10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q/A

(Mark One)

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2012

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ________ to _________

Commission File Number    001-32534

ZAP
(Exact name of registrant as specified in its charter)
California	94-3210624
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
501 4th Street Santa Rosa, CA           95401
(Address of principal executive offices) (Zip Code)
(707) 525-8658
(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x   No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filer required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.

Yes  x   No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  o Accelerated filer  o Non-accelerated filer  o Smaller reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o   No  x

As of August 14, 2012, there were300,156,177 shares outstanding of the registrant’s common stock.

INDEX

		Page No.
PART I. Financial Information
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011	1
	Condensed Consolidated Statements of Operations for the Three and Six months ended June 30, 2012 and 2011.	2
	Condensed Consolidated Statements of Cash Flows for the Six months ended June 30, 2012 and 2011.	3
	Notes to Condensed Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantative and Qualitative Disclosures about Market Risk	33
Item 4.	Controls and Procedures	33
PART II. Other Information
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	34
SIGNATURES		35

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ZAP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

	June 30,			December 31,
ASSETS	2012			2011
Current assets:
Cash and cash equivalents	$	499		$	5,859
Restricted Cash		13,146			6,128
Marketable Securities		1,289			1,830
Notes receivable from Jonway Auto dealers		1,117			1,457
Accounts receivable, net of allowance of $15 in 2012 and $9 in 2011		2,946			2,963
Inventories, net		16,190			11,118
Prepaid expenses and other current assets		2,554			1,984
Total current assets		37,741			31,339
Property, plant and equipment, net		57,283			46,953
Land use rights, net		9,865			10,075
Other assets:
Investment in joint ventures		1,017			1,290
Distribution fees for Jonway Products and
Better Worlds Products		12,359			13,439
Intangible assets, net		4,776			5,002
Goodwill		324			324
Due from related party		3,375			1,137
Advance payments to related party		—			11,616
Deposits and other assets		338			313
Total other assets		22,189			33,121
Total assets	$	127,078		$	121,488
LIABILITIES AND  EQUITY
Current liabilities:
Short term loans	$	3,676		$	5,485
Accounts payable		19,787			15,164
Accrued liabilities		6,011			8,030
Notes payable		26,124			10,528
Advances from customers		1,695			1,971
Taxes payable		325			885
Due to related party		228			2,122
Other payables		2,209			2,116
Total current liabilities		60,055			46,301
Long term liabilities:
Accrued warranty costs		799			592
Senior convertible debt		18,916			19,000
Total long term liabilities		19,715			19,592
Total liabilities		79,770			65,893
Commitments and contingencies
ZAP Shareholders' Equity
Common stock, no par value; 800 million shares authorized;
300,156,120 and 297,746,376 shares issued and
outstanding at June 30, 2012 and December 31, 2011, respectively		229,140			225,378
Accumulated other comprehensive income		431			1,051
Accumulated deficit		(203,596	)		(195,596	)
Total ZAP shareholders’ equity		25,975			30,833
Non-controlling interest		21,333			24,762
Total equity		47,308			55,595
Total liabilities and equity	$	127,078		$	121,488

See accompanying notes to unaudited condensed consolidated financial statements

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ZAP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS

 (In thousands, except per share data)

(Unaudited)

	For the Three Months ended June 30,			For the Three Months ended  June 30,			For the Six Months ended June 30,			For the Six Months ended June 30,
	2012			2011			2012			2011
				Restated						Restated
Net sales	$	12,705		$	16,266		$	24,886		$	27,974
Cost of goods sold		11,675			14,711			23,154			25,384
Gross profit		1,030			1,555			1,732			2,590
Operating expenses:
Sales and marketing		3,469			3,473			5,581			5,345
General and administrative		2,805			4,213			5,296			7,682
Research and development		814			1,119			1,093			1,881
Total operating expenses		7,088			8,805			11,970			14,908
Loss from operations		(6,058	)		(7,250	)		(10,238	)		(12,318	)
Other income (expense):
Interest expense, net		(957	)		(6,978	)		(1,443	)		(8,828	)
Loss from equity in Joint Venture		(152	)		(88	)		(273	)		(161	)
Loss on financial instruments		—			10			—			(358	)
Other income (expense), net		231			636			468			789
Total other income (expense)		(878	)		(6,420	)		(1,248	)		(8,558	)
Loss before income taxes		(6,936	)		(13,670	)		(11,486	)		(20,876	)
Income (tax) benefit		92			(9	)		130			15
Net loss		(6,844	)		(13,679	)		(11,356	)		(20,861	)
Net loss attributable to non controlling interest		(2,282	)		( 1,114	)		(3,355	)		(1,684	)
Net loss attributable to Zap	$	(4,562	)	$	(12,565	)	$	(8,001	)	$	(19,177	)
Net loss	$	(6,844	)	$	(13,679	)	$	(11,356	)	$	(20,861	)
Other Comprehensive income (loss)
Foreign currency translation gain (loss)		34			849			(153	)		1,163
Net unrealized (loss) on securities available for sale		(67	)		(231	)		(541	)		(517	)
Comprehensive loss		(6,877	)		(13,061	)		(12,050	)		(20,215	)
Comprehensive loss attributable to non controlling interest		(2,263	)		( 698	)		(3,428	)		(1,114	)
Comprehensive loss attributable to ZAP	$	(4,614	)	$	(12,363	)	$	(8,622	)	$	(19,101	)
Net loss per share attributable to common shareholders:
Basic and diluted	$	(0.02	)	$	(0.06	)	$	(0.03	)	$	(0.09	)
Weighted average number of common shares outstanding:
Basic and diluted		298,127			214,316			298,891			211,808

See accompanying notes to unaudited condensed consolidated financial statements

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ZAP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, except per share data)

(Unaudited)

	For the Six Months ended June 30,
	2012			2011
				Restated
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(11,356	)	$	(20,861	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		1,588			1,013
Change in fair value of derivative liability		—			358
Depreciation and amortization		3,605			3,286
Provision for doubtful accounts		50			2
Inventory Reserve		47			12
Loss from joint venture and other investments		273			161
Loss on disposal of equipment		10			(29	)
Management fee due to related party		—			1,250
Convertible debt discount		410			8,108
Deferred Taxes		(130	)		—
Changes in assets and liabilities
Notes receivable		335			4,287
Accounts receivable		(44	)		1,338
Inventories		(5,145	)		2,414
Prepaid expenses and other current assets		(466	)		(401	)
Due from related parties		(2,242	)		—
Accounts payable		4,653			(1,147	)
Accrued liabilities and warranty costs		(93	)		2,173
Other payables		89			—
Advances from customers		(269	)		(1,389	)
Taxes payable		(557	)		(600	)
Net cash used in operating activities		(9,242	)		(25	)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of 51% Interest in Zhejiang Jonway Automobile , net		—			(18,477	)
Acquisition of property and equipment		(1,004	)		(580	)
Proceeds from sale of equipment		1			81
Net cash flows used in investing activities:		(1,003	)		(18,976	)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in restricted cash		(7,030	)		1,957
Repayment of notes payable		(2,589	)		(3,127	)
Proceeds from notes payable		18,203			—
Proceeds from issuance of common stock		—			331
Repayment to related parties		(1,886	)		—
Proceeds from issuance of convertible debt		—			19,000
Proceeds from stock subscription agreement		—			2,000
Proceeds from short term loans		3,051			1,535
Repayment of short term loans		(4,842	)		(2,011	)

Net cash provided by (used in) financing activities	4,907		19,685
Effect of exchange rate changes on cash and cash equivalents	(22	)	16
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(5,360	)	700

CASH AND CASH EQUIVALENTS, beginning of period	5,859		1,503
CASH AND CASH EQUIVALENT, end of period	499	$	2,203
Supplemental disclosure of cash flow information:
Cash paid during period for interest	812	$	—
Cash paid during period for taxes	—	$	4

See accompanying notes to unaudited condensed consolidated financial statements

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ZAP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - ORGANIZATION AND OPERATIONS:

ZAP was incorporated in California in September 1994 (together with its subsidiaries, “the Company,” or “ZAP”). ZAP markets advanced transportation, including alternative energy and fuel efficient automobiles, motorcycles, bicycles, scooters, personal watercraft, hovercraft, neighborhood electric vehicles and commercial vehicles. The Company’s business strategy has been to develop, acquire and commercialize electric vehicles and electric vehicle power systems, which the Company believes have fundamental practical and environmental advantages over available internal combustion modes of transportation that can be produced commercially on an economically competitive basis. In pursuit of a manufacturing plant and a partner with an existing product line, a distribution and customer support network in China and experience in vehicle manufacturing, ZAP acquired a majority of the outstanding equity in Zhejiang Jonway Automobile Co., Ltd. (“Jonway”). 

On January 21, 2011, the Company completed the acquisition of 51% of the equity shares of Jonway for a total purchase price of $31.75 million consisting of approximately $29 million in cash and 8 million shares of ZAP common stock valued at $2.7 million.  The Company believes that the acquisition will allow it to expand its electric vehicle (“EV”) business and distribution network around the world, give it access to the rapidly growing Chinese market for electric vehicles and have competitive production capacity in an ISO 9000 certified manufacturing facility with the capacity and resources to support production of ZAP’s electric vehicles and new product line of mini vans and new SUVs.

              Jonway is a limited liability company incorporated in Sanmen County, Zhejiang Province of the People’s Republic of China (“the PRC”) on April 28, 2004 by Jonway Group Co., Ltd. (“Jonway Group”). Jonway Group is under the control of three individuals, Wang Huaiyi, Alex Wang (the son of Wang Huaiyi) and Wang Xiao Ying (the daughter of Wang Huaiyi and all three individuals collectively referred to as the “Wang Family”). 

Jonway’s approved scope of business operations includes the production and sale of vehicle spare parts, and the sale of UFO licensed SUV vehicles.  The principal activities of Jonway are the production and sale of automobile spare parts and the production and distribution of SUVs in China using the consigned UFO license from an affiliate of Jonway Group. 

With the completion of the acquisition of a majority interest in Jonway, the combined companies’ new product lines planned for the second half of 2012 include the A380 SUV EV and the minivan EV. Both products leverage the production moldings, the manufacturing engineering infrastructure and facilities currently in place for the gasoline models of these vehicles. Since the acquisition, the companies have been working on developing the joint product line, marketing and sales plans for the 2012 EV product lines.

Jonway is preparing for certification of the EV production line by the Chinese electric vehicle authorities, which we expect to occur in the second half of 2012, since we anticipate that the EV production facilities in Jonway will be ready for the certification process in the second half of 2012.  Meanwhile, the engineering teams from both companies are undertaking extensive testing of the A380 SUV EV at Jonway Auto and ZAP Hangzhou EV research and development center.

Our target is to deliver the China type approved EV A380 SUV and EV minivan in the second half of 2012, with the purpose of generating sales by taking advantage of the Chinese central government electric vehicle incentives of up to RMB 60,000 or over $9,680 per vehicle.  ZAP intends to use the existing manufacturing plant from Jonway that is being upgraded for the production of g the electric vehicles and utilizing the existing Jonway models to gain economy of scale and reduce molding investment costs. ZAP also intends to leverage Jonway’s distribution and customer support centers in China to support the sales and marketing of its new EV product line. In May 2012, we launched the gasoline-powered minivan models into China market.  We expect this gasoline minivan series can contribute our business expansion across the world. In the 2nd quarter of 2012, Jonway auto established its two wholly owned subsidiaries, namely, Taizhou Fuxing Vehicle Sale Co., Ltd. focusing on minivan marketing and distribution in China and Taizhou Vehicle Leasing Co., Ltd. focusing on the vehicle leasing business in Taizhou, China.

 ZAP plans to focus on developing new international markets such as Brazil, South Africa, Russia and some of the Central America countries such as Costa Rica, Ecuador and Mexico.  These countries are looking for affordable gasoline and electric SUVs and minivans with a competitive price and quality.

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BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the financial statements of ZAP, and its subsidiaries: Jonway Automobile, Voltage Vehicles and ZAP Stores and are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”).  In these financial statements, “subsidiaries” are companies that are over 50% controlled, the financial statements of which are consolidated with those of the Company.  Significant inter-company transactions and balances are eliminated in consolidation; profits from inter-company sales, are also eliminated; non –controlling interests are included in equity.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (all of which are of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2012 are not indicative of the results that may be expected for the year ending December 31, 2012 or for any other future period.  These condensed consolidated financial statements and the notes thereto should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission (the “SEC”) on April 16, 2012 (our “10-K”).

Liquidity and Capital Resources

In assessing our liquidity, we monitor and analyze our cash on-hand, liquidation value of our investment in securities, and our operating and capital expenditure commitments.  Our principal liquidity needs are to meet our working capital requirements, operating expenses and capital expenditure obligations. 

Our principal sources of liquidity consist of our existing cash on hand, bank facilities from China-based banks for Jonway Auto, our investment in securities with Samyang Optics, Ltd. and transactions with Luo Hua Liang, the brother-in-law of Alex Wang, the Co-CEO and a director of ZAP.  In 2011, we entered into private placement subscription agreements with Mr. Luo for the purchase of ZAP common stock for the aggregate purchase price of $7 million, of which we received $2 million as of the quarter ended March 31, 2011.  The private placement subscription agreements were then superseded and terminated by a stock purchase agreement with Mr. Luo in August 2011. Pursuant to the stock purchase agreement, Mr. Luo agreed to purchase ZAP common stock for an aggregate purchase price of $2 million in multiple closings. On September 8, 2011, we issued approximately 2.3 million shares of ZAP common stock in connection with the initial closing of $771,000. We received an additional $1.025 million in subsequent closings for which we have issued approximately 3.35 million shares of ZAP common stock. During 2011, we issued 7.7 million shares to Mr. Liang for cash of $3.8 million.

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

Under the above mentioned credit line of $6.2 million granted by CMB on August 19, 2011, Jonway entered into a Credit Agreement with CMB 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% and is due on August 18, 2012. The loan is secured by a Maximum Amount Mortgage Contract by and between Jonway and CMB 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. During the six months ended June 30, 2012, the Company had repaid $2.1 million and $1.1 million remained outstanding.

In December 2011, Jonway established additional short term bank loans amounting to approximately $2.2 million from three small-size banks based in Taizhou City, which are subject to a Jonway Group guarantee with $790,000 of such loans also secured by bank notes received from Jonway dealers. The $2.2 million  was repaid on March 31, 2012.

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On March 31, 2012, to support the monthly business performance target of CMB, Jonway entered into another credit agreement with this bank for a sum of short term bank loan in the aggregate amount of approximately $520,000 which was drawn down on March 31, 2012, and repaid on April 1, 2012.

In May 2012, we were approved up to an aggregate of $ 7.1 million of bank facility from the Sanmen Branch of CITIC Bank (“CITIC”)  through Jonway. Although we have been approved for the credit line, there are no legal obligations or rights to the credit line until we execute agreements with the lender to borrow funds under the credit line. When drawn down, the credit line will be secured by land and buildings on this land  owned by Jonway and guaranteed by Jonway Group.

Under the above mentioned credit line of $7.1  million granted by CITIC , Jonway entered into a Credit Agreement with CITIC for a revolving short term bank loan in the aggregate amount of approximately US$ 1.6  million which was drawn down on May 25, 2012.  The annual interest rate is 8.33% and is due on December 28, 2012. The loan is secured by a Maximum Amount Mortgage Contract by and between Jonway and CITIC dated May 25, 2012  in which land use right over one parcels of land  and the buildings on this land owned by Jonway at Sanmen Factory have been pledged as security for this loan. The remaining $5.6 million of the credit line was executed through the issuance of bank acceptance notes by CITIC to  Jonway suppliers for the due payables.

During the quarter ended June 30, 2012,  Jonway entered into additional short term loan  agreements with various banks based in Taizhou city for proceeds aggregating approximately $1 million. Such bank loans are secured by Jonway Group, certain individuals and Jonway’s property, plant and equipment.

As of June 30, 2012, Jonway had $3.6 million in short term bank loans, which are borrowed from the above stated China-based banks with interest rates ranging from 7.22% to 9.47% per annum due through August 18, 2012.

Jonway intends to utilize the credit lines to expand its electric vehicle business as well as other future vehicle models.  This includes on-going working capital needs, electric vehicle production equipment requirements, testing, homologation and new EV product molds. These credit lines will also be used to support the company’s expansion plans, with emphasis on its electric vehicle production line facilities in China. The credit will also help advance new electric vehicle initiatives, launch new strategic global sales and marketing operations, bolster infrastructure, and finance working capital.

In the event that we require additional liquidity, our principal shareholders, Cathaya and Jonway Group, have agreed to provide the necessary support to meet our financial obligations through May 21, 2013.

NOTE 2 - RESTATEMENT OF MARCH 2011 UNAUDITED QUARTERLY FINANCIAL STATEMENTS

On January 21, 2011(the “Closing Date”), the Company completed the acquisition of 51% of the equity shares of Jonway.  The transaction was accounted for in accordance with the provisions of ASC 805-10, Business Combinations. The Company retained independent appraisers to advise management in the determination of the fair value of the various assets acquired and liabilities assumed. The values assigned in the unaudited financial statements for the three and six months ended June 30, 2011 represented management’s best estimate of fair values as of the Closing Date.

As required by ASC 805-20, Business Combinations—Identifiable Assets and Liabilities, and Any Noncontrolling Interest, management conducted a review for the year ended December 31, 2011 to reassess whether they identified all the assets acquired and all the liabilities assumed, and followed ASC 805-20’s measurement procedures for Closing Date recognition of the fair value of net assets acquired.  

The revaluation of the fair value at December 31, 2011, of the various assets acquired and liabilities assumed, resulted in restated financial information in this quarterly report. The table below illustrates the calculation of the adjustments.

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Account	Provisional amount as of January 21, 2011			Adjustment based on final valuation report			Revised amount recorded as of January 21, 2011
Inventory	$	12,715		$	25		$	12,740
Property and Equipment		46,322			10,749			57,071
Other  liabilities assumed		(14,524	)		166			(14,358	)
Goodwill and Intangible Assets		23,794			(18,412	)		5,382
Purchase option		2,695			(310	)		2,385
Non controlling interest		(31,875	)		3,662			(28,213	)
	$	39,127		$	(4,120	)	$	35,007
	As reported at June 30, 2011			Adjustments to the six months ended June 30, 2011			As restated at June 30, 2011
Cost of goods sold	$	25,359		$	25		$	25,384
Amortization and Depreciation		6,063			(2,777	)		3,286
	$	31,422		$	(2,752	)	$	28,670

As a result, the Company restated its 2011 first quarter financial information to reflect the final measurement of the fair value of the assets acquired. The financial information in this quarterly report reflects the restated financial information.

Amounts in (‘000s)	June 30, 2011
Net assets  as reported	$	61,936
Adjustments		(4,342	)
Restated net assets	$	57,594

	Three Months Ended June 30, 2011			Six Months Ended June 30, 2011
Net loss as reported	$	(13,715	)	$	(23,613	)
Adjustments		36			2,752
Restated loss	$	(13,679	)	$	(20,861	)

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NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles requires the Management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. The more significant estimates relate to revenue recognition, contractual allowances and uncollectible accounts, intangible assets, accrued liabilities, derivative liabilities, income taxes, litigation and contingencies. Estimates are based on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for judgments about results and the carrying values of assets and liabilities. Actual results and values may differ significantly from these estimates.

Concentration of Credit Risk

The Company’s operations are all carried out in the PRC.  Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy.  The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe.  These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange.  The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Financial instruments which subject the Company to potential credit risk consist of its cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with several high credit quality financial institutions. Deposits may exceed the amount of insurance provided; however, these deposits typically are redeemable upon demand and, therefore, the Company believes the financial risks associated with these financial instruments are minimal. The Company has not experienced any losses to date on its deposits.

The Company performs ongoing credit evaluations of its customers, and generally does not require collateral on its accounts receivable. The Company estimates the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and records a provision for uncollectible accounts when collection is uncertain. The Company has not experienced significant credit related losses to date.

The Company currently relies on various outside contract manufacturers in China to supply electric vehicles and products for its customers. Although management believes that other contract manufactures could provide similar services and intends to transition its manufacturing to Jonway’s facilities in Sanmen, China, but, if these Chinese companies are unable to supply electric vehicles and the Company is unable to transition manufacturing to Jonway’s facilities or find alternative sources for these product and services, the Company might not be able to fill existing backorders and/or sell more electric vehicles. Any significant manufacturing interruption could have a material adverse effect on the Company’s business, financial condition and results of operations.

Revenue Recognition

The Company records revenues for non-Jonway sales when all of the following criteria have been met:

● Persuasive evidence of an arrangement exists. The Company generally relies upon sales contracts or agreements, and customer purchase orders to determine the existence of an arrangement.

● Sales price is fixed or determinable. The Company assesses whether the sales price is fixed or determinable based on the payment terms and whether the sales price is subject to refund or adjustment.

● Delivery has occurred. The Company uses shipping terms and related documents, or written evidence of customer acceptance, when applicable, to verify delivery or performance. The Company’s customary shipping terms are FOB shipping point.

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● Collectability is reasonably assured.  The Company assesses collectability based on creditworthiness of customers as determined by our credit checks and their payment histories. The Company records accounts receivable net of allowance for doubtful accounts and estimated customer returns.

The Company provides no price protection. Sales are recognized net of sale discounts, rebates and return allowances.

Stock-based Compensation

The Company accounts for stock-based compensation which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes-Merton option pricing model (the “Black-Scholes model”). The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. We estimate forfeitures at the time of grant and revise our estimate in subsequent periods if actual forfeitures differ from those estimates.

The Company accounts for stock-based compensation awards and warrants granted to non-employees by determining the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. To the extent a deferred tax asset cannot be recognized under the preceding criteria, allowances are established.

Foreign Currency Translation

The Company and its wholly owned subsidiary/investments maintain their accounting records in United States Dollars (“US$”) whereas Jonway Auto maintains its accounting records in the currency of Chinese Renminbi (“RMB”), being the primary currency of the economic environment in which their operations are conducted.

Jonway Auto’s principal country of operations is the PRC.  The financial position and results of these operations are determined using RMB, the local currency, as the functional currency.  The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period.  Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date.  The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution.  Due to the fact that cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.  Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholder’s equity as “Accumulated Other Comprehensive Income.”

The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions, any significant revaluation of RMB may materially affect our financial condition in terms of US$ reporting.

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Loss per Share

Basic and diluted net loss per share is computed by dividing consolidated net loss by the weighted-average number of common shares outstanding during the period. The Company’s potentially dilutive shares, which include outstanding stock options, convertible debt and warrants, have not been included in the computation of diluted net loss per share for all periods presented as the result would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share. Outstanding common stock options, warrants and debentures totaled 88.7 million shares and 100.7 million shares at June 30, 2012 and 2011, respectively. ZAP also had outstanding convertible debt, which is convertible into 188 million shares of ZAP common stock at June 30, 2012.

Cash and Cash Equivalents

The Company invests its excess cash in short-term investments with various banks and financial institutions. Short-term investments are cash equivalents, as they are part of the cash management activities of the Company and are comprised of investments having maturities of three months or less when purchased.  The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents

Restricted Cash

The Company has cash restricted in connection with the issuance of bank acceptance notes to various suppliers of spare parts which were issued through Jonway’s banks.  To issue these bank acceptance notes to Jonway’s suppliers, the banks require a deposit of approximately 40-60% of the full amount of such notes which are payable within 6 months from issuance.  Upon the maturity date, restricted funds will be used to settle the bank acceptance notes. 

Marketable Securities

The Company has an investment that is comprised of marketable equity securities, which are classified as available-for-sale and recorded at fair value, the value of which fluctuates with the stock market value.   The securities are shares of Samyang Optics Co., Ltd., which shares are traded on the Korean stock exchange.  ZAP’s ownership is not material to Samyang Optics Co., Ltd. Net unrealized holding gains and losses, net of tax, are reported as a separate component of shareholders’ deficit, except where holding losses are determined to be “other-than-temporary”, whereby the losses are reported in gains and losses on investments in the consolidated statement of operations.  Gains and losses on disposals of marketable equity securities are determined using the specific identification method.

Accounts and Notes Receivable

Accounts receivable consist mainly of receivables from our established dealer network.  Notes receivable balances consist of bank acceptance notes received from various Jonway dealers to finance such dealer’s purchase of our vehicles products.  These bank acceptance notes can be endorsed to settle the payables to Jonway suppliers or discounted to fund cash flows. These notes are a means of financing working capital for orders that were placed by these dealers. A credit review is performed by the Company before the dealer is approved to purchase vehicles form the Company. The Company performs ongoing credit evaluations of its dealers, and generally does not require collateral on its accounts receivable. The Company estimates the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and records a provision for uncollectible accounts when collection is uncertain. The Company has not experienced significant credit related losses to date.   The allowance for doubtful accounts was $15,000 and $9,000 at June 30, 2012 and December 31, 2011, respectively.

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Fair Value of Financial Instruments

The Company measures its financial assets and liabilities at fair value. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. For certain of the Company’s financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amount approximates fair value because of the short maturities. The fair value of debt is not determinable due to the terms of the debt and the lack of a comparable market for such debt.  These tiers include:

Level 1:  Observable inputs such as quoted prices in active markets;

Level 2:  Inputs other than quoted prices in active markets that are directly or indirectly observable;

Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions and methodologies that result in management’s best estimate of fair value.

The change in fair value of derivative liabilities is classified in other income (expense) in the Company’s statement of operations.  The fair value of the Company’s derivative liabilities related to stock purchase warrants was determined using the Black-Scholes option pricing model – a Level 3 input.

Derivative Financial Instruments

The Company generally does not use derivative financial instruments to hedge exposures to cash flow or market risks. However, certain other financial instruments, such as warrants, are classified as liabilities when either (a) the holder possesses rights to net-cash settlement or (b) physical or net-share settlement is not within the control of the Company. In such instances, net-cash settlement is assumed for financial accounting and reporting, even when the terms of the underlying contracts do not provide for net-cash settlement. Such financial instruments are initially recorded at fair value and subsequently adjusted to fair value at the close of each reporting period.

The Company accounts for derivative instruments and debt instruments in accordance with the interpretative guidance of ASC 815 (“Derivatives and Hedging”).   It is necessary for the Company to make certain assumptions and estimates to value derivatives and debt instruments.

During the six months ended June 30, 2011, derivative liabilities were converted into 4.3 million shares of ZAP stock. At June 30, 2011 and June 30, 2012, the Company did not have any derivative liabilities.

 The following table set forth a summary of changes in the fair value of Level 3 liabilities for the 3 months ended June 30, 2011 (in thousands):

	Balance		Exercise			Change in		Balance
	3/31/2011		of warrants			fair value		6/30/2011
Derivative Liabilities	$	201	$	(70	)	$	10	$	0

The following table summarizes those assets and liabilities measured at fair value on a recurring basis (in thousands):

                                                                                               June 30, 2012

Assets	Level 1		Level 2		Level 3		Fair Value Measurements
Marketable Securities (1)	$	1,289		—		—	$	1,289

                                                                                                        December 31, 2011

Assets	Level 1		Level 2		Level 3		Fair Value Measurements
Marketable Securities (1)	$	1,830		—		—	$	1,830

____________

(1) Marketable securities consist of common stock of a related party. The fair value of marketable securities is based upon market value quoted by Korean stock exchange

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The Company’s other financial instruments at June 30, 2012 consist of cash and cash equivalents, accounts and notes receivable, accounts payable and debt. For the period ended June 30, 2012 the Company did not have any derivative financial instruments. The Company believes the reported carrying amounts of its accounts receivable and accounts payable approximate fair value, based upon the short-term nature of these accounts. The carrying value of the Company’s loan agreements approximate fair value as each of the loans bears interest at a floating rate.

Inventories

Inventories consist primarily of vehicles, both gas and electric, parts and supplies, and work in progress and are carried at the lower of cost (first-in, first-out basis for ZAP and moving average basis for Jonway) or market (net realizable value or replacement cost). The Company maintains reserves for estimated excess, obsolete and damaged inventory based on projected future shipments using historical selling rates, and taking into account market conditions, inventory on-hand, purchase commitments, product development plans and life expectancy, and competitive factors. If markets for the Company’s products and corresponding demand were to decline, then additional reserves may be deemed necessary. Any changes to the Company’s estimates of its reserves are reflected in cost of goods sold within the statement of operations during the period in which such changes are determined by management.

