Three years later, ZENN finally negotiates to get disclosure from EEStor… does it matter?

After major delays, missed deadlines, and pretty much three years of silence, EEStor will soon have to disclose where it’s at in terms of development of its much-anticipated (and for some, much written off) super, duper ultracapacitor-based energy storage technology.

It’s been a long time coming, and many have already declared the company dead — or at least close to it. Back in December 2010 Greentech Media posed the question: Is the EEStor saga finished? Since then, those who aren’t EEStor diehards have come to the conclusion that, yes, it’s pretty much over. Of course, EEStor was the major focus of a chapter in my book Mad Like Tesla (to buy on Amazon click here), so I have a personal interest in seeing things through to their true end. Based on comments made yesterday by EEStor-investor ZENN Motor Co. at its annual general meeting, the dream still appears to be very much alive.

Here’s what ZENN said on March 26 in a press release to report is first quarter 2012 numbers: “The Company recently participated as a minority investor in an equity financing completed by EEStor Inc. While the Company’s investment was small, the investment was part of a financing that provided EEStor with additional working capital to further the development of its power storage technology. Importantly, as part of the investment the Company was able to review certain aspects of the technology and obtain a covenant from EEStor regarding a timeline for near term public disclosure of the status of its technological development certified by an independent third party.”

A day later, at ZENN’s AGM in Toronto, company chairman and chief executive James Kofman gave EEStor investors and groupies a clearer picture of what to expect in the months ahead, and spoke about the state of ZENN’s relationship with EEStor, which hasn’t disclosed anything publicly since 2009.

“The relationship between ZENN and EEStor is as strong as it’s ever been, and certainly stronger than it’s been in many, many years,” Kofman said. “There is a very good dialogue between the companies, and regular rapport on many fronts… The recent announcement has demonstrated we really are in a good position with them, much better than we were a year ago. What everyone is looking for is real transparency and real disclosure. The announcement we made puts us finally on a path where we have a clear methodology for getting better public disclosure.”

So what does that means? It means that going forward, as part of ZENN’s latest minority investment in EEStor, the company will have greater access to EEStor and insight into its progress. As well, EEStor will have to do a better job of disclosing that progress publicly. “I met (EEStor founder and CEO) Dick Weir before I joined the board and went down to Austin. We have kept a very regular dialogue. A number of directors have kept a regular dialogue with him, and also have visited with EEStor in Texas,” said Kofman, in an effort to give investors more confidence that ZENN isn’t oblivious to what’s going down in Austin.  “We now have a very clear agreement with EEStor which provides for a mechanism for them to publicly reveal where their technology is, and to do so certified by a third-party expert in the near term.”

Kofman continued: “Dick is a very secretive person, he’s very careful about his patents, and we respect that. We’ve worked incredibly hard over the last year to earn his trust. There were some issues that happened a number of years ago that made him very cautious about making any statements for fear they would end up in the public domain. I think we’ve demonstrated consistently to him we can be trusted. Through that he’s opened up more to us than he has in a very long time.”

So when can the world expect Weir and Co. to reveal what’s going on inside the walls of EEStor? “We’re expecting this before the summer, if not well before that time,” said Kofman. “It’s coming, and it’s very specific on what needs to be disclosed. So we’re excited.”

He said EEStor continues to file patents and work on its patent portfolio. “That’s critical because there’s a lot of competition out there.” But Kofman made clear that whatever developments there are at EEStor the technology, for all its potential, isn’t going to change the world tomorrow. “I think we’ve recognized that technology doesn’t just happen overnight. So even if there is in the near term some public disclosure that says where you are, it doesn’t mean you can just plug it into your Chevy Volt… It’s likely the EEStor technology will be used in some of the simpler applications well before automotive.”

