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ZENN Motor Company Reports Third Quarter Fiscal 2008 Results
Financial Results For the current quarter and nine months ended June 30, 2008, gross revenue was $977,305 and $2,618,477 respectively compared to $862,256 and $1,646,443 in the corresponding prior periods. The Company recorded a provision for rebates in the current three and nine month periods in the amount of $14,980 and $314,574 relating to a marketing program initiated in September 2007. Unit sales increased in the current period to 67 and 190 year to date from 60 and 113 in the comparable prior periods. Net loss for the three months and nine months ended June 30, 2008 was $1,910,304 and $5,425,895 or $0.06 and $0.18 per share respectively compared with a net loss of $1,566,955 and $4,316,052 or $0.06 and $0.17 per share respectively for the corresponding periods in the prior year. At June 30, 2008 the Company had working capital of $16,966,685 including cash and cash equivalents of $16,181,151 compared to working capital of $6,944,190 including cash and cash equivalents of $6,221,257 as at September 30, 2007. The Company is pleased to report progress on a number of key areas. The 2008 ZENN with its innovative air conditioning system has opened up additional markets in the southern United States. In the current quarter, Florida represented 22% of the orders booked in the period. "The level of activity in Florida sets a positive trend for future periods" says Ian Clifford, CEO of ZENN Motor Company. "We know from experience, that the payback on targeted marketing programs can be several quarters later, so to see this immediate uptake is a strong endorsement for our 2008 ZENN." California, where the Company conducted a marketing campaign in late 2007 continues to be an active market. In the current fiscal quarter, California represented 38% of orders booked, an increase from 15% in the same quarter of the previous year. The Company also completed a short form prospectus offering of common shares in the quarter ended June 30, 2008. On May 30, the Company issued 4,060,000 common shares for gross proceeds of $15,225,000. "There was significant interest in our long-term business strategy when we were marketing our shares" says Clifford. "The additional capital allows us to execute on the development of new products and strategies relating to the highway capable cityZENN(TM) and the ZENNergy(TM) drivetrain projects for new zero emission vehicles and the retrofit of used internal combustion vehicles from gas to electric drive". The Company's strategic partner in power storage technology, EEStor, Inc. announced through a press release on July 29, 2008 its progress in advancing the commercialization efforts of its technology. The Company viewed this announcement as confirmation that significant progress is being made toward the third-party verified permittivity results and ultimately, the development of a commercial product. Additional Information Readers are encouraged to read the Company's unaudited consolidated financial statements for the three months and nine months ended June 30, 2008, the corresponding Management's Discussion and Analysis, the Company's Annual Information Form dated January 21, 2008 and the Company's audited financial statements for the years ended September 30, 2008 and 2007, all of which are available at www.sedar.com or the Company's website at www.ZENNcars.com. The Company's Annual and Special Meeting of shareholders held on March 28, 2008 was broadcast live as a webcast and is available on-line through the Company's website. ABOUT ZENN Motor Company Inc. ZENN Motor Company is dedicated to being the global leader in producing zero emission transportation solutions for markets around the world. The Company's current ZENN car is the perfect vehicle for urban commuters, fleets (such as resorts, gated communities, airports, college and business campuses, municipalities and parks), the environmentally conscious driver, and consumers who just want to save money. The ZENN is sold through a growing network of retailers across the United States. The ZENN is a fully electric low speed vehicle (LSV) with European styling and appointments that offers customers tremendous operational cost savings compared to a vehicle powered by an internal combustion engine. Recently named "Commuter King of the Plug-ins" by Newsweek Magazine, the 2008 ZENN is ultra nimble quick from a stop and perfect for small parking spaces and San Franciscan slopes. The potential commercialization of the high power-density ceramic ultra capacitor being developed by the Company's strategic partner, EEStor Inc. for future ZENN vehicles will enable them to travel at highway speeds and extended distances comparable to a traditional car but at a fraction of the cost. Forward-looking Statement Certain statements in this release may contain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of ZENN Motor Company Inc. to be materially different from those expressed or implied by such forward-looking statements including but not limited to those risk factors discussed in the Company's most recent Annual Information Form. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. ZMC does not undertake to update any forward-looking statements, except in accordance with applicable securities laws.
ZENN Motor Company Inc.
