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Press release from Marketwire

CORRECTION FROM SOURCE: ZENN Motor Company Reports Second Quarter 2010 Results

Friday, May 28, 2010

CORRECTION FROM SOURCE: ZENN Motor Company Reports Second Quarter 2010 Results14:52 EDT Friday, May 28, 2010TORONTO, ONTARIO--(Marketwire - May 28, 2010) - The news release issued by ZENN Motor Company on Thursday, May 27, 2010 at 6 pm EST contained an error in the title. The title should have read "ZENN Motor Company Reports Second Quarter 2010 Results". The complete release follows.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, 2010. All amounts are expressed in Canadian dollars unless otherwise indicated.For the three and six months ended March 31, 2010 gross revenues were $405,375 and $1,386,266, respectively (2009 - $391,227 and $936,619, respectively).Net losses for the three and six month periods were $2,014,839 or $(0.05) per share and $3,861,228 or $(0.10) per share compared with net losses of $1,973,015 or $(0.06) per share and $3,759,387 or $(0.11) per share for the corresponding periods in the prior year.At March 31, 2010 the Company had working capital of $6,478,243 including cash, cash equivalents and short-term investments totaling $7,482,990 compared to $9,655,369 and $10,143,540, respectively, at September 30, 2009.In the three months ended March 31, 2010, the Company ended production and sales of the ZENN LSV and was able to realize greater than forecast value on selling the remaining production inventories. The Company also took a provision in the period of $418,000 for severance and related costs. As a result of these actions, the Company's cash burn in future months is expected to show a noticeable decline."With the completion of our transition out of the LSV business and the associated reductions in overhead, we entered the 3rd quarter of 2010 with a more focused organization. Our engineering efforts are dedicated to the development of ZENNergy(TM) solutions that optimize the potential high voltage and energy density capabilities of EEStor's solid state energy storage technology for automotive and specialty vehicle markets" stated Ian Clifford, CEO of ZMC. "With an eye on strategic spending, our engineering group is engaged in multiple research and development initiatives within the realm of high voltage power electronics and components to assess where the Company can offer its prospective customers the greatest value. The engineering team's progress further supports our on-going business development activities."Additional InformationReaders are encouraged to read the Company's unaudited consolidated financial statements for the three months ended March 31, 2010 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 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 StatementsCertain 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 ---------------------------------------------------------------------------- Mar. 31 2010 Sep. 30 2009 (unaudited) (audited) $ $ ---------------------------------------------------------------------------- Assets Current Cash and cash equivalents 382,990 2,543,540 Short-term investments 7,100,000 7,600,000 Accounts receivable 34,304 118,601 Inventory 210,757 552,074 Prepaid expenses and sundry assets 386,032 482,611 -------------- -------------- 8,114,083 11,296,826 Property and equipment 155,870 237,876 Rental deposits 11,833 13,358 EEStor technology marketing rights 2,303,275 2,303,275 Investment in EEStor, Inc. 8,674,771 8,674,771 -------------- -------------- 19,259,832 22,526,106 -------------- -------------- -------------- -------------- Liabilities Current Accounts payable and accrued liabilities 1,635,840 1,641,457 -------------- -------------- 1,635,840 1,641,457 -------------- -------------- Shareholders' Equity Capital stock 52,239,586 52,009,481 Contributed surplus 2,379,145 1,946,725 Warrant capital 170,525 232,479 Deficit (37,165,264) (33,304,036) -------------- -------------- 17,623,992 20,884,649 -------------- -------------- 19,259,832 22,526,106 -------------- -------------- -------------- -------------- ZENN Motor Company Inc. Consolidated Statements of Operations and Deficit For the three and six months ended March 31 (unaudited) ---------------------------------------------------------------------------- Three Months Six Months --------------------------- ---------------------------- 2010 2009 2010 2009 ------------ ------------- ------------- ------------- $ $ $ $ ---------------------------------------------------------------------------- Gross revenue 405,375 391,227 1,386,266 936,619 Provision for rebates 154,425 115,266 545,812 166,422 ------------ ------------- ------------- ------------- Net revenue 250,950 275,961 840,454 770,197 Cost of sales 221,529 291,356 747,140 880,455 ------------ ------------- ------------- ------------- Gross profit (loss) 29,421 (15,395) 93,314 (110,258) Expenses Marketing and promotion 334,838 376,727 734,161 813,716 Engineering and development 405,008 276,165 885,972 485,610 General and administrative 988,975 1,298,413 1,996,076 2,423,856 Provision for severance costs 418,036 - 418,036 - Inventory valuation adjustment (140,115) - (140,115) - Foreign exchange loss (gain) (1,538) 25,103 (3,369) 4,196 Amortization 49,152 44,639 85,802 89,047 ------------ ------------- ------------- ------------- 2,054,356 2,021,047 3,976,563 3,816,425 ------------ ------------- ------------- ------------- Loss from operations (2,024,935) (2,036,442) (3,883,249) (3,926,683) Interest income 10,096 63,427 22,021 167,295 ------------ ------------- ------------- ------------- Net loss for the period (2,014,839) (1,973,015) (3,861,228) (3,759,388) Deficit, beginning of period (35,150,425) (25,001,282) (33,304,036) (23,214,909) ------------ ------------- ------------- ------------- Deficit, end of period (37,165,264) (26,974,297) (37,165,264) (26,974,297) ------------ ------------- ------------- ------------- Loss per share, basic and diluted (0.05) (0.06) (0.10) (0.11) Weighted average number of shares outstanding 37,194,152 34,057,793 37,139,650 33,843,092 ZENN Motor Company Inc. Consolidated Statements of Cash Flows For the three and six months ended March 31 (unaudited) ---------------------------------------------------------------------------- Three Months Six Months ------------------------ ------------------------ 2010 2009 2010 2009 ----------- ----------- ----------- ----------- $ $ $ $ ---------------------------------------------------------------------------- Cash flows from (to) operating activities Net loss for period (2,014,839) (1,973,015) (3,861,228) (3,759,388) Add items not affecting cash flow Loss on disposal of assets 11,879 - 11,879 - Amortization 49,152 44,639 85,802 89,047 Stock based compensation 162,582 263,713 419,464 520,630 ----------- ----------- ----------- ----------- (1,791,226) (1,664,663) (3,344,083) (3,149,711) Changes in non-cash working capital Accounts receivable (9,174) (10,420) 84,296 (147,180) Inventory 42,044 115,894 341,317 (460,905) Prepaid expenses and other assets 53,736 85,302 96,579 (15,716) Accounts payable and accrued liabilities (268,868) (89,464) (5,613) (562,610) ----------- ----------- ----------- ----------- (1,973,488) (1,563,351) (2,827,504) (4,336,122) ----------- ----------- ----------- ----------- Cash flow from (to) investing activities Short-term investments 500,000 425,000 500,000 2,200,000 Proceeds on sale of assets 2,650 6,090 2,650 6,090 Rental deposits 9,700 (8,136) 1,525 1,564 Development costs - (100,254) - (250,093) Purchase of property, plant and equipment - (10,109) (18,327) (25,610) ----------- ----------- ----------- ----------- 512,350 312,591 485,848 1,931,951 ----------- ----------- ----------- ----------- Cash flow from (to) financing activities Exercise of options and warrants 57,000 715,000 181,106 722,498 ----------- ----------- ----------- ----------- 57,000 715,000 181,106 722,498 ----------- ----------- ----------- ----------- Increase (decrease) in cash during period (1,404,138) (535,760) (2,160,550) (1,681,673) Cash and cash equivalents at beginning of period 1,787,128 6,540,187 2,543,540 7,686,100 ----------- ----------- ----------- ----------- Cash and cash equivalents at end of period 382,990 6,004,427 382,990 6,004,427 ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Consists of: Cash 382,990 819,588 382,990 819,588 Cash equivalents - 5,184,839 - 5,184,839 ----------- ----------- ----------- ----------- 382,990 6,004,427 382,990 6,004,427 ----------- ----------- ----------- ----------- FOR FURTHER INFORMATION PLEASE CONTACT: ZENN Motor Company Catherine Scrimgeour Manager, Public Affairs 416-535-8395 ext. 201 cscrimgeour@ZENNcars.com or ZENN Motor Company Ian Clifford Chief Executive Officer 416-535-8395 ext. 202 ian.clifford@zenncars.com 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.