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ZAP HITS $400
Million Plus Orders Mark |
|
ZAPZ released year end earnings
after the close yesterday, and the year end results were nothing to write
home about. I have not had time to really dissect the numbers, but will
do so in a future edition. I want to look at how much real money they lost
after taking out all the non cash charges.
On the plus side, 2004 numbers are
a snapshot of the past, and the market prices stocks on perception of the
future. ZAPZ is a company that put a lot of cash and energy into
the future. This year we will find out if their investment paid off.
I really like the press release the
company put out in conjunction with the year end numbers and letting the
world know they had surpassed $400 million in orders for the SmartCar.
There are a few hurdles the company needs to clear in order to fill these
orders- the biggest being where they will get the cars. That's the speculation
at this juncture. ZAPZ's press release addresses every issue to
the best of the company's ability at this time. Please take the time to
read it. You will find it below.
$400 million plus represents somewhere
in the 20,000 to 25,000 car range. Assuming the company makes at least
a 10% gross margin on the cars, I believe the stock would be worth about
$10 if there is no major dilution and they can fill the orders. I will
cover how I arrive at that number in a future edition.
The stock will not doubt trade up
on this news, but the real breakthrough won't come until ZAPZ convinces
the market they will be able to get the cars. This situation is heaven
sent for those who are willing to speculate, because the stock is still
priced with plenty of upside if they can pull it off. Here's a summary
of the situation:
ZAPZ has spent the past two
years modifying the SmartCar for US DOT and EPA standards. The ZAPZ
modified car is approved for sale in 45 states, with the remainder soon
to follow.
The SmartCar was developed
by Mercedes Benz in 1998 in a joint venture with Swatch, who designed the
snappy interior. The SmartCar has been a thorn in MB's side. The
division did 1.5 billion of MB's 142 billion in '04, but lost $600 million
(numbers in Euros).
MB has an excess supply of
the cars, and has announced they will be discontinuing several of the models
in the line. The one you see pictured above will still be produced.
ZAPZ took the risk of modifying
the car on it's own nickel, and is a year or two ahead of MB on
that score. Now that MB realizes there is significant demand for
the car stateside, they could start the process on their own, and eventually
bypass ZAPZ. They would lose at least a year if not more, and/or
another manufacturer could beat them through this window of opportunity.
However, ZAPZ has both the
approvals and the distribution right now. MB has an excess supply
of cars, and a lot of heat over this division's losses.
Here's a quote from the press release:
"Delivery of the Smart Cars
represented by the current purchase orders is conditional upon ZAP's execution
of strategic relationships with major automotive manufacturing partners
that will enable it to support the full sales pipeline. To build sufficient
capacity to supply the full U.S. demand, 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 there is
little doubt the company is talking directly to Mercedes Benz. MB
has the cars and needs to sell them. ZAPZ has the approval and the
orders. If common sense prevails, it seems to me there's a high probability
of a deal.
There's your bet. The stock will
have probably traded up nicely by the time you read this, but the $1 to
$3 point move will be made if they can strike a deal with MB.
They are moving forward with limited
production of cars they acquired through a distributor, so there will be
sales.
The chart is compelling for a move
to the upside. The $2.465 61.8% retracement level has now held three times.
A break above the $3.50 level would be very bullish for the long term.
If you want to speculate on a potential
arrangement with MB, a stop loss of $2.40 is recommended. You have
to own the stock before they make the announcement. You won't be able to
own it at right price after the event, if they pull it off. This is one
that could trade extremely well even in this anemic market environment.
This is a full and fair assessment
of exactly where this one stands right now. An ideal situation for those
willing to take the risk.
Here is the complete text of the
press release for your review:
| Press Release Source:
ZAP
ZAP Announces Total
of $431 Million in SMARTCAR Purchase Orders in SEC Form 10-KSB Annual Report
Filed Today
Tuesday April 5, 7:26
pm ET
Company Details Business
Activity in High-Efficiency Transportation and Energy Divisions in Financial
Filing
SANTA ROSA, Calif.--(BUSINESS
WIRE)--April 5, 2005--ZAP (OTCBB:ZAPZ - News), pioneering the next generation
of advanced transportation and energy technologies, announced today that
purchase orders from U.S. auto dealers for its SMARTCAR micro-coupe has
reached $431 million, reflecting a broad base of consumer demand for a
vehicle that fulfills modern transportation needs while providing high
levels of fuel efficiency.
Dealer orders for the
Smartcar have climbed steadily in recent months as ZAP has successfully
solved the technological conversion issues required to prepare the Mercedes-built
vehicle Americanized by ZAP for the U.S. marketplace. On March 22, ZAP
announced reaching $200 million in dealer orders. ZAP and its partners
have developed a number of proprietary software and other technical solutions
to enable the Smartcar to meet U.S. safety and emissions standards, and
also hold licensing rights to conduct the Smartcar Americanization from
non-affiliated Smart-Automobile LLC.
"The phenomenal response
has made it clear that the Smart Car has arrived in the U.S. at precisely
the moment that American consumer demand for a new class of high-efficiency
motor vehicles is exploding," said Steve Schneider, CEO of ZAP. "Oil and
gas prices have been climbing steadily and show no signs of abating, with
one prominent industry analyst predicting a coming oil price `super-spike'
to $100 per barrel. This is causing increasing numbers of motorists to
think in terms of fuel-efficient transportation of the sort that ZAP is
a leader. Our market research and feedback has shown that U.S. consumers
are attracted to the Smart Car by a number of factors, including its eye-catching
design, styling, and size, as well as its groundbreaking gas mileage economies.