Consolidated Balance Sheet
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Jun. 30 2008 Sep. 30 2007
(unaudited) (audited)
$ $
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Assets
Current
Cash and cash equivalents 16,181,151 6,221,257
Accounts receivable 295,306 272,946
Inventory 1,885,877 1,442,862
Prepaid expenses and other assets 296,856 642,061
------------ ------------
18,659,190 8,579,126
Property, plant and equipment 332,313 353,047
Deferred development costs 169,915 -
Rental deposits 94,978 100,535
EEStor technology rights 1,510,145 1,510,145
Equity investment in EEStor, Inc. 2,857,815 2,857,815
------------ ------------
23,624,356 13,400,668
------------ ------------
------------ ------------
Liabilities
Current
Accounts payable and accrued liabilities 1,692,505 1,634,936
------------ ------------
Shareholders' Equity
Capital stock 41,198,210 26,081,655
Contributed surplus 1,158,397 584,455
Warrant capital 477,425 575,908
Deficit (20,902,181) (15,476,286)
------------ ------------
21,931,851 11,765,732
------------ ------------
23,624,356 13,400,668
------------ ------------
------------ ------------
ZENN Motor Company Inc.
Consolidated Statement of Operations and Deficit
For the three months and nine months ended June 30
(unaudited)
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Three Months Nine Months
------------ -----------
2008 2007 2008 2007
---- ---- ---- ----
$ $ $ $
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Gross revenue 977,305 862,256 2,618,477 1,646,443
Provision for rebates 14,980 - 314,574 -
---------- ---------- ---------- ----------
Net revenue 962,325 862,256 2,303,903 1,646,443
Cost of sales 933,104 857,954 2,200,804 1,623,375
---------- ---------- ---------- ----------
Gross profit 29,221 4,302 103,099 23,068
Expenses
Modification and
engineering 155,202 128,059 488,894 395,511
General and
administrative 1,145,950 896,057 3,427,189 2,703,596
Marketing and promotion 645,307 375,094 1,625,274 1,012,712
Foreign exchange
loss (gain) 12,279 22,009 (15,943) 36,505
Amortization 39,331 24,403 106,204 63,517
Inventory write-down - 181,817 59,367 227,500
---------- ---------- ---------- ----------
1,998,069 1,627,439 5,690,985 4,439,341
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Loss from operations (1,968,848) (1,623,137) (5,587,886) (4,416,273)
Interest income 58,544 56,182 161,991 100,221
---------- ---------- ---------- ----------
Net loss for the period (1,910,304) (1,566,955) (5,425,895) (4,316,052)
Deficit, beginning
of period (18,991,877) (11,249,241) (15,476,286) (8,500,144)
---------- ---------- ---------- ----------
Deficit, end of
period (20,902,181) (12,816,196) (20,902,181) (12,816,196)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Loss per share,
basic and diluted (0.06) (0.06) (0.18) (0.17)
Weighted average number
of shares outstanding 30,763,614 27,575,573 29,546,615 25,013,421
ZENN Motor Company Inc.
Consolidated Statement of Cash Flows
For the three months and nine months ended June 30
(unaudited)
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Three Months Nine Months
------------ -----------
2008 2007 2008 2007
---- ---- ---- ----
$ $ $ $
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Cash flows from (to)
operating activities
Net loss for period (1,910,304) (1,566,955) (5,425,895) (4,316,052)
Add items not
affecting cash flow
Amortization 39,331 24,403 106,204 63,517
Stock based
compensation 211,748 112,444 573,943 283,481
---------- ---------- ---------- ----------
(1,659,225) (1,430,108) (4,745,748) (3,969,054)
Changes in non-cash
working capital
Accounts receivable 67,722 (13,407) (22,362) (208,606)
Inventory (229,796) 611,948 (443,015) (930,535)
Prepaid expenses and
other assets 325,659 17,579 345,200 102,278
Accounts payable and
accrued liabilities 169,665 (46,458) 57,569 (276,779)
---------- ---------- ---------- ----------
(1,325,975) (860,445) (4,808,356) (5,282,696)
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Cash flow from (to)
investing activities
Property, plant and
equipment (53,565) (48,487) (85,464) (189,412)
Deferred development
costs (123,336) (16,800) (169,915) (60,720)
Rental deposits (3,658) 387 5,557 (28,228)
Technology rights - - - (643,170)
Shares of EEStor, Inc. - (2,857,815) - (2,857,815)
---------- ---------- ---------- ----------
(180,559) (2,922,715) (249,822) (3,779,345)
---------- ---------- ---------- ----------
Cash flow from (to)
financing activities
Issue of shares, net
of costs 14,086,598 4,766,615 14,086,598 14,097,782
Exercise of warrants - - 931,474 -
---------- ---------- ---------- ----------
14,086,598 4,766,615 15,018,072 14,097,782
---------- ---------- ---------- ----------
Increase (decrease) in
cash and cash
equivalents during
period 12,580,064 983,455 9,959,894 5,035,741
Cash and cash
equivalents at
beginning of period 3,601,087 6,269,248 6,221,257 2,216,962
---------- ---------- ---------- ----------
Cash and cash
equivalents at
end of period 16,181,151 7,252,703 16,181,151 7,252,703
---------- ---------- ---------- ----------
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