Property and Equipment

Property and equipment consists of land, building and improvements, machinery and equipment, office furniture and equipment, vehicles, and leasehold improvements. Property and equipment is stated at cost, net of accumulated depreciation and amortization, and is depreciated or amortized using straight-line method over the asset’s estimated useful life. Costs of maintenance and repairs are charged to expense as incurred; significant renewals and betterments are capitalized.  Leasehold improvements are amortized over 10 years using the straight-line method.

Land use Rights

Under PRC law, all land in the PRC is permanently owned by the government and cannot be sold to an individual or company but companies can purchase the land use rights for the specified period of time, as in our industry the industrial purpose has a useful life of 50 years.  The government grants individuals and companies the right to use parcels of land for specified periods of time.  These land use rights are sometimes referred to informally as “ownership”.  Land use rights are stated at cost less accumulated amortization.  Amortization is provided over the respective useful lives, using the straight –line method.  Estimated useful life is 50 years, and is determined in the connection with the term of the land use right.

Long-lived Assets

Long-lived assets are comprised of property and equipment and intangible assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An estimate of undiscounted future cash flows produced by the asset, or by the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flow and fundamental analysis. The Company reports an asset to be disposed of at the lower of its carrying value or its estimated net realizable value.

Intangible Assets-Finite

Intangible assets consist of patents, trademarks, land use rights, government approvals and customer relationships (including client contracts). For financial statement purposes, identifiable intangible assets with a defined life are being amortized using the straight-line method over the estimated useful lives of seven years for the EPA license and 8.5 years for the customer relationships. Costs incurred by the Company in connection with patent, trademark applications and approvals from governmental agencies such as the Environmental Protection Agency, including legal fees, patent and trademark fees and specific testing costs, are expensed as incurred. Purchased intangible costs of completed developments are capitalized and amortized over an estimated economic life of the asset, generally seven years, commencing on the acquisition date. Costs subsequent to the acquisition date are expensed as incurred.

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Goodwill and Intangible Assets – Indefinite

Goodwill and intangible assets determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually.  Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance applicable accounting principles.  The Company assesses annually whether there is an indication that goodwill is impaired, or more frequently if events and circumstances indicate that the asset might be impaired during the year.  The Company performs its annual impairment test in the fourth quarter of each year.   Calculating the fair value of the reporting units requires significant estimates and assumptions by management.  To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit, there is an indication that the reporting unit goodwill may be impaired and a second step of the impairment test is performed to determine the amount of the impairment to be recognized, if any.

Non-Controlling Interests

The Financial Accounting Standards Board (“FASB”) issued a statement which established accounting and reporting standards that require non-controlling interests (previously referred to as minority interest) to be reported as a component of equity, changes in a parent’s ownership interest while the parent retains its controlling interest be accounted for as equity transactions, and upon a loss of control, retained ownership interest will be re-measured at fair value, with any gain or loss recognized in earnings.

On January 21, the Company acquired 51% of Zhejiang Jonway Automobile Co. Ltd from Jonway Group, a related party, who holds a 49% of the remaining interest in Jonway Auto. (See Note 4)  Pursuant to the Jonway Acquisition Agreement, ZAP had the right to acquire the remaining 49% of Jonway at the same valuation, which expired on March 31, 2011.  To account for the expired option,we recorded a reduction of common stock.

Product warranty Costs

The Company provides 30 to 90 day warranties on its personal electric products, including the ZAPPY3 and the Zapino scooters, six month warranties for the Xebra®, the ZAPTRUCK XL, the ZAPVAN Shuttle vehicles, and a six month warranty for Xebra® vehicles repaired by ZAP pursuant to its product recall.  The Company records the estimated cost of the product warranties at the time of sale using the estimated costs of products warranties based on historical results. The estimated cost of warranties has not been significant to date. Should actual failure rates and material usage differ from our estimates, revisions to the warranty obligation may be required.

The Company provides a 2-year or 60,000 kilometer mileage warranty for its Jonway SUV products. The Company records the estimated cost of the product warranties at the time of sale using the estimated cost of product warranties based on historical results. The estimated cost of warranties has not been significant to date. Should actual failure rates and material usage differ from our estimates, revisions to the warranty obligation may be required 

Comprehensive loss

Comprehensive loss represents the net loss for the period plus the results of certain changes to shareholders’ equity that are not reflected in the consolidated statements of operations. The Company’s comprehensive loss consists of net losses, foreign currency translation adjustments and unrealized net losses on investments.  

Reclassifications

Certain amounts from prior period have been reclassified to conform to the current period’s presentation.

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NOTE 4 - ACQUISITION

In December 2009, ZAP issued 4 million shares of ZAP common stock to Jonway Group’s designee, Alex Wang, which was attributed towards $1 million of the purchase price under the amendment to the Jonway Acquisition Agreement.  In June 2010, ZAP issued 40 million shares of stock to Cathaya Capital, L.P., or Cathaya, in order to pay $10 million of the purchase price under the Jonway Acquisition Agreement.  

On January 21, 2011(the “Closing Date”), the Company completed the acquisition of 51% of the equity shares of Jonway.  The transaction was accounted for in accordance with the provisions of ASC 805-10, Business Combinations. The Company retained independent appraisers to advise management in the determination of the fair value of the various assets acquired and liabilities assumed. The values assigned in these financial statements and represent management’s best estimate of fair values as of the Closing Date.

As required by ASC 805-20, Business Combinations—Identifiable Assets and Liabilities, and Any Non controlling Interest, management conducted a review to reassess whether they identified all the assets acquired and all the liabilities assumed, and followed ASC 805-20’s measurement procedures for Closing Date recognition of the fair value of net assets acquired. As part of the measurement process, a third party valuation firm was used to assist in estimating the fair value of the intangible assets received in the acquisition of the 51% equity of Jonway Automobile. The valuation was not completed until December 31, 2011, and therefore a provisional amount was recognized in the period ended March 31, 2011.

The following are the estimated fair value of assets acquired and liabilities assumed as of the Closing Date (in thousands):  

Cash and cash equivalents	$	993
Restricted cash		3,088
Inventories, net		12,740
Property & equipment		57,071
Other tangible assets		11,472
Accounts payable		(14,549)
Notes payable		(4,261)
Other liabilities assumed		(14,358)
Net tangible assets acquired		52,196
Goodwill and intangible assets		5,382
Net assets acquired		57,578
Non controlling interest - fair value		(28,213)
Option to purchase remaining 49%		2,385
Purchase price	$	31,750

The fair value of the major components of the intangible assets acquired and their estimated useful lives is as follows (dollars in thousands):

	Date of Acquisition Fair Value		Weighted Average Useful Life (in Years)
Customer relationships	$	745		8
Developed technology		2,076		7
Tradename		2,078	(a)
In-process research and development costs		175	(b)
Total		5,074
Goodwill		308
	$	5,382

_______________

(a)  The Jonway trade name has been determined to have an indefinite life.

(b)  In-process research and development is accounted for as an indefinite life intangible asset until the completion or abandonment of the associated research and development efforts.

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Under ASC 805-10, acquisition-related costs (i.e., advisory, legal, valuation and other professional fees) are not included as a component of consideration transferred, but are accounted for as expenses in the periods in which the costs are incurred. Acquisition-related costs were $0 and $204,000 for the periods ended June 30, 2012 and 2011, respectively. The excess of the purchase price over the net tangible assets and intangible assets was recorded as goodwill.

The following unaudited pro forma condensed financial information presents the combined results of operations of ZAP and Jonway as if the acquisition had occurred as of the beginning of the period presented (in thousands except per share amounts):

	For the Six Months ended June 30, 2011 Restated			For the Three Months ended June 30, 2011 Restated
Net sales	$	27,974		$	16,266
Net loss		(20,861	)		(13,679	)
Net loss per common share, basic and diluted	$	(0.09	)	$	(0.06	)
Shares outstanding, basic and diluted		211,808			214,316

The unaudited pro forma condensed financial information is not intended to represent or be indicative of the consolidated results of operations of the Company that would have been reported had the acquisition been completed as of the beginning of the period presented.

Any pro forma adjustments are based upon available information and certain assumptions that the Company believes are reasonable. The pro forma results of operations do not include the potential post-acquisition effects of any restructuring, impairment or integration costs related to the combined operations nor of any revenue opportunities, operating synergies or cost savings anticipated as eventual benefits of the acquisition.

NOTE 5 – INVENTORIES

Inventories at June 30, 2012 and December 31, 2011 are summarized as follows (in thousands):

	June 30, 2012			December 31, 2011
Advanced technology vehicles	$	942		$	713
Vehicles-conventional		9,516			4,630
WIP  Jonway SUV’s		1,975			2,234
Parts and supplies		4,978			4,879
Finished goods		402			240
		17,813			12,696
Less-inventory reserve		(1,623	)		(1,578	)
	$	16,190		$	11,118

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at June 30, 2012 and December 31, 2011 are summarized as follows (in thousands):

	June 30, 2012			December 31, 2011
Buildings and improvements	$	21,610		$	21,649
Machinery and equipment		51,946			39,566
Office furniture and equipment		453			415
Leasehold improvements		37			37
Vehicles		896			745
		74,942			62, 412
Less - accumulated depreciation
and amortization		(17,659	)		(15,459	)
	$	57,283		$	46,953

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Four pieces of land were acquired from the acquisition of Jonway auto in 2011, all land in the People’s Republic of China is government owned and cannot be sold to any individual or company. However, the government grants the user a “land use right” (the Right) to use the land. The Company has the right to use the land for 50 years and amortized the Right on a straight-line basis over the period of 50 years. As of June 30, 2012 and December 31, 2011, intangible assets consist of the following:

	June 30, 2012			December 31, 2011
Land use right	$	10,433		$	10,518
Software		97			92
		10,530			10,610
Less: accumulated amortization		( 665	)		(535	)
	$	9,865		$	10,075

Depreciation and amortization expense was $2.3 million and $2 million for the six months, $1.2 million and $1.3 million for the three months  ended June 30, 2012 and 2011, respectively.

NOTE 7 – GOODWILL & OTHER INTANGIBLES

The goodwill and other intangible assets at June 30, 2012 are summarized as follows:

	Useful Life (In Years)		Net Book Value 12/31/2011		Accumulated Amortization 6/30/2012			Net Book Value 6/30/2012
Patents and Trademarks		7	$	75	$	( 12	)	$	63
Customer Relationships		8.5	$	692	$	(47	)	$	645
Developed Technology		7	$	1,879	$	(167	)	$	1,712
In Process Technology			$	183	$	—		$	183
Trade name			$	2,173	$	—		$	2,173
Intangibles			$	5,002	$	(226	)	$	4,776
Goodwill Assets			$	324	$	—		$	324
			$	$5,326	$	(226	)	$	5,100

Amortization was $211 and $430 for the six months ended June 30, 2012 and 2011, and $106 and $229 for the three months ended June 30, 2012 and 2011,  respectively.

NOTE 8 – DISTRIBUTION AGREEMENTS

Distribution agreements as of June 30, 2012 and December 31, 2011 are presented below (in thousands):

	June 30, 2012			December 31, 2011
Better World Products	$	2,160		$	2,160
Jonway Products		14,400			14,400
		16,560			16,560
Less amortization		(4,201	)		(3,121	)
	$	12,359		$	13,439

Amortization was $1.1 million for both the six months ended June 30, 2012 and 2011, and $560,000 for both the three months ended June 30, 2012 and 2011, respectively. 

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Distribution Agreement with Better World, Ltd

On January 15, 2010, ZAP entered into a Stock Purchase Agreement with Better World, Ltd., a British Virgin Islands company, whereby the Company issued 6 million shares of its common stock valued at $2.16 million in exchange for an agreement on terms relating to rights to the distribution of Better Worlds products for three years, such as charging stations for electric vehicles both in the U.S. and internationally.  Priscilla Lu, Chairman of the Board of Directors of ZAP, is also General Partner of Better World International, Ltd.

Distribution Agreement with Goldenstone Worldwide Limited for Jonway Products

On October 10, 2010, ZAP entered into a ten year  International Distribution Agreement with Goldenstone Worldwide Limited as the distributor of Jonway products such as gas SUV’s and gas and electric motor scooters, both in the U. S. and internationally. In connection with the distribution agreement the Company also issued 30 million shares of ZAP common stock valued at $14.4 million.  The Jonway Group had previously granted exclusive worldwide distribution of Jonway products to Goldenstone Worldwide Limited.   ZAP acquired a 51% equity interest in Jonway Auto but this equity interest did not include the world wide distribution rights for Jonway Products.  Therefore, it was necessary for ZAP to acquire distribution rights for Jonway Products.

Distribution Agreement with Samyang Optics

On January 27, 2010, ZAP entered into an International Distribution Agreement (the “Distribution Agreement”) with Samyang Optics Co. Ltd. (“Samyang”) pursuant to which ZAP appointed Samyang as the exclusive distributor of certain ZAP electric vehicles including the Jonway A380 5-door electric sports utility vehicle equipped with  ZAP’s electric power train, in the Republic of Korea.  In addition, the Distribution Agreement provides that ZAP and Samyang will negotiate to enter into additional agreements related to the manufacture and assembly of ZAP vehicles by Samyang in Korea.  The Distribution Agreement shall be in effect for one year and may be extended annually by Samyang provided that Samyang has satisfied sales quotas determined by ZAP and Samyang is otherwise in compliance with the Distribution Agreement.

In addition, on January 27, 2010, ZAP and Samyang entered into an initial purchase order pursuant to the Distribution Agreement for the purchase of one hundred ZAP Jonway UFO electric sports utility vehicles.  Selling prices have yet to be determined and no purchases have been made as of June 30, 2012.

NOTE 9 – INVESTMENT IN JOINT VENTURES

On December 11, 2009, the Company entered into a Joint Venture Agreement to establish a new US-China company incorporated as ZAP Hangzhou to design and manufacture electric vehicle and infrastructure technology with Holley Group, the parent company of a global supplier of electric power meters and Better World.  Priscilla Lu, Ph.D., who is the current Chairman of the Board of ZAP is also a director and shareholder of Better World. In January of 2011, Holley Group’s interest in ZAP Hangzhou was purchased by Alex Wang, Co-CEO and director of ZAP. ZAP and Better World each own 37.5% of the equity shares of ZAP Hangzhou, and Alex Wang owns 25% of the equity shares of ZAP Hangzhou. The joint venture partners have also funded the initial capital requirements under the agreement for a total of $3 million, of which ZAP’s portion is $1.1 million.

In November 2011, Jonway and ZAP Hangzhou jointly set up Shanghai Zapple Electric Vehicle Technologies Co., Ltd. (Shanghai Zapple) with registered capital of RMB 20 million. Jonway and ZAP Hangzhou each own 50% of the equity share of Shanghai Zapple.  Jonway injected RMB 5 million into this joint venture and ZAP Hangzhou injected RMB 3 million. Shanghai Zapple’s approved scope of business includes: technical advice, technical development, technical services, technology transfer regarding electric vehicle technology, auto technology, energy technology, material science and technology, sale of commercial vehicle and vehicle for nine seats or more, auto parts, auto supplies, lubricant, mechanical equipment and accessories, business management consulting, industrial investment, exhibition services, business marketing planning, car rental (shall not be engaged in financial leasing), import and export of goods and technologies.

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The carrying amount of the joint ventures is as follows:

	ZAP Hangzhou			Shanghai Zapple			Total
Balance as of December 31, 2011	$	554		$	736		$	1,290
Less: investment loss		(136	)		(137	)		(273	)
Balance as of June 30,2012	$	418			599			1,017

		June 30, 2012			June 30, 2011
Equity method investments losses	$	(273	) (1)	$	(161	) (1)

__________

(1)   The Company recorded a loss of $136,000 and $161,000 in ZAP Hangzhou, and a loss of $137,000 and $0 in Shanghai Zapple for the periods ended June 30, 2012 and 2011 respectively. These losses relate to the investment in a non-consolidated joint ventures accounted for under the equity method of accounting. 

NOTE 10 - LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

Line of credit

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

In this May 2012, we were approved up to an aggregate of $ 7.1 million of bank facility from the Sanmen Branch of CITIC Bank (“CITIC”)  through Jonway. Although we have been approved for the credit line, there are no legal obligations or rights to the credit line until we execute agreements with the lender to borrow funds under the credit line. When drawn down, the credit line will be secured by land and buildings on this land  owned by Jonway and guaranteed by Jonway Group.

Short term debt

Under the above mentioned credit line of  $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 $3.2 million which was drawn down by Jonway in 2011.  The annual interest rate is 7.22%. The bank loan under the Credit Agreement is 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 $3.0 million of the credit line is available for future executions at the discretion of Jonway Auto. For the six months ended June 30, 2012, the Company had repaid 2.1 million and $1.1 million remained outstanding.

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In December 2011, Jonway established additional short term bank loans amounting to over $2.2 million from three small-size banks based in Taizhou City, which are subject to Jonway Group guarantee, of which $790 of such loans were secured by bank notes received from Jonway dealers. These loans were repaid on March 31, 2012.

On March 31, 2012, to support the monthly business performance target of Taizhou Branch of China Merchants Bank, Jonway entered into another credit agreement with this bank for a sum of short term bank loan in the aggregate amount of approximately $520 which was drawn down on March 31, 2012, and repaid on April 1, 2012.

Under the above mentioned credit line of $7.1 million granted by CITIC , Jonway entered into a Credit Agreement with CITIC for a revolving short term bank loan in the aggregate amount of approximately US$ 1.59  million which was drawn down on May 25, 2012.  The annual interest rate is 8.33% and is due on December 28, 2012. The loan is secured by a Maximum Amount Mortgage Contract by and between Jonway and CITIC dated May 25, 2012  in which land use right over one parcels of land  and the buildings on this land owned by Jonway at Sanmen Factory have been pledged as security for this loan. The remaining $5.6 million of the credit line was executed through the issuance bank acceptance notes by CITIC to  Jonway suppliers for the due payables.

During the quarter ended June 30, 2012, Jonway entered into additional short term loan agreements with various banks based in Taizhou City for proceeds aggregating approximately $1 million. Such bank loans are secured by Jonway Group, certain individuals and Jonway’s property, plant and equipment.

As of June 30, 2012, Jonway had $3.6 million in short term bank loans, which are borrowed from the above stated China-based banks with interest rate range of 7.22% to 9.47% per annum due through December 28, 2012.

	June 30, 2012		December 31, 2011
Loan from China Merchant Bank	$	1,044	$	3,174
Loan from Taizhou Bank		633		1,428
Loan from Zhejiang Tailong Commercial Bank		316		794
Loan from CITIC Bank		1,583		—
Short term financing insurance premiums		100		89
Total	$	3,676	$	5,485

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 June 30, 2012, the Company has bank acceptance notes payable in the amount of $26.1million. 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 June 30, 2012, the restricted cash for the notes was $13.1 million.

Bank acceptance notes - 6 month term for each note issued

	June 30, 2012		December 31, 2011
a) Bank acceptance notes payable to Taizhou Bank	$	5,064	$	2,451
b) Bank acceptance notes payable to China Merchant Bank		4,557		3,316
c) Bank acceptance notes payable to China Everbright Bank		2,172		4,761
d) Bank acceptance notes payable to Zhejiang Tailong Commercial Bank		1,313		—
e) Bank acceptance notes payable to Zhejiang Sanmen Yin Zuo Village Bank		1,266		—
f) Bank acceptance Notes payable to Shanghai Pudong Development Bank		676		—
g) Bank acceptance Notes payable to CITIC Bank		11,076		—
	$	26,124	$	10,528

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 million 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 and such borrowing was repaid in January 2012.

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NOTE 11 – LONG-TERM NOTES

8% SENIOR CONVERTIBLE NOTE - China Electric Vehicle Corporation (“CEVC”) Note

On January 12, 2011, the Company entered into a Senior Secured Convertible Note and Warrant Purchase Agreement (the “Agreement”) with China Electric Vehicle Corporation (“CEVC”), a British Virgin Island company whose sole shareholder is Cathaya Capital, L.P., a Cayman Islands exempted limited partnership (“Cathaya”).  Priscilla Lu is the chairman of the board of directors of ZAP, a managing partner of Cathaya and a director of CEVC.

Pursuant to the Agreement, (i) CEVC purchased from the Company a Senior Secured Convertible Note (the “Note”) in the principal amount of US$19 million, as amended, (ii) the Company issued to CEVC a warrant (the “Warrant”) exercisable for two years for the purchase up to 20 million shares of the Company’s Common Stock at $0.50 per share, as amended  (iii) the Company, certain investors and CEVC entered into an Amended and Restated Voting Agreement that amended and restated that certain Voting Agreement, dated as of August 6, 2009 that was previously granted to Cathaya Capital L.P., (iv) the Company, certain investors and CEVC entered into an Amended and Restated Registration Rights Agreement that amended and restated that certain Registration Rights Agreement, dated as of August 6, 2009, that was previously granted to Cathaya Capital L.P which grants certain registration rights relating to the Note and the Warrant, and (v) the Company and CEVC entered into a Security Agreement that secures the Note with all of the Company’s assets other than those assets specifically excluded from the lien created by the Security Agreement.

The Note was scheduled to mature on February 12, 2012 but was originally extended to August 12, 2012. On March 31, 2012, ZAP entered into an amendment to the note which extended the maturity date of the note from August 12, 2012 to August 12, 2013. This amendment changed the terms of the note requiring adjustment of the conversion price of the note for dilutive issuances by ZAP. In addition, the warrant issued in connection with the CEVC note was amended to change the terms of its conversion and to extend the maturity date until February 12, 2014. The interest accrued through the original maturity date of February 12, 2012 in the amount of $1.7 million has been added to the existing principal. The total amount of the convertible note is approximately $20.7 million with a new maturity date of August 12, 2013. The note accrued interest at a rate per annum of 8% effective to February 12, 2012. After this date, the parties agreed to waive the interest. However, the Company in accordance with ASC-470-10 calculated imputed interest for the non-interest bearing loan between a related party and recorded a discount in the amount of $2.2 million. This amount will be amortized monthly through the maturity date of the note which is August of 2013. The Company has amortized approximately $408,000 for the six months ended June 30, 2012.

The note is convertible upon the option of CEVC at any time, into (a) shares of Jonway capital stock owned by ZAP at a conversion rate of 0.003743% of shares of Jonway capital stock owned by ZAP for each $1,000 principal amount of the Note being converted or (b) shares of ZAP common stock at a conversion rate of 4,435 shares of common stock for each $1,000 principal amount of the Note being converted.

NOTE 12 - STOCK-BASED COMPENSATION

Services performed and other transactions settled in the company’s common stock are recorded at the estimated fair value of the stock issued if that value is more readily determinable, than the fair value of the consideration received.

We have stock compensation plans for employees and directors. We recognize the stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. All of our stock-based compensation is accounted for as an equity instrument.

	Number of Shares (in Thousands)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding December 31, 2011		29,578		$	0.50		6.0		—
Options granted under the plan		—			—		—		—
Options exercised		—			—		—		—
Options forfeited and expired		(2,050	)		—		—		—
Outstanding June 30, 2012		27,528		$	0.48		6.0		—

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Aggregate intrinsic value is the sum of the amounts by which the quoted market price of our stock exceeded the exercise price of the options at June 30, 2012 for those options for which the quoted market price was in excess of the exercise price (“in-the-money­ options”). There were no options in the money at June 30, 2012.

As of June 30, 2012, total compensation cost of unvested employee stock options is $2.2 million. This cost is expected to be recognized through September 30, 2016. We recorded no income tax benefits for stock-based compensation expense arrangements for the three and six months ended June 30, 2012, as we have cumulative operating losses, for which a valuation allowance has been established

NOTE 13 – SEGMENT REPORTING

Operating Segments

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 280, Segment Reporting (“ASC 280”), establishes standards for the way public business enterprises report information about operating segments. ASC 280 also establishes standards for related disclosures about products and services, geographic areas and major customers.

In accordance with ASC 280, the Company has identified four reportable segments consisting of Jonway Vehicles, Advanced Technology Vehicles, Consumer Product and Car Outlet.  The Jonway Vehicles segment represents sales of the gas fueled Jonway A380 three and five-door sports utility vehicles and spare parts principally through distributors in China. Jonway and ZAP are also jointly developing various electric vehicles anticipated to enter into the electric vehicle market during 2012.  The Advanced Technology Vehicles segment represents sales and marketing outside of China of the ZAPTRUCK XL, the ZAPVAN Shuttle and the Xebra® Sedan and will transition to selling mostly Jonway’s EV A380SUV and EV minivan in 2012. The Consumer Product segment represents rechargeable portable energy products, our Zapino scooter, and our ZAPPY3 personal transporters.  Our Car Outlet segment represents operation of a retail car outlet that sells pre-owned conventional vehicles and advanced technology vehicles.  These segments are strategic business units that offer different services.  They are managed separately because each business requires different resources and strategies.  The Company’s chief operating decision making group, which is comprised of the Chief Executive Officer and the senior executives of each of ZAP’s strategic segments, regularly evaluate the financial information about these segments in deciding how to allocate resources and in assessing performance.  The performance of each segment is measured based on its profit or loss from operations before income taxes.

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The performance of each segment is measured based on its profit or loss from operations to ZAP before income taxes. Segment results are summarized as follows (in thousands):

	Jonway			Electric						Advanced
	Conventional			Consumer						Technology
	Vehicles			Products			Car outlet			Vehicles			Total
For the three months ended June  30, 2012:
Net sales	$	12,381		$	272		$	42		$	10		$	12,705
Gross profit	$	899		$	45		$	33		$	53		$	1,030
Depreciation, amortization and impairment	$	742		$	547		$	2		$	7		$	1,298
Net loss	$	(4,651	)	$	(2,077	)	$	(94	)	$	(22	)	$	(6,844	)
Total assets	$	81,906		$	44,222		$	631		$	319		$	127,078
For the three months ended June 30, 2011:
Net sales	$	15,721		$	102		$	249		$	194		$	16,266
Gross profit	$	1,422		$	24		$	95		$	14		$	1,555
Depreciation, amortization and impairment	$	1,078		$	554		$	2		$	3		$	1,637
Net loss	$	(2,278	)	$	(10,803	)	$	(15	)	$	(583	)	$	( 13,679	)
Total assets	$	82,360		$	17,470		$	709		$	1,053		$	101,592
For the six months ended June  30, 2012:
Net sales	$	24,370		$	386		$	115		$	16		$	24,886
Gross profit (loss)	$	1,622		$	73		$	40		$	(3	)	$	1,732
Depreciation, amortization and impairment	$	2,494		$	1,093		$	4		$	14		$	3,605
Net loss	$	(6,334	)	$	(4,196	)	$	(128	)	$	(190	)	$	(11,356	)
Total assets	$	81,906		$	44,222		$	631		$	319		$	127,078
For the six months ended June 30, 2011:
Restated
Net sales	$	26,668		$	302		$	614		$	390		$	27,974
Gross profit	$	2,357		$	48		$	153		$	32		$	2,590
Depreciation, amortization and impairment	$	2,210		$	1,063		$	4		$	9		$	3,286
Net loss	$	(6,152	)	$	(13,648	)	$	(71	)	$	(990	)	$	(20,861	)
Total assets	$	82,360		$	17,470		$	709		$	1,053		$	101,592

Operating segments do not sell products to each other, and accordingly, there is no inter-segment revenue to be reported.  Jonway Automobile results have been included since the acquisition date of January 21, 2011.

Customer information

Approximately 98% or $24.4 million of our revenues for the six months ended June 30, 2012 are from sales in China. Jonway Auto distributes its products to an established network of over 100 factory level dealers in China with some contributing more than 10% of our consolidated revenue.

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NOTE 14 – RELATED PARTY

Due from (to) related parties

Amounts due from related parties are principally for advances in the normal course of business for parts and supplies used in manufacturing.

