Time to Forget About Zenn Motor

On July 26th I wrote a piece about oil and energy which also focused on the speculative battery technology company EEstor and it’s minority owner Zenn Motor Company (ZNNMF). Since then I’ve given more thought and some added research to the matter. On July 29th, I posted a correction to my original pieces as follows:

re: the Zenn investment, it seems the information in my piece was incorrect. According to a 7/2/09 press release you can find at: http://www.emediaworld.com/press_release/release_detail.php?id=623265
the Zenn investment was $5M [not $700,00]. The other noteworthy fact from this press release is that Zenn was able to invest the maximum amount permitted under a prior agreement because other investors (presumably Kleiner Perkins) elected not to invest the amount to which they were entitled.

It is potentially quite troubling that Kleiner Perkins is no longer supporting EEstor. It is also a bit troubling that Mort Topfer, a former Dell top exec, has left the EEstor board for the second time as of June, 2009.

In sum, I must say that the skeptics on EEstor also have a lot of ammunition.

It’s possible that Weir is hookwinking Zenn into bankrolling them now. But the question is why would Weir want to do that if he did not feel he was going to be successful fairly soon. Expectations have been raised for rapid product visibility. Weir must think he can produce.

As I think about the matter further, it seems increasingly likely to me that the EEstor/Kleiner-Perkins relationship probably came apart some time ago and that K-P no longer supports EEstor. There could be personality reasons behind such a split but I doubt it could be unrelated to a cold business judgement on the part of K-P. That is not a good signal for EEstor bulls.

In retrospect, my judgement now is that the degree of risk in Zenn’s stock is just as high as it has ever been. Therefore I have reduced my Zenn holdings. I still have some shares, but I think they are a pure roll of the dice with probably no more than a 10% chance of success. Fortunately, the price of Zenn has been fairly strong since July 26th, so any follower of this site who wants to become more conservative in regard to Zenn, as I have, is likely to be able to sell at a profit.

In sum, there are many more interesting and important investment decisions that require attention than this one speculation, despite the huge potential that a success would have. I would not allocate a lot more brain cells to Zenn. Either it happens and I will wish I had owned a lot more shares or, more likely, Zenn will fade into the the sunset at some point, another Grand Plan that was not practical.

Comments

[tvillars:]

Dick Weir recently had something to say about this during a recent investment call.

19:44

I: OK. You mentioned Kliener Perkins and Lockheed.

W: Uhuh.

I: I think Kliener has an interest in you and ... how much do they own? Can you tell us that?

W: They own about 20 some percent of the company. I can't give you an exact number. But, it's in that range.

I: OK.

W: Ummm, they ... We really stopped being a VC company probably about 2 ... 2 1/2 years ago. When we took the first investment with ZENN Capital there that was common stock. And VCs just don't work in common stock. They're invested ... they have to guarantee preferential treatment. Since that went through we've got money through other sources right now. And more money is coming from those sources, non-diluting sources, so they admit it. That we're just not a VC company anymore. But we stay friends. Hey, they own stock in us and they'll get the great rewards because of it.

Full transcript of the call is here www.theeestory.com/top... and well worth reading as Dick Weir rarely gives interviews of this depth.

Aug 12 07:36 AM

[Davewmart:]

Great article, Jim.
It takes guts to rethink, and even more to come out in public and admit that you have done so.
That quality makes you one of my must-reads on this site.

Aug 12 08:05 AM

[liberty21:]

Eestor, in the end will prove itself, either they produce or not. Zenn is a huge gamble. But now is not the time to forget about it, that time may come soon, or it will prove to be a Very exciting ride up. We will see. Stay long and strong. I suggest making your own call, see theeestory.com.

Respectfully

Aug 12 08:10 AM

[User 470360:]

Is it true you only have 524 followers?

Aug 12 08:29 AM

[William Taylor:]

I have held a bit of Zenn for a few years and I think I am probably insane to do so but it is throwaway money and I have already mentally written it off.

