To OTC Journal Members:
 

Comments in the BLOG

There haven't been any BLOG entries so far this week, but your comments and questions are welcome on the most recent: BrandPartners (BPTR). Tomorrow I will do a BLOG posting on AMW, which appears to be having problems with its year end financials, and NWKI, which has been getting clobbered of late and has not filed it's year end financials either.

To use the BLOG, simply go to the home page at www.otcjournal.com - the BLOG will scroll down automatically on the right side of your screen. The most current journal entries appear in the middle of your screen. Check back frequently for updates particularly when stocks are moving to overbought or oversold levels or in volatile markets. Your questions and postings do not automatically appear, so don't bother posting the same question multiple times. I personally go through to moderate and respond to every question. If not for the filter, our BLOG would be filled with invitations to online poker sites- a total waste of your valuable time.
 

ZAP (OTC BB: ZAPZ); The Cars Are Rolling

The first street legal ZAP Smart Car rolled out today, driven by the mayor of Santa Ana. The Honorable Miguel Pulido began the test drive at City Hall, and proceeded to the Smart Car conversion facility three miles away, at G&K Automotive Conversions. 

In conjunction with the first test drive of a street legal Smart Car, ZAPZ announced the company had received the absolute final regulatory approvals to sell the cars in 45 states after a rigorous testing process.

I guess we can't really call the first test drive completely street legal, as the car has been approved for California. Approval is expected in the next several months.

It is now safe to assume ZAP will begin delivering the cars it currently has on a limited basis as the conversions are completed.

Also disclosed in the press release were the latest figures on orders for the Smart Car. Dealers from all over the United States have submitted orders now totaling in excess of $750 million- yes folks- that's 3/4 of one billion dollars. I believe this would be somewhere in the neighborhood of 35,000 to 40,000 cars.

I'm really starting to like the risk/reward picture that is developing. For those of you who have been following this story, you know the stock does not trading as if the market believes the company can fill these orders.

My feeling is both ZAP and Mercedes Benz had no idea how rapidly sales for this car would gain momentum in the United States. Furthermore, it is rumored that Mercedes Benz was doubtful the car could be "Americanized".

Here's where we stand today: ZAP has successfully cleared all regulatory hurdles, and is going to begin delivering the cars it has from a European Distributor. ZAP has been actively showing the car nationwide, and has received $750 million in orders from dealers all over the US.

Mercedes Benz manufactures the car for the European Market. This MB division has been problematic for Mercedes. Several of the models they developed did not sell very well, and the Smart Car division has been losing money.

Today's press release alludes to following: "the Company has been in discussions with a number of major automotive industry leaders in Europe and Asia that have direct experience in the manufacture and sales of high-efficiency vehicles." 

Reading between the lines, it is clear ZAPZ is talking to MB and others about a potential relationship. $750 million in orders is a fairly big bargaining chip, and someone will step up to provide the infrastructure to fill those orders.

Against the backdrop of the current dismal market conditions, the stock is actually behaving quite nicely and could be getting ready to move up. As you can see from the chart, the 61.8% retracement level ($2.64) as measured from last fall's rapid run to $5.17 has now held three times. The right news could see the stock challenging the $3.61 level. It has been trading up over the past few sessions while most microcaps are selling off.

I really like the risk/reward ratio here. If MB decides to go it alone in the United States with the Smart Car, they risk losing $750 million in orders for a troubled division while they go through a minimum one year regulatory process. During that year, ZAP could find another manufacturer to jump on board and fill the orders.

A $90 million market valuation (30 million I&O at $3) against would could be potentially $750 million in orders: This situation offers a lot of upside.

Here is the complete text of today's news release for your review:
 

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