Amount due from related parties are as follows:

	June 30, 2012		December 31, 2011
Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd	$	3,375	$	978
Jonway Group		—		159
Total	$	3,375	$	1,137
Amount due to related parties are follows:
	June 30, 2012		December 31, 2011
Jonway Group	$	218	$	2,104
Sanmen Branch of Zhejiang UFO Automobile		—		—
Jonway Motor Cycle		10		18
Total	$	228	$	2,122
Advance payment to Jonway Group	$	—	$	11,616

Issuance of stock to Jonway Group for the Development and Production of Vehicles

On December 11, 2011, ZAP entered into a Payment Agreement with Jonway Group pursuant to which ZAP paid Jonway Group for the already completed interior and exterior design, R&D activities, testing and trial production and molding equipments etc. of the mini-van product platform, and the Alias interior and exterior design and molding, which is underway. Pursuant to the Payment Agreement, ZAP agreed to grant Jonway Group 70 million shares of ZAP’s Common Stock valued at $15.4 million. All intellectual property rights related to the work performed by Jonway Group for the mini-van and Alias shall be owned by ZAP. During the year ended December 31, 2011, $3.78 million of the payment of $15.4 million was recognized as R&D expense in ZAP, with the remaining $11.6 million, which was recorded as an advance payment to Jonway Group, has been reclassified to machinery and equipment.

Promissory notes and Down Payment on Convertible Note from Jonway Group

On December 11, 2011 Jonway entered into a Promissory Note with Jonway Group pursuant to which Jonway can borrow up to $3 million 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, $1.6 million had been advanced to Jonway Auto under the Promissory Note arrangement and was repaid in January 2012.

On December 11, 2011, ZAP entered into a Down Payment Convertible Note with Jonway Group pursuant to which ZAP may borrow $3 million for the production of seventy-five Alias electric vehicles to be delivered and sold in 2012.  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.  Upon the completion of selling seventy-five Alias vehicles, ZAP will repay the unpaid principal, together with any then unpaid and accrued interest, on or before December 31, 2012.  Repayment shall be made at the option of Jonway Group in the form of either cash or ZAP’s Common Stock priced as of the date the principal was deposited into Jonway’s bank account on behalf of ZAP. As of June 30, 2012, no advance has been made to ZAP from Jonway Group.

Transactions with Jonway Group

Jonway Group is considered as a related party as the Wang Family, one of the shareholders of the Company, has controlling interests in Jonway Group. Jonway Group supplies some of the plastic spare parts to Jonway and gave guarantees on Jonway short term bank facilities from China-based banks. For the period ended June 30, 2012 Jonway made purchases from Jonway Group for a total of $766.

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Sale of Stock to a Party Related to ZAP’s CO-CEO and Director

On January 14, 2011, we entered into private placement subscription agreements with Luo Hua Liang, the brother-in-law of Alex Wang, the Co-CEO and director of ZAP for the purchase of ZAP’s common stock for the aggregate purchase price of $7 million, of which we received $2 million. The private placement subscription agreement was superseded and terminated by a stock purchase agreement with Mr. Luo in August 2011. Pursuant to the stock purchase agreement, Mr. Luo will purchase ZAP’s common stock for an aggregate purchase price of $2.6 million in multiple closings. On September 8, 2011, we issued approximately 2.3 million shares of ZAP common stock in connection with the initial closing of $771.  We received an additional $1.025 million in subsequent closings for which we have issued approximately 3.35 million shares of ZAP common stock.

During 2011, the Company issued 7.7 million shares of common stock for cash of $3.8 million through private placement subscription agreements with Luo Hua Liang.

Rental Agreements

The Company rented office space, land and warehouse space from its former CEO and a major shareholder. Mr. Steven Schneider.  These properties was used to operate a car outlet and to store inventory. Rental expense was approximately $46,200 for the period ended June 30, 2011. The company discontinued paying rent in August, 2011.

Management Agreement with Cathaya Capital, L.P.

On August 6, 2009, Cathaya purchased 20 million shares of the Company’s Common Stock. On August 6, 2009, the Company entered into a Secured Convertible Promissory Note with Cathaya for aggregate principal advances of up to $10 million. In addition, the Company issued one warrant to Cathaya exercisable for shares of the Company’s Common Stock.

On July 9, 2010, Cathaya entered into a securities purchase agreement, pursuant to which, Cathaya purchased 44 million shares of the Company’s Common Stock at a price of $0.25 per share for an aggregate purchase price of $11 million.

Priscilla Lu, the chairman of the board of directors of ZAP, is also a general partner of Cathaya. On November 10, 2010, ZAP entered into a Management Agreement with Cathaya, for the payment of $2.5 million in exchange for Cathaya’s prior and ongoing transaction advisory, financial and management consulting services for the year ended December 31, 2010.  Pursuant to the agreement, principals of Cathaya will be available to serve on the Board and will devote such time and attention to the Company’s affairs as reasonably necessary to accomplish the purposes of the agreement.  The agreement is renewable yearly but fees paid in subsequent periods are subject to renegotiation based on the fair market values of services rendered, and the management fee was payable in cash or in common stock of ZAP at $0.50 per share.  Five million shares were issued to Cathaya Capital L.P. in payment of this fee for the year ended December 31, 2010.  No management fee  payment was made for 2011.

Jonway Agreement with Zhejiang UFO

Based on a contract by and among the Zhejiang UFO, Jonway Group and Jonway dated as of January 1, 2006, Zhejiang UFO has authorized Jonway to operate its Sanmen Branch to assemble and sell UFO branded SUVs for a period of 10 years starting from January 1, 2006.

According to the contract, Jonway shall pay Zhejiang UFO a variable contractual fee which is calculated based on the number of SUVs that Jonway assembles in the Sanmen Branch every year, at the following rates:

The first 3,000 vehicles	$44 per vehicle
Vehicles from 3,001 to 5,000	$30 per vehicle
Vehicles over 5,000	$22 per vehicle

Zhejiang UFO is considered a related party because the Wang Family, who are shareholders of Jonway, has certain non-controlling equity interests in Zhejiang UFO.  In December 2012, Zhejiang UFO, Jonway Group and Jonway amended the above contract, and agreed that the accumulated payable to Zhejiang UFO for the above variable contractual fees as of December 31, 2011 will not be repaid. From 2012 onwards, Jonway still has obligation for payment for such fees based on 2012 and thereafter the number of SUVs with the deferred payment without interest indefinitely.

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NOTE 15 - INCOME TAXES

The Company is subject to United States of America (“US”) and People’s Republic of China (“PRC”) profit tax.

 US

The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company has no taxable income for the year. The applicable income tax rate for the Company for the three and six months ended June 30, 2012 and 2011 was 35%, respectively.  No tax benefit has been realized since a valuation allowance has offset the deferred tax asset resulting from the net operating losses

PRC

Effective on January 1, 2008, the PRC Enterprise Income Tax Law, EIT Law, and Implementing Rules impose an unified enterprise income tax rate of 25% on all domestic-invested enterprises and foreign investment enterprises in PRC, unless they qualify under certain limited exceptions. As such, the Company’s subsidiary in PRC is subject to an enterprise income tax rate of 25%.

No provisions for income taxes have been made as the Company has no taxable income for the periods.  $38 of tax benefits were recognized due to the change in the deferred tax assets.

Loss before income taxes consisted of:

	For Three Months Ended						For Six Months Ended
	June, 30,						June, 30,
	2012			2011			2012			2011
				Restated						Restated
US	$	(2,193	)	$	(11,398	)	$	(4,514	)	$	(17,381	)
PRC		(4,743	)		(2,272	)		(6,972	)		(3,495	)
	$	(6,936	)	$	(13,670	)	$	(11,486	)	$	(20,876	)

Provision (Benefit) for income taxes consisted of:

	For Three Months Ended					For Six Months Ended
	June, 30,					June, 30,
	2012			2011		2012			2011
				Restated					Restated
Current provision:
US	$	—		$	3	$	—		$	4
PRC		—			—		—			—
Total current provision		—			3		—			4
Deferred provision (benefit):
US		—			—		—			—
PRC		(92	)		6		(130	)		(19	)
Total Deferred provision (benefit)		(92	)		6		(130	)		(19	)
Total provision / (benefit) for income taxes	$	(92	)	$	9	$	(130	)	$	(15	)

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NOTE 16 – LITIGATION

In the normal course of business, we may become involved in various legal proceedings.

The Company is in dispute with its warehouse landlord regarding lease payments and other amounts claimed by the landlord. The landlord is also is in dispute with ZAP over alleged office space and renovations on the 9th Street property which ZAP had vacated. 

The Company is also entering into mediation with a former contracted employee with regard to wrongful termination. 

The Company received demand for arbitration for payment from two parties for professional, legal and engineering work performed. 

A letter was received in May 2012 from a shareholder regarding various prior transactions of the Company which the Company is working to address and clarify.  No action is pending at this time.

The Company has accrued for estimated expenses related to above claims.

NOTE 17 – COMMITMENTS AND CONTINGENCIES

Employment agreement

As of Jan 16, 2011, the Company entered into employment agreements with Benjamin Zhu. The agreement provides for an annual salary of $140,000 for each year for the term of the agreement with Mr. Zhu.

On June 18, 2012, the Company also entered into an employment agreement with Charles Schillings as its Chief Operating Officer. The agreement provides for an annual salary of $144,000 for a three month initial term with an automatic extension of nine months. After one year, annual renewals will continue unless the agreement is terminated by the either party. On August 7, 2012, Mr. Schillings was appointed as the Co-Chief Executive Officer (Co-CEO) to lead U.S. and International operations alongside with Alex Wang,  the Co-CEO for ZAP Jonway's China division.

Guarantees

Jonway Auto guaranteed certain financial obligations of outside third parties including suppliers to support our business and economic growth. Guarantees will terminate on payment and/or cancellation of the obligation once it is repaid. A payment by us would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guarantee. Maximum potential payments under guarantees total $4,130 through June 30, 2012. Our performance risk under these guarantees is reviewed regularly, and has resulted in no changes to our initial valuations.

NOTE 18 – SUBSEQUENT EVENTS

Dealership Financing

At the end of July 2012, we received US$12.7 million in dealership financing from China Everbright Bank to finance the purchase of vehicles for sale at qualified dealerships in China.

The dealership financing obtained by Jonway Auto is for authorized, eligible and approved Jonway Auto dealers in China. It is a new model of financing support that Jonway Auto was able to negotiate with China Everbright Bank after more than 1 year of due diligence. The fund is available for qualified dealers to finance “flooring” of the vehicles purchased to be sold in the dealership. The dealership has to be qualified by China Everbright Bank and the approved amount of loan for that dealership is drawn down based on the value of the orders placed with Jonway Auto. The bank pays Jonway Auto for the orders placed and the dealer repays the bank when the vehicles are sold. The dealer is liable for repayment of the loan as the vehicles are sold over a six month period. Jonway Auto provides the guarantee behind this repayment. This is a revolving credit line that is drawn down and repaid as the vehicles are bought and sold by qualified dealers. The overall amount available could increase as the business of each dealership grows. 

Appointment of Co-Chief Executive Officer

On August 7, 2012 the Board of Directors (the “Board”) of ZAP (the “Company”) elected Charles Schillings as the Company’s Co-Chief Executive Officer.  Mr. Schillings who is the currently the Chief Operating Officer of the Company will serve as Co-Chief Executive Officer with Alex Wang who has been the Company’s Co-Chief Executive Officer since October of 2010.

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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This quarterly report of Form 10-Q, or Form 10-Q, including the following management’s discussion and analysis, and other reports filed by the registrant from time to time with the securities and exchange commission (collectively the “filings”) contain forward-looking statements which are intended to convey our expectations or predictions regarding the occurrence of possible future events or the existence of trends and factors that may impact our future plans and operating results. These forward-looking statements are derived, in part, from various assumptions and analyses we have made in the context of our current business plan and information currently available to us and in light of our experience and perceptions of historical trends, current conditions and expected future developments and other factors we believe to be appropriate in the circumstances. you can generally identify forward-looking statements through words and phrases such as “seek”, “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan”, “budget”, “project”, “may be”, “may continue”, “may likely result”, and similar expressions. When reading any forward-looking statement you should remain mindful that all forward-looking statements are inherently uncertain as they are based on current expectations and assumptions concerning future events or future performance of our company, and are subject to risks, uncertainties, assumptions and other factors relating to our industry and results of operations, including but not limited to the following factors:

·   our ability to establish, maintain and strengthen our brand;

·   our ability to successfully integrate acquired subsidiaries, particularly Jonway, into our company and business;

·   our ability to maintain effective disclosure controls and procedures;

·   our limited operating history, particularly of ZAP and Jonway on a consolidated basis;

·   whether the alternative energy and gas-efficient vehicle market for our electric products continues to grow and, if it does, the pace at which it may grow;

·   our ability to attract and retain the personnel qualified to implement our growth strategies;

·   our ability to obtain approval from government authorities for our products;

·   our ability to protect the patents on our proprietary technology;

·   our ability to fund our short-term and long-term financing needs;

·   our ability to compete against large competitors in a rapidly changing market for electric and conventional fuel  vehicles;

·   changes in our business plan and corporate strategies; and

·   Other risks and uncertainties discussed in greater detail in various sections of this report, or set forth in part I, Item 1A of our Form 10K under the heading “Risk Factors”.

Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

Each forward-looking statement should be read in context with, and with an understanding of, the various other disclosures concerning our company and our business made in our filings. You should not place undue reliance on any forward-looking statement as a prediction of actual results or developments. We are not obligated to update or revise any forward-looking statement contained in this report to reflect new events or circumstances unless and to the extent required by applicable law.

In this quarterly report on Form 10-Q the term “ZAP” refers to ZAP, the term “Jonway” refers to Zhejiang Jonway Automobile Co. Ltd., of which ZAP owns 51% of the equity shares, “ZAP Jonway” refers to both ZAP and Jonway on a consolidated basis, and “we,” “us” and “our” refer to ZAP or ZAP Jonway, as the context indicates.

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Recent Developments

From April 23, 2012 through May 2, 2012, we showcased our traditional gas and all-electric vehicles at the 2012 Beijing International Automotive Exhibition which was held in Beijing, China. The Beijing International Automotive Exhibition is now one of the most influential in the auto industry as China is becoming one of the most important auto markets in the world. In this exhibition, we displayed all of our vehicle models, including the new 2012 SUV gasoline models and fully-electric models.

On May 19, 2012 we launched sales for its gasoline minivan models with the brand name of new Five Star van on May 19, including an unveiling and celebration with dealers, employees, government officials and media at our Sanmen Factory in China. The Five Star minivan is distinctively designed, economical and versatile and will open new markets for ZAP JONWAY, one of China's newest automakers since launching production in 2009.We are establishing Five Star as a new brand and separate dealer network to expand its market in dense urban areas, with families, small businesses, governments and corporations..  Our Five Star will be very competitive in China, a market that has grown with the economy and commercial vehicle subsidies. The largest seller of minivans, SGM Wuling Auto (“SGM W”), reported sales volume of 534,000 units of Sunshine minivan model in 2011. We believe that the quality and pricing of our new Five Star minivan will allow it to gain a significant share of this market. Priced from RMB37,800 (US$5,975), the Five Star model is 15 percent less than SGM W base version while sharing features like a 1.1-liter four-cylinder engine.

In May 2012, Jonway Auto established its two wholly owned subsidiaries, namely, Taizhou Fuxing Vehicle Sale Co., Ltd. focusing on minivan marketing and distribution in China and Taizhou Vehicle Leasing Co., Ltd. focusing on the vehicle leasing business in Taizhou, China. These both subsidiaries setting-up will facilitate our business diversification and new business model development.

We operate our business in four reportable segments:  Jonway Conventional Vehicles, Advanced Technology, Consumer Product and Car Outlet. These segments are strategic business units that offer different services.  They are managed separately because each business requires different resources and strategies.   The Jonway Conventional Vehicle Segment represents the manufacture and sales of vehicles through distributors in China and abroad. The Advanced Technology segment represents the sales activity of advanced technology vehicles to ZAP dealers throughout the U.S.  The Consumer Product segment represents sales of our ZAPPY 3, a three wheeled electric scooter, and the overall corporate expenses of ZAP. Many of these expenses relate to the overall development of our core business, electric consumer products.  The Car Outlet segment represents the activity of a retail outlet that sells pre-owned conventional vehicles and advanced technology vehicles.

The board of ZAP has demanded that Co-CEO Alex Wang resolve the conflict of interest in Jonway Group’s purchase of the Aptera asset and the formation of the new company Aptera (same name as the product) in the USA. Alex Wang has agreed to transfer the asset ownership of Aptera to Jonway Auto but this currently remains unresolved. 

Results of Operations

The following table sets forth, as a percentage of net sales, certain items included in the Company’s Statements of Operations (see Financial Statements and Notes) for the periods indicated:

	Three Months ended June 30						Six Months ended June 30
	2012			2011			2012			2011
Statements of Operations Data:										Restated
Net sales		100.0	%		100.0	%		100	%		100	%
Cost of sales		(91.9)			(90.4)			(93.0)			(90.8)
Operating expenses		(55.8)			(54.1)			(48.1)			(53.5)
Loss from operations		(47.7)			(44.6)			(41.1)			(44.0)
Net loss attributable to ZAP		(35.9)			(77.2)			(32.2)			(68.6)

We present results of operations that have been derived from our financial statements, which were prepared in accordance with accounting principles generally accepted in the United States of America and that include the results of operations of Jonway in our unaudited condensed consolidated financial statements since the date of ZAP’s acquisition of 51% of the equity shares of Jonway on January 21, 2011.

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Quarter Ended June 30, 2012 Compared to Quarter Ended June 30, 2011

Net sales for the quarter ended June 30, 2012 were $12.7 million as compared to $16.3 million for the period ended June 30, 2011.

Jonway Auto’s revenue for the second quarter ended June 30, 2012 decreased by $3.3 million from $15.7 million for the quarter ended June 30, 2011 compared to $12.4 million in second quarter ended June 30, 2012. The sales volume decreased due to  the following factors: (i) :more SUV models were launched into market by China-based auto makers, which intensified the competition, (ii) Jonway ‘s upgraded A380 did not  launch into market in time to compete with these competitors (iii) increasing oil prices in China affected customer demand and (iv) China’s overall economic condition worsened during the quarter (the GDP increase rate for this first quarter compared to same quarter in 2011 was 7.6%, which is the lowest level in the past three years).

Our second quarter sales of Advanced Technology segment sales decreased by $183,000 from $194,000 for the period ended June 30,  2011 to $11,000 for the period ended June 30, 2012, The decrease is primarily due to the tight United States credit market and general economic conditions negatively impacting our dealer sales in 2012. We also began the transition of moving our operations from the U.S. to China and switching suppliers for advanced technology vehicles from outside contract manufacturers to our auto manufacturing plant in China.

Our retail car lot experienced a decrease of $ 207,000 in sales for the second quarter from $249,000 in 2011 to $42,000 in 2012. The car outlet was adversely affected by a supply limitation on the number of consigned vehicles for resale.

In our Consumer Product segment second quarter sales increased from $102,000 in 2011 to $272,000 in 2012.  The increase is primarily due to a bulk sale to a new customer of our ZAPPY 3 electric scooters.

Gross profit decreased by $525,000 from a gross profit of $1.6 million for the second quarter ended June 30, 2011 to a gross profit of $ 1million for the quarter ended June 30, 2012.

Jonway Auto’s gross profit decreased by $523,000 from $1.4 million in the second quarter of 2011 to $900,000 for the second quarter ended June 30, 2012. The decrease was primarily due to a new price reduction program to the existing SUV models while the upgraded models with higher gross profit were not launched into market in this second quarter. In order to deal with the increasing competition in SUV market in China, Jonway auto initiated its price reduction program to end users throughout the 1st half of 2012. This resulted in a decrease of the ex-factory price to dealers by RMB 6,000 or over $950.

Advanced Technology vehicles gross profit increased $39,000 from a $14,000 gross profit for the period ended June 30, 2011 to a gross profit of $53,000 for the period ended June 30, 2012.  The increase was primarily due to decrease in the amount of reserves included in calculating the lower of cost or market for inventory vehicles.

The Consumer Products segment experienced an increase in gross profit in the second quarter from $24,000 in 2011 to a gross profit of $45,000 in 2012. The decrease was due to a decrease in sales volume.

Our retail car lot gross profits decreased by $62,000 from $95,000 for the quarter ended June 30, 2011 to $33,000 for the quarter ended June 30, 2012. The lower profits are due tighter margins on purchased resale versus those on consignment.

Sales and marketing expenses stayed consistently at $3.5 million for the three month periods ended June 30, 2012 and 2011.  As a percentage of sales the expense increased from 21.3% for the quarter ended June 30, 2011 to 27.3% for the quarter ended June 30, 2012. During the second quarter ended June 30, 2012 Jonway Auto increased  dealer incentives in an effort to increase vehicle sales.

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General and administrative expenses decreased by $ 1.4 million from $4.2 million for the quarter ended June 30, 2011 to $2.8 million in 2012. The decrease was primarily a result of reductions in ZAP US operations due to the following: (i) less salaries and wages due to transferring of various functions to Jonway China, (ii) fewer professional fees in 2012 in the prior year we experienced non–recurring professional fees in connection with the Jonway acquisition in January of 2011 and (iii) finally, the elimination of the management fee to Cathaya Capital L.P that was previously expensed in the second quarter of 2011.

Research and development expenses decreased by $305,000 from $1.1 million for the second quarter ended June 30, 2011 to $ 814,000 for the second quarter ended June 30, 2012. The decrease was primarily due to fewer projects scheduled for the second quarter of 2012. In the prior year’s quarter ended June 30, 2011, we incurred Research and Development fees relating to refinement of the automatic transmission for Jonway’s three and five door sport utility vehicles.

Interest expense decreased by $6 million from $6.9 million in second quarter 2011 to $957,000 in second quarter of 2012. In 2011, the amortization on the previous years discount on the convertible debt was significantly more.

Other income decreased by $405,000 from $636,000 for the period ended June 30, 2011 to $231,000 for the period ended June 30, 2012.  This amount mainly represents decrease in the sales of metal scrap by Jonway in 2012.

Net loss for the second quarter ended June 30, 2012 was $6.8 million as compared to a loss   of $13.7 million for the period ended June 30, 2011.

Six Months Ended June 30, 2012 Compared to Six Months Ended June 30, 2011

Net sales decreased by $3 million in the six months ended June 30, 2012 from $27.9 million for the six months ended June 30, 2011 to $24.9 million in June 30, 2012.  

Jonway auto’s revenue for the six months ended June 30, 2012 decreased by $2.3 million from $26.7 million for the six months ended June 30, 2011 compared to $24.4 million for the six months ended June 30, 2011. The sales volume decreased due to  the following factors: (i) :more SUV models were launched into market by China-based auto makers, which intensified the competition, (ii) Jonway ‘s upgraded A380 did not  launch into market in time to compete with these competitors (iii) increasing oil prices in China affected customer demand and (iv) China’s overall economic condition worsened during the 1st half of 2012 (the GDP increase rate for this 1st half of 2012 compared to same quarter in 2011 was 7.8%, which is the lowest level in the past three years).

Sales in the Advanced Technology segment decreased by $374,000 from $390,000 in 2011 to $16,000 in 2012 for the six months ended June 30. The tight U.S. credit and general economic conditions negatively impacted our dealer sales in the first six months of 2012.

We experienced an increase of $84,000 in sales of consumer products from $302,000 in 2011 to $386,000 in 2012 due to increases in ZAPPY 3 scooters sold to a single customer for resale.

Our retail car lot experienced a decrease in sales of $499,000 from $614,000 in 2011 to $115,000 in 2012. The decrease was due to a decrease in the consignment cars available for sale and a general downturn in the economy. Due to the current recession many consumers chose lower priced pre-owned vehicles that are distributed through our retail car outlet.

Gross profit decreased by $858,000 from $2.6 million for the Six Months ended June 30, 2011 to $1.7 million for the six months ended June 30, 2012.  The decrease in gross profit in the six months ended June 30, 2012 principally related to the lower profits on the manufacturing of Jonway Auto’s vehicles.

Jonway auto’s gross profit decreased by $735,000 from $2.3 million for the first six months of 2011 to $1.6 million for the six months ended June 30, 2012. The decrease was primarily due to a new price reduction program to its existing models while the upgraded models with higher gross profit were not launched into market in the six months ended June 30, 2012. In order to deal with the increasing competition in SUV market in China, Jonway auto initiated its price reduction program to end users throughout the first six months of 2012. This resulted in a decrease of the ex-factory price to dealers by RMB 6,000 or over $950.

In our Advanced Technology segment our gross profit decreased by $35,000 from a gross profit of $32,000 for the six months ended June 30, 2011 to a gross loss of $3,000 for the six months ended June 30, 2012.  The decrease was due to fewer sales of the XL models for designed for fleets.

In our Consumer Products segment we experienced an increase of $25,000 in gross profits from a gross profit of $48,000 in 2011 to a gross profit of $73,000 in 2012. The increase was due to the sales of the Zappy 3 Pro to a major customer.

Gross profits in our retail car lot decreased by $113,000 from $153,000 for the Six Months ended June 30, 2011 to $40,000 for the Six Months ended June 30, 2012. The decrease in gross profits was due to lower sales volumes and a decline of consignment cars available for sale.

Sales and marketing expenses in the first Six Months of 2012 increased by $236,000 from $5.3 million in 2011 to $5.6 million in 2012.  As a percentage of sales the expense increased from 19.1% for the six months ended June 30, 2011 to 22.4% for the six months ended June 30, 2012. During the six months ended June 30, 2012 Jonway Auto increased dealer incentives in an effort to increase vehicle sales.

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General and administrative expenses for the Six Months ended June 30, 2012 decreased by approximately $2.4 million, from $7.7 million in 2011 to $5.3 million in 2012. The decrease was due to the following : The decrease was primarily a result of reductions in ZAP US operations due to the following: (i) less salaries and wages due to transferring of various functions to Jonway China, (ii) fewer professional fees in 2012  in the prior year we experienced non –recurring professional fees in connection with the Jonway acquisition in January of 2011 and (iii) finally, the elimination of the management fee to Cathaya Capital L.P that was previously expensed in the first six months of 2011.

Research and development expenses decreased by $788,000 from $1.9 million in 2011 to $1.1 million in 2012. The increase was the result of fewer projects scheduled for the first six months of 2012.

Interest expense, net decreased by $7.4 million from an interest expense of $8.8 million for the first Six Months of 2011 to interest expense of $1.4 million in the Six Months ended June 30, 2012.The decrease was due to In 2011, the amortization on the previous years discount on the convertible debt was significantly more.

Other income (expense) decreased $312,000 from $780,000 for the first six months of 2011 to other income of $468,000 in the second quarter of 2012.  The increase was due to less sales of scrap metal by Jonway Auto.

Net loss for the six Months ended June 30, 2012 was $11.3 million loss compared to a $20.9 million loss for the six months ended June 30, 2011.

Liquidity and Capital Resources

In assessing our liquidity, we monitor and analyze our cash on-hand, liquidation value of our investment in related party securities, and our operating and capital expenditure commitments.  Our principal liquidity needs are to meet our working capital requirements, operating expenses and capital expenditure obligations.  At June 30, 2012, we believe that we will have sufficient liquidity required to conduct operations through June 30, 2013.

In January 2011, ZAP issued $19 million of convertible debt to China Electric Vehicle Corporation (“CEVC”) to make a partial payment in connection with the Jonway Acquisition.  On March 31, 2012, ZAP entered into an amendment to the note which extended the maturity date of the note from August 12, 2012 to August 12, 2013. This amendment changed the terms of the note requiring adjustment of the conversion price of note for dilutive issuances by ZAP.  In addition, the warrant issued in connection with the CEVC note was amended to change the terms of conversion and to extend the maturity date until February 12, 2014. The interest accrued through the maturity date of February 12, 2012 in the amount of $1.7 million has been added to the existing principal. The total amount of the convertible note is approximately $18.9 million with a new maturity date of August 12, 2013.

At present, the Company will require additional capital to expand our current operations.  In particular, we require additional capital to expand our presence into Asia, to continue development of our methodology for converting gasoline vehicles to electric and to continue building our dealer network and expanding our market initiatives.  We also require financing to purchase consumer inventory for the continued roll-out of new products to add qualified sales and professional staff to execute our efforts in the research and development of advanced technology vehicles, such as the new ZAP Alias and other fuel efficient vehicles.

We intend to fund our long term liquidity needs related to operations through the incurrence of indebtedness, equity financing or a combination of both.  Although we believe that these sources will provide sufficient liquidity for us to meet our future liquidity and capital obligations, our ability to fund these needs will depend on our future performance, which will be subject in part to general economic, financial, regulatory and other factors beyond our control, including trends in our industry and technological developments.  However, we may not be able to obtain this additional financing on terms acceptable to us or at all.