Aug 12 08:42 AM

[homeTon:]

Jim, you say your drop in confidence in eestor is based on pure suppositions made by you with no facts to back it up other than K-P not investing more money and a change in one board member. I am sure you read Weir's phone conversation transcript with pretty detailed information about the timeline for production - so why not comment on what Weir has said himself and why you think that eestor is not going to be able to produce their first ultracap storage unit in September and deliver production product at the end of the year.

Aug 12 09:01 AM

[User 470404:]

You obviously do not know much about the way VCs work. They control or they do not play. They want in early and they want big returns generally via a IPO w/i 5 years. EEStor ended up being none of these things so it actually would have been surprizing if KPCB DID increase its invbestment. VCs are NOT hedge funds, so don't expect them to act like htey are.

Throwing in the towel on Zenn/EEStor when they have a comitment to deliver pre-production batteries within months, is the height of stupidity IMO. The only sensable thing is to ride this out for 4-5 months. It is very doubtful you will lose anything in that period and the upside is probably 100x. The author really needs to gather better info and use his brain before he writes this dribble.

Aug 12 09:17 AM

[Brendan Bag...:]

TVillar is the moderator of the site of the blogger with the bag over his head (Baghead). They are pumpers of Zenn/EESTOR. TVillar and Dick Weir do not like to mention when KP could have increased their investment in EESTOR, KP DECIDED NOT TO.

The following is what tvillars posted on Baghead's site,
"All that being said, I'll be shocked and very disappointed if ZMC is able to purchase more than 47,103 shares because the other investors didn't also go all in. It is rather ironic that ZMC's best outcome is NOT to get 10.5% but rather only 6.2% of EEStor a company potentiality worth $100B+ USD".

The final outcome was the other investors (KP) decided not to "go all in" EESTOR, and Zenn increased there share to 10.7%, but just don't remind Dick Weir or tvillars.

Aug 12 09:23 AM

[Brendan Bag...:]

Hey freya,
Everyone should watch this youtube video from 2007 and listen closely to what comes out of Ian Clifford's mouth especially at 4:35
www.youtube.com/watch?...
----------------------...

Dick Weir stated in 2004 EESTor was ready to accept purcahase orders from major companies...in June 2009 Dick Weir audio interview he stated production line is 85% complete. Was Dick Weir lying in 2004 or is he lying in the recent interview? How could a production line not be completed in over 5 years, at best stuck at 85% complete????
www.ufto.com/clients-o...
"A number of major companies have said they would issue a purchase order quickly if specs are met.
The company is currently seeking equity investment of $3.5 million. A business plan is available.
Contact Richard D. Weir, President and CEO
EEStor, Inc. Cedar Park, TX
512-258-5669 [e-mail]"
----------------------...

I believe something rotten is going on with EESTOR/Zenn.

Aug 12 09:54 AM

[notsosmart:]

must be a better bet somewhere on this ponzi/casino wall st scene.

Aug 12 10:05 AM

[Jhayma:]

I've been following EESTOR for about two years, and have made a modest ivestment of about 1000 shares. The article above is nothing more than the usual garbage, proving only that so called experts like to talk. Why would someone write an article stating that they are selling their stock, and no longer believe Zenns claims, 1 to 4 months from confirmation? I don't believe for one minute that this guy has sold his shares but if enough people believe him, he might lower the stock price to buy more. Everything he complained about was covered in the recently released phone conversation, including the fact that KP already owns 20%$ of EESTOR. Hey, if I was a true believer I would pour everything I have into the stock, but I'm not a fool. This is a hobby, and an interesting one. If you can believe what is coming out of Weir, all the technical ssues are solved, they have been producing large quantities of working units for years, and they have been content to create deals behind the scenes while the bloggers and experts rant. If this is for real, they must be very amused. If this isn't for real, they are going to prison. Everyone knows that stock maipulation is a federal crime and since the claims have been very precise and specific, they must deliver or face serious charges in Canada and the United States. As a matter of fact, if the author knows that this will work, and isn't selling his shares like he claims, he could be guilty of manipulating the price and could end up in serious trouble. Personally, I'm buying a little more before long because I have a sneaking suspicion that we don't have much longer to wait. Let the drama unfold!!!!

