few observations:


pg 03 - "The permittivity re-testing was conducted on hot-pressed dielectric layers provided by EEStor and certified by them to have been made of materials produced on their production line."

The "layers" comment might mean that the "checker" was hot pressed in steps, a bit of powder for each layer at a time. This could ease the goal of maximum densification. Maximum densification, or void (pocket) removal, is critical when establishing accurate permittivity and capacitance measurements. It might be possible to do it all at one go on a checker 3mm thick, but that could require either higher peak pressure or longer press time, which might change the bulk powder chemically or morphologically and therefore would not be desireable. Also, higher pressure on a thicker sample of powder might initially produce inhomogenous stress and temperature gradients throughout the volume of the material which might have the same deleterious effect. Just a WAG, I'm not familiar with sample prep.


pg 04 - "The tests undertaken by the Company as outlined above confirmed the attainment of a relative permittivity of at least 22,500 over an operating temperature range of -20 to +65 degrees centigrade."

According to EEStor's patent, and all else being equal in the production process, this would mean that the same amount of material in the original 52 kWh EESU battery module would now hold at least 63 kWh, 21% more energy.


pg 08 - "For the three and nine months ended June 30, 2009, the Company recorded the cost of stock options in the amounts of $255,654 and $776,284,"

When will this $255,654 in stock options for April-May-June show up on SEDI? Who was it for? Maybe "cost of stock options" isn't the same as "grant of stock options", and is just a delayed bookkeeping item from a previous option grant? Can anyone familiar with the specific jargon clear this up?


pg 15 - "The Company is currently engaged in negotiating a supply agreement for the 4-seater ZENN and cityZENN projects. While there has been substantial progress and management is confident of a positive outcome, there can be no assurance that the negotiations will conclude favorably until all definitive documentation is executed."

This process has been going on far longer than anticipated. The implication I get from this is that the resource commitment on the part of the OEM is considerable, and since Zenn doesn't have tens or hundreds of million of dollars to put in escrow on the deal, the OEM won't sign off on it and commit resources until proof of ED at the very least and preferably delivery of EESUs to Zenn. This may also be the reason why the Tier 1 partner/supplier for Zennergy (Magna?) hasn't been announced either. On the other hand, stealth might be deemed very important as a business strategy regarding the industry partnership.


pg 16 - "... an amendment to the supply agreement whereby the Company would give up territorial exclusivity with the Microcar platform in exchange for a reduction in the MPR to 100 units per annum." ... and ... pg 12 - "In January 2009, the Company and Microcar revised the minimum purchase requirement for 2009 and 2010 to reflect approximately $800,000 in purchases in each of the two years."

Does this mean that each glider costs Zenn $8,000?

Daniel R Plante wrote:

...
According to EEStor's patent, and all else being equal in the production process, this would mean that the same amount of material in the original 52 kWh EESU battery module would now hold at least 63 kWh, 21% more energy.

***IF*** either or both permittivity and voltage are yet significantly higher, that would be further improvement in ED (Energy Density), thus further reduction in size, weight, material and processing needed for EESU fabrication.

K = ~30,000, for example, would mean a shrinkage to 62% of previous figures.
~ one half weight and volume.

Alternatively, raise the standard operating voltage to 5,000V on top of K >= 22,500.
That would further double ED, shrinking to 31% of previous figures.

In the very best case, the mythical 100x (vs Lead Acid ED) EESU, a 10x improvement over the EESU ED so much discussed here, would mean EESUs of only 10% of the previous discussions.

A 52 kWh EESU in a ~30 pound package in about 2 gallons of volume.
Higher ED than gasoline!

Which would also greatly decrease EEStor's cost for materials and processing, by a factor of 10x. Thus greatly increase the profit, assuming pricing to ZENN remains at $100 / kWh of *capacity*.

All around, that would be a very, very happy thing!

Last edited Tue, 25 Aug 2009, 6:24am by nekote