"Progress" ??

Zenn Motor Company Inc. has provided an update on the progress at EEStor Inc. regarding the development of EESU layers.

The changes previously announced at EEStor as a result of Zenn's acquisition of control of EEStor continue to be implemented. The technical advisory committee (TAC) has met three times formally and additional times less formally. The TAC is very involved in assisting EEStor in reviewing its testing procedures, developing improved procedures, evaluating test results, and generally providing technology assistance and assessment.

Under the direction of its chief science officer, Richard Weir, EEStor is working to produce new layers with the objective of being able to simultaneously demonstrate both high resistivity and high capacitance in the same layer over a range of voltages. EESU layers previously provided to the TAC by EEStor did not show commercial potential. EEStor continues to work with its new and latest polymer and is trying to address issues that affected the homogeneity of the layers. As the fill factor of composition modified barium titanate (CMBT) was increased the consistency of the distribution of the CMBT powder in the layers was not optimal, but progress has been made in creating layers with better consistency. EEStor produced layers in early March with a fill factor of 40 per cent of EEStor's CMBT. In order to understand the impact of the CMBT powder on the layers, the TAC requested that layers be produced with higher fill factors. EEStor has not had time to optimize its new layers, but was able to produce preliminary layers with fill factors of 50 per cent and 65 per cent. The layers were all tested on the company's own Hewlett Packard LCR meter as a way of initially screening to see if the layers produced any technically interesting results. A summary of the testing is set out in the table.

                                                   Insulation resistance in
             Thickness                                     gigaohms        
Sample date   microns  100Hz  1000Hz 10kHz  100kHz 100 V       250 V       

40% fill                                                                   
factor                                                                    
3-6-14                                                                     
Sample A        133                                0.99         1.02       
Capacitance                                                                
 (nF)                   0.12  0.058  0.049  0.046                          
Permittivity             45     22     18     17                           

3-6-14                                                                     
Sample B        119                                1.25         1.25       
Capacitance                                                                
(nF)                    0.15  0.088  0.078  0.072                          
Permittivity             50     29     26     24                           

3-7-14                                                                     
Sample A        40                                 0.607       0.655       
Capacitance                                                                
(nF)                    0.53  0.325  0.178  0.165                          
Permittivity             59     36     20     18                           

50% fill                                                                   
factor                                                                    
3-26-14                                                                    
Sample 3        222                                13.6         13.6       
Capacitance                                                                
(nF)                    0.23  0.107  0.079  0.021                          
Permittivity            143     66     49     44                           

65% fill                                                                   
factor                                                                    
4/3/14                                                                     
Sample 1        125                                16.7         16.7       
Capacitance                                                                
(nF)                    1.14   0.44   0.27  0.258                          
Permittivity            400    154     94     90                           
                                                                            
(i) Capacitance measured on HP 4192A operating in Parallel model mode       

The tests done are preliminary and further testing is needed, both externally and internally in order to reach any final conclusions. The TAC noted that permittivity did rise in the layers as the amount of CMBT in the layer was increased, over five times when fill was increased from 40 per cent to 65 per cent. However, based on the preliminary results the TAC has not seen indications that the layers have commercial potential for energy storage. To be of commercial value for energy storage purposes both the permittivity and the resistivity of the layers would have to be much higher. These results are well below the target levels set by EEStor several years ago where it targeted permittivity in excess of 10,000. The TAC has questioned whether the mixing of the CMBT with low permittivity polymers can yield the high permittivity necessary to store commercially meaningful amounts of electrical energy. The TAC is composed of five members who possess expertise in a number of areas including capacitor manufacture and design, chemistry, electrical engineering, measurement and energy modelling.

The TAC focused on permittivity at higher frequencies and noted that at frequencies of 10 hertz and below it is difficult to determine the accurateness of the readings. The TAC did note that if the layers can maintain a permittivity as high as that shown in the 50 per cent and 65 per cent fill factor layers, the CMBT itself could have commercial potential in a number of applications other than energy storage, but significant additional work would need to be done to determine if this is practical. In this regard EEStor is reaching out to existing manufacturers to determine the potential for its materials.

The TAC has been assessing the CMBT powders prior to it being mixed with polymer. The TAC concluded that, given the characteristics of the CMBT, it would not be possible to design a 100-per-cent reliable testing protocol for the powders alone. The TAC continues to work on testing procedures to better its understanding of both the CMBT powders and the EESU layers.

EEStor's chief science officer believes that by further refining the layers and increasing the fill factor, both the insulation resistance and the permittivity will increase. To date the examples provided to the TAC do not show that permittivity improvement will increase sufficiently for the commercialization of an EESU.

Both EEStor and Zenn are operating with limited financial resources. They will have to raise additional capital in the near term if work at EEStor is to continue. Without meaningful technological progress it may be difficult to access sufficient capital and the companies are therefore reviewing their options including exploring the possibility of partnering with companies with greater financial resources and capabilities. Zenn and EEStor are in discussions at an early stage with a number of potential partners. The goal is to create a partnership which brings additional resources to the effort to develop the EEStor technology. The companies recognize that on their own the development path will continue to be challenging. Unless the companies are successful in their attempts to attract partners or capital, which is uncertain, there can be no assurance about their ability to continue development of the EESU.

Option grant

As previously agreed in its consulting contract with Jamin Patrick, Zenn has issued 30,000 options to Mr. Patrick at a price of 63 cents and subject to approval by the TSX Venture Exchange. The options are valid for five years from the date of issue and vest immediately.

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