In the first six months of 2012, the net cash used for operating activities was $9.2 million.  Cash used in the first six months of 2012 was comprised of the net loss incurred for the first six months of $11.4 million plus net non-cash expenses of $5.9 million and the net increase of $3.7 million in operating assets and liabilities. In the first six months of 2011, net cash used for operating activities was $25,000. Cash used in the first six months of 2011 was comprised of the net loss incurred for the first six months of $20.9 million plus net non-cash expenses of $14.2 million and the net increase of $6.7 million in operating assets and liabilities.

Investing activities used cash of $1.0million and $19.0 million in the first six months ended June 30, 2012 and 2011, respectively. In 2011, $18.5 million was utilized for the 51% acquisition of Jonway Automobile. In addition, $1.0 million and $580,000 was used for the purchase of equipment for the period ended June 30, 2012 and 2011, respectively.

Financing activities for the first six months ended June 30, 2012 provided cash of $4.9 million compared with financing activities that provided cash of $19.7 million in 2011. During the first six months of 2012, we provided cash of $21.2 million in short term financing and used cash of $1.9 million for repayment to related parties, $4.9 million for repayment of short term debt, $2.6 million for repayment of notes payable and the change in restricted cash of $7 million.

In the first six months of 2011, we issued $19 million in convertible debt to China Electric Vehicle Corporation, a related party to ZAP. The proceeds were utilized to complete the acquisition of the 51% interest in Jonway. 

The Company had cash of $499,000 at June 30, 2012 as compared to $5.9 million at December 31, 2011. The Company had working capital deficits of $22.3 million and $14.9 million for the periods ended June 30, 2012 and December 31, 2011 respectively.

In the event that we require additional liquidity, our principal shareholders, Cathaya Capital L.P. and Jonway Group, have agreed to provide the necessary support to meet our financial obligations throughJune 2013.

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Critical Accounting Policies and Use of Estimates

Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with United States generally accepted accounting principles requires Management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. The more significant estimates relate to revenue recognition, contractual allowances and uncollectible accounts, intangible assets, accrued liabilities, derivative liabilities, income taxes, litigation and contingencies. Estimates are based on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for judgments about results and the carrying values of assets and liabilities. Actual results and values may differ significantly from these estimates

Stock Based Compensation

The Company accounts for stock-based compensation which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes-Merton option pricing model (the “Black-Scholes model”). The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. We estimate forfeitures at the time of grant and revise our estimate in subsequent periods if actual forfeitures differ from those estimates.

The Company accounts for stock-based compensation awards and warrants granted to non-employees by determining the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

Derivative Financial Instruments

The Company generally does not use derivative financial instruments to hedge exposures to cash flow or market risks. However, certain other financial instruments, such as warrants, are classified as liabilities when either (a) the holder possesses rights to net-cash settlement or (b) physical or net-share settlement is not within the control of the Company. In such instances, net-cash settlement is assumed for financial accounting and reporting, even when the terms of the underlying contracts do not provide for net-cash settlement. Such financial instruments are initially recorded at fair value and subsequently adjusted to fair value at the close of each reporting period.

The Company accounts for derivative instruments and debt instruments in accordance with the interpretative guidance of ASC 815 and associated pronouncements related to the classification and measurement of warrants and instruments with conversion features. It is necessary for the Company to make certain assumptions and estimates to value derivatives and debt instruments.

Allowance for Doubtful Accounts

The Company provides an allowance for doubtful accounts when management estimates collectability to be uncertain. Accounts receivable are continually reviewed to determine which, if any, accounts are doubtful of collection. In making the determination of the appropriate allowance amount, the Company considers current economic and industry conditions, relationships with each significant customer, overall customer credit-worthiness and historical experience. The allowance for doubtful accounts was $15,000 and $9,000 at June 30, 2012 and December 31, 2011 respectively.

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Inventories

Inventories consist primarily of vehicles, both gas and electric, parts and supplies, and finished goods and are carried at the lower of cost (first-in, first-out basis) or market (net realizable value or replacement cost). The Company maintains reserves for estimated excess, obsolete and damaged inventory based on projected future shipments using historical selling rates, and taking into account market conditions, inventory on-hand, purchase commitments, product development plans and life expectancy, and competitive factors. If markets for the Company’s products and corresponding demand were to decline, then additional reserves may be deemed necessary. Any changes to the Company's estimates of its reserves are reflected in cost of goods sold within the statement of operations during the period in which such changes are determined by management.

Off-Balance Sheet Arrangements

None.

Item 3.   Quantitative and Qualitative Disclosures about Market Risk

A smaller reporting company is not required to provide disclosure pursuant to this Item 3.

Item 4.   Controls and Procedures

Material weakness previously disclosed

As discussed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2011, we identified a lack of sufficient control in the area of technical competency in review and approval of financial reporting processes. This control weakness allowed for reconciliations, reports and other documents to be insufficiently reviewed prior to being approved by management and audit adjustments to be identified by our auditors as part of their year-end audit work. This material weakness resulted in errors in the recording of non-routine and complex accounting transactions in the preparation of our annual consolidated financial statements and disclosures. The Company is considering utilizing outside accounting experts to assist us in accounting for future complex transactions. During the first Quarter 2012 we have arranged with another independent accounting firm to assist us in accounting for non-recurring complex accounting transactions

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Co-Chief Executive Officers and our Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Securities and Exchange Act of 1934 Rules 13a-15(f). Based on this evaluation, our Co-Chief Executive Officers and our Chief Financial Officer concluded that the Company’s disclosure controls and procedures were ineffective as of the end of the period covered by this report.

Changes in internal control over financial reporting

No significant changes were made in our internal control over financial reporting during the Company’s second quarter of 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1.    Legal Proceedings

We are subject to various legal proceedings from time to time in the ordinary course of business, none of which are required to be disclosed under this Item 1.

Item 1A. Risk Factors

There have been no material changes to the Company’s risk factors which are included and described in the annual report on Form 10-K for the fiscal year ended December 31, 2011 filed with the SEC on April 16, 2012.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 1B. Unresolved Staff Comments

None

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.    Defaults upon Senior Securities

None

Item 4.    Mine safety disclosure

Not Applicable

Item 5.    Other Information

Item 6.    Exhibits

(b) Exhibits.

Exhibit Number	Description
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14/15d-14 of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to 13a-14/15d-14 of the Exchange Act as  Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.DEF	XBRL Definition Linkbase Document
101.LAB	XBRL Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document

In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

Furnished herewith, XBLR (Extensive Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated:    August 14, 2012 By: /s/ Alex Wang                                         

Name: Alex Wang

Title: Co-Chief Executive Officer

(Co-Principal Executive Officer)

Dated:    August 14, 2012 By: /s/ Benjamin Zhu                                    

Name: Benjamin Zhu

Title: Chief Financial Officer

(Principal Financial Officer)

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EX-31.1

EXHIBIT 31.1

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002:

I, Alex Wang certify that:

1. I have reviewed this 10-Q of ZAP.

2. Based on our knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report.

4. The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or its reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The small business issuer’s other certifying officer and I  have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

/s/ Alex Wang                                 

Alex Wang

Title: Chief Executive Officer

(Principal Executive Officer)

Date: August 14, 2012

EX-31.2

EXHIBIT 31.2

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002:

I, Benjamin Zhu, certify that:

1.  I have reviewed this 10-Q of ZAP.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report.

4. The small business issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:

(a)   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)   Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)   Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or its reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The small business issuer’s other certifying officer  and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a)   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b)   Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

/s/ Benjamin Zhu                        

Benjamin Zhu

Title: Chief Financial Officer

(Principal Financial and Accounting Officer)

Date: August 14, 2012

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of ZAP (the "Company") on Form 10-Q for the period ending June 30, 2012 as filed with the U.S. Securities and Exchange Commission on the date hereof (the "Report"), each of the undersigned certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  August 14, 2012                                                           By: /s/ Alex Wang                                        

     Alex Wang

     Chief Executive Officer

     (Principal Executive Officer)

Dated:  August 14, 2012                                                           By: /s/ Benjamin Zhu                                    

     Benjamin Zhu

     Chief Financial Officer

     (Principal Financial Officer)

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Organization And Operations (Liquidity And Capital Resources) (Details) (USD $)	6 Months Ended			3 Months Ended	4 Months Ended	12 Months Ended		0 Months Ended		0 Months Ended	6 Months Ended			3 Months Ended				6 Months Ended		0 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Mar. 31, 2011 Luo Hau Liang [Member]	Dec. 31, 2011 Luo Hau Liang [Member]	Dec. 31, 2011 Luo Hau Liang [Member]	Aug. 31, 2011 Multiple Closings [Member] Luo Hau Liang [Member]	Sep. 08, 2011 Initial Closing [Member] Luo Hau Liang [Member]	Jun. 30, 2012 Subsequent Closing [Member] Luo Hau Liang [Member]	Apr. 02, 2012 Taizhou Branch Of China Merchants Bank [Member]	Jun. 30, 2012 Taizhou Branch Of China Merchants Bank [Member]	Mar. 31, 2012 Taizhou Branch Of China Merchants Bank [Member]	Dec. 31, 2011 Taizhou Branch Of China Merchants Bank [Member]	Mar. 31, 2012 Three Small-Sized Banks Based In Taizhou City [Member]	Dec. 31, 2011 Three Small-Sized Banks Based In Taizhou City [Member]	Jun. 30, 2012 Sanmen Branch Of CITIC Bank [Member]	May 31, 2012 Sanmen Branch Of CITIC Bank [Member]	Jun. 30, 2012 Revolving Short Term Bank Loan [Member] Taizhou Branch Of China Merchants Bank [Member]	Dec. 31, 2011 Revolving Short Term Bank Loan [Member] Taizhou Branch Of China Merchants Bank [Member]	May 25, 2012 Revolving Short Term Bank Loan [Member] Sanmen Branch Of CITIC Bank [Member]	Jun. 30, 2012 Revolving Short Term Bank Loan [Member] Sanmen Branch Of CITIC Bank [Member]	Dec. 31, 2011 Secured Debt [Member] Three Small-Sized Banks Based In Taizhou City [Member]	Jun. 30, 2012 Secured Debt [Member] Various Banks Based In Taizhou [Member]	Jun. 30, 2012 Minimum [Member]	Dec. 31, 2011 Minimum [Member] Three Small-Sized Banks Based In Taizhou City [Member]	Jun. 30, 2012 Maximum [Member]
Short-term Debt [Line Items]
Subscription agreement, aggregate purchase price				$ 7,000,000
Value of stock purchase agreement							2,000,000
Proceeds from issuance of common stock		331,000		2,000,000
Number of shares issued					3,350,000	7,700,000		2,300,000
Value of shares issued					1,025,000	3,800,000		771,000
Common stock, value	229,140,000		225,378,000		3,800,000	3,800,000			1,025,000
Common stock, issued	300,156,120		297,746,376		7,700,000	7,700,000			3,350,000
Line of credit, borrowing capacity													6,200,000				7,100,000
Line of credit, amount outstanding											1,100,000					5,600,000		1,100,000	3,200,000	1,600,000	1,590,000
Line of credit, annual interest rate											7.22%							7.22%		8.33%	8.33%
Line of credit, amount repaid											2,100,000							2,100,000
Short term loans	3,676,000		5,485,000									520,000			2,200,000							790,000	1,000,000		2,200,000
Payment of short term debt	$ 4,842,000	$ 2,011,000								$ 520,000				$ 2,200,000
Interest rate																								7.22%		9.47%

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Property, Plant And Equipment (Schedule Of Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Property, Plant And Equipment [Abstract]
Land use right	$ 10,433	$ 10,518
Software	97	92
Intangible assets, gross	10,530	10,610
Less: accumulated amortization	(665)	(535)
Intangible assets, net	$ 9,865	$ 10,075

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Acquisition (Schedule Of Estimated Fair Value Of Assets Acquired And Liabilities Assumed) (Details) (USD $) In Thousands, unless otherwise specified	Jan. 21, 2011
Acquisition [Abstract]
Cash and cash equivalents	$ 993
Restricted cash	3,088
Inventories, net	12,740
Property & equipment	57,071
Other tangible assets	11,472
Accounts payable	(14,549)
Notes payable	(4,261)
Other liabilities assumed	(14,358)
Net tangible assets acquired	52,196
Goodwill and intangible assets	5,382
Net assets acquired	57,578
Non controlling interest - fair value	(28,213)
Option to purchase remaining 49%	2,385
Purchase price	$ 31,750

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Related Party (Narrative) (Details) (USD $)	6 Months Ended					6 Months Ended	12 Months Ended					3 Months Ended	4 Months Ended	12 Months Ended	6 Months Ended	0 Months Ended		2 Months Ended		0 Months Ended	1 Months Ended				12 Months Ended	1 Months Ended		0 Months Ended
	Jun. 30, 2011	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2012 Sanmen Branch Of Zhejiang UFO Automobile [Member]	Dec. 31, 2011 Sanmen Branch Of Zhejiang UFO Automobile [Member]	Jun. 30, 2012 Jonway Group [Member]	Dec. 31, 2011 Jonway Group [Member]	Dec. 31, 2011 Jonway Group [Member] Research And Development Expense [Member]	Dec. 31, 2011 Jonway Group [Member] Machinery And Equipment [Member]	Jun. 30, 2012 Jonway Motor Cycle [Member]	Dec. 31, 2011 Jonway Motor Cycle [Member]	Mar. 31, 2011 Luo Hau Liang [Member]	Dec. 31, 2011 Luo Hau Liang [Member]	Dec. 31, 2011 Luo Hau Liang [Member]	Jun. 30, 2011 Steven Schneider [Member] Rent Expense [Member]	Jul. 09, 2010 Cathaya Capital, L.P. [Member]	Aug. 06, 2009 Cathaya Capital, L.P. [Member]	Dec. 31, 2010 Cathaya Capital, L.P. [Member]	Dec. 31, 2010 Cathaya Capital, L.P. [Member] Advisory, Financial And Management Consulting Services [Member]	Dec. 11, 2011 Promissory Note [Member] Jonway Group [Member]	Jan. 31, 2012 Promissory Note [Member] Jonway Group [Member]	Dec. 31, 2011 Promissory Note [Member] Jonway Group [Member]	Dec. 11, 2011 Down Payment Convertible Note [Member] Jonway Group [Member]	Aug. 06, 2009 Secured Convertible Promissory Note [Member] Cathaya Capital, L.P. [Member]	Dec. 31, 2012 Scenario, Forecast [Member] Down Payment Convertible Note [Member] Jonway Group [Member]	Jan. 31, 2006 Agreement Period [Member] Sanmen Branch Of Zhejiang UFO Automobile [Member]	Aug. 31, 2011 Multiple Closings [Member] Luo Hau Liang [Member]	Sep. 08, 2011 Initial Closing [Member] Luo Hau Liang [Member]
Related Party Transaction [Line Items]
Shares issued to Jonway Group under Payment agreement							70,000,000
Value of shares issued to Jonway Group under Payment agreement							$ 15,400,000	$ 3,780,000	$ 11,600,000
Amount due to related parties		228,000	2,122,000			218,000	2,104,000			10,000	18,000
Interest rate																				8.00%			8.00%
Period after demand that payment must be made																				10 days
Advances received from related party																						1,600,000
Repayment to related party																					1,600,000
Amount that may be borrowed																				3,000,000			3,000,000	10,000,000
Number of vehicles																									75
Purchase from related party						766,000
Related party transaction expense															46,200				2,500,000
Subscription agreement, aggregate purchase price												7,000,000
Value of shares issued													1,025,000	3,800,000		11,000,000												771,000
Proceeds from issuance of common stock	331,000											2,000,000
Value of stock purchase agreement																											$ 2,000,000
Number of shares issued													3,350,000	7,700,000		44,000,000	20,000,000	5,000,000										2,300,000
Term of agreement																										10 years
Warrants issued																	1
Common stock price per share																$ 0.25		$ 0.50

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Goodwill & Other Intangibles (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Depreciation and amortization expense			$ 3,605	$ 3,286
Other Intangible Assets [Member]
Depreciation and amortization expense	$ 106	$ 229	$ 211	$ 430

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Significant Accounting Policies And Use Of Estimates (Summary Of Assets And Liabilities Measured At Fair Value) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012		Dec. 31, 2011
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable Securities	$ 1,289	[1]	$ 1,830	[1]
Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable Securities	1,289	[1]	1,830	[1]
Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable Securities		[1]		[1]
Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Marketable Securities		[1]		[1]

[1] Marketable securities consist of common stock of a related party. The fair value of marketable securities is based upon market value quoted by Korean stock exchange

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Line Of Credit, Short Term Debt And Bank Acceptance Notes (Tables)

6 Months Ended

Jun. 30, 2012

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

Schedule Of Short-Term Debt

		June 30, 2012		December 31, 2011
Loan from China Merchant Bank	$	1,044	$	3,174
Loan from Taizhou Bank		633		1,428
Loan from Zhejiang Tailong Commercial Bank		316		794
Loan from CITIC Bank		1,583		-
Short term financing insurance premiums		100		89
Total	$	3,676	$	5,485

Schedule Of Bank Acceptance Notes

		June 30, 2012		December 31, 2011
a)Bank acceptance notes payable to Taizhou Bank	$	5,064	$	2,451
b)Bank acceptance notes payable to China Merchant Bank		4,557		3,316
c)Bank acceptance notes payable to China Everbright Bank		2,172		4,761
d)Bank acceptance notes payable to Zhejiang Tailong Commercial Bank		1,313		-
e)Bank acceptance notes payable to Zhejiang Sanmen Yin Zuo Village Bank		1,266		-
f)Bank acceptance Notes payable to Shanghai Pudong Development Bank		676		-
g) Bank acceptance Notes payable to CITIC Bank		11,076		-
	$	26,124	$	10,528

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Income Taxes (Narrative) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
US [Member]
Applicable income tax rate	35.00%	35.00%	35.00%	35.00%
PRC [Member]
PRC enterprise tax rate			25.00%

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Distribution Agreements (Narrative) (Details) (USD $) Share data in Millions, unless otherwise specified	6 Months Ended			0 Months Ended					3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jan. 21, 2011	Jan. 15, 2010 Better World [Member]	Oct. 10, 2010 Goldenston Worldwide Limited [Member]	Jan. 15, 2010 Goldenston Worldwide Limited [Member]	Oct. 10, 2010 Samyang Optics [Member]	Jan. 27, 2010 Samyang Optics [Member]	Jun. 30, 2012 Distribution Agreements [Member]	Jun. 30, 2011 Distribution Agreements [Member]	Jun. 30, 2012 Distribution Agreements [Member]	Jun. 30, 2011 Distribution Agreements [Member]
Distribution Agreements [Line Items]
Depreciation and amortization expense	$ 3,605,000	$ 3,286,000							$ 560,000	$ 560,000	$ 1,100,000	$ 1,100,000
Shares issue for distribution agreements				6	30
Value of shares issue for distribution agreements				$ 2,160,000	$ 14,400,000
Percentage acquired in Jonway Auto	51.00%		51.00%
Term of distribution agreement						10 years	1 year
Supply commitment, number of vehicles								100

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Commitments And Contingencies (Details) (USD $)		0 Months Ended
	Jun. 30, 2012	Jan. 16, 2011 Chief Financial Officer [Member]	Jun. 18, 2012 Chief Operating Officer [Member]	Jun. 18, 2012 Initial Term [Member] Chief Operating Officer [Member]	Jun. 18, 2012 Automatic Extension [Member] Chief Operating Officer [Member]	Jun. 18, 2012 Annual Renewals [Member] Chief Operating Officer [Member]
Commitments And Contingencies [Line Items]
Annual salary		$ 140,000	$ 144,000
Potential payments under guarantee	$ 4,130,000
Term of agreement				3 months	9 months	1 year

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Subsequent Events (Details) (USD $)	1 Months Ended
	Jul. 31, 2012
Dealership Financing [Member] | China Everbright Bank [Member]
Subsequent Event [Line Items]
Dealership financing	12,700,000
Minimum [Member]
Subsequent Event [Line Items]
Term of due diligence	1 year
Maximum [Member]
Subsequent Event [Line Items]
Period after sale repayment of loan must be paid	6 months

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Related Party (Schedule Of Amount Due To/From Related Parties) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Related Party Transaction [Line Items]
Amount due from related parties	$ 3,375	$ 1,137
Amount due to related parties	228	2,122
Advance payment to Jonway Group		11,616
Sanmen Branch Of Zhejiang UFO Automobile [Member]
Related Party Transaction [Line Items]
Amount due from related parties	3,375	978
Amount due to related parties
Jonway Group [Member]
Related Party Transaction [Line Items]
Amount due from related parties		159
Amount due to related parties	218	2,104
Advance payment to Jonway Group		11,616
Jonway Motor Cycle [Member]
Related Party Transaction [Line Items]
Amount due to related parties	$ 10	$ 18

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Restatement Of March 2011 Unaudited Quarterly Financial Information (Tables)

6 Months Ended

Jun. 30, 2012

Restatement Of March 2011 Unaudited Quarterly Financial Information [Abstract]

Revaluation Of The Fair Value Of Various Assets Acquired And Liabilities Assumed

Account	Provisional amount as of January 21, 2011			Adjustment based on final valuation report			Revised amount recorded as of January 21, 2011
Inventory	$	12,715		$	25		$	12,740
Property and Equipment		46,322			10,749			57,071
Other  liabilities assumed		(14,524	)		166			(14,358	)
Goodwill and Intangible Assets		23,794			(18,412	)		5,382
Purchase option		2,695			(310	)		2,385
Non controlling interest		(31,875	)		3,662			(28,213	)
	$	39,127		$	(4,120	)	$	35,007
	As reported at June 30, 2011			Adjustments to the six months ended June 30, 2011			As restated at June 30, 2011
Cost of goods sold	$	25,359		$	25		$	25,384
Amortization and Depreciation		6,063			(2,777	)		3,286
	$	31,422		$	(2,752	)	$	28,670

Restatement Of 2011 First Quarter Balance Sheet Information To Reflect The Final Measurement Of The Fair Value Of The Assets Acquired

Amounts in ('000s)	June 30, 2011
Net assets  as reported	$	61,936
Adjustments		(4,342	)
Restated net assets	$	57,594

Restatement Of 2011 First Quarter Income Statement Information To Reflect The Final Measurement Of The Fair Value Of The Assets Acquired

	Three Months Ended June 30, 2011			Six Months Ended June 30, 2011
Net loss as reported	$	(13,715	)	$	(23,613	)
Adjustments		36			2,752
Restated loss	$	(13,679	)	$	(20,861	)

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Acquisition (Schedule Of Pro Forma Information) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011
Acquisition [Abstract]
Net sales	$ 16,266	$ 27,974
Net loss	$ (13,679)	$ (20,861)
Net loss per common share, basic and diluted	$ (0.06)	$ (0.09)
Shares outstanding, basic and diluted	214,316	211,808

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Restatement Of March 2011 Unaudited Quarterly Financial Information (Restatement Of 2011 First Quarter Balance Sheet Information To Reflect The Final Measurement Of The Fair Value Of The Assets Acquired) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2011
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net assets	$ 57,594
Previously Reported [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net assets	61,936
Adjustments [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net assets	$ (4,342)

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Income Taxes (Components of Income Tax Provision (Benefit)) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Income Taxes [Abstract]
Current provision: US		$ 3		$ 4
Current provision: PRC
Total current provision		3		4
Deferred provision (benefit): US
Deferred provision (benefit): PRC	(92)	6	(130)	(19)
Total Deferred provision (benefit)	(92)	6	(130)	(19)
Total provision / (benefit) for income taxes	$ (92)	$ 9	$ (130)	$ (15)

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2012

Income Taxes [Abstract]

Schedule Of Loss Before Income Taxes

		For Three Months Ended						For Six Months Ended
		June, 30,						June, 30,
		2012			2011			2012			2011
					Restated						Restated
US	$	(2,193	)	$	(11,398	)	$	(4,514	)	$	(17,381	)
PRC		(4,743	)		(2,272	)		(6,972	)		(3,495	)
	$	(6,936	)	$	(13,670	)	$	(11,486	)	$	(20,876	)

Components of Income Tax Provision (Benefit)

	For Three Months Ended						For Six Months Ended
	June, 30,						June, 30,
		2012			2011		2012			2011
					Restated					Restated
Current provision:
US	$	--		$	3	$	--		$	4
PRC		--			--		--			--
Total current provision		--			3		--			4
Deferred provision (benefit):
US		--			--		--			--
PRC		(92	)		6		(130	)		(19	)
Total Deferred provision (benefit)		(92	)		6		(130	)		(19	)
Total provision / (benefit) for income
taxes	$	(92	)		9	$	(130	)	$	(15	)

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Property, Plant And Equipment (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended		12 Months Ended	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Jun. 30, 2012 Property, Plant And Equipment [Member]	Jun. 30, 2011 Property, Plant And Equipment [Member]	Jun. 30, 2012 Property, Plant And Equipment [Member]	Jun. 30, 2011 Property, Plant And Equipment [Member]
Pieces of land acquired			4
Useful life of finite intangible asset	50 years
Depreciation and amortization expense	$ 3,605	$ 3,286		$ 1,200	$ 1,300	$ 2,300	$ 2,000

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Stock-Based Compensation (Schedule Of Option Activity) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Stock-Based Compensation [Abstract]
Outstanding December 31, 2011, Number of Shares	29,578
Options granted under the plan, Number of Shares
Options exercised, Number of Shares
Options forfeited and expired, Number of Shares	(2,050)
Outstanding June 30, 2012, Number of Shares	27,528	29,578
Outstanding December 31, 2011, Weighted Average Exercise Price	$ 0.50
Options granted under the plan, Weighted Average Exercise Price
Options exercised, Weighted Average Exercise Price
Options forfeited and expired, Weighted Average Exercise Price
Outstanding June 30, 2012, Weighted Average Exercise Price	$ 0.48	$ 0.50
Outstanding December 31, 2011, Weighted Average Remaining Contractual Term	6 years	6 years
Options granted under the plan, Weighted Average Remaining Contractual Term
Options exercised, Weighted Average Remaining Contractual Term
Options forfeited and expired, Weighted Average Remaining Contractual Term
Outstanding June 30, 2012, Weighted Average Remaining Contractual Term	6 years	6 years
Outstanding December 31, 2011, Aggregate Intrinsic Value
Options granted under the plan, Aggregate Intrinsic Value
Options exercised, Aggregate Intrinsic Value
Options forfeited and expired, Aggregate Intrinsic Value
Outstanding June 30, 2012, Aggregate Intrinsic Value

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Investment In Joint Ventures (Schedule Of Losses From Joint Ventures) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012		Jun. 30, 2011
Investment In Joint Ventures [Abstract]
Equity method investment losses	$ (152)	$ (88)	$ (273)	[1]	$ (161)	[1]

[1] The Company recorded a loss of $136,000 and $161,000 in ZAP Hangzhou, and a loss of $137,000 and $0 in Shanghai Zapple for the periods ended June 30, 2012 and 2011 respectively. These losses relate to the investment in a non-consolidated joint ventures accounted for under the equity method of accounting.

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Acquisition (Narrative) (Details) (USD $) Share data in Millions, unless otherwise specified	0 Months Ended	6 Months Ended		1 Months Ended
	Jan. 21, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2009 Alex Wang [Member]	Jun. 30, 2010 Cathaya Capital, L.P. [Member]
Business Acquisition [Line Items]
Number of shares issue in Jonway acquisition	8			4	40
Value of shares issue in Jonway acquisition	$ 2,700,000			$ 1,000,000	$ 10,000,000
Percentage of equity shares acquired	51.00%	51.00%
Acquisition-related costs		$ 0	$ 204,000

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Acquisition

6 Months Ended

Jun. 30, 2012

Acquisition [Abstract]

Acquisition

NOTE 4 - ACQUISITION

In December 2009, ZAP issued 4 million shares of ZAP common stock to Jonway Group's designee, Alex Wang, which was attributed towards $1 million of the purchase price under the amendment to the Jonway Acquisition Agreement.  In June 2010, ZAP issued 40 million shares of stock to Cathaya Capital, L.P., or Cathaya, in order to pay $10 million of the purchase price under the Jonway Acquisition Agreement.  

On January 21, 2011(the "Closing Date"), the Company completed the acquisition of 51% of the equity shares of Jonway.  The transaction was accounted for in accordance with the provisions of ASC 805-10, Business Combinations. The Company retained independent appraisers to advise management in the determination of the fair value of the various assets acquired and liabilities assumed. The values assigned in these financial statements and represent management's best estimate of fair values as of the Closing Date.

