New Zenn EEStor Agreement Provides “Significant Clarity” says Versant’s Fiore

Last week, Zenn Motor (TSXV:ZNN) announced its Q2, 2012 results. The Toronto based company, which has not yet realized revenue from its electric battery storage technology, lost $347,500 or a penny a share, which was approximately in line with the company’s Q1 loss.

Versant Partners analyst Massimo Fiore says the numbers take a backseat to bigger news; on Monday, Zenn released the details of its new technology agreement with partner EEStor. Fiore says the document provides “…significant clarity and disclosure with regards to upcoming milestones, technical specifications and payments that will be made by Zenn to EEStor at each step.” In a research update to clients Monday, Fiore maintained his Speculative Buy rating on Zenn.

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Zenn Motors, which was founded in 2000, originally planned to build its own “Zero Emission No Noise” electric cars. The result was NEV, or “Neighbourhood Electric Vehicle” which hit the markets in 2006. These vehicles were called LSV’s or “low-speed vehicles”, because their top speed was a mere 40 km/h. The NEV, however, never went into mass production. In 2009, Zenn decided to shift directions, and to instead focus on building a highway capable electric drive system to market to major auto manufacturers.

Last year was particularly difficult for Zenn. The company had to reduce its head count and suspend its investment in EEStor, the Texas company that claims to have developed a new form of capacitor for electricity storage that can reduce the weight of a conventional lead-acid battery by 90%. EEStor’s technology has been regarded, in some quarters, as controversial. Citing privacy reasons, the company has typically refused to publicly disclose its technological advancements. As far back as 2007 CNet’s Michael Kanellos said Zenn’s partner EEstor was “the world’s craziest battery company, describing it as “a cross between Tesla Motors and the CIA.”

Monday’s agreement, says Fiore, contains “Simple, well defined and clear milestones” which give Zenn favoured status with regard to pricing and the right to inform the public of technology milestones. Those milestones, points out the Versant analyst, include providing third party verification on how EEStor has created a storage unit that has nearly three times the capacity of the next best technology, information the company says should be available by June 21st.

At press time, shares of Zenn Motor were up 3.9% to $1.34.

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