Ms. Natasha Vandesluis reports

ZENN MOTOR COMPANY REPORTS 2014 FIRST QUARTER RESULTS

Zenn Motor Company Inc. is releasing its unaudited financial results for the three months ended Dec. 31, 2013. All amounts are expressed in Canadian dollars.

Financial results

In the three months ended Dec. 31, 2013, net losses from continuing operations were $384,222 or one cent per share. For the corresponding period in the prior year, net losses from continuing operations were $320,317 or one cent per share.

At Dec. 31, 2013, the company had working capital of $1,967,584 and cash, including cash, cash equivalents and short-term investments, totalling $2,304,864, compared with working capital of $461,292 and cash of $715,869, respectively, at Sept. 30, 2013.

EEStor update

The changes previously announced at EEStor as a result of Zenn's acquisition of control of EEStor are now being implemented. The technical advisory committee (TAC) has been formed and has had its first formal meeting. Members of the TAC are involved on an active basis in assisting EEStor in reviewing its testing procedures, developing improved procedures, evaluating test results and generally providing technology assistance. Transition work is being undertaken to review and organize prior data and testing information. Under the direction of its chief science officer, EEStor is working to produce new layers which can demonstrate both high resistance and high capacitance over a range of voltages. Recent EESU layers produced by EEStor have shown improvements in resistance, however, capacitance remains low. New layers produced in February with a thickness of 56 microns and one-fourth-inch by one-fourth-inch square showed resistance of approximately 1.9 terra ohms at both 100 volts and 250 volts. Capacitance was 0.110 nF at 100 hertz and remained constant from 30 volts to 200 volts. The EEStor team feels that as the fill factor of composition-modified barium titanate powder (CMBT) is increased in these layers, the capacitance should increase significantly. To understand this thesis, the EEStor team was asked to demonstrate that as CMBT levels were increased capacitance would indeed increase. To do so, EEStor retested EESU layers produced in April and May of 2013. Layers were produced with a similar mix but had fill factors (the amount of CMBT by volume in the layer) of 10 per cent, 20 per cent and 30 per cent, respectively (ZENN is unable to confirm the composition of previously produced layers). The capacitance when tested at 100 hertz increased almost 10 times between the first two layers and the 30-per-cent layer had roughly 40 times the capacitance of the 10-per-cent layer. There is no assurance that the EESU layers that EEStor is currently working on which use the same CMBT but are of a different formulation will perform in a similar manner or that capacitance can be increased to commercially relevant levels. The EEStor team is focused on refining the current layers so that additional CMBT can be added.

Additional information

Readers are encouraged to read the company's audited consolidated financial statements for the years ended Sept. 30, 2013, and Sept. 30, 2012, the corresponding management's discussion and analysis, and the company's annual information form dated Feb. 19, 2014. All of these documents have been filed, and are available for viewing on the company's profile on SEDAR and posted on the company's website.

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