As required by ASC 805-20, Business Combinations—Identifiable Assets and Liabilities, and Any Non controlling Interest, management conducted a review to reassess whether they identified all the assets acquired and all the liabilities assumed, and followed ASC 805-20's measurement procedures for Closing Date recognition of the fair value of net assets acquired. As part of the measurement process, a third party valuation firm was used to assist in estimating the fair value of the intangible assets received in the acquisition of the 51% equity of Jonway Automobile. The valuation was not completed until December 31, 2011, and therefore a provisional amount was recognized in the period ended March 31, 2011.

     The following are the estimated fair value of assets acquired and liabilities assumed as of the Closing Date (in thousands):

Cash and cash equivalents	$	993
Restricted cash		3,088
Inventories, net		12,740
Property & equipment		57,071
Other tangible assets		11,472
Accounts payable		(14,549	)
Notes payable		(4,261	)
Other liabilities assumed		(14,358	)
Net tangible assets acquired		52,196
Goodwill and intangible assets		5,382
Net assets acquired		57,578
Non controlling interest - fair value		(28,213	)
Option to purchase remaining 49%		2,385
Purchase price	$	31,750

     The fair value of the major components of the intangible assets acquired and their estimated useful lives is as follows (dollars in thousands):

	Date of Acquisition Fair Value		Weighted Average Useful Life (in Years)
Customer relationships	$	745		8
Developed technology		2,076		7
Tradename		2,078	(a)
In-process research and development costs		175	(b)
Total		5,074
Goodwill		308
	$	5,382

_______________

(a)  The Jonway trade name has been determined to have an indefinite life.

(b)  In-process research and development is accounted for as an indefinite life intangible asset until the completion or abandonment of the associated research and development efforts.

Under ASC 805-10, acquisition-related costs (i.e., advisory, legal, valuation and other professional fees) are not included as a component of consideration transferred, but are accounted for as expenses in the periods in which the costs are incurred. Acquisition-related costs were $0 and $204,000 for the periods ended June 30, 2012 and 2011, respectively. The excess of the purchase price over the net tangible assets and intangible assets was recorded as goodwill.

The following unaudited pro forma condensed financial information presents the combined results of operations of ZAP and Jonway as if the acquisition had occurred as of the beginning of the period presented (in thousands except per share amounts):

	For the Six Months ended June 30, 2011 Restated			For the Three Months ended June 30, 2011 Restated
Net sales	$	27,974		$	16,266
Net loss		(20,861	)		(13,679	)
Net loss per common share, basic and diluted	$	(0.09	)	$	(0.06	)
Shares outstanding, basic and diluted		211,808			214,316

The unaudited pro forma condensed financial information is not intended to represent or be indicative of the consolidated results of operations of the Company that would have been reported had the acquisition been completed as of the beginning of the period presented.

Any pro forma adjustments are based upon available information and certain assumptions that the Company believes are reasonable. The pro forma results of operations do not include the potential post-acquisition effects of any restructuring, impairment or integration costs related to the combined operations nor of any revenue opportunities, operating synergies or cost savings anticipated as eventual benefits of the acquisition.

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Line Of Credit, Short Term Debt And Bank Acceptance Notes (Narrative) (Details) (USD $)	6 Months Ended			0 Months Ended		6 Months Ended				6 Months Ended	12 Months Ended				0 Months Ended	6 Months Ended	3 Months Ended						6 Months Ended		6 Months Ended			0 Months Ended	1 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Apr. 02, 2012 Taizhou Branch Of China Merchants Bank [Member]	Dec. 06, 2011 Taizhou Branch Of China Merchants Bank [Member]	Jun. 30, 2012 Taizhou Branch Of China Merchants Bank [Member]	Mar. 31, 2012 Taizhou Branch Of China Merchants Bank [Member]	Dec. 31, 2011 Taizhou Branch Of China Merchants Bank [Member]	Jun. 30, 2012 Taizhou Branch Of China Merchants Bank [Member] Line of Credit [Member]	Jun. 30, 2012 Taizhou Branch Of China Merchants Bank [Member] Revolving Short Term Bank Loan [Member]	Dec. 31, 2011 Taizhou Branch Of China Merchants Bank [Member] Revolving Short Term Bank Loan [Member]	Jun. 30, 2012 Sanmen Branch Of CITIC Bank [Member]	May 31, 2012 Sanmen Branch Of CITIC Bank [Member]	Jun. 30, 2012 Sanmen Branch Of CITIC Bank [Member] Line of Credit [Member]	May 25, 2012 Sanmen Branch Of CITIC Bank [Member] Revolving Short Term Bank Loan [Member]	Jun. 30, 2012 Sanmen Branch Of CITIC Bank [Member] Revolving Short Term Bank Loan [Member]	Mar. 31, 2012 Three Small-Sized Banks Based In Taizhou City [Member]	Dec. 31, 2011 Three Small-Sized Banks Based In Taizhou City [Member]	Dec. 06, 2011 Taizhou Branch Of China Everbright Bank [Member]	Dec. 31, 2011 Secured Debt [Member] Three Small-Sized Banks Based In Taizhou City [Member]	Jun. 30, 2012 Secured Debt [Member] Various Banks Based In Taizhou [Member]	Jun. 30, 2012 Notes Payable [Member]	Jun. 30, 2012 Minimum [Member]	Dec. 31, 2011 Minimum [Member] Three Small-Sized Banks Based In Taizhou City [Member]	Jun. 30, 2012 Maximum [Member]	Jun. 30, 2012 Jonway Group [Member]	Dec. 31, 2011 Jonway Group [Member]	Dec. 11, 2011 Jonway Group [Member] Promissory Note [Member]	Jan. 31, 2012 Jonway Group [Member] Promissory Note [Member]	Dec. 31, 2011 Jonway Group [Member] Promissory Note [Member]
Short-term Debt [Line Items]
Line of credit, borrowing capacity								$ 6,200,000					$ 7,100,000
Line of credit, remaining borrowing capacity									3,000,000
Line of credit, amount outstanding						1,100,000				1,100,000	3,200,000	5,600,000		5,600,000	1,600,000	1,590,000
Line of credit, amount repaid						2,100,000				2,100,000
Line of credit, annual interest rate						7.22%				7.22%					8.33%	8.33%
Line of credit, interest due date																Dec. 28, 2012
Parcels of land used to secure debt					1						2				1
Short term debt	3,676,000		5,485,000				520,000											2,200,000		790,000	1,000,000			2,200,000
Extinguishment of debt	4,842,000	2,011,000		520,000													2,200,000
Interest rate																							7.22%		9.47%			8.00%
Restricted cash																						13,100,000
Bank acceptance notes payable	26,124,000		10,528,000																4,700,000
Required cash deposits																							40.00%		60.00%
Amount due to related parties	228,000		2,122,000																							218,000	2,104,000
Repayment to related party																													1,600,000
Period after demand that payment must be made																												10 days
Advances received from related party																														$ 1,600,000

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Restatement Of March 2011 Unaudited Quarterly Financial Information (Restatement Of 2011 First Quarter Income Statement Information To Reflect The Final Measurement Of The Fair Value Of The Assets Acquired) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net loss	$ (6,844)	$ (13,679)	$ (11,356)	$ (20,861)
Previously Reported [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net loss		(13,715)		(23,613)
Adjustments [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Net loss		$ 36		$ 2,752

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Property, Plant And Equipment (Tables)

6 Months Ended

Jun. 30, 2012

Property, Plant And Equipment [Abstract]

Schedule Of Property, Plant And Equipment

		June 30, 2012			December 31, 2011
Buildings and improvements	$	21,610		$	21,649
Machinery and equipment		51,946			39,566
Office furniture and equipment		453			415
Leasehold improvements		37			37
Vehicles		896			745
		74,942			62,412
Less - accumulated depreciation
and amortization		(17,659	)		(15,459	)
	$	57,283		$	46,953

Schedule Of Intangible Assets

		June 30, 2012			December 31, 2011
Land use right	$	10,433		$	10,518
Software		97			92
		10,530			10,610
Less: accumulated amortization		(665	)		(535	)
	$	9,865		$	10,075

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Inventories (Tables)

6 Months Ended

Jun. 30, 2012

Inventories [Abstract]

Schedule Of Inventory

	June 30, 2012			December 31, 2011
Advanced technology vehicles	$	942		$	713
Vehicles-conventional		9,516			4,630
WIP  Jonway SUV's		1,975			2,234
Parts and supplies		4,978			4,879
Finished goods		402			240
		17,813			12,696
Less-inventory reserve		(1,623	)		(1,578	)
	$	16,190		$	11,118

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Goodwill & Other Intangibles (Summary Of Goodwill And Intangible Assets) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Finite-Lived Intangible Assets [Line Items]
Finite Assets, Useful Life	50 years
Finite Assets, Net Book Value	$ 9,865	$ 10,075
Finite Assets, Accumulated Amortization	(226)
Intangible Assets, Net Book Value	4,776	5,002
Goodwill Assets, Net Book Value	324	324
Intangible Assets and Goodwill Assets, Net Book Value, Total	5,100	5,326
Patents And Trademarks [Member]
Finite-Lived Intangible Assets [Line Items]
Finite Assets, Useful Life	7 years
Finite Assets, Net Book Value	63	75
Finite Assets, Accumulated Amortization	(12)
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite Assets, Useful Life	8 years 6 months
Finite Assets, Net Book Value	645	692
Finite Assets, Accumulated Amortization	(47)
Developed Technology Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Finite Assets, Useful Life	7 years
Finite Assets, Net Book Value	1,712	1,879
Finite Assets, Accumulated Amortization	(167)
In Process Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Indefinite Assets, Net Book Value	183	183
Trade Name [Member]
Finite-Lived Intangible Assets [Line Items]
Indefinite Assets, Net Book Value	$ 2,173	$ 2,173

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Significant Accounting Policies And Use Of Estimates (Narrative) (Details) (USD $) In Thousands, except Share data in Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Jan. 21, 2011
Significant Accounting Policies And Use Of Estimates [Line Items]
Outstanding common stock options, warrants and debentures	86.4	100.7
Outstanding debt convertible to shares	188
Allowance for doubtful accounts	$ 15,000		$ 9,000
Useful life of finite intangible asset	50 years
Percentage acquired in Jonway Auto	51.00%			51.00%
Personal Electric Products Including ZAPPY3 and Zapino Scooters [Member]
Significant Accounting Policies And Use Of Estimates [Line Items]
Warranty term	30 to 90 day
Xebra, ZAPTRUCK XL, and ZAPVAN Shuttle [Member]
Significant Accounting Policies And Use Of Estimates [Line Items]
Warranty term	six month
Xebra Vehicles Repaired By ZAP [Member]
Significant Accounting Policies And Use Of Estimates [Line Items]
Warranty term	six month
Jonway SUV Products [Member]
Significant Accounting Policies And Use Of Estimates [Line Items]
Warranty term	2-year or 60,000 kilometer mileage
Zhejiang Jonway Automobile Co., Ltd. [Member]
Significant Accounting Policies And Use Of Estimates [Line Items]
Percentage of ownership in Jonway Auto				49.00%
Minimum [Member]
Significant Accounting Policies And Use Of Estimates [Line Items]
Percentage of deposit required for bank acceptance notes	40.00%
Maximum [Member]
Significant Accounting Policies And Use Of Estimates [Line Items]
Percentage of deposit required for bank acceptance notes	60.00%
Derivative Liabilities [Member]
Significant Accounting Policies And Use Of Estimates [Line Items]
Derivative liabilities converted into shares		4.3
EPA License [Member]
Significant Accounting Policies And Use Of Estimates [Line Items]
Useful life of finite intangible asset	7 years
Customer Relationships [Member]
Significant Accounting Policies And Use Of Estimates [Line Items]
Useful life of finite intangible asset	8 years 6 months
Developed Technology Rights [Member]
Significant Accounting Policies And Use Of Estimates [Line Items]
Useful life of finite intangible asset	7 years
Land Use Rights [Member]
Significant Accounting Policies And Use Of Estimates [Line Items]
Useful life of finite intangible asset	50 years
Leasehold Improvements [Member]
Significant Accounting Policies And Use Of Estimates [Line Items]
Period of amortization	10 years

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Goodwill & Other Intangibles (Tables)

6 Months Ended

Jun. 30, 2012

Goodwill & Other Intangibles [Abstract]

Summary Of Goodwill And Intangible Assets

			Net Book		Accumulated			Net Book
	Useful Life		Value		Amortization			Value
	(In Years)		12/31/2011		6/30/2012			6/30/2012
Patents and Trademarks	7	$	75	$	(12	)	$	63
Customer Relationships	8.5	$	692	$	(47	)	$	645
Developed Technology	7	$	1,879	$	(167	)	$	1,712
In Process Technology		$	183	$	-		$	183
Trade name		$	2,173	$	-		$	2,173
Intangibles		$	5,002	$	(226	)	$	4,776
Goodwill Assets		$	324	$	-		$	324
		$	5,326	$	(226	)	$	5,100

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Distribution Agreements (Tables)

6 Months Ended

Jun. 30, 2012

Distribution Agreements [Abstract]

Schedule Of Distribution Agreements

		June 30, 2012			December 31, 2011
Better World Products	$	2,160		$	2,160
Jonway Products		14,400			14,400
		16,560			16,560
Less amortization		(4,201	)		(3,121	)
	$	12,359		$	13,439

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Significant Accounting Policies And Use Of Estimates

6 Months Ended

Jun. 30, 2012

Significant Accounting Policies And Use Of Estimates [Abstract]

Significant Accounting Policies And Use Of Estimates

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles requires the Management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. The more significant estimates relate to revenue recognition, contractual allowances and uncollectible accounts, intangible assets, accrued liabilities, derivative liabilities, income taxes, litigation and contingencies. Estimates are based on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for judgments about results and the carrying values of assets and liabilities. Actual results and values may differ significantly from these estimates.

Concentration of Credit Risk

The Company's operations are all carried out in the PRC.  Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC's economy.  The Company's operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe.  These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange.  The Company's results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Financial instruments which subject the Company to potential credit risk consist of its cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with several high credit quality financial institutions. Deposits may exceed the amount of insurance provided; however, these deposits typically are redeemable upon demand and, therefore, the Company believes the financial risks associated with these financial instruments are minimal. The Company has not experienced any losses to date on its deposits.

The Company performs ongoing credit evaluations of its customers, and generally does not require collateral on its accounts receivable. The Company estimates the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and records a provision for uncollectible accounts when collection is uncertain. The Company has not experienced significant credit related losses to date.

The Company currently relies on various outside contract manufacturers in China to supply electric vehicles and products for its customers. Although management believes that other contract manufactures could provide similar services and intends to transition its manufacturing to Jonway's facilities in Sanmen, China, but, if these Chinese companies are unable to supply electric vehicles and the Company is unable to transition manufacturing to Jonway's facilities or find alternative sources for these product and services, the Company might not be able to fill existing backorders and/or sell more electric vehicles. Any significant manufacturing interruption could have a material adverse effect on the Company's business, financial condition and results of operations.

Revenue Recognition

The Company records revenues for non-Jonway sales when all of the following criteria have been met:

Persuasive evidence of an arrangement exists. The Company generally relies upon sales contracts or agreements, and customer purchase orders to determine the existence of an arrangement.

Sales price is fixed or determinable. The Company assesses whether the sales price is fixed or determinable based on the payment terms and whether the sales price is subject to refund or adjustment.

Delivery has occurred. The Company uses shipping terms and related documents, or written evidence of customer acceptance, when applicable, to verify delivery or performance. The Company's customary shipping terms are FOB shipping point.

Collectability is reasonably assured.  The Company assesses collectability based on creditworthiness of customers as determined by our credit checks and their payment histories. The Company records accounts receivable net of allowance for doubtful accounts and estimated customer returns.

The Company provides no price protection. Sales are recognized net of sale discounts, rebates and return allowances.

Stock-based Compensation

The Company accounts for stock-based compensation which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes-Merton option pricing model (the "Black-Scholes model"). The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. We estimate forfeitures at the time of grant and revise our estimate in subsequent periods if actual forfeitures differ from those estimates.

The Company accounts for stock-based compensation awards and warrants granted to non-employees by determining the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty's performance is complete.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. To the extent a deferred tax asset cannot be recognized under the preceding criteria, allowances are established.

Foreign Currency Translation

The Company and its wholly owned subsidiary/investments maintain their accounting records in United States Dollars ("US$") whereas Jonway Auto maintains its accounting records in the currency of Chinese Renminbi ("RMB"), being the primary currency of the economic environment in which their operations are conducted.

Jonway Auto's principal country of operations is the PRC.  The financial position and results of these operations are determined using RMB, the local currency, as the functional currency.  The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period.  Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date.  The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution.  Due to the fact that cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.  Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholder's equity as "Accumulated Other Comprehensive Income."

The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in China's political and economic conditions, any significant revaluation of RMB may materially affect our financial condition in terms of US$ reporting.

Loss per Share

     Basic and diluted net loss per share is computed by dividing consolidated net loss by the weighted-average number of common shares outstanding during the period. The Company's potentially dilutive shares, which include outstanding stock options, convertible debt and warrants, have not been included in the computation of diluted net loss per share for all periods presented as the result would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share. Outstanding common stock options, warrants and debentures totaled 86.4 million shares and 100.7 million shares at June 30, 2012 and 2011, respectively. ZAP also had outstanding convertible debt, which is convertible into 188 million shares of ZAP common stock at June 30, 2012.

Cash and Cash Equivalents

The Company invests its excess cash in short-term investments with various banks and financial institutions. Short-term investments are cash equivalents, as they are part of the cash management activities of the Company and are comprised of investments having maturities of three months or less when purchased.  The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents

Restricted Cash

The Company has cash restricted in connection with the issuance of bank acceptance notes to various suppliers of spare parts which were issued through Jonway's banks.  To issue these bank acceptance notes to Jonway's suppliers, the banks require a deposit of approximately 40-60% of the full amount of such notes which are payable within 6 months from issuance.  Upon the maturity date, restricted funds will be used to settle the bank acceptance notes. 

Marketable Securities

The Company has an investment that is comprised of marketable equity securities, which are classified as available-for-sale and recorded at fair value, the value of which fluctuates with the stock market value.   The securities are shares of Samyang Optics Co., Ltd., which shares are traded on the Korean stock exchange.  ZAP's ownership is not material to Samyang Optics Co., Ltd. Net unrealized holding gains and losses, net of tax, are reported as a separate component of shareholders' deficit, except where holding losses are determined to be "other-than-temporary", whereby the losses are reported in gains and losses on investments in the consolidated statement of operations.  Gains and losses on disposals of marketable equity securities are determined using the specific identification method.

Accounts and Notes Receivable

Accounts receivable consist mainly of receivables from our established dealer network.  Notes receivable balances consist of bank acceptance notes received from various Jonway dealers to finance such dealer's purchase of our vehicles products.  These bank acceptance notes can be endorsed to settle the payables to Jonway suppliers or discounted to fund cash flows. These notes are a means of financing working capital for orders that were placed by these dealers. A credit review is performed by the Company before the dealer is approved to purchase vehicles form the Company. The Company performs ongoing credit evaluations of its dealers, and generally does not require collateral on its accounts receivable. The Company estimates the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and records a provision for uncollectible accounts when collection is uncertain. The Company has not experienced significant credit related losses to date.   The allowance for doubtful accounts was $15,000 and $9,000 at June 30, 2012 and December 31, 2011, respectively.

Fair Value of Financial Instruments

The Company measures its financial assets and liabilities at fair value. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. For certain of the Company's financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amount approximates fair value because of the short maturities. The fair value of debt is not determinable due to the terms of the debt and the lack of a comparable market for such debt.  These tiers include:

Level 1:  Observable inputs such as quoted prices in active markets;

Level 2:  Inputs other than quoted prices in active markets that are directly or indirectly observable;

Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions and methodologies that result in management's best estimate of fair value.

The change in fair value of derivative liabilities is classified in other income (expense) in the Company's statement of operations.  The fair value of the Company's derivative liabilities related to stock purchase warrants was determined using the Black-Scholes option pricing model – a Level 3 input.

Derivative Financial Instruments

The Company generally does not use derivative financial instruments to hedge exposures to cash flow or market risks. However, certain other financial instruments, such as warrants, are classified as liabilities when either (a) the holder possesses rights to net-cash settlement or (b) physical or net-share settlement is not within the control of the Company. In such instances, net-cash settlement is assumed for financial accounting and reporting, even when the terms of the underlying contracts do not provide for net-cash settlement. Such financial instruments are initially recorded at fair value and subsequently adjusted to fair value at the close of each reporting period.

The Company accounts for derivative instruments and debt instruments in accordance with the interpretative guidance of ASC 815 ("Derivatives and Hedging").   It is necessary for the Company to make certain assumptions and estimates to value derivatives and debt instruments.

During the six months ended June 30, 2011, derivative liabilities were converted into 4.3 million shares of ZAP stock. At June 30, 2011 and June 30, 2012, the Company did not have any derivative liabilities.

 The following table set forth a summary of changes in the fair value of Level 3 liabilities for the 3 months ended June 30, 2011 (in thousands):

	Balance		Exercise			Change in		Balance
	3/31/2011		of warrants			fair value		6/30/2011
Derivative Liabilities	$	201	$	(70	)	$	10	$	0

The following table summarizes those assets and liabilities measured at fair value on a recurring basis (in thousands):

                                                                                               June 30, 2012

Assets	Level 1		Level 2		Level 3		Fair Value Measurements
Marketable Securities (1)	$	1,289		—		—	$	1,289

                                                                                                        December 31, 2011

Assets	Level 1		Level 2		Level 3		Fair Value Measurements
Marketable Securities (1)	$	1,830		—		—	$	1,830

____________

(1) Marketable securities consist of common stock of a related party. The fair value of marketable securities is based upon market value quoted by Korean stock exchange

The Company's other financial instruments at June 30, 2012 consist of cash and cash equivalents, accounts and notes receivable, accounts payable and debt. For the period ended June 30, 2012 the Company did not have any derivative financial instruments. The Company believes the reported carrying amounts of its accounts receivable and accounts payable approximate fair value, based upon the short-term nature of these accounts. The carrying value of the Company's loan agreements approximate fair value as each of the loans bears interest at a floating rate.

Inventories

Inventories consist primarily of vehicles, both gas and electric, parts and supplies, and work in progress and are carried at the lower of cost (first-in, first-out basis for ZAP and moving average basis for Jonway) or market (net realizable value or replacement cost). The Company maintains reserves for estimated excess, obsolete and damaged inventory based on projected future shipments using historical selling rates, and taking into account market conditions, inventory on-hand, purchase commitments, product development plans and life expectancy, and competitive factors. If markets for the Company's products and corresponding demand were to decline, then additional reserves may be deemed necessary. Any changes to the Company's estimates of its reserves are reflected in cost of goods sold within the statement of operations during the period in which such changes are determined by management.

Property and Equipment

Property and equipment consists of land, building and improvements, machinery and equipment, office furniture and equipment, vehicles, and leasehold improvements. Property and equipment is stated at cost, net of accumulated depreciation and amortization, and is depreciated or amortized using straight-line method over the asset's estimated useful life. Costs of maintenance and repairs are charged to expense as incurred; significant renewals and betterments are capitalized.  Leasehold improvements are amortized over 10 years using the straight-line method.

Land use Rights

Under PRC law, all land in the PRC is permanently owned by the government and cannot be sold to an individual or company but companies can purchase the land use rights for the specified period of time, as in our industry the industrial purpose has a useful life of 50 years.  The government grants individuals and companies the right to use parcels of land for specified periods of time.  These land use rights are sometimes referred to informally as "ownership".  Land use rights are stated at cost less accumulated amortization.  Amortization is provided over the respective useful lives, using the straight –line method.  Estimated useful life is 50 years, and is determined in the connection with the term of the land use right.

Long-lived Assets

Long-lived assets are comprised of property and equipment and intangible assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An estimate of undiscounted future cash flows produced by the asset, or by the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flow and fundamental analysis. The Company reports an asset to be disposed of at the lower of its carrying value or its estimated net realizable value.

Intangible Assets-Finite

     Intangible assets consist of patents, trademarks, land use rights, government approvals and customer relationships (including client contracts). For financial statement purposes, identifiable intangible assets with a defined life are being amortized using the straight-line method over the estimated useful lives of seven years for the EPA license and 8.5 years for the customer relationships. Costs incurred by the Company in connection with patent, trademark applications and approvals from governmental agencies such as the Environmental Protection Agency, including legal fees, patent and trademark fees and specific testing costs, are expensed as incurred. Purchased intangible costs of completed developments are capitalized and amortized over an estimated economic life of the asset, generally seven years, commencing on the acquisition date. Costs subsequent to the acquisition date are expensed as incurred.

Goodwill and Intangible Assets – Indefinite

Goodwill and intangible assets determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually.  Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance applicable accounting principles.  The Company assesses annually whether there is an indication that goodwill is impaired, or more frequently if events and circumstances indicate that the asset might be impaired during the year.  The Company performs its annual impairment test in the fourth quarter of each year.   Calculating the fair value of the reporting units requires significant estimates and assumptions by management.  To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit, there is an indication that the reporting unit goodwill may be impaired and a second step of the impairment test is performed to determine the amount of the impairment to be recognized, if any.

Non-Controlling Interests

The Financial Accounting Standards Board ("FASB") issued a statement which established accounting and reporting standards that require non-controlling interests (previously referred to as minority interest) to be reported as a component of equity, changes in a parent's ownership interest while the parent retains its controlling interest be accounted for as equity transactions, and upon a loss of control, retained ownership interest will be re-measured at fair value, with any gain or loss recognized in earnings.

On January 21, the Company acquired 51% of Zhejiang Jonway Automobile Co. Ltd from Jonway Group, a related party, who holds a 49% of the remaining interest in Jonway Auto. (See Note 4)  Pursuant to the Jonway Acquisition Agreement, ZAP had the right to acquire the remaining 49% of Jonway at the same valuation, which expired on March 31, 2011.  To account for the expired option,we recorded a reduction of common stock.

Product warranty Costs

The Company provides 30 to 90 day warranties on its personal electric products, including the ZAPPY3 and the Zapino scooters, six month warranties for the Xebra®, the ZAPTRUCK XL, the ZAPVAN Shuttle vehicles, and a six month warranty for Xebra® vehicles repaired by ZAP pursuant to its product recall.  The Company records the estimated cost of the product warranties at the time of sale using the estimated costs of products warranties based on historical results. The estimated cost of warranties has not been significant to date. Should actual failure rates and material usage differ from our estimates, revisions to the warranty obligation may be required.

The Company provides a 2-year or 60,000 kilometer mileage warranty for its Jonway SUV products. The Company records the estimated cost of the product warranties at the time of sale using the estimated cost of product warranties based on historical results. The estimated cost of warranties has not been significant to date. Should actual failure rates and material usage differ from our estimates, revisions to the warranty obligation may be required 

Comprehensive loss

Comprehensive loss represents the net loss for the period plus the results of certain changes to shareholders' equity that are not reflected in the consolidated statements of operations. The Company's comprehensive loss consists of net losses, foreign currency translation adjustments and unrealized net losses on investments.  

Reclassifications

Certain amounts from prior period have been reclassified to conform to the current period's presentation.

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Investment In Joint Ventures (Tables)

6 Months Ended

Jun. 30, 2012

Investment In Joint Ventures [Abstract]

Schedule Of Joint Venture's Carrying Amount

		ZAP Hangzhou			Shanghai Zapple			Total
Balance as of December 31, 2011	$	554		$	736		$	1,290
Less: investment loss		(136	)		(137	)		(273	)
Balance as of June 30,2012	$	418			599			1,017

Schedule Of Losses From Joint Ventures

		June 30, 2012			June 30 2011
Equity method investments losses	$	(273	)(1)	$	(161	)(1)

(1) The Company recorded a loss of $136,000 and $161,000 in ZAP Hangzhou, and a loss of $137,000 and $0 in Shanghai Zapple for the periods ended June 30, 2012 and 2011 respectively. These losses relate to the investment in a non-consolidated joint ventures accounted for under the equity method of accounting.

