SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2013

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

NOTE 15 - SUBSEQUENT EVENTS

Legal Proceedings

On May 6, 2013, the U.S. Department of Justice filed a complaint for declaratory and injunctive relief and for civil penalties against the Company. The complaint was filed in the U.S. District Court of the District of Columbia as United States v. Zap; Civil Action No. 13-646. The action was brought under the National Traffic and Motor Vehicle Safety Act of 1966. The complaint alleges that the Company failed to develop and implement a remedy to bring its 2008 ZAP Zebra into compliance with minimum safety requirements; failed to timely and properly notify the National Highway Traffic Safety Administration ("NHTSA") about the vehicle recalls; and was uncooperative and evasive with NHTSA. The Company has discontinued the sale of the Zebra vehicles after these 2008 models. The 2008 Zebra vehicles were manufactured by a company called, Fulu, based in Shandong Province, China, that ZAP had imported from.

The complaint seeks relief, which among other things, would impose penalties of $6,000 to $7,000 for each violation. Because the total amount of the penalties would exceed the maximum civil penalties for the series of alleged violations, the complaint seeks to impose the statutory maximum of $17,350,000 in civil penalties.

The Company will respond to the complaint after appropriate consultation with its legal counsel.