COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2012

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 17 - COMMITMENTS AND CONTINGENCIES

Employment agreements

On June 18, 2012, the Company entered into an employment agreement with Charles Schillings as its Chief Operating Officer. The agreement provides for an annual salary of $144,000 with 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 either party. On August 8, 2012, Mr. Schillings was appointed as the Co-Chief Executive Officer (Co-CEO) to lead U.S. and International operations alongside Alex Wang, the Co-CEO for ZAP Jonway's China division.

Charles Schillings, a veteran technology executive was appointed as Co-Chief Executive Officer to lead U.S. and International operations.

Mr. Schillings has previous operating experience in telecommunications and semiconductor technologies as former CEO of Strasbaugh. Schillings' background is financial and he has had extensive sales and marketing experience selling to large Asian technology companies. At ZAP, he will oversee U.S. operations and support ZAP and Jonway Auto's international partnerships as well as support for the sales and marketing activities.

Mr. Schillings currently serves on the Board of Directors for Strasbaugh, where he was President & CEO from 2005 to 2010. He also held executive management positions at Strasbaugh subsidiary R. H. Strasbaugh between 1994 and 2001, including Marketing, Sales, President and CEO. He led the  business development and sales in Japan and other parts of Asia, working with companies like Fujitsu, Hyundai, Samsung, NEC and others, increasing revenues from a start-up to more than US$40 million annual sales.

Schillings' prior experience includes mortgage securities, running a non-profit organization as well as due diligence analysis at a securities broker-dealer. He holds an M.S.B.A. in International Business from San Francisco State University and a B.S. in Business Finance with an Economics Minor from San Diego State University.

Changes to the Board of Directors

Georges-Penalver and Patrick Sevian resigned from the Board of Directors of ZAP effective October 18, 2012. for personal reasons.  Prior to their resignation, the board approved their replacements.

The board approved the appointment of Co Nguyen as the director replacing Georges Penalver.

Mr. Nguyen serves as Chief Financial Officer of Cathaya Capital.  He has in-depth experience in corporate finance and corporate management.  Mr. Nguyen was previously Corporate Finance Director of Jaccar Holdings Vietnam.  Before joining Jaccar Holdings in 2008, he was Deputy Director of Corporate Strategy and Finance Department of Prudential Life Insurance (Vietnam).  Mr. Nguyen also has spent 7 years with FedEx in France as Senior Financial Advisor and 3-year professional experience with Ernst & Young as an auditor.  Mr. Nguyen received his Master in Auditing and Consulting from "Ecole Supérieure de commerce de Paris", France and MBA in International Business in 2000.

The Board approved the appointment of Aileen Kao as the director replacing Patrick Sevian.

Aileen Kao is Deputy General Manager at ZAP (Hangzhou) Electric Vehicle Co., Ltd, a joint venture company with a focus on green transportation technology. Under her leadership, ZAP (Hangzhou) has built a great technical savvy team to provide know-how solutions to meet China's emerging and dynamic new energy automobile industry.    Ms. Kao came to ZAP with broad experience in several established companies including BASF, Eastman Kodak, Bell Atlantic, Cisco and interWAVE Communications, all of which afforded her with increased responsibilities and helped transition her from a hands-on software engineer to a seasoned executive at ZAP.  She also served on the Saratoga school governing board in 1998 and then was elected to the Saratoga City Council in 2004 and served as Mayor in 2007. Ms. Kao holds a BS in Pharmacy from Taipei Medical University, Taiwan and a MS in Chemistry from University of Rhode Island, Rhode Island, USA. 

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 $1.7 million at December 31, 2012. The guarantee expires in November 2013. Our performance risk under these guarantees is reviewed regularly, and has resulted in no changes to our initial valuations.