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Restatement Of March 2011 Unaudited Quarterly Financial Information (Narrative) (Details)	0 Months Ended
	Jan. 21, 2011	Jun. 30, 2012
Restatement Of March 2011 Unaudited Quarterly Financial Information [Abstract]
Date of acquisition	Jan. 21, 2011
Percentage of equity shares acquired	51.00%	51.00%

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Property, Plant And Equipment (Schedule Of Property, Plant And Equipment) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 74,942	$ 62,412
Less - accumulated depreciation	(17,659)	(15,459)
Property, plant and equipment, net	57,283	46,953
Building And Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	21,610	21,649
Machinery And Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	51,946	39,566
Office Furniture And Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	453	415
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	37	37
Vehicles [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 896	$ 745

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Related Party (Schedule Of Contract Rates) (Details) (Sanmen Branch Of Zhejiang UFO Automobile [Member], USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
The First 3,000 Vehicles [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	3,000
Contractual fee per vehicle	$ 44
Vehicles From 3,001 To 5,000 [Member]
Related Party Transaction [Line Items]
Contractual fee per vehicle	30
Vehicles From 3,001 To 5,000 [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	3,001
Vehicles From 3,001 To 5,000 [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	5,000
Vehicles Over 5,000 [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	5,000
Contractual fee per vehicle	$ 22

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 499	$ 5,859
Restricted Cash	13,146	6,128
Marketable Securities	1,289	1,830
Notes receivable from Jonway Auto dealers	1,117	1,457
Accounts receivable, net of allowance of $15 in 2012 and $9 in 2011	2,946	2,963
Inventories, net	16,190	11,118
Prepaid expenses and other current assets	2,554	1,984
Total current assets	37,741	31,339
Property, plant and equipment, net	57,283	46,953
Land use rights, net	9,865	10,075
Other assets:
Investment in joint ventures	1,017	1,290
Distribution fees for Jonway Products and Better Worlds Products	12,359	13,439
Intangible assets, net	4,776	5,002
Goodwill	324	324
Due from related party	3,375	1,137
Advance payments to related party		11,616
Deposits and other assets	338	313
Total other assets	22,189	33,121
Total assets	127,078	121,488
Current liabilities:
Short term loans	3,676	5,485
Accounts payable	19,787	15,164
Accrued liabilities	6,011	8,030
Notes payable	26,124	10,528
Advances from customers	1,695	1,971
Taxes payable	325	885
Due to related party	228	2,122
Other payables	2,209	2,116
Total current liabilities	60,055	46,301
Long term liabilities:
Warranty costs	799	592
Senior convertible debt	18,916	19,000
Total long term liabilities	19,715	19,592
Total liabilities	79,770	65,893
Commitments and contingencies
ZAP Shareholders' Equity
Common stock, no par value; 800 million shares authorized; 300,156,120 and 297,746,376 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively	229,140	225,378
Accumulated other comprehensive income	431	1,051
Accumulated deficit	(203,596)	(195,596)
Total ZAP shareholders' equity	25,975	30,833
Non-controlling interest	21,333	24,762
Total equity	47,308	55,595
Total liabilities and equity	$ 127,078	$ 121,488

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Significant Accounting Policies And Use Of Estimates (Summary Of Changes In Level 3 Liabilities) (Details) (Derivative Liabilities [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2011
Derivative Liabilities [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance 3/31/2011	$ 201
Exercise of warrants	(70)
Change in fair value	10
Balance 6/30/2011	$ 0

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Organization And Operations

6 Months Ended

Jun. 30, 2012

Organization And Operations [Abstract]

Organization And Operations

NOTE 1 - ORGANIZATION AND OPERATIONS:

ZAP was incorporated in California in September 1994 (together with its subsidiaries, "the Company," or "ZAP"). ZAP markets advanced transportation, including alternative energy and fuel efficient automobiles, motorcycles, bicycles, scooters, personal watercraft, hovercraft, neighborhood electric vehicles and commercial vehicles. The Company's business strategy has been to develop, acquire and commercialize electric vehicles and electric vehicle power systems, which the Company believes have fundamental practical and environmental advantages over available internal combustion modes of transportation that can be produced commercially on an economically competitive basis. In pursuit of a manufacturing plant and a partner with an existing product line, a distribution and customer support network in China and experience in vehicle manufacturing, ZAP acquired a majority of the outstanding equity in Zhejiang Jonway Automobile Co., Ltd. ("Jonway"). 

On January 21, 2011, the Company completed the acquisition of 51% of the equity shares of Jonway for a total purchase price of $31.75 million consisting of approximately $29 million in cash and 8 million shares of ZAP common stock valued at $2.7 million.  The Company believes that the acquisition will allow it to expand its electric vehicle ("EV") business and distribution network around the world, give it access to the rapidly growing Chinese market for electric vehicles and have competitive production capacity in an ISO 9000 certified manufacturing facility with the capacity and resources to support production of ZAP's electric vehicles and new product line of mini vans and new SUVs.

              Jonway is a limited liability company incorporated in Sanmen County, Zhejiang Province of the People's Republic of China ("the PRC") on April 28, 2004 by Jonway Group Co., Ltd. ("Jonway Group"). Jonway Group is under the control of three individuals, Wang Huaiyi, Alex Wang (the son of Wang Huaiyi) and Wang Xiao Ying (the daughter of Wang Huaiyi and all three individuals collectively referred to as the "Wang Family"). 

Jonway's approved scope of business operations includes the production and sale of vehicle spare parts, and the sale of UFO licensed SUV vehicles.  The principal activities of Jonway are the production and sale of automobile spare parts and the production and distribution of SUVs in China using the consigned UFO license from an affiliate of Jonway Group. 

With the completion of the acquisition of a majority interest in Jonway, the combined companies' new product lines planned for the second half of 2012 include the A380 SUV EV and the minivan EV. Both products leverage the production moldings, the manufacturing engineering infrastructure and facilities currently in place for the gasoline models of these vehicles. Since the acquisition, the companies have been working on developing the joint product line, marketing and sales plans for the 2012 EV product lines.

Jonway is preparing for certification of the EV production line by the Chinese electric vehicle authorities, which we expect to occur in the second half of 2012, since we anticipate that the EV production facilities in Jonway will be ready for the certification process in the second half of 2012.  Meanwhile, the engineering teams from both companies are undertaking extensive testing of the A380 SUV EV at Jonway Auto and ZAP Hangzhou EV research and development center.

Our target is to deliver the China type approved EV A380 SUV and EV minivan in the second half of 2012, with the purpose of generating sales by taking advantage of the Chinese central government electric vehicle incentives of up to RMB 60,000 or over $9,680 per vehicle.  ZAP intends to use the existing manufacturing plant from Jonway that is being upgraded for the production of g the electric vehicles and utilizing the existing Jonway models to gain economy of scale and reduce molding investment costs. ZAP also intends to leverage Jonway's distribution and customer support centers in China to support the sales and marketing of its new EV product line. In May 2012, we launched the gasoline-powered minivan models into China market.  We expect this gasoline minivan series can contribute our business expansion across the world. In the 2nd quarter of 2012, Jonway auto established its two wholly owned subsidiaries, namely, Taizhou Fuxing Vehicle Sale Co., Ltd. focusing on minivan marketing and distribution in China and Taizhou Vehicle Leasing Co., Ltd. focusing on the vehicle leasing business in Taizhou, China.

     ZAP plans to focus on developing new international markets such as Brazil, South Africa, Russia and some of the Central America countries such as Costa Rica, Ecuador and Mexico. These countries are looking for affordable gasoline and electric SUVs and minivans with a competitive price and qualities.

BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the financial statements of ZAP, and its subsidiaries: Jonway Automobile, Voltage Vehicles and ZAP Stores and are prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP").  In these financial statements, "subsidiaries" are companies that are over 50% controlled, the financial statements of which are consolidated with those of the Company.  Significant inter-company transactions and balances are eliminated in consolidation; profits from inter-company sales, are also eliminated; non –controlling interests are included in equity.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (all of which are of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2012 are not indicative of the results that may be expected for the year ending December 31, 2012 or for any other future period.  These condensed consolidated financial statements and the notes thereto should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011 filed with the Securities and Exchange Commission (the "SEC") on April 16, 2012 (our "10-K").

Liquidity and Capital Resources

In assessing our liquidity, we monitor and analyze our cash on-hand, liquidation value of our investment in securities, and our operating and capital expenditure commitments.  Our principal liquidity needs are to meet our working capital requirements, operating expenses and capital expenditure obligations. 

Our principal sources of liquidity consist of our existing cash on hand, bank facilities from China-based banks for Jonway Auto, our investment in securities with Samyang Optics, Ltd. and transactions with Luo Hua Liang, the brother-in-law of Alex Wang, the Co-CEO and a director of ZAP.  In 2011, we entered into private placement subscription agreements with Mr. Luo for the purchase of ZAP common stock for the aggregate purchase price of $7 million, of which we received $2 million as of the quarter ended March 31, 2011.  The private placement subscription agreements were then superseded and terminated by a stock purchase agreement with Mr. Luo in August 2011. Pursuant to the stock purchase agreement, Mr. Luo agreed to purchase ZAP common stock for an aggregate purchase price of $2 million in multiple closings. On September 8, 2011, we issued approximately 2.3 million shares of ZAP common stock in connection with the initial closing of $771,000. We received an additional $1.025 million in subsequent closings for which we have issued approximately 3.35 million shares of ZAP common stock. During 2011, we issued 7.7 million shares to Mr. Liang for cash of $3.8 million.

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

Under the above mentioned credit line of $6.2 million granted by CMB on August 19, 2011, Jonway entered into a Credit Agreement with CMB 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% and is due on August 18, 2012. The loan is secured by a Maximum Amount Mortgage Contract by and between Jonway and CMB 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. During the six months ended June 30, 2012, the Company had repaid $2.1 million and $1.1 million remained outstanding.

In December 2011, Jonway established additional short term bank loans amounting to approximately $2.2 million from three small-size banks based in Taizhou City, which are subject to a Jonway Group guarantee with $790,000 of such loans also secured by bank notes received from Jonway dealers. The $2.2 million  was repaid on March 31, 2012.

On March 31, 2012, to support the monthly business performance target of CMB, Jonway entered into another credit agreement with this bank for a sum of short term bank loan in the aggregate amount of approximately $520,000 which was drawn down on March 31, 2012, and repaid on April 1, 2012.

In May 2012, we were approved up to an aggregate of $ 7.1 million of bank facility from the Sanmen Branch of CITIC Bank ("CITIC")  through Jonway. Although we have been approved for the credit line, there are no legal obligations or rights to the credit line until we execute agreements with the lender to borrow funds under the credit line. When drawn down, the credit line will be secured by land and buildings on this land  owned by Jonway and guaranteed by Jonway Group.

     Under the above mentioned credit line of $7.1 million granted by CITIC, Jonway entered into a Credit Agreement with CITIC for a revolving short term bank loan in the aggregate amount of approximately US$ 1.6 million which was drawn down on May 25, 2012. The annual interest rate is 8.33% and is due on December 28, 2012. The loan is secured by a Maximum Amount Mortgage Contract by and between Jonway and CITIC dated May 25, 2012 in which land use right over one parcels of land and the buildings on this land owned by Jonway at Sanmen Factory have been pledged as security for this loan. The remaining $5.6 million of the credit line was executed through the issuance of bank acceptance notes by CITIC to Jonway suppliers for the due payables.

     During the quarter ended June 30, 2012, Jonway entered into additional short term loan agreements with various banks based in Taizhou city for proceeds aggregating amount of approximately $1 million. Such bank loans are secured by Jonway Group, certain individuals and Jonway's property, plant and equipment.

As of June 30, 2012, Jonway had $3.6 million in short term bank loans, which are borrowed from the above stated China-based banks with interest rates ranging from 7.22% to 9.47% per annum due through August 18, 2012.

Jonway intends to utilize the credit lines to expand its electric vehicle business as well as other future vehicle models.  This includes on-going working capital needs, electric vehicle production equipment requirements, testing, homologation and new EV product molds. These credit lines will also be used to support the company's expansion plans, with emphasis on its electric vehicle production line facilities in China. The credit will also help advance new electric vehicle initiatives, launch new strategic global sales and marketing operations, bolster infrastructure, and finance working capital.

In the event that we require additional liquidity, our principal shareholders, Cathaya and Jonway Group, have agreed to provide the necessary support to meet our financial obligations through May 21, 2013.

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Investment In Joint Ventures (Narrative) (Details) In Millions, unless otherwise specified	Jun. 30, 2012 ZAP Hangzhou [Member]	Dec. 11, 2009 ZAP Hangzhou [Member] ZAP [Member] USD ($)	Jun. 30, 2012 Shanghai Zapple [Member]	Nov. 30, 2011 Shanghai Zapple [Member] CNY	Jun. 30, 2012 Better World [Member] ZAP Hangzhou [Member]	Jun. 30, 2012 Alex Wang [Member] ZAP Hangzhou [Member]	Dec. 31, 2012 ZAP Hangzhou [Member] Shanghai Zapple [Member]	Nov. 30, 2011 ZAP Hangzhou [Member] Shanghai Zapple [Member] CNY	Dec. 11, 2009 ZAP, Alex Wang, And Better World [Member] ZAP Hangzhou [Member] USD ($)
Schedule of Equity Method Investments [Line Items]
Joint venture ownership percentage	37.50%		50.00%		37.50%	25.00%	50.00%
Original registered capital of joint venture				20
Joint venture, capital investment		$ 1.1		5.0				3.0	$ 3.0

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Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2012

Segment Reporting [Abstract]

Schedule Of Segment Results

		Jonway			Electric						Advanced
		Conventional			Consumer						Technology
		Vehicles			Products			Car outlet			Vehicles			Total
For the three months ended June 30, 2012:
Net sales	$	12,381		$	272		$	42		$	10		$	12,705
Gross profit	$	899		$	45		$	33		$	53		$	1,030
Depreciation, amortization and impairment	$	742		$	547		$	2		$	7		$	1,298
Net loss	$	(4,651	)	$	(2,077	)	$	(94	)	$	(22	)	$	(6,844	)
Total assets	$	81,906		$	44,222		$	631		$	319		$	127,078
For the three months ended June 30, 2011:
Net sales	$	15,721		$	102		$	249		$	194		$	16,266
Gross profit	$	1,422		$	24		$	95		$	14		$	1,555
Depreciation, amortization and impairment	$	1,078		$	554		$	2		$	3		$	1,637
Net loss	$	(2,278	)	$	(10,803	)	$	(15	)	$	(583	)	$	(13,679	)
Total assets	$	82,360		$	17,470		$	709		$	1,053		$	101,592
For the six months ended June 30, 2012:
Net sales	$	24,370		$	386		$	115		$	16		$	24,886
Gross profit (loss)	$	1,622		$	73		$	40		$	(3	)	$	1,732
Depreciation, amortization and impairment	$	2,494		$	1,093		$	4		$	14		$	3,605
Net loss	$	( 6,334	)	$	(4,196	)	$	(128	)	$	(190	)	$	(11,356	)
Total assets	$	81,906		$	44,222		$	631		$	319		$	127,078
For the six months ended June 30, 2011:
Restated
Net sales	$	26,668		$	302		$	614		$	390		$	27,974
Gross profit	$	2,357		$	48		$	153		$	32		$	2,590
Depreciation, amortization and impairment	$	2,210		$	1,063		$	4		$	9		$	3,286
Net loss	$	(6,152	)	$	(13,648	)	$	(71	)	$	(990	)	$	(20,861	)
Total assets	$	82,360		$	17,470		$	709		$	1,053		$	101,592

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Long-Term Notes (Details) (USD $) Share data in Millions, except Per Share data, unless otherwise specified	6 Months Ended			6 Months Ended	0 Months Ended	6 Months Ended			0 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011	Jun. 30, 2012 8% Senior Convertible Note [Member]	Feb. 12, 2012 8% Senior Convertible Note [Member] CEVC [Member]	Jun. 30, 2012 8% Senior Convertible Note [Member] CEVC [Member]	Jun. 30, 2012 8% Senior Convertible Note [Member] CEVC [Member] Jonway Capital Stock [Member]	Jun. 30, 2012 Maximum [Member]	Jan. 12, 2011 Amended [Member] 8% Senior Convertible Note [Member] CEVC [Member]	Jun. 30, 2012 Amended [Member] 8% Senior Convertible Note [Member] CEVC [Member]	Jan. 12, 2011 Amended [Member] Maximum [Member] 8% Senior Convertible Note [Member] CEVC [Member]
Debt Instrument [Line Items]
Senior Secured convertible note, principal amount	$ 18,916,000		$ 19,000,000		$ 20,700,000				$ 19,000,000
Term of exercisable warrant									2 years
Warrant issued											20
Warrant, exercise price									$ 0.50
Senior Secured convertible note, maturity date						Feb. 12, 2012				Aug. 12, 2013
Warrant, maturity date						Feb. 12, 2014
Interest accrued					1,700,000
Interest rate					8.00%			9.47%
Debt instrument, discount						2,200,000
Debt instrument, amount amortized	410,000	8,108,000				408,000
Principle amount of debt used in applying conversion				$ 1,000
Debt instrument, conversion rate							0.00003743
Debt instrument, number of shares per $1,000 principal if converted				4,435

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Commitments And Contingencies

6 Months Ended

Jun. 30, 2012

Commitments And Contingencies [Abstract]

Commitments And Contingencies

NOTE 17 – COMMITMENTS AND CONTINGENCIES

Employment agreement

     As of Jan 16, 2011, the Company entered into employment agreements with Benjamin Zhu. The agreement provides for an annual salary of $140,000 for each year for the term of the agreement with Mr. Zhu.

     On June 18, 2012, the Company also entered into an employment agreement with Charles Schillings as its Chief Operating Officer. The agreement provides for an annual salary of $144,000 for a three month initial term with an automatic extension of nine months. After one year, annual renewals will continue unless the agreement is terminated by the either party. On August 7, 2012, Mr. Schillings was appointed as the Co-Chief Executive Officer (Co-CEO) to lead U.S. and International operations alongside with Alex Wang, the Co-CEO for ZAP Jonway's China division.

Guarantees

     Jonway Auto guaranteed certain financial obligations of outside third parties including suppliers to support our business and economic growth. Guarantees will terminate on payment and/or cancellation of the obligation once it is repaid. A payment by us would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guarantee. Maximum potential payments under guarantees total $4,130 through June 30, 2012. Our performance risk under these guarantees is reviewed regularly, and has resulted in no changes to our initial valuations.

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Related Party (Tables)

6 Months Ended

Jun. 30, 2012

Related Party [Abstract]

Schedule Of Amount Due To/From Related Parties

Amount due from related parties are as follows:

June 30, 2012

December 31, 2011

Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd

$

3,375

$

978

Jonway Group

-

159

Total

$

3,375

$

1,137

Amount due to related parties are follows:

June 30, 2012

December 31, 2011

Jonway Group

$

218

$

2,104

Sanmen Branch of Zhejiang UFO Automobile

-

-

Jonway Motor Cycle

10

18

Total

$

228

$

2,122

Advance payment to Jonway Group

$

-

$

11,616

Schedule Of Contract Rates

The first 3,000 vehicles	$44 per vehicle
Vehicles from 3,001 to 5,000	$30 per vehicle
Vehicles over 5,000	$22 per vehicle

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Significant Accounting Policies And Use Of Estimates (Policy)

6 Months Ended

Jun. 30, 2012

Significant Accounting Policies And Use Of Estimates [Abstract]

Use Of Estimates

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements in conformity with generally accepted accounting principles requires the Management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. The more significant estimates relate to revenue recognition, contractual allowances and uncollectible accounts, intangible assets, accrued liabilities, derivative liabilities, income taxes, litigation and contingencies. Estimates are based on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for judgments about results and the carrying values of assets and liabilities. Actual results and values may differ significantly from these estimates.

Concentration Of Credit Risk

Concentration of Credit Risk

The Company's operations are all carried out in the PRC.  Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC's economy.  The Company's operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe.  These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange.  The Company's results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

Financial instruments which subject the Company to potential credit risk consist of its cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with several high credit quality financial institutions. Deposits may exceed the amount of insurance provided; however, these deposits typically are redeemable upon demand and, therefore, the Company believes the financial risks associated with these financial instruments are minimal. The Company has not experienced any losses to date on its deposits.

The Company performs ongoing credit evaluations of its customers, and generally does not require collateral on its accounts receivable. The Company estimates the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and records a provision for uncollectible accounts when collection is uncertain. The Company has not experienced significant credit related losses to date.

The Company currently relies on various outside contract manufacturers in China to supply electric vehicles and products for its customers. Although management believes that other contract manufactures could provide similar services and intends to transition its manufacturing to Jonway's facilities in Sanmen, China, but, if these Chinese companies are unable to supply electric vehicles and the Company is unable to transition manufacturing to Jonway's facilities or find alternative sources for these product and services, the Company might not be able to fill existing backorders and/or sell more electric vehicles. Any significant manufacturing interruption could have a material adverse effect on the Company's business, financial condition and results of operations.

Revenue Recognition

Revenue Recognition

The Company records revenues for non-Jonway sales when all of the following criteria have been met:

Persuasive evidence of an arrangement exists. The Company generally relies upon sales contracts or agreements, and customer purchase orders to determine the existence of an arrangement.

Sales price is fixed or determinable. The Company assesses whether the sales price is fixed or determinable based on the payment terms and whether the sales price is subject to refund or adjustment.

Delivery has occurred. The Company uses shipping terms and related documents, or written evidence of customer acceptance, when applicable, to verify delivery or performance. The Company's customary shipping terms are FOB shipping point.

Collectability is reasonably assured.  The Company assesses collectability based on creditworthiness of customers as determined by our credit checks and their payment histories. The Company records accounts receivable net of allowance for doubtful accounts and estimated customer returns.

The Company provides no price protection. Sales are recognized net of sale discounts, rebates and return allowances.

Stock-Based Compensation

Stock-based Compensation

The Company accounts for stock-based compensation which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes-Merton option pricing model (the "Black-Scholes model"). The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. We estimate forfeitures at the time of grant and revise our estimate in subsequent periods if actual forfeitures differ from those estimates.

The Company accounts for stock-based compensation awards and warrants granted to non-employees by determining the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty's performance is complete.

Income Taxes

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. To the extent a deferred tax asset cannot be recognized under the preceding criteria, allowances are established.

Foreign Currency Translation

Foreign Currency Translation

The Company and its wholly owned subsidiary/investments maintain their accounting records in United States Dollars ("US$") whereas Jonway Auto maintains its accounting records in the currency of Chinese Renminbi ("RMB"), being the primary currency of the economic environment in which their operations are conducted.

Jonway Auto's principal country of operations is the PRC.  The financial position and results of these operations are determined using RMB, the local currency, as the functional currency.  The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period.  Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date.  The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution.  Due to the fact that cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.  Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholder's equity as "Accumulated Other Comprehensive Income."

The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in China's political and economic conditions, any significant revaluation of RMB may materially affect our financial condition in terms of US$ reporting.

Loss Per Share

Loss per Share

     Basic and diluted net loss per share is computed by dividing consolidated net loss by the weighted-average number of common shares outstanding during the period. The Company's potentially dilutive shares, which include outstanding stock options, convertible debt and warrants, have not been included in the computation of diluted net loss per share for all periods presented as the result would be anti-dilutive. Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share. Outstanding common stock options, warrants and debentures totaled 86.4 million shares and 100.7 million shares at June 30, 2012 and 2011, respectively. ZAP also had outstanding convertible debt, which is convertible into 188 million shares of ZAP common stock at June 30, 2012.

Cash And Cash Equivalents

Cash and Cash Equivalents

The Company invests its excess cash in short-term investments with various banks and financial institutions. Short-term investments are cash equivalents, as they are part of the cash management activities of the Company and are comprised of investments having maturities of three months or less when purchased.  The Company considers all highly liquid investments with an original maturity of three months or less from the date of purchase to be cash equivalents

Restricted Cash

Restricted Cash

The Company has cash restricted in connection with the issuance of bank acceptance notes to various suppliers of spare parts which were issued through Jonway's banks.  To issue these bank acceptance notes to Jonway's suppliers, the banks require a deposit of approximately 40-60% of the full amount of such notes which are payable within 6 months from issuance.  Upon the maturity date, restricted funds will be used to settle the bank acceptance notes. 

Marketable Securities

Marketable Securities

The Company has an investment that is comprised of marketable equity securities, which are classified as available-for-sale and recorded at fair value, the value of which fluctuates with the stock market value.   The securities are shares of Samyang Optics Co., Ltd., which shares are traded on the Korean stock exchange.  ZAP's ownership is not material to Samyang Optics Co., Ltd. Net unrealized holding gains and losses, net of tax, are reported as a separate component of shareholders' deficit, except where holding losses are determined to be "other-than-temporary", whereby the losses are reported in gains and losses on investments in the consolidated statement of operations.  Gains and losses on disposals of marketable equity securities are determined using the specific identification method.

Accounts And Notes Receivable

Accounts and Notes Receivable

Accounts receivable consist mainly of receivables from our established dealer network.  Notes receivable balances consist of bank acceptance notes received from various Jonway dealers to finance such dealer's purchase of our vehicles products.  These bank acceptance notes can be endorsed to settle the payables to Jonway suppliers or discounted to fund cash flows. These notes are a means of financing working capital for orders that were placed by these dealers. A credit review is performed by the Company before the dealer is approved to purchase vehicles form the Company. The Company performs ongoing credit evaluations of its dealers, and generally does not require collateral on its accounts receivable. The Company estimates the need for allowances for potential credit losses based on historical collection activity and the facts and circumstances relevant to specific customers and records a provision for uncollectible accounts when collection is uncertain. The Company has not experienced significant credit related losses to date.   The allowance for doubtful accounts was $15,000 and $9,000 at June 30, 2012 and December 31, 2011, respectively.

Fair Value Of Financial Instruments

Fair Value of Financial Instruments

The Company measures its financial assets and liabilities at fair value. The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties. For certain of the Company's financial instruments, including cash equivalents, accounts receivable, accounts payable and accrued liabilities, the carrying amount approximates fair value because of the short maturities. The fair value of debt is not determinable due to the terms of the debt and the lack of a comparable market for such debt.  These tiers include:

Level 1:  Observable inputs such as quoted prices in active markets;

Level 2:  Inputs other than quoted prices in active markets that are directly or indirectly observable;

Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions and methodologies that result in management's best estimate of fair value.

The change in fair value of derivative liabilities is classified in other income (expense) in the Company's statement of operations.  The fair value of the Company's derivative liabilities related to stock purchase warrants was determined using the Black-Scholes option pricing model – a Level 3 input.

Derivative Financial Instruments

Derivative Financial Instruments

The Company generally does not use derivative financial instruments to hedge exposures to cash flow or market risks. However, certain other financial instruments, such as warrants, are classified as liabilities when either (a) the holder possesses rights to net-cash settlement or (b) physical or net-share settlement is not within the control of the Company. In such instances, net-cash settlement is assumed for financial accounting and reporting, even when the terms of the underlying contracts do not provide for net-cash settlement. Such financial instruments are initially recorded at fair value and subsequently adjusted to fair value at the close of each reporting period.

The Company accounts for derivative instruments and debt instruments in accordance with the interpretative guidance of ASC 815 ("Derivatives and Hedging").   It is necessary for the Company to make certain assumptions and estimates to value derivatives and debt instruments.

During the six months ended June 30, 2011, derivative liabilities were converted into 4.3 million shares of ZAP stock. At June 30, 2011 and June 30, 2012, the Company did not have any derivative liabilities.

 The following table set forth a summary of changes in the fair value of Level 3 liabilities for the 3 months ended June 30, 2011 (in thousands):

	Balance		Exercise			Change in		Balance
	3/31/2011		of warrants			fair value		6/30/2011
Derivative Liabilities	$	201	$	(70	)	$	10	$	0

The following table summarizes those assets and liabilities measured at fair value on a recurring basis (in thousands):

                                                                                               June 30, 2012

Assets	Level 1		Level 2		Level 3		Fair Value Measurements
Marketable Securities (1)	$	1,289		—		—	$	1,289

                                                                                                        December 31, 2011

Assets	Level 1		Level 2		Level 3		Fair Value Measurements
Marketable Securities (1)	$	1,830		—		—	$	1,830

____________

(1) Marketable securities consist of common stock of a related party. The fair value of marketable securities is based upon market value quoted by Korean stock exchange

The Company's other financial instruments at June 30, 2012 consist of cash and cash equivalents, accounts and notes receivable, accounts payable and debt. For the period ended June 30, 2012 the Company did not have any derivative financial instruments. The Company believes the reported carrying amounts of its accounts receivable and accounts payable approximate fair value, based upon the short-term nature of these accounts. The carrying value of the Company's loan agreements approximate fair value as each of the loans bears interest at a floating rate.

