Line Of Credit, Short Term Debt And Bank Acceptance Notes

12 Months Ended

Dec. 31, 2011

Line Of Credit, Short Term Debt And Bank Acceptance Notes [Abstract]

Line Of Credit, Short Term Debt And Bank Acceptance Notes

NOTE 9 –LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

Line of credit

     In 2011, we were approved to have the grants of up to an aggregate of US$6.2 million of bank facilities from the Taizhou Branch of China Merchants Bank through our majority-owned subsidiary, Jonway. Although we have been approved for these credit lines, there are no legal obligations or rights to the credit lines until we execute agreements with the respective lenders to borrow funds under the credit lines. When drawn down, the credit lines will be secured by lands owned by Jonway and guaranteed by Jonway Group.

Short tem debt

     Under the above mentioned credit line of US$6.2 million granted by Taizhou Branch of China Merchants Bank , on August 19, 2011, Jonway entered into a Credit Agreement with this bank for a revolving short term bank loan in the aggregate amount of approximately US$3.2 million which was drawn down in 2011. The annual interest rate is 7.22%. Such bank loan under the Credit Agreement are secured by a Maximum Amount Mortgage Contract by and between Jonway and this bank dated August 11, 2011 in which land use rights over two parcels of land owned by Jonway at Sanmen Factory have been pledged as security for this loan. The remaining $1.58 million of the credit line is available for future executions at the discretion of Jonway Auto.

     In December 2011, Jonway established additional short term bank loans amounting to over $2.22 million from three small-size banks based in Taizhou City, which are subject to Jonway Group guarantee, and US$790,000 of such loans is secured by bank notes received from Jonway dealers.

     As of December 31, 2011, ZAP had $5.4 million in short term bank loans, which are borrowed from the above stated China-based banks with interest rate range of 7.22% to 9.82% per annum due from March 2012 to August 2012.

		December 31,
		2011
Loan from China Merchants Bank	$	3,174
Loan from Taizhou Bank		1,428
Loan from Zhejiang Tailong Commercial Bank		794
Loan from Pay-Ins Prem		89
	$	5,485

Bank acceptance notes- 6 month tern for each note issued

		December 31, 2011
a) Bank acceptance notes payable to Taizhou Bank	$	2,451
b) Bank acceptance notes payable to China Merchants Bank		3,316
c) Bank acceptance notes payable to China Everbright Bank		4,761
		10,528

     On December 6, 2011, Jonway entered into a bank acceptance note Agreement with Taizhou Branch of China Everbright Bank for a revolving bank note facility in the aggregate amount of approximately US$4.7 million. Such bank note facility were issued to Jonway Auto's suppliers under the Credit Agreement and are secured by a Maximum Amount Mortgage Contract by and between Jonway and this bank dated December 6, 2011 in which land use right over one parcel of land owned by Jonway at Sanmen Factory has been pledged as security for this facility. Except for the bank acceptance notes payable to China Everbright Bank, other bank acceptance notes payable to other banks were granted through the below mentioned cash deposit practice.

     As of December 31, 2011, the Company has bank acceptance notes payable in the amount of $10.5 million. The notes are guaranteed to be paid by the banks and usually for a short-term period of six (6) months. The Company is required to maintain cash deposits at a minimum 40%-60% of the notes payable with these banks, in order to ensure future credit availability. As of December 31, 2011, the restricted cash for the notes was $6.1 million.

     On December 11, 2011, Zhejiang Jonway Automobile Co., Ltd. ("Jonway"), a majority owned subsidiary of ZAP, entered into a Promissory Note with Jonway Group Co. Ltd. ("Jonway Group") pursuant to which Jonway borrowed $3,000,000 to be repaid on demand. The unpaid principal amount of the note bears interest at a rate per annum equal to 8%, calculated on the basis of a 365 day year and the actual number of days lapsed. All unpaid principal, together with any then unpaid and accrued interest, are due and payable within ten (10) calendar days following demand by Jonway Group. Payment shall be made in the form of cash. As of December 31, 2011, a total of $1.6 million had been advanced to Jonway Automobile under the Promissory note arrangement.