Tag Archives: ZENN

Another chapter in a very long EEStory

eestor2An eye-glazing technical press release was put out this week by Texas-based EEStor, a company that has spent more than a decade trying to bring low-cost, high-capacity and super safe energy storage to market.

The next morning, Toronto-based ZENN Motor – a minority strategic shareholder in EEStor—saw its stock price shoot up 150 per cent. It was as if a defibrillator had brought a corpse back to life.

So what’s going on here? As someone who has followed this company closely for eight years, it’s still difficult to say. What’s clear is that EEStor is the story that refuses to die, and given the company’s ambitious goals, that’s could be viewed as a good thing.

My first Clean Break column about EEStor – and the first to appear in a major newspaper—appeared in 2006. Back then, the company was promising an energy storage device (a type of super-duper capacitor) that pound for pound could pack 10 times more energy than a lead-acid battery. More impressive is that it would cost half as much, charge in minutes, and was made of abundant, non-toxic materials.

Think about that: With such a technology, the price of electric cars would plummet and fears over “range anxiety” would disappear. Your iPhone or BlackBerry could last a week or two on a single charge, and when it did run out, it would recharge faster than boiling water for a cup of tea. Energy from wind turbines and solar panels could be stored and dispatched on demand, and affordably.

EEStor founder and chief executive Dick Weir, a former fighter jet pilot, was in my experience an abrupt, somewhat cantankerous individual who didn’t make many public announcements, but when he did he ratcheted up expectations of what and when the company would deliver.

So, too, did management at ZENN, which through its investment and technology rights agreement with EEStor was betting the farm that Weir would deliver. As a publicly traded company, ZENN was a proxy for EEStor – a way for retail investors to back what was an extremely speculative opportunity.

It didn’t hurt that venture capital firm Kleiner Perkins Caufield & Byers, known for its successful bets on Google and Amazon.com, were early investors, or that former Dell Computer vice-chairman Mort Topfer sat on EEStor’s board, or that the tiny company had a strategic development agreement with military contractor Lockheed Martin.

Unfortunately, the past seven years has been marked by a series of missed milestones and disappointments. There is still a loyal group of EEStor followers – called “EEStorians” – who track the company’s every move, but for the most part those who were optimistic in the early days, even if skeptical, have tuned out.

Part of the reason is that ZENN, which is hibernating pretty much as a shell company to save cash, and EEStor, which continues to work away in the background, have both stopped talking. They learned their lesson that talking didn’t help; it only created problems and undermined their credibility.

They also learned that their own expectations were unrealistic and didn’t reflect the many barriers that stand in the way of product development, regardless of the breakthrough nature of their technology. They needed to walk where they wanted to run.

This week’s announcement was another small step along the grueling path, but judging by the market reaction, it’s a positive one. Just how positive is open to interpretation.

The company disclosed that energy storage “layers” built on its pilot product line, and which are the building blocks of its final device, were independently lab tested and reviewed by expert Rick Ulrich, a chemical engineering professor at the University of Arkansas.

Ulrich called the samples a “significant advance” and an “important breakthrough.” The measurements taken still don’t come close to what EEStor is aiming for, but one observer who accompanied Ulrich during his visit said it’s enough to prove that the approach works, the production line is doing its job, and improvements can be made with some final tuning.

“There are only 80 people in the world that Weir needs the attention of at this point, and to get those 80 people to care you have to put out this information,” he said. “This is a tease, for sure, but enough is there to get those peoples’ full attention.”

EEStor’s next step is to independently certify its pre-production layers. At that point, the big automakers and industrial giants will be invited to obtain test samples. If they like what they see, the story gets really interesting – the building of the layers into a full device that can be lab tested in power tools, mobile gadgets, and even vehicles.

One could argue that EEStor, through its delays, has lost its window of opportunity and that the rest of the technology world has caught up. The batteries used in the higher-end version of the Tesla Model S, for example, boasts 240 watt-hours per kilogram, not far from the original EEStor goal of 286 watt-hours per kilogram.

Newark, Calif.-based Envia Systems, which counts General Motors as a strategic investor, claims it has reached 400 watt-hours per kilogram with its lithium-ion technology and could hit the market with a commercial product by 2015.

But EEStor has since upped its game by claiming it can double, even triple its original target, even achieving energy densities of more than 1,000 watt-hours per kilogram at a cost that few could – at this point – compete with. Plus, unlike batteries, its device can charge instantly and would have unmatched environmental attributes.