Inventories

Inventories

Inventories consist primarily of vehicles, both gas and electric, parts and supplies, and work in progress and are carried at the lower of cost (first-in, first-out basis for ZAP and moving average basis for Jonway) or market (net realizable value or replacement cost). The Company maintains reserves for estimated excess, obsolete and damaged inventory based on projected future shipments using historical selling rates, and taking into account market conditions, inventory on-hand, purchase commitments, product development plans and life expectancy, and competitive factors. If markets for the Company's products and corresponding demand were to decline, then additional reserves may be deemed necessary. Any changes to the Company's estimates of its reserves are reflected in cost of goods sold within the statement of operations during the period in which such changes are determined by management.

Property And Equipment

Property and Equipment

Property and equipment consists of land, building and improvements, machinery and equipment, office furniture and equipment, vehicles, and leasehold improvements. Property and equipment is stated at cost, net of accumulated depreciation and amortization, and is depreciated or amortized using straight-line method over the asset's estimated useful life. Costs of maintenance and repairs are charged to expense as incurred; significant renewals and betterments are capitalized.  Leasehold improvements are amortized over 10 years using the straight-line method.

Land Use Rights

Land use Rights

Under PRC law, all land in the PRC is permanently owned by the government and cannot be sold to an individual or company but companies can purchase the land use rights for the specified period of time, as in our industry the industrial purpose has a useful life of 50 years.  The government grants individuals and companies the right to use parcels of land for specified periods of time.  These land use rights are sometimes referred to informally as "ownership".  Land use rights are stated at cost less accumulated amortization.  Amortization is provided over the respective useful lives, using the straight –line method.  Estimated useful life is 50 years, and is determined in the connection with the term of the land use right.

Long-Lived Assets

Long-lived Assets

Long-lived assets are comprised of property and equipment and intangible assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An estimate of undiscounted future cash flows produced by the asset, or by the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including a discounted value of estimated future cash flow and fundamental analysis. The Company reports an asset to be disposed of at the lower of its carrying value or its estimated net realizable value.

Intangible Assets-Finite

Intangible Assets-Finite

     Intangible assets consist of patents, trademarks, land use rights, government approvals and customer relationships (including client contracts). For financial statement purposes, identifiable intangible assets with a defined life are being amortized using the straight-line method over the estimated useful lives of seven years for the EPA license and 8.5 years for the customer relationships. Costs incurred by the Company in connection with patent, trademark applications and approvals from governmental agencies such as the Environmental Protection Agency, including legal fees, patent and trademark fees and specific testing costs, are expensed as incurred. Purchased intangible costs of completed developments are capitalized and amortized over an estimated economic life of the asset, generally seven years, commencing on the acquisition date. Costs subsequent to the acquisition date are expensed as incurred.

Goodwill And Intangible Assets - Indefinite

Goodwill and Intangible Assets – Indefinite

Goodwill and intangible assets determined to have an indefinite useful life are not amortized, but instead are tested for impairment at least annually.  Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance applicable accounting principles.  The Company assesses annually whether there is an indication that goodwill is impaired, or more frequently if events and circumstances indicate that the asset might be impaired during the year.  The Company performs its annual impairment test in the fourth quarter of each year.   Calculating the fair value of the reporting units requires significant estimates and assumptions by management.  To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit, there is an indication that the reporting unit goodwill may be impaired and a second step of the impairment test is performed to determine the amount of the impairment to be recognized, if any.

Non-Controlling Interests

Non-Controlling Interests

The Financial Accounting Standards Board ("FASB") issued a statement which established accounting and reporting standards that require non-controlling interests (previously referred to as minority interest) to be reported as a component of equity, changes in a parent's ownership interest while the parent retains its controlling interest be accounted for as equity transactions, and upon a loss of control, retained ownership interest will be re-measured at fair value, with any gain or loss recognized in earnings.

On January 21, the Company acquired 51% of Zhejiang Jonway Automobile Co. Ltd from Jonway Group, a related party, who holds a 49% of the remaining interest in Jonway Auto. (See Note 4)  Pursuant to the Jonway Acquisition Agreement, ZAP had the right to acquire the remaining 49% of Jonway at the same valuation, which expired on March 31, 2011.  To account for the expired option,we recorded a reduction of common stock.

Product Warranty Costs

Product warranty Costs

The Company provides 30 to 90 day warranties on its personal electric products, including the ZAPPY3 and the Zapino scooters, six month warranties for the Xebra®, the ZAPTRUCK XL, the ZAPVAN Shuttle vehicles, and a six month warranty for Xebra® vehicles repaired by ZAP pursuant to its product recall.  The Company records the estimated cost of the product warranties at the time of sale using the estimated costs of products warranties based on historical results. The estimated cost of warranties has not been significant to date. Should actual failure rates and material usage differ from our estimates, revisions to the warranty obligation may be required.

The Company provides a 2-year or 60,000 kilometer mileage warranty for its Jonway SUV products. The Company records the estimated cost of the product warranties at the time of sale using the estimated cost of product warranties based on historical results. The estimated cost of warranties has not been significant to date. Should actual failure rates and material usage differ from our estimates, revisions to the warranty obligation may be required 

Comprehensive Loss

Comprehensive loss

Comprehensive loss represents the net loss for the period plus the results of certain changes to shareholders' equity that are not reflected in the consolidated statements of operations. The Company's comprehensive loss consists of net losses, foreign currency translation adjustments and unrealized net losses on investments.  

Reclassifications

Reclassifications

Certain amounts from prior period have been reclassified to conform to the current period's presentation.

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Segment Reporting (Narrative) (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012 segment
Segment Reporting [Abstract]
Number of reportable segments	4
Percentage of revenue earned in China	98.00%
Revenue earned in China	$ 24.4
Number of factory level dealers distributed to	100

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Restatement Of March 2011 Unaudited Quarterly Financial Information

6 Months Ended

Jun. 30, 2012

Restatement Of March 2011 Unaudited Quarterly Financial Information [Abstract]

Restatement Of March 2011 Unaudited Quarterly Financial Statements

NOTE 2 - RESTATEMENT OF MARCH 2011 UNAUDITED QUARTERLY FINANCIAL STATEMENTS

On January 21, 2011(the "Closing Date"), the Company completed the acquisition of 51% of the equity shares of Jonway.  The transaction was accounted for in accordance with the provisions of ASC 805-10, Business Combinations. The Company retained independent appraisers to advise management in the determination of the fair value of the various assets acquired and liabilities assumed. The values assigned in the unaudited financial statements for the three and six months ended June 30, 2011 represented management's best estimate of fair values as of the Closing Date.

As required by ASC 805-20, Business Combinations—Identifiable Assets and Liabilities, and Any Noncontrolling Interest, management conducted a review for the year ended December 31, 2011 to reassess whether they identified all the assets acquired and all the liabilities assumed, and followed ASC 805-20's measurement procedures for Closing Date recognition of the fair value of net assets acquired.  

The revaluation of the fair value at December 31, 2011, of the various assets acquired and liabilities assumed, resulted in restated financial information in this quarterly report. The table below illustrates the calculation of the adjustments.

Account	Provisional amount as of January 21, 2011			Adjustment based on final valuation report			Revised amount recorded as of January 21, 2011
Inventory	$	12,715		$	25		$	12,740
Property and Equipment		46,322			10,749			57,071
Other  liabilities assumed		(14,524	)		166			(14,358	)
Goodwill and Intangible Assets		23,794			(18,412	)		5,382
Purchase option		2,695			(310	)		2,385
Non controlling interest		(31,875	)		3,662			(28,213	)
	$	39,127		$	(4,120	)	$	35,007
	As reported at June 30, 2011			Adjustments to the six months ended June 30, 2011			As restated at June 30, 2011
Cost of goods sold	$	25,359		$	25		$	25,384
Amortization and Depreciation		6,063			(2,777	)		3,286
	$	31,422		$	(2,752	)	$	28,670

As a result, the Company restated its 2011 first quarter financial information to reflect the final measurement of the fair value of the assets acquired. The financial information in this quarterly report reflects the restated financial information.

Amounts in ('000s)	June 30, 2011
Net assets  as reported	$	61,936
Adjustments		(4,342	)
Restated net assets	$	57,594

	Three Months Ended June 30, 2011			Six Months Ended June 30, 2011
Net loss as reported	$	(13,715	)	$	(23,613	)
Adjustments		36			2,752
Restated loss	$	(13,679	)	$	(20,861	)

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Condensed Consolidated Balance Sheets [Abstract]
Accounts receivable, allowance	$ 15	$ 9
Common stock, shares authorized	800,000,000	800,000,000
Common stock, no par value
Common stock, shares issued	300,156,120	297,746,376
Common stock, shares outstanding	300,156,120	297,746,376

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation

NOTE 12-STOCK-BASED COMPENSATION

     Services performed and other transactions settled in the company's common stock are recorded at the estimated fair value of the stock issued if that value is more readily determinable, than the fair value of the consideration received.

     We have stock compensation plans for employees and directors. We recognize the stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. All of our stock-based compensation is accounted for as an equity instrument.

					Weighted	Aggregate
	Number of			Weighted	Average	Intrinsic
	Shares (in			Average	Remaining	Value
	Thousands)			Exercise	Contractual
				Price	Term
					(in years)
Outstanding December 31, 2011	29,578		$	0.50	6.0	--
Options granted under the plan	-			-	-	--
Options exercised	-			-	-	--
Options forfeited and expired	(2,050	)		-	-	--
Outstanding June 30, 2012	27,528		$	0.48	6.0	--

     Aggregate intrinsic value is the sum of the amounts by which the quoted market price of our stock exceeded the exercise price of the options at June 30, 2012 for those options for which the quoted market price was in excess of the exercise price ("in-the-money options"). There were no options in the money at June 30, 2012.

     As of June 30, 2012, total compensation cost of unvested employee stock options is $2.2 million. This cost is expected to be recognized through September 30, 2016. We recorded no income tax benefits for stock-based compensation expense arrangements for the three and six months ended June 30, 2012, as we have cumulative operating losses, for which a valuation allowance has been established

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Document And Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 14, 2012
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2012
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2012
Entity Registrant Name	ZAP
Entity Central Index Key	0001024628
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		300,156,177

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Segment Reporting

6 Months Ended

Jun. 30, 2012

Segment Reporting [Abstract]

Segment Reporting

NOTE 13 – SEGMENT REPORTING

Operating Segments

Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 280, Segment Reporting ("ASC 280"), establishes standards for the way public business enterprises report information about operating segments. ASC 280 also establishes standards for related disclosures about products and services, geographic areas and major customers.

     In accordance with ASC 280, the Company has identified four reportable segments consisting of Jonway Vehicles, Advanced Technology Vehicles, Consumer Product and Car Outlet. The Jonway Vehicles segment represents sales of the gas fueled Jonway A380 three and five-door sports utility vehicles and spare parts principally through distributors in China. Jonway and ZAP are also jointly developing various electric vehicles anticipated to enter into the electric vehicle market during 2012. The Advanced Technology Vehicles segment represents sales and marketing outside of China of the ZAPTRUCK XL, the ZAPVAN Shuttle and the Xebra® Sedan and will transition to selling mostly Jonway's EV A380SUV and EV minivan in 2012. The Consumer Product segment represents rechargeable portable energy products, our Zapino scooter, and our ZAPPY3 personal transporters. Our Car Outlet segment represents operation of a retail car outlet that sells pre-owned conventional vehicles and advanced technology vehicles. These segments are strategic business units that offer different services. They are managed separately because each business requires different resources and strategies. The Company's chief operating decision making group, which is comprised of the Chief Executive Officer and the senior executives of each of ZAP's strategic segments, regularly evaluate the financial information about these segments in deciding how to allocate resources and in assessing performance. The performance of each segment is measured based on its profit or loss from operations before income taxes.

     The performance of each segment is measured based on its profit or loss from operations to ZAP before income taxes. Segment results are summarized as follows (in thousands):

		Jonway			Electric						Advanced
		Conventional			Consumer						Technology
		Vehicles			Products			Car outlet			Vehicles			Total
For the three months ended June 30, 2012:
Net sales	$	12,381		$	272		$	42		$	10		$	12,705
Gross profit	$	899		$	45		$	33		$	53		$	1,030
Depreciation, amortization and impairment	$	742		$	547		$	2		$	7		$	1,298
Net loss	$	(4,651	)	$	(2,077	)	$	(94	)	$	(22	)	$	(6,844	)
Total assets	$	81,906		$	44,222		$	631		$	319		$	127,078
For the three months ended June 30, 2011:
Net sales	$	15,721		$	102		$	249		$	194		$	16,266
Gross profit	$	1,422		$	24		$	95		$	14		$	1,555
Depreciation, amortization and impairment	$	1,078		$	554		$	2		$	3		$	1,637
Net loss	$	(2,278	)	$	(10,803	)	$	(15	)	$	(583	)	$	(13,679	)
Total assets	$	82,360		$	17,470		$	709		$	1,053		$	101,592
For the six months ended June 30, 2012:
Net sales	$	24,370		$	386		$	115		$	16		$	24,886
Gross profit (loss)	$	1,622		$	73		$	40		$	(3	)	$	1,732
Depreciation, amortization and impairment	$	2,494		$	1,093		$	4		$	14		$	3,605
Net loss	$	( 6,334	)	$	(4,196	)	$	(128	)	$	(190	)	$	(11,356	)
Total assets	$	81,906		$	44,222		$	631		$	319		$	127,078
For the six months ended June 30, 2011:
Restated
Net sales	$	26,668		$	302		$	614		$	390		$	27,974
Gross profit	$	2,357		$	48		$	153		$	32		$	2,590
Depreciation, amortization and impairment	$	2,210		$	1,063		$	4		$	9		$	3,286
Net loss	$	(6,152	)	$	(13,648	)	$	(71	)	$	(990	)	$	(20,861	)
Total assets	$	82,360		$	17,470		$	709		$	1,053		$	101,592

     Operating segments do not sell products to each other, and accordingly, there is no inter-segment revenue to be reported. Jonway Automobile results have been included since the acquisition date of January 21, 2011.

Customer information

     Approximately 98 % or $24.4 million of our revenues for the six months ended June 30, 2012 are from sales in China. Jonway Auto distributes its products to an established network of over 100 factory level dealers in China with some contributing more than 10% of our consolidated revenue.

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Condensed Consolidated Statement Of Operations And Comprehensive Loss (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012		Jun. 30, 2011
Condensed Consolidated Statement Of Operations And Comprehensive Loss [Abstract]
Net sales	$ 12,705	$ 16,266	$ 24,886		$ 27,974
Cost of goods sold	11,675	14,711	23,154		25,384
Gross profit	1,030	1,555	1,732		2,590
Operating expenses:
Sales and marketing	3,469	3,473	5,581		5,345
General and administrative	2,805	4,213	5,296		7,682
Research and development	814	1,119	1,093		1,881
Total operating expenses	7,088	8,805	11,970		14,908
Loss from operations	(6,058)	(7,250)	(10,238)		(12,318)
Other income (expense):
Interest expense, net	(957)	(6,978)	(1,443)		(8,828)
Loss from equity in Joint Venture	(152)	(88)	(273)	[1]	(161)	[1]
Loss on financial instruments		10			(358)
Other income (expense), net	231	636	468		789
Total other income (expense)	(878)	(6,420)	(1,248)		(8,558)
Loss before income taxes	(6,936)	(13,670)	(11,486)		(20,876)
Income (tax) benefit	92	(9)	130		15
Net loss	(6,844)	(13,679)	(11,356)		(20,861)
Net loss attributable to non controlling interest	(2,282)	(1,114)	(3,355)		(1,684)
Net loss attributable to Zap	(4,562)	(12,565)	(8,001)		(19,177)
Other Comprehensive income (loss)
Foreign currency translation gain (loss)	34	849	(153)		1,163
Net unrealized (loss) on securities available for sale	(67)	(231)	(541)		(517)
Comprehensive loss	(6,877)	(13,061)	(12,050)		(20,215)
Comprehensive loss attributable to non controlling interest	(2,263)	(698)	(3,428)		(1,114)
Comprehensive loss attributable to ZAP	$ (4,614)	$ (12,363)	$ (8,622)		$ (19,101)
Net loss per share attributable to common shareholders:
Basic and diluted	$ (0.02)	$ (0.06)	$ (0.03)		$ (0.09)
Weighted average number of common shares outstanding:
Basic and diluted	298,127	214,316	298,891		211,808

[1] The Company recorded a loss of $136,000 and $161,000 in ZAP Hangzhou, and a loss of $137,000 and $0 in Shanghai Zapple for the periods ended June 30, 2012 and 2011 respectively. These losses relate to the investment in a non-consolidated joint ventures accounted for under the equity method of accounting.

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Goodwill & Other Intangibles

6 Months Ended

Jun. 30, 2012

Goodwill & Other Intangibles [Abstract]

Goodwill & Other Intangibles

NOTE 7 – GOODWILL & OTHER INTANGIBLES

The goodwill and other intangible assets at June 30, 2012 are summarized as follows:

			Net Book		Accumulated			Net Book
	Useful Life		Value		Amortization			Value
	(In Years)		12/31/2011		6/30/2012			6/30/2012
Patents and Trademarks	7	$	75	$	(12	)	$	63
Customer Relationships	8.5	$	692	$	(47	)	$	645
Developed Technology	7	$	1,879	$	(167	)	$	1,712
In Process Technology		$	183	$	-		$	183
Trade name		$	2,173	$	-		$	2,173
Intangibles		$	5,002	$	(226	)	$	4,776
Goodwill Assets		$	324	$	-		$	324
		$	5,326	$	(226	)	$	5,100

Amortization was $211 and $430 for the six months ended June 30, 2012 and 2011, and $106 and $229 for the three months ended June 30, 2012 and 2011, respectively.

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Property, Plant And Equipment

6 Months Ended

Jun. 30, 2012

Property, Plant And Equipment [Abstract]

Property, Plant And Equipment

NOTE 6 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at June 30, 2012 and December 31, 2011 are summarized as follows (in thousands):

		June 30, 2012			December 31, 2011
Buildings and improvements	$	21,610		$	21,649
Machinery and equipment		51,946			39,566
Office furniture and equipment		453			415
Leasehold improvements		37			37
Vehicles		896			745
		74,942			62,412
Less - accumulated depreciation
and amortization		(17,659	)		(15,459	)
	$	57,283		$	46,953

     Four pieces of land were acquired from the acquisition of Jonway auto in 2011, all land in the People's Republic of China is government owned and cannot be sold to any individual or company. However, the government grants the user a "land use right" (the Right) to use the land. The Company has the right to use the land for 50 years and amortized the Right on a straight-line basis over the period of 50 years. As of June 30, 2012 and December 31, 2011, intangible assets consist of the following:

		June 30, 2012			December 31, 2011
Land use right	$	10,433		$	10,518
Software		97			92
		10,530			10,610
Less: accumulated amortization		(665	)		(535	)
	$	9,865		$	10,075

     Depreciation and amortization expense was $2.3 million and $2 million for the six months, $1.2 million and $1.3 million for the three months ended June 30, 2012 and 2011, respectively.

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Subsequent Events

6 Months Ended

Jun. 30, 2012

Subsequent Events [Abstract]

Subsequent Events

NOTE 18 – SUBSEQUENT EVENTS

Dealership Financing

At the end of July 2012, we received US$12.7 million in dealership financing from China Everbright Bank to finance the purchase of vehicles for sale at qualified dealerships in China.

The dealership financing obtained by Jonway Auto is for authorized, eligible and approved Jonway Auto dealers in China. It is a new model of financing support that Jonway Auto was able to negotiate with China Everbright Bank after more than 1 year of due diligence. The fund is available for qualified dealers to finance "flooring" of the vehicles purchased to be sold in the dealership. The dealership has to be qualified by China Everbright Bank and the approved amount of loan for that dealership is drawn down based on the value of the orders placed with Jonway Auto. The bank pays Jonway Auto for the orders placed and the dealer repays the bank when the vehicles are sold. The dealer is liable for repayment of the loan as the vehicles are sold over a six month period. Jonway Auto provides the guarantee behind this repayment. This is a revolving credit line that is drawn down and repaid as the vehicles are bought and sold by qualified dealers. The overall amount available could increase as the business of each dealership grows. 

Appointment of Co-Chief Executive Officer

On August 7, 2012 the Board of Directors (the "Board") of ZAP (the "Company") elected Charles Schillings as the Company's Co-Chief Executive Officer.  Mr. Schillings who is the currently the Chief Operating Officer of the Company will serve as Co-Chief Executive Officer with Alex Wang who has been the Company's Co-Chief Executive Officer since October of 2010.

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Related Party

6 Months Ended

Jun. 30, 2012

Related Party [Abstract]

Related Party

NOTE 14– RELATED PARTY

Due from (to) related parties

     Amounts due from related parties are principally for advances in the normal course of business for parts and supplies used in manufacturing.

Amount due from related parties are as follows:

June 30, 2012

December 31, 2011

Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd

$

3,375

$

978

Jonway Group

-

159

Total

$

3,375

$

1,137

Amount due to related parties are follows:

June 30, 2012

December 31, 2011

Jonway Group

$

218

$

2,104

Sanmen Branch of Zhejiang UFO Automobile

-

-

Jonway Motor Cycle

10

18

Total

$

228

$

2,122

Advance payment to Jonway Group

$

-

$

11,616

Issuance of stock to Jonway Group for the Development and Production of Vehicles

     On December 11, 2011, ZAP entered into a Payment Agreement with Jonway Group pursuant to which ZAP paid Jonway Group for the already completed interior and exterior design, R&D activities, testing and trial production and molding equipments etc. of the mini-van product platform, and the Alias interior and exterior design and molding, which is underway. Pursuant to the Payment Agreement, ZAP agreed to grant Jonway Group 70 million shares of ZAP's Common Stock valued at $15.4 million. All intellectual property rights related to the work performed by Jonway Group for the mini-van and Alias shall be owned by ZAP. During the year ended December 31, 2011, $3.78 million of the payment of $15.4 million was recognized as R&D expense in ZAP, with the remaining $11.6 million, which was recorded as an advance payment to Jonway Group, has been reclassified to machinery and equipment.

Promissory notes and Down Payment on Convertible Note from Jonway Group

     On December 11, 2011 Jonway entered into a Promissory Note with Jonway Group pursuant to which Jonway can borrow up to $3 million 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, $1.6 million had been advanced to Jonway Auto under the Promissory Note arrangement and was repaid in January 2012.

     On December 11, 2011, ZAP entered into a Down Payment Convertible Note with Jonway Group pursuant to which ZAP may borrow $3 million for the production of seventy-five Alias electric vehicles to be delivered and sold in 2012. 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. Upon the completion of selling seventy-five Alias vehicles, ZAP will repay the unpaid principal, together with any then unpaid and accrued interest, on or before December 31, 2012. Repayment shall be made at the option of Jonway Group in the form of either cash or ZAP's Common Stock priced as of the date the principal was deposited into Jonway's bank account on behalf of ZAP. As of June 30, 2012, no advance has been made to ZAP from Jonway Group.

Transactions with Jonway Group

     Jonway Group is considered as a related party as the Wang Family, one of the shareholders of the Company, has controlling interests in Jonway Group. Jonway Group supplies some of the plastic spare parts to Jonway and gave guarantees on Jonway short term bank facilities from China-based banks. For the period ended June 30, 2012 Jonway made purchases from Jonway Group for a total of $766.

Sale of Stock to a Party Related to ZAP's CO-CEO and Director

     On January 14, 2011, we entered into private placement subscription agreements with Luo Hua Liang, the brother-in-law of Alex Wang, the Co-CEO and director of ZAP for the purchase of ZAP's common stock for the aggregate purchase price of $7 million, of which we received $2 million. The private placement subscription agreement was superseded and terminated by a stock purchase agreement with Mr. Luo in August 2011. Pursuant to the stock purchase agreement, Mr. Luo will purchase ZAP's common stock for an aggregate purchase price of $2.0 million in multiple closings. On September 8, 2011, we issued approximately 2.3 million shares of ZAP common stock in connection with the initial closing of $771. We received an additional $1.025 million in subsequent closings for which we have issued approximately 3.35 million shares of ZAP common stock.

     During 2011, the Company issued 7.7 million shares of common stock for cash of $3.8 million through private placement subscription agreements with Luo Hua Liang.

Rental Agreements

     The Company rented office space, land and warehouse space from its former CEO and a major shareholder. Mr. Steven Schneider. These properties were used to operate a car outlet and to store inventory. Rental expense was approximately $46,200 for the period ended June 30, 2011. The company discontinued paying rent in August, 2011.

Management Agreement with Cathaya Capital, L.P.

     On August 6, 2009, Cathaya purchased 20 million shares of the Company's Common Stock. On August 6, 2009, the Company entered into a Secured Convertible Promissory Note with Cathaya for aggregate principal advances of up to $10 million. In addition, the Company issued one warrant to Cathaya exercisable for shares of the Company's Common Stock.

     On July 9, 2010, Cathaya entered into a securities purchase agreement, pursuant to which, Cathaya purchased 44 million shares of the Company's Common Stock at a price of $0.25 per share for an aggregate purchase price of $11 million.

     Priscilla Lu, the chairman of the board of directors of ZAP, is also a general partner of Cathaya. On November 10, 2010, ZAP entered into a Management Agreement with Cathaya, for the payment of $2.5 million in exchange for Cathaya's prior and ongoing transaction advisory, financial and management consulting services for the year ended December 31, 2010. Pursuant to the agreement, principals of Cathaya will be available to serve on the Board and will devote such time and attention to the Company's affairs as reasonably necessary to accomplish the purposes of the agreement. The agreement is renewable yearly but fees paid in subsequent periods are subject to renegotiation based on the fair market values of services rendered, and the management fee was payable in cash or in common stock of ZAP at $0.50 per share. Five million shares were issued to Cathaya Capital L.P. in payment of this fee for the year ended December 31, 2010. No management fee payment was made for 2011.

Jonway Agreement with Zhejiang UFO

     Based on a contract by and among the Zhejiang UFO, Jonway Group and Jonway dated as of January 1, 2006, Zhejiang UFO has authorized Jonway to operate its Sanmen Branch to assemble and sell UFO branded SUVs for a period of 10 years starting from January 1, 2006.

     According to the contract, Jonway shall pay Zhejiang UFO a variable contractual fee which is calculated based on the number of SUVs that Jonway assembles in the Sanmen Branch every year, at the following rates:

The first 3,000 vehicles	$44 per vehicle
Vehicles from 3,001 to 5,000	$30 per vehicle
Vehicles over 5,000	$22 per vehicle

     Zhejiang UFO is considered a related party because the Wang Family, who are shareholders of Jonway, has certain non-controlling equity interests in Zhejiang UFO. In December 2012, Zhejiang UFO, Jonway Group and Jonway amended the above contract, and agreed that the accumulated payable to Zhejiang UFO for the above variable contractual fees as of December 31, 2011 will not be repaid. From 2012 onwards, Jonway still has obligation for payment for such fees based on 2012 and thereafter the number of SUVs with the deferred payment without interest indefinitely.

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Line Of Credit, Short Term Debt And Bank Acceptance Notes

6 Months Ended

Jun. 30, 2012

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

Line Of Credit, Short Term Debt And Bank Acceptance Notes

NOTE 10 - LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

Line of credit

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

     In this May 2012, we were approved up to an aggregate of $ 7.1 million of bank facility from the Sanmen Branch of CITIC Bank ("CITIC") through Jonway. Although we have been approved for the credit line, there are no legal obligations or rights to the credit line until we execute agreements with the lender to borrow funds under the credit line. When drawn down, the credit line will be secured by land and buildings on this land owned by Jonway and guaranteed by Jonway Group.

Short term debt

     Under the above mentioned credit line of $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 $3.2 million which was drawn down by Jonway in 2011. The annual interest rate is 7.22%. The bank loan under the Credit Agreement is 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 $3.0 million of the credit line is available for future executions at the discretion of Jonway Auto. For the six months ended June 30, 2012, the Company had repaid 2.1 million and $1.1 million remained outstanding.

     In December 2011, Jonway established additional short term bank loans amounting to over $2.2 million from three small-size banks based in Taizhou City, which are subject to Jonway Group guarantee, of which $790 of such loans were secured by bank notes received from Jonway dealers. These loans were repaid on March 31, 2012.