Asked by one shareholder about EEStor’s competitive advantage against other up-and-coming technologies and startups, Kofman replied: “I don’t want to put words in Dick’s mouth. I will say Dick remains incredibly bullish that there is no technology like his technology… I’m paid to be a little more of a skeptic… We recognize eventually there will be competitive technologies one way or another, but in fairness to date we haven’t seen anything with the potential of this technology – not yet. But it will come.” He left open the possibility of major joint ventures, or even the scenario that ZENN would get bought out. “We’re going to do whatever it takes to get the most value for shareholders.”

As far as cash flow goes, he said he wasn’t comfortable with where ZENN was at — about $750,000 in the bank. For this reason, the company is going to look at doing a new round of financing to make sure the company can move quickly to leverage its investment in EEStor when the time is right.

One shareholder asked why EEStor has been selling off manufacturing equipment, and whether this was a sign it was running out of money and desperate. Kofman dismissed the idea. “I sold an old pair of skis the other day. It doesn’t mean I’m running out of money. I just don’t use those skis anymore. For EEStor, this is equipment they’re not currently using and don’t see a use for. And definitely capital is more interesting than equipment that’s going to get less valuable over time. They’re getting rid of equipment, as I understand it, that they’re not using and don’t expect to use.”

The reason why this update should not be dismissed as just another EEStor striptease is that it’s coming from Kofman, who is highly respected in the Toronto financial community and has his own reputation to protect. (See this little backgrounder prepared by A veteran investment banker who worked at UBS Canada until 2009, Kofman joined Cormark Securities last fall as its vice-chairman. He holds that role in parallel to his dual chairman/CEO role at EEStor, which he first joined as a director in March 2011. As one Cormark colleague of Kofman’s told me recently: “He’s far too busy here, and it’s far too lucrative, for him to waste time at ZENN unless he felt it was ultimately worth it.”

Kofman, it should be pointed out, isn’t getting paid. He’s taking stock options only in the hopes that his contributions to ZENN will pay off. If nothing happens, he gets zero back — pretty much the same position ZENN shareholders are in. Shareholders seem to like the message. The stock is up 28 per cent as of noon today and could soon shed its penny-stock status.

So, perhaps EEStor will still surprise and survive… In the meantime, ZENN is sitting tight, slowing down cash burn, raising extra money, and waiting for the day that Dick Weir will make good on a very delayed and very important promise.

7 thoughts on “Three years later, ZENN finally negotiates to get disclosure from EEStor… does it matter?”

  1. OOps, typo:

    A veteran investment banker at UBS Canada until 2009, Kofman later joined Cormark Securities last fall as its vice-chairman. He holds that role in parallel to his dual chairman/CEO role at ZENN,

  2. Zenn’s press release and AGM were very encouraging, very positive. Kofman seems like he knows what he is doing, seems very credible, and seems cautiously optimistic. Of course, I have been, and remain, optimistic about Eestor, so perhaps my view is a bit tainted;-)

    But I appreciate your take on this, especially on the person of James Kofman, his history and his name- lends a lot to Eestor making seem more credible.

  3. Tyler,

    Fact is 8 years after Mr. Weir submitted EESU patent (7466536) to the patent office (2004), there is no EESU meeting the patent specs and there never will be. You should know that issued patent 7466536 is provable inequitable conduct, a fraud on the patent office.

    I hope you didn’t forget EESTor’s progress report from the 2009 conference call. If you did, you can listen to the conference call at
    Make sure you take notes of what comes out of Mr. Weir’s mouth. Then compare those notes to the new imminent progress report from EESTOR which Mr. Kofman is looking forward to. I can guarantee you there will be no EESU meeting the patent (7466536) specs delivered to ZMC. Fraud continues.

  4. Why is this worthless pipedream still alive?

    Ahh, yes, to take money from suckers. I forgot…

  5. Ahh- such Internet Hypocrisy- it is amazing how the anonymnity of the Internet allows folks to so easily disparage others without fear of reprisal. There are many reasons why an EESU may never make it to commercial viability, and none of them have anything to do with fraud. Most new businesses fail, and have nothing to do with fraud. Go to the Technology Review site- there are articles every day on new, cutting-edge items- most of those will never make it to market- and guess what- they are not fradulent schemes, even though they file patents and have use investor money.