We believe that the Smart Car, shown to be one of the world's most fuel-efficient
gas vehicles, is one of the leading contenders in the next generation of
road transportation."
The Form 10-KSB report
for fiscal year end December 31, 2004 reflected the Company's business
strategy to create a significant corporate technology and marketing entity
capable of designing and delivering a broad line of transportation and
advanced energy products. Topline revenues were $4.77 million, an 18.1%
drop from the previous year's $5.83 million. Net losses were $ $29.4 million,
compared with $5.5 million in 2003. Net loss per share was a loss of $1.67,
compared with a net loss per share of $0.49 the previous year. A significant
portion of the net loss for the year is comprised of non-cash transactions
such as stock based compensation for consulting, services and employee
arrangements, settlement of a stock agreement, and revaluation of certain
ZAP warrants. Total Assets have also increased from $7.2 million in 2003
to $29.8 million at the end of 2004.
"The Company invested
heavily in 2004 to create the current opportunities we're now witnessing
in the automobile market as demand grows for the Smart Car and other ZAP
advanced products," said Mr. Schneider. "Our success in this phase of our
business plan has been demonstrated by the growth of purchase orders for
the Smart Car and of our marketing strategy to build an alternative energy
and high-efficiency automotive dealer network. This strategy has already
generated $431 million in orders from U.S. dealers as we prepare to deliver
our energy-efficient vehicles to the American marketplace."
Delivery of the Smart
Cars represented by the current purchase orders is conditional upon ZAP's
execution of strategic relationships with major automotive manufacturing
partners that will enable it to support the full sales pipeline. To build
sufficient capacity to supply the full U.S. demand, 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.
"The Company has not
agreed to accept all orders received at this time, and have not determined
a delivery schedule," said Mr. Schneider. "The Company will need the support
of a major manufacturer and the full approval of all necessary governmental
agencies for Smart Car models ordered to be able to deliver cars in this
volume. We are actively seeking this support. The success of our marketing
efforts so far in the U.S. has generated significant interest from these
potential manufacturing partners. Upon finalization of these strategic
relationships, we will determine our delivery schedule. Fortunately, interest
in Smart Car Americanized by ZAP is so strong that a number of dealers
have indicated that they are prepared to purchase a significant number
of vehicles with cash up front, which will assist the Company's efforts
to bring the product to the market. There is also currently a significant
supply of unsold new Smart Cars in Europe that could be directed into the
ZAP pipeline for Americanization and sale here in the United States. Currently,
no other companies besides ZAP have the know-how or proprietary solutions
to convert Smart Cars for sale in the United States."
About ZAP
ZAP, Zero Air Pollution®,
has been a leader in advanced transportation technologies and energy products
since 1994. ZAP serves the multibillion-dollar markets for next-generation
transportation and power products through three divisions: ZAP Automotive,
ZAP Personal Transportation and ZAP Energy. The Company has delivered more
than 90,000 fuel-efficient and pollution-free vehicles powered by gasoline,
electric, hydrogen and other fuels to customers in more than 75 countries
around the world.
ZAP owns the technology
developed by Smart-Automobile LLC to Americanize the popular European-made
Smart Car, a high-efficiency gas vehicle, for the U.S. marketplace. ZAP
Americanizes the Smart Car to meet U.S. federal and state safety and emissions
standards. The U.S. Environmental Protection Agency and the Department
of Transportation have approved a Smart Car model Americanized by ZAP for
domestic use in 45 U.S. states. ZAP is not affiliated with, or authorized
by, smart gmbh, the manufacturer of SMART automobiles, or the smartUSA
division of Mercedes-Benz LLC, the exclusive authorized U.S. importer and
distributor of those vehicles. The Smart Car is manufactured by global
automotive company DaimlerChrysler. ZAP purchases its vehicles from non-affiliated
direct importer Smart-Automobile LLC.
The Company's all-electric
vehicles include the ZAP Intimidator L.U.V. and ZAP Worldcar neighborhood
and urban electric cars, ZAPPY® Scooters, Mobility Scooters, Bikes
and All Terrain Vehicles (ATV). These products offer convenient, dependable
and fun transportation that's heavy duty, powerful and noise free. The
ZAP Portable Energy division has developed a next-generation, multi-use
battery for electronic products that delivers up to four times the power
of typical batteries to charge or power a variety of devices, including
cell phones, digital cameras, DVD and MP3 players, camcorders, and laptops.
For more information, visit http://www.zapworld.com. For investor-specific
information, including daily and historical Company stock quote data and
recent news releases, visit http://www.trilogy-capital.com/tcp/zap. To
read or download the Company's Investor Fact Sheet visit http://www.trilogy-capital.com/tcp/zap/factsheet.html.
For recent news coverage of ZAP, visit http://www.trilogy-capital.com/tcp/zap/press.html.
To view a video about ZAP, visit http://www.trilogy-capital.com/tcp/zap/video.html.
Cautionary Statement
Forward-looking statements
in this release are made pursuant to the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995. Investors are cautioned
that such forward-looking statements involve risks and uncertainties, including,
without limitation, continued acceptance of the Company's products, increased
levels of competition for the Company, new products and technological changes,
the Company's dependence upon third-party suppliers, intellectual property
rights, and other risks detailed from time to time in the Company's periodic
reports filed with the Securities and Exchange Commission.
Contact:
ZAP
Alex Campbell, 707-525-8658 Ext. 241 (Media Relations)
acampbell@zapworld.com
or
Trilogy Capital Partners, Inc.
Paul Karon, 800-342-1467 (Investor Relations)
paul@trilogy-capital.com
Source: ZAP |
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