     On March 31, 2012, to support the monthly business performance target of Taizhou Branch of China Merchants Bank, Jonway entered into another credit agreement with this bank for a sum of short term bank loan in the aggregate amount of approximately $520 which was drawn down on March 31, 2012, and repaid on April 1, 2012.

     Under the above mentioned credit line of $7.1 million granted by CITIC , Jonway entered into a Credit Agreement with CITIC for a revolving short term bank loan in the aggregate amount of approximately US$ 1.59 million which was drawn down on May 25, 2012. The annual interest rate is 8.33% and is due on December 28, 2012. The loan is secured by a Maximum Amount Mortgage Contract by and between Jonway and CITIC dated May 25, 2012 in which land use right over one parcels of land and the buildings on this land owned by Jonway at Sanmen Factory have been pledged as security for this loan. The remaining $5.6 million of the credit line was executed through the issuance bank acceptance notes by CITIC to Jonway suppliers for the due payables.

     During the quarter ended June 30, 2012, Jonway entered into additional short term loan agreements with various banks based in Taizhou city for proceeds aggregating approximately $1 million .Such bank loans are secured by Jonway Group, certain individuals and Jonway's property, plant and equipment.

     As of June 30, 2012, Jonway had $3.6 million in short term bank loans, which are borrowed from the above stated China-based banks with interest rate range of 7.22% to 9.47 %per annum due through December 28, 2012.

		June 30, 2012		December 31, 2011
Loan from China Merchant Bank	$	1,044	$	3,174
Loan from Taizhou Bank		633		1,428
Loan from Zhejiang Tailong Commercial Bank		316		794
Loan from CITIC Bank		1,583		-
Short term financing insurance premiums		100		89
Total	$	3,676	$	5,485

     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 June 30, 2012, the Company has bank acceptance notes payable in the amount of $26.1million. 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 June 30, 2012, the restricted cash for the notes was $13.1 million.

Bank acceptance notes- 6 month term for each note issued

		June 30, 2012		December 31, 2011
a)Bank acceptance notes payable to Taizhou Bank	$	5,064	$	2,451
b)Bank acceptance notes payable to China Merchant Bank		4,557		3,316
c)Bank acceptance notes payable to China Everbright Bank		2,172		4,761
d)Bank acceptance notes payable to Zhejiang Tailong Commercial Bank		1,313		-
e)Bank acceptance notes payable to Zhejiang Sanmen Yin Zuo Village Bank		1,266		-
f)Bank acceptance Notes payable to Shanghai Pudong Development Bank		676		-
g) Bank acceptance Notes payable to CITIC Bank		11,076		-
	$	26,124	$	10,528

     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 million 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 and such borrowing was repaid in January 2012.

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Investment In Joint Ventures (Schedule Of Joint Venture's Carrying Amount) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012		Jun. 30, 2011
Schedule of Equity Method Investments [Line Items]
Balance as of December 31, 2011			$ 1,290
Less: investment loss	(152)	(88)	(273)	[1]	(161)	[1]
Balance as of June 30, 2012	1,017		1,017
ZAP Hangzhou [Member]
Schedule of Equity Method Investments [Line Items]
Balance as of December 31, 2011			554
Less: investment loss			(136)		(161)
Balance as of June 30, 2012	418		418
Shanghai Zapple [Member]
Schedule of Equity Method Investments [Line Items]
Balance as of December 31, 2011			736
Less: investment loss			(137)		0
Balance as of June 30, 2012	$ 599		$ 599

[1] The Company recorded a loss of $136,000 and $161,000 in ZAP Hangzhou, and a loss of $137,000 and $0 in Shanghai Zapple for the periods ended June 30, 2012 and 2011 respectively. These losses relate to the investment in a non-consolidated joint ventures accounted for under the equity method of accounting.

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Distribution Agreements

6 Months Ended

Jun. 30, 2012

Distribution Agreements [Abstract]

Distribution Agreements

NOTE 8 – DISTRIBUTION AGREEMENTS

Distribution agreements as of June 30, 2012 and December 31, 2011 are presented below (in thousands):

		June 30, 2012			December 31, 2011
Better World Products	$	2,160		$	2,160
Jonway Products		14,400			14,400
		16,560			16,560
Less amortization		(4,201	)		(3,121	)
	$	12,359		$	13,439

Amortization was $1.1 million for both the six months ended June 30, 2012 and 2011, and $560,000 for both the three months ended June 30, 2012 and 2011, respectively.

Distribution Agreement with Better World, Ltd

On January 15, 2010, ZAP entered into a Stock Purchase Agreement with Better World, Ltd., a British Virgin Islands company, whereby the Company issued 6 million shares of its common stock valued at $2.16 million in exchange for an agreement on terms relating to rights to the distribution of Better Worlds products for three years, such as charging stations for electric vehicles both in the U.S. and internationally.  Priscilla Lu, Chairman of the Board of Directors of ZAP, is also General Partner of Better World International, Ltd.

Distribution Agreement with Goldenstone Worldwide Limited for Jonway Products

On October 10, 2010, ZAP entered into a ten year  International Distribution Agreement with Goldenstone Worldwide Limited as the distributor of Jonway products such as gas SUV's and gas and electric motor scooters, both in the U. S. and internationally. In connection with the distribution agreement the Company also issued 30 million shares of ZAP common stock valued at $14.4 million.  The Jonway Group had previously granted exclusive worldwide distribution of Jonway products to Goldenstone Worldwide Limited.   ZAP acquired a 51% equity interest in Jonway Auto but this equity interest did not include the world wide distribution rights for Jonway Products.  Therefore, it was necessary for ZAP to acquire distribution rights for Jonway Products.

Distribution Agreement with Samyang Optics

On January 27, 2010, ZAP entered into an International Distribution Agreement (the "Distribution Agreement") with Samyang Optics Co. Ltd. ("Samyang") pursuant to which ZAP appointed Samyang as the exclusive distributor of certain ZAP electric vehicles including the Jonway A380 5-door electric sports utility vehicle equipped with  ZAP's electric power train, in the Republic of Korea.  In addition, the Distribution Agreement provides that ZAP and Samyang will negotiate to enter into additional agreements related to the manufacture and assembly of ZAP vehicles by Samyang in Korea.  The Distribution Agreement shall be in effect for one year and may be extended annually by Samyang provided that Samyang has satisfied sales quotas determined by ZAP and Samyang is otherwise in compliance with the Distribution Agreement.

In addition, on January 27, 2010, ZAP and Samyang entered into an initial purchase order pursuant to the Distribution Agreement for the purchase of one hundred ZAP Jonway UFO electric sports utility vehicles.  Selling prices have yet to be determined and no purchases have been made as of June 30, 2012.

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Investment In Joint Ventures

6 Months Ended

Jun. 30, 2012

Investment In Joint Ventures [Abstract]

Investment In Joint Ventures

NOTE 9 – INVESTMENT IN JOINT VENTURES

     On December 11, 2009, the Company entered into a Joint Venture Agreement to establish a new US-China company incorporated as ZAP Hangzhou to design and manufacture electric vehicle and infrastructure technology with Holley Group, the parent company of a global supplier of electric power meters and Better World. Priscilla Lu, Ph.D., who is the current Chairman of the Board of ZAP is also a director and shareholder of Better World. In January of 2011, Holley Group's interest in ZAP Hangzhou was purchased by Alex Wang, Co-CEO and director of ZAP. ZAP and Better World each own 37.5% of the equity shares of ZAP Hangzhou, and Alex Wang owns 25% of the equity shares of ZAP Hangzhou. The joint venture partners have also funded the initial capital requirements under the agreement for a total of $3 million, of which ZAP's portion is $1.1 million.

     In November 2011, Jonway and ZAP Hangzhou jointly set up Shanghai Zapple Electric Vehicle Technologies Co., Ltd. (Shanghai Zapple) with registered capital of RMB 20 million. Jonway and ZAP Hangzhou each own 50% of the equity share of Shanghai Zapple. Jonway injected RMB 5 million into this joint venture and ZAP Hangzhou injected RMB 3 million. Shanghai Zapple's approved scope of business includes: technical advice, technical development, technical services, technology transfer regarding electric vehicle technology, auto technology, energy technology, material science and technology, sale of commercial vehicle and vehicle for nine seats or more, auto parts, auto supplies, lubricant, mechanical equipment and accessories, business management consulting, industrial investment, exhibition services, business marketing planning, car rental (shall not be engaged in financial leasing), import and export of goods and technologies.

The carrying amount of the joint ventures is as follows:

		ZAP Hangzhou			Shanghai Zapple			Total
Balance as of December 31, 2011	$	554		$	736		$	1,290
Less: investment loss		(136	)		(137	)		(273	)
Balance as of June 30,2012	$	418			599			1,017

		June 30, 2012			June 30 2011
Equity method investments losses	$	(273	)(1)	$	(161	)(1)

(1) The Company recorded a loss of $136,000 and $161,000 in ZAP Hangzhou, and a loss of $137,000 and $0 in Shanghai Zapple for the periods ended June 30, 2012 and 2011 respectively. These losses relate to the investment in a non-consolidated joint ventures accounted for under the equity method of accounting.

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Long-Term Notes

6 Months Ended

Jun. 30, 2012

Long-Term Notes [Abstract]

Long-Term Notes

NOTE 11 – LONG-TERM NOTES

8% SENIOR CONVERTIBLE NOTE - China Electric Vehicle Corporation ("CEVC") Note

     On January 12, 2011, the Company entered into a Senior Secured Convertible Note and Warrant Purchase Agreement (the "Agreement") with China Electric Vehicle Corporation ("CEVC"), a British Virgin Island company whose sole shareholder is Cathaya Capital, L.P., a Cayman Islands exempted limited partnership ("Cathaya"). Priscilla Lu is the chairman of the board of directors of ZAP, a managing partner of Cathaya and a director of CEVC.

     Pursuant to the Agreement, (i) CEVC purchased from the Company a Senior Secured Convertible Note (the "Note") in the principal amount of US$19 million, as amended, (ii) the Company issued to CEVC a warrant (the "Warrant") exercisable for two years for the purchase up to 20 million shares of the Company's Common Stock at $0.50 per share, as amended (iii) the Company, certain investors and CEVC entered into an Amended and Restated Voting Agreement that amended and restated that certain Voting Agreement, dated as of August 6, 2009 that was previously granted to Cathaya Capital L.P., (iv) the Company, certain investors and CEVC entered into an Amended and Restated Registration Rights Agreement that amended and restated that certain Registration Rights Agreement, dated as of August 6, 2009, that was previously granted to Cathaya Capital L.P which grants certain registration rights relating to the Note and the Warrant, and (v) the Company and CEVC entered into a Security Agreement that secures the Note with all of the Company's assets other than those assets specifically excluded from the lien created by the Security Agreement.

     The Note was scheduled to mature on February 12, 2012 but was originally extended to August 12, 2012. On March 31, 2012, ZAP entered into an amendment to the note which extended the maturity date of the note from August 12, 2012 to August 12, 2013. This amendment changed the terms of the note requiring adjustment of the conversion price of the note for dilutive issuances by ZAP. In addition, the warrant issued in connection with the CEVC note was amended to change the terms of its conversion and to extend the maturity date until February 12, 2014. The interest accrued through the original maturity date of February 12, 2012 in the amount of $1.7 million has been added to the existing principal. The total amount of the convertible note is approximately $20.7 million with a new maturity date of August 12, 2013. The note accrued interest at a rate per annum of 8% effective to February 12, 2012. After this date, the parties agreed to waive the interest. However, the Company in accordance with ASC-470-10 calculated imputed interest for the non-interest bearing loan between a related party and recorded a discount in the amount of $2.2 million. This amount will be amortized monthly through the maturity date of the note which is August of 2013. The Company has amortized approximately $408,000 for the six months ended June 30, 2012.

     The note is convertible upon the option of CEVC at any time, into (a) shares of Jonway capital stock owned by ZAP at a conversion rate of 0.003743% of shares of Jonway capital stock owned by ZAP for each $1,000 principal amount of the Note being converted or (b) shares of ZAP common stock at a conversion rate of 4,435 shares of common stock for each $1,000 principal amount of the Note being converted.

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Line Of Credit, Short Term Debt And Bank Acceptance Notes (Schedule Of Bank Acceptance Notes) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Short-term Debt [Line Items]
Bank acceptance notes payable	$ 26,124	$ 10,528
Taizhou Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	5,064	2,451
China Merchant Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	4,557	3,316
China Everbright Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	2,172	4,761
Zhejiang Tailong Commercial Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	1,313
Zhejiang Sanmen Yin Zuo Village Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	1,266
Shanghai Pudong Development Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	676
CITIC Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	$ 11,076

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Stock-Based Compensation (Narrative) (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012
Stock-Based Compensation [Abstract]
Unrecognized compensation cost	$ 2.2

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Line Of Credit, Short Term Debt And Bank Acceptance Notes (Schedule Of Short-Term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Short-term Debt [Line Items]
Short term debt	$ 3,676	$ 5,485
China Merchant Bank [Member]
Short-term Debt [Line Items]
Short term debt	1,044	3,174
Taizhou Bank [Member]
Short-term Debt [Line Items]
Short term debt	633	1,428
Zhejiang Tailong Commercial Bank [Member]
Short-term Debt [Line Items]
Short term debt	316	794
CITIC Bank [Member]
Short-term Debt [Line Items]
Short term debt	1,583
Insurance Premiums [Member]
Short-term Debt [Line Items]
Short term debt	$ 100	$ 89

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation [Abstract]

Schedule Of Option Activity

					Weighted	Aggregate
	Number of			Weighted	Average	Intrinsic
	Shares (in			Average	Remaining	Value
	Thousands)			Exercise	Contractual
				Price	Term
					(in years)
Outstanding December 31, 2011	29,578		$	0.50	6.0	--
Options granted under the plan	-			-	-	--
Options exercised	-			-	-	--
Options forfeited and expired	(2,050	)		-	-	--
Outstanding June 30, 2012	27,528		$	0.48	6.0	--

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Inventories [Line Items]
WIP Jonway SUV's	$ 1,975	$ 2,234
Parts and supplies	4,978	4,879
Finished goods	402	240
Inventories, gross	17,813	12,696
Less-inventory reserve	(1,623)	(1,578)
Inventories, net	16,190	11,118
Advanced Technology Vehicles [Member]
Inventories [Line Items]
Vehicles	942	713
Vehicles-Conventional [Member]
Inventories [Line Items]
Vehicles	$ 9,516	$ 4,630

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Litigation

6 Months Ended

Jun. 30, 2012

Litigation [Abstract]

Litigation

NOTE 16– LITIGATION

      In the normal course of business, we may become involved in various legal proceedings.

     The Company is in dispute with its warehouse landlord regarding lease payments and other amounts claimed by the landlord. The landlord is also is in dispute with ZAP over alleged office space and renovations on the 9th Street property which ZAP had vacated.

     The Company is also entering into mediation with a former contracted employee with regard to wrongful termination.

     The Company received demand for arbitration for payment from two parties for professional, legal and engineering work performed.

     A letter was received in May 2012 from a shareholder regarding various prior transactions of the Company which the Company is working to address and clarify. No action is pending at this time.

The Company has accrued for estimated expenses related to above claims.

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Significant Accounting Policies And Use Of Estimates (Tables)

6 Months Ended

Jun. 30, 2012

Significant Accounting Policies And Use Of Estimates [Abstract]

Summary Of Changes In Level 3 Liabilities

	Balance		Exercise			Change in		Balance
	3/31/2011		of warrants			fair value		6/30/2011
Derivative Liabilities	$	201	$	(70	)	$	10	$	0

Summary Of Assets And Liabilities Measured At Fair Value

                                                                                               June 30, 2012

Assets	Level 1		Level 2		Level 3		Fair Value Measurements
Marketable Securities (1)	$	1,289		—		—	$	1,289

                                                                                                        December 31, 2011

Assets	Level 1		Level 2		Level 3		Fair Value Measurements
Marketable Securities (1)	$	1,830		—		—	$	1,830

____________

(1) Marketable securities consist of common stock of a related party. The fair value of marketable securities is based upon market value quoted by Korean stock exchange

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Acquisition (Schedule Of Intangible Assets Acquired) (Details) (USD $) In Thousands, unless otherwise specified	0 Months Ended
	Jan. 21, 2011
Business Acquisition [Line Items]
Intangible assets acquired	$ 5,074
Goodwill	308
Goodwill and intangible assets	5,382
Trade Name [Member]
Business Acquisition [Line Items]
Indefinite lived intangible assets acquired	2,078	[1]
In Process Technology [Member]
Business Acquisition [Line Items]
Indefinite lived intangible assets acquired	175	[2]
Customer Relationships [Member]
Business Acquisition [Line Items]
Finite lived intangible assets acquired	745
Finite lived intangible assets acquired, Weighted Average Useful Life	8 years
Developed Technology Rights [Member]
Business Acquisition [Line Items]
Finite lived intangible assets acquired	$ 2,076
Finite lived intangible assets acquired, Weighted Average Useful Life	7 years

[1] The Jonway trade name has been determined to have an indefinite life.

[2] In-process research and development is accounted for as an indefinite life intangible asset until the completion or abandonment of the associated research and development efforts.

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Restatement Of March 2011 Unaudited Quarterly Financial Information (Revaluation Of The Fair Value At December 31, 2011 Of The Various Assets Acquired And Liabilities Assumed) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Jan. 21, 2011
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Inventory					$ 12,740
Property and Equipment					57,071
Other liabilities assumed					(14,358)
Goodwill And Intangible Assets					5,382
Purchase option					2,385
Non controlling interest					(28,213)
Assets acquired and liabilities assumed, net					35,007
Cost of goods sold	11,675	14,711	23,154	25,384
Amortization and Depreciation			3,605	3,286
Sum Of Cost Of Goods Sold, Amortization And Depreciation				28,670
Previously Reported [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Inventory					12,715
Property and Equipment					46,322
Other liabilities assumed					(14,524)
Goodwill And Intangible Assets					23,794
Purchase option					2,695
Non controlling interest					(31,875)
Assets acquired and liabilities assumed, net					39,127
Cost of goods sold				25,359
Amortization and Depreciation				6,063
Sum Of Cost Of Goods Sold, Amortization And Depreciation				31,422
Adjustments [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Inventory					25
Property and Equipment					10,749
Other liabilities assumed					166
Goodwill And Intangible Assets					(18,412)
Purchase option					(310)
Non controlling interest					3,662
Assets acquired and liabilities assumed, net					(4,120)
Cost of goods sold				25
Amortization and Depreciation				(2,777)
Sum Of Cost Of Goods Sold, Amortization And Depreciation				$ (2,752)

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Condensed Consolidated Statement Of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (11,356)		$ (20,861)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	1,588		1,013
Change in fair value of derivative liability			358
Depreciation and amortization	3,605		3,286
Provision for doubtful accounts	50		2
Inventory Reserve	47		12
Loss from joint venture and other investments	273	[1]	161	[1]
Loss on disposal of equipment	10		(29)
Management fee due to related party			1,250
Convertible debt discount	410		8,108
Deferred Taxes	(130)
Changes in assets and liabilities
Notes receivable	335		4,287
Accounts receivable	(44)		1,338
Inventories	(5,145)		2,414
Prepaid expenses and other current assets	(466)		(401)
Due from related parties	(2,242)
Accounts payable	4,653		(1,147)
Accrued liabilities and warranty cost	(93)		2,173
Other payables	89
Advances from customers	(269)		(1,389)
Taxes payable	(557)		(600)
Net cash used in operating activities	(9,242)		(25)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of 51% Interest in Zhejiang Jonway Automobile, net			(18,477)
Acquisition of property and equipment	(1,004)		(580)
Proceeds from sale of equipment	1		81
Net cash flows used in investing activities:	(1,003)		(18,976)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in restricted cash	(7,030)		1,957
Repayment of notes payable	(2,589)		(3,127)
Proceeds from notes payable	18,203
Proceeds from issuance of common stock			331
Repayment to related parties	(1,886)
Proceeds from issuance of convertible debt			19,000
Proceeds from stock subscription agreement			2,000
Proceeds from short term loans	3,051		1,535
Repayment of short term loans	(4,842)		(2,011)
Net cash provided by (used in) financing activities	4,907		19,685
Effect of exchange rate changes on cash and cash equivalents	(22)		16
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(5,360)		700
CASH AND CASH EQUIVALENTS, beginning of period	5,859		1,503
CASH AND CASH EQUIVALENT, end of period	499		2,203
Supplemental disclosure of cash flow information:
Cash paid during period for interest	812
Cash paid during period for taxes			$ 4

[1] The Company recorded a loss of $136,000 and $161,000 in ZAP Hangzhou, and a loss of $137,000 and $0 in Shanghai Zapple for the periods ended June 30, 2012 and 2011 respectively. These losses relate to the investment in a non-consolidated joint ventures accounted for under the equity method of accounting.

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Inventories

6 Months Ended

Jun. 30, 2012

Inventories [Abstract]

Inventories

NOTE 5 – INVENTORIES

Inventories at June 30, 2012 and December 31, 2011 are summarized as follows (in thousands):

	June 30, 2012			December 31, 2011
Advanced technology vehicles	$	942		$	713
Vehicles-conventional		9,516			4,630
WIP  Jonway SUV's		1,975			2,234
Parts and supplies		4,978			4,879
Finished goods		402			240
		17,813			12,696
Less-inventory reserve		(1,623	)		(1,578	)
	$	16,190		$	11,118

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Distribution Agreements (Schedule Of Distribution Agreements) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Distribution Agreements [Line Items]
Distribution agreements, gross	$ 16,560	$ 16,560
Less amortization	(4,201)	(3,121)
Distribution agreements, net	12,359	13,439
Zhejiang Jonway Automobile Co., Ltd. [Member]
Distribution Agreements [Line Items]
Distribution agreements, gross	14,400	14,400
Better World [Member]
Distribution Agreements [Line Items]
Distribution agreements, gross	$ 2,160	$ 2,160

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Segment Reporting (Schedule Of Segment Results) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Segment Reporting Information [Line Items]
Net sales	$ 12,705	$ 16,266	$ 24,886	$ 27,974
Gross profit (loss)	1,030	1,555	1,732	2,590
Depreciation, amortization and impairment	1,298	1,637	3,605	3,286
Net loss	(6,844)	(13,679)	(11,356)	(20,861)
Total assets	127,078	101,592	127,078	101,592	121,488
Jonway Conventional Vehicles [Member]
Segment Reporting Information [Line Items]
Net sales	12,381	15,721	24,370	26,668
Gross profit (loss)	899	1,422	1,622	2,357
Depreciation, amortization and impairment	742	1,078	2,494	2,210
Net loss	(4,651)	(2,278)	6,334	(6,152)
Total assets	81,906	82,360	81,906	82,360
Electric Consumer Products [Member]
Segment Reporting Information [Line Items]
Net sales	272	102	386	302
Gross profit (loss)	45	24	73	48
Depreciation, amortization and impairment	547	554	1,093	1,063
Net loss	(2,077)	(10,803)	(4,196)	(13,648)
Total assets	44,222	17,470	44,222	17,470
Car Outlet [Member]
Segment Reporting Information [Line Items]
Net sales	42	249	115	614
Gross profit (loss)	33	95	40	153
Depreciation, amortization and impairment	2	2	4	4
Net loss	(94)	(15)	(128)	(71)
Total assets	631	709	631	709
Advanced Technology Vehicles [Member]
Segment Reporting Information [Line Items]
Net sales	10	194	16	390
Gross profit (loss)	53	14	(3)	32
Depreciation, amortization and impairment	7	3	14	9
Net loss	(22)	(583)	(190)	(990)
Total assets	$ 319	$ 1,053	$ 319	$ 1,053

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Acquisition (Tables)

6 Months Ended

Jun. 30, 2012

Acquisition [Abstract]

Schedule Of Estimated Fair Value Of Assets Aquired And Liabilities Assumed

Cash and cash equivalents	$	993
Restricted cash		3,088
Inventories, net		12,740
Property & equipment		57,071
Other tangible assets		11,472
Accounts payable		(14,549	)
Notes payable		(4,261	)
Other liabilities assumed		(14,358	)
Net tangible assets acquired		52,196
Goodwill and intangible assets		5,382
Net assets acquired		57,578
Non controlling interest - fair value		(28,213	)
Option to purchase remaining 49%		2,385
Purchase price	$	31,750

Schedule Of Intangible Assets Acquired

	Date of Acquisition Fair Value		Weighted Average Useful Life (in Years)
Customer relationships	$	745		8
Developed technology		2,076		7
Tradename		2,078	(a)
In-process research and development costs		175	(b)
Total		5,074
Goodwill		308
	$	5,382

_______________

(a)  The Jonway trade name has been determined to have an indefinite life.

(b)  In-process research and development is accounted for as an indefinite life intangible asset until the completion or abandonment of the associated research and development efforts.

Schedule Of Pro Forma Information

	For the Six Months ended June 30, 2011 Restated			For the Three Months ended June 30, 2011 Restated
Net sales	$	27,974		$	16,266
Net loss		(20,861	)		(13,679	)
Net loss per common share, basic and diluted	$	(0.09	)	$	(0.06	)
Shares outstanding, basic and diluted		211,808			214,316

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Income Taxes (Schedule Of Loss Before Income Taxes) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Income Tax [Line Items]
Loss before income taxes	$ (6,936)	$ (13,670)	$ (11,486)	$ (20,876)
US [Member]
Income Tax [Line Items]
Loss before income taxes	(2,193)	(11,398)	(4,514)	(17,381)
PRC [Member]
Income Tax [Line Items]
Loss before income taxes	$ (4,743)	$ (2,272)	$ (6,972)	$ (3,495)

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Organization And Operations (Basis Of Presentation) (Details) Share data in Millions, unless otherwise specified	0 Months Ended		6 Months Ended
	Jan. 21, 2011 USD ($)	Jun. 30, 2012	Jun. 30, 2012 Minimum [Member] USD ($)	Jun. 30, 2012 Maximum [Member] CNY
Business Acquisition [Line Items]
Date of acquisition	Jan. 21, 2011
Percentage of equity shares acquired	51.00%	51.00%
Acquisition purchase price	$ 31,750,000
Cash paid in acquisition	29,000,000
Shares of common stock paid in acquisition	8
Value of shares of common stock paid in acquisition	2,700,000
Electric vehicle incentive, per vehicle			$ 9,680	60,000

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Income Taxes

6 Months Ended

Jun. 30, 2012

Income Taxes [Abstract]

Income Taxes

NOTE 15-INCOME TAXES

The Company is subject to United States of America ("US") and People's Republic of China ("PRC") profit tax.

US

     The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company has no taxable income for the year. The applicable income tax rate for the Company for the three and six months ended June 30, 2012 and 2011 was 35%, respectively. No tax benefit has been realized since a valuation allowance has offset the deferred tax asset resulting from the net operating losses

PRC

     Effective on January 1, 2008, the PRC Enterprise Income Tax Law, EIT Law, and Implementing Rules impose an unified enterprise income tax rate of 25% on all domestic-invested enterprises and foreign investment enterprises in PRC, unless they qualify under certain limited exceptions. As such, the Company's subsidiary in PRC is subject to an enterprise income tax rate of 25%.

No provisions for income taxes have been made as the Company has no taxable income for the periods. $38 of tax benefits were recognized due to the change in the deferred tax assets.

Loss before income taxes consisted of:

		For Three Months Ended						For Six Months Ended
		June, 30,						June, 30,
		2012			2011			2012			2011
					Restated						Restated
US	$	(2,193	)	$	(11,398	)	$	(4,514	)	$	(17,381	)
PRC		(4,743	)		(2,272	)		(6,972	)		(3,495	)
	$	(6,936	)	$	(13,670	)	$	(11,486	)	$	(20,876	)

Provision (Benefit) for income taxes consisted of:

	For Three Months Ended						For Six Months Ended
	June, 30,						June, 30,
		2012			2011		2012			2011
					Restated					Restated
Current provision:
US	$	--		$	3	$	--		$	4
PRC		--			--		--			--
Total current provision		--			3		--			4
Deferred provision (benefit):
US		--			--		--			--
PRC		(92	)		6		(130	)		(19	)
Total Deferred provision (benefit)		(92	)		6		(130	)		(19	)
Total provision / (benefit) for income
taxes	$	(92	)		9	$	(130	)	$	(15	)