Aug 12 10:23 AM

[Jhayma:]

Oops, I forgot to mention one curiousity. Why is this article, which is one of thousands, suddenly important enough to quote on Yahoo finance? Curiouser and curiouser......

Aug 12 10:37 AM

[Brendan Bag...:]

Hey Jhayma,
If you been following EESTor for two years, you are aware we went through the same crap last year. Did you forget Ian Clifford stated EESTOR delivery of EESU was "imminent" in 2008? Actually IC first stated delivery was "imminent" in 2006. It's amazing a CEO of a company does not know the definition of "imminent".

You will be back here in 1 to 4 months stating EESTor's will deliver EESU to Zenn end of next year, then next year, then next year....

Aug 12 10:41 AM

[Jhayma:]

Exactly, so why is Yahoo finance linking this article to the stock. J.K. doesn't have enough followers to be important, and the article is just another crtitique by someone who doesn't actually know anything. My suspicions are that he is being used to manipulate stock prices, regardless of the reality of the product.


On Aug 12 08:29 AM User 470360 wrote:

> Is it true you only have 524 followers?

Aug 12 10:43 AM

[Jhayma:]

Not really Brendan because one article I read stated that while Weir has made other plans to power the CityZenn if EESTOR doesn't come through, they only have enough financing to last about another year. If this doesn't work out this year, I will sell at a loss rather than lose everything. I don't currently have the link due to the huge volume of comments and articles, but Zenn can't survive if this doesn't work. They have borrowed almost all the money they have invested in EESTOR. SInce Weir and his people are the owners of large amounts of stock in their own company, he stands to lose everything. If he starts selling, it's time to jump. Either way, there won't be a ZENN a year from now if this is a scam, and WEIR will be paying the judgements from his prison job....


On Aug 12 10:41 AM Brendan Baghead wrote:

> Hey Jhayma,
> If you been following EESTor for two years, you are aware we went
> through the same crap last year. Did you forget Ian Clifford stated
> EESTOR delivery of EESU was "imminent" in 2008? Actually IC first
> stated delivery was "imminent" in 2006. It's amazing a CEO of a company
> does not know the definition of "imminent".
>
> You will be back here in 1 to 4 months stating EESTor's will deliver
> EESU to Zenn end of next year, then next year, then next year....

Aug 12 10:49 AM

[searcher:]

The technology development sector as well as the pharmaceutical development sector requires the CEO to beat the bushes for capital. They say a great many things and lose their way as their 'goals' and 'hopes' and 'beliefs' are forced to become 'strongly indicated' or 'virtually certain' to 'imminent' as credulity of the investor comes at a higher and higher price. How many times have you heard, "How could he said or done such a thing with the punishment for such a transgression so clearly inevitable?" An appeal to your credulity should not solely rest on the ferocity of the sanction for deceit.

Aug 12 02:31 PM

[bindlepete:]

Ok the energy sector does breed some very interesting technical plays . I too have been following EEStor but have yet to lay a buck down. The big kick was when Lockheed came in but of course they did it with our Tax dollars. (They are not a private enterprise.)

At any rate if you like energy tech take a look at PetroBank's (pbg.to)THAI/Capri processes. If this hits, and I think it will, a whole new area of low cost oil production will open up with minimal environmental damage. I own/control a lot of this for a moderate investor.

They are gutsy players in Canadian Oil and gas and may have developed an industry changing technology. They made big and early bets in the Bakken which have proved very good for all of us stakeholders.

I hope that EEStor makes it but Weir remains a bit of a Ceasar Chavez of the electrical engineering entrepreneurs. A bully boy bombast.

Aug 12 03:02 PM

[Dave K.:]

I thought Richard Weir's background was marketing not R&D. Guess he was very good at marketing to get this far. So if he is the marketing guru then who is the real technical brains behind the operation?

Aug 12 04:23 PM

[energyinvestor:]

JK - this is just pump and dump stuff. If you had been doing your research you would be waiting like everyone else.