Of course, this is all still highly speculative and incredible claims require incredible evidence. Fool me once…

But the fact that this little company, tucked away in a small suburb of Austin, Texas, has managed to stick around for 12 years is evidence that this is no fly-by-night operation.

It may ultimately fail, though we should all hope it doesn’t. But as my high-school gym teacher used to tell the scrawny kid that was me, “Hey, at least you get an A for effort.”

Tyler Hamilton, author of Mad Like Tesla, writes weekly about green energy and clean technologies. (Mad Like Tesla includes a chapter on the EEStor saga for those looking for more background on this company and its story)

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 TheEEStory.com). 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.

ZENN chair resigns, CEO dumped and working relationship with EEStor tightened

ZENN has just put out a press release to discuss the outcome of a strategic review. Company chair Rick McGraw has decided to resign because of the “greater time commitment” being required of his role. CEO Brian Cott is also stepping down, which I was fully expecting. The company says that beyond these management changes it will continue to simplify the structure of the company with a eye to increasing its working relationship with EEStor. “As part of the strategic review, the Board spent considerable time in meetings and discussions with EEStor to determine the best path for the Company going forward. A strong relationship with EEStor is the Company’s priority. The pace of development and achievement of key milestones as well as disclosure relating to these events are all under the control of EEStor. The Company maintains a regular dialogue with EEStor and intends to increase its interaction with EEStor and, where appropriate, collaborate with and assist EEStor,” according to the release.

All of this is no surprise. ZENN is trying the best it can to conserve cash until EEStor delivers on what it has promised. There are no shocking departures here. All restructuring is orderly, and that is a good sign. And while we’re all impatient to see whether EEStor can deliver, I guess the good news is that the ZENN/EEStor relationship remains strong and the two companies are planning to work more closely together. Being a media guy, however, I’m still uber curious about the role that Allan Greg is playing here on EEStor’s board.

Former Xantrex CEO joins ZENN board

Many things reflect the credibility of a company, and among them is the composition of its board of directors. So I find it interesting that ZENN today announced that John Robert Wallace, former CEO of power-electronics firm Xantrex, has been appointed a director. Wallace is plugged into all sectors that are important to ZENN. He is currently chairman of Enova Systems, the California maker of electric and hybrid-electric drive trains. He is also a former chairman of the World Electric Vehicle Association and the United States Advanced Battery Consortium. Earlier in his career he spent 20 years at Ford Motor Co., where he held the title of director of sustainable technologies. He was also once the executive director and chairman at TH!NK Nordic.

Wallace, like any seasoned exec, wouldn’t just join any board. Obviously he’s done his research and felt comfortable associating with ZENN. For this reason, I view this appointment as quite positive. After all, if EEStor wasn’t going to deliver would Wallace waste him time?

Still waiting, however…

EEStor’s latest patent: large-scale grid storage for renewables

Since it’s been all-too-quiet on the EEStor front, I figured I’d at least draw attention to the company’s latest patent approval — this one titled “Systems and Methods for Utility Grid Power Averaging, Long Term Uninterruptible Power Supply…”

A link to the patent, which was just approved a few days ago by the U.S. patent office, can be found here at the TheEEStory.com. EEStor and ZENN appear to be in complete lock down — no information is flowing from either. I’ve being hearing chatter in the investment community that EEStor has run into some technical (not financial) trouble, but then again, I’ve been hearing this kind of chatter for the past few years since I wrote my first feature on the company in the Toronto Star. I tried to arrange a visit to EEStor’s headquarters in Cedar Park, Texas, for some time this summer. I wanted to gather some information for a book I’m working on that will be released next fall, but Weir — despite my offer to sign a non-disclosure — wouldn’t allow it. He wished me luck and said he doesn’t want or need the attention. (The book, by the way, isn’t just about EEStor, but EEStor will represent a chapter in it. The book will be about barriers to energy innovation… stay tuned).

Fair enough.

The explanation in the patent of how an EESU could benefit the grid is pretty straight forward, so this is really no surprise. But it’s nice to see the company beginning to accumulate a sizable stockpile of patents to protect its IP. Despite the silence out of Cedar Park (and Toronto), I do find it interesting that there are some other ventures hot on EEStor’s heels, just as Weir was expecting. On April 29, for example, the U.S. Department of Energy announced funding as part of its ARPA-E program. One recipient of funding was venture spun out of Penn State University called Recapping Inc., which received $1 million. Continue reading EEStor’s latest patent: large-scale grid storage for renewables