    If Eestor is a scam, it is the worse-run scam in the history of scams. They have pulled in what- something less than $20 million over nearly a decade for an earth-shattering technology (not including whatever it is they raised over the last couple of weeks- maybe)?

    Don’t misunderstand me- Eestor is, and remains, a very high-risk investment- but that is all it is, and it bothers me when whiny posters cry foul because they are disappointed in its progress. I think Bill Joy of KPCB said it best- Eestor is trying to do something very hard. Hooray if they make it! Good try if they don’t.

  6. On the “youtube” link there is an eestor video that is titled leaked interview. Supposedly Zenn is to be first in line for this eestor technology, is this correct?

  7. “Deception of Zenn Investors

    Tuesday, June 2, 2009
    Archival note concerning Zenn, EEStor, and the EESTORY blog.

    As a result of listening to the VP of manufacturing of Zenn give a recorded
    interview to eestorblogger B, I realized that the whole thing will now be provably a
    knowing deception of Zenn investors. If not at the outset (initial investment and
    erroneously drafted milestones could have resulted from naivete and lack of diligence),
    then certainly now. These arguments were posted on the thread discussing the interview
    and need not be repeated. They were posted knowing this would kick the proverbial
    hornets nest, which it did on the website. Two further long, detailed explanations of all
    the logical dilemmas that lead to the unfortunate conclusion that fraudulent deception is
    very likely were also posted. They are on the site.
    One hoped for result was that some Zenn shareholders would be alerted, and
    indeed this was the case. One investor even asked for short answers (the blogger’s style)
    to complex questions, which were given, and to which there was no riposte.
    Another hoped for result was that perhaps this allegation would force more clarity
    into Zenn/EEStor pronouncements if they were well-intentioned. Or, in the alternative,
    get them to provide further evidence that knowing deception is probably being practiced.
    The latter became true as a result of B’s posting a short follow up interview with
    Tom Weir of EEStor, to which much exaltation has been recorded this date on the
    website. Incredibly, Zenn emailed this “press announcement” to its shareholders this date.
    It is actually a published report from the editor in chief of AllCarsElectric, who in turn
    misreports B’s website interview of the EEStor VP. The ACE article is available this date
    unaltered on the Zenn website under press releases. The headline touts, “EEStor VP Says
    EESU’s to be delivered by end of 2009.” Which is not what the VP said. He said the
    permittivity announcement (at low voltage) was “a step toward the second objective to
    deliver production quality components and/or EESU’s by the end of 2009.”
    That is a significant qualification, since no working component has yet been
    demonstrated (permittivity at voltage) to Zenn according to Bergeron himself, and an
    EESU has many more issues than a single working component. Zenn knows this. The
    interview with VP Engineering Bergeron proves it.
    One must consider various possible sources of the inaccuracy.
    1. Naïve carelessness. Zenn is a licensee of EEStor, purportedly working closely
    with them. Zenn touts an inaccurate headline (proven in the text itself), which
    itself is hearsay (ACE quoting B quoting Weir). They could easily have
    double checked with Weir himself, and/or issued their own opine on B’s
    posting. The plainly misleading headline is to their advantage. Knew or
    should have known. Naivete is not a legal defense when this important.
    2. Effort to avoid liability by hiding behind “we are just repeating what he said B
    said W said.” But that violates the duty to know for oneself, reflects bad legal
    advice and/or legal naivete, and again provides little liability shelter.
    3. Zenn knows it is true despite the misquote. In which case, there is no liability
    issue if in fact a working EESU materializes by end of 2009.
    4. Deliberate perpetration of knowingly wrong information in order to fund
    Zenn. Which will be the only reasonable interpretation left if it does not.
    Addendum Jan 14 2010. It did not. Given the Jacobs report, #4 is most likely.

    (Source: NanoCarbons with permission)”

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