At best you are a dummy, at worst? Well your readers will judge you:-)

Aug 12 05:37 PM

[John Petersen:]

From a lawyer's perspective the fascinating thing is how both ZENN and EEstor will be able argue that they're not responsible for losses suffered by investors. EEstor, a private company, can simply say the interview with its executive was not intended for public consumption and it has no responsibility under the securities laws for actions taken by a minority shareholder. ZENN can say "we believed what EEstor said" and besides, it's those darned unauthorized blog sites that caused all the trouble. It's a wonderful world, nobody ends up taking responsibility for hype that maintains ZENNs market capitalization at 10x book value. You made a good choice Jim.

Aug 13 01:54 AM

[Brendan Bag...:]

Mr. John Peterson, I agree with you 100% about the outcome of EESTOR/Zenn. Zenn has already covered themselves with their new "forward looking statement".
www.marketwire.com/pre...

The only question I have is could the average Joe Investor who already has stock in Zenn have a possible case against Zenn Motor Corp based on the institutional investors were prevued to information from Dick Weir's investment call which Joe Investor was not? It can be claimed Dick Weir's investment call created an unfair playing field for Joe Investor.

Aug 13 09:10 AM

[Watcher@the...:]

Actually, there is no reason to believe that Kleiner had any rights to buy additional stock with the latest permittivity announcement.

The only party we know for sure had those rights was Zenn and one or more anonymous "other investors".

On Aug 12 09:23 AM Brendan Baghead wrote:

> TVillar is the moderator of the site of the blogger with the bag
> over his head (Baghead). They are pumpers of Zenn/EESTOR. TVillar
> and Dick Weir do not like to mention when KP could have increased
> their investment in EESTOR, KP DECIDED NOT TO.
>
> The following is what tvillars posted on Baghead's site,
> "All that being said, I'll be shocked and very disappointed if ZMC
> is able to purchase more than 47,103 shares because the other investors
> didn't also go all in. It is rather ironic that ZMC's best outcome
> is NOT to get 10.5% but rather only 6.2% of EEStor a company potentiality
> worth $100B+ USD".
>
> The final outcome was the other investors (seekingalpha.com/symbo...)
> decided not to "go all in" EESTOR, and Zenn increased there share
> to 10.7%, but just don't remind Dick Weir or tvillars.

Aug 13 11:12 AM

[jimp:]

Jayma,

You never really answered the question. You just provided a fluff of excuses.

It is odd that only Zenn invested more money, when others that were in the know, like KP, could have added to there equity.

Aug 13 11:15 AM

[Brendan Bag...:]

I agree with your comment.
The only people believed Kleiner had any rights to buy additional stock was the blogger with the bag over his head (Baghead) and his followers.


On Aug 13 11:12 AM Watcher@theGates wrote:

> Actually, there is no reason to believe that Kleiner had any rights
> to buy additional stock with the latest permittivity announcement.
>
>
> The only party we know for sure had those rights was Zenn and one
> or more anonymous "other investors".
>
> On Aug 12 09:23 AM Brendan Baghead wrote:

Aug 15 01:52 AM

[Brendan Bag...:]

Zenn Motor loses $2.6M in Q3.
Zenn sells 19 low speed vehicles (glorified golf carts) in Q3.

www.reuters.com/articl...

There are investors out there who believe Zenn is a proven electric vehicle company. Bernie Madoff could sell them the Brooklyn Bridge :).

Mr. Kingsdale is 100% correct, "Time to forget about Zenn Motors".

Aug 15 01:04 PM

[William Taylor:]

As a skeptic it is hard to forget when the stock price keeps going up.

Sep 02 01:01 PM

[Cantal:]

I guess anyone can blog about eestor after they ponder all of the implications that occur to them in isolation. This is a very interesting technology and if you take a moment to read the content of the detractors, you will find they have as much insight as the typical blogger who is willing to spend more time on speculative commentary than productive investigation.

Sep 03 04:01 PM

[Jhayma:]

The current stock price is irrelevant. Only a functioning production unit will make a difference for Zenn. This is all or nothing. There will be no Zenn if Eestor fails.

Sep 11 10:20 AM

[Brendan Bag...:]

Is Zenn committing Fraud?

www.gm-volt.com/forum/...

Oct 22 10:05 AM