NOTE 17 - RELATED PARTY TRANSACTIONS

Due from (to) related parties

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

Amount due from related parties are as follows (in thousands):

	12/31/2013		12/31/2012
Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd	$	4,973	$	3,093
JAZ		961		-
ZAP Hangzhou		127		-
Total	$	6,061	$	3,093

Amount due to related parties are follows (in thousands):

	12/31/2013		12/31/2012
Jonway Group	$	303	$	122
Jonway Motor Cycle		113		181
Taizhou Huadu		631		431
Shanghai Zapple		36		36
ZAP Hangzhou		-		147
Ms. Lu		30		-
Betterworld		149		152
Cathaya Capital		1,147		90
Total	$	2,409	$	1,159

Promissory notes and Down Payment Convertible Note from Jonway Group

On December 11, 2011, ZAP entered into a Down Payment Convertible Note agreement 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 December 31, 2013, 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 JonwayGroup. Jonway Group supplies some of plastics spare parts to Jonway and gave guarantees on Jonway short term bank facilities from China-based banks. Jonway made such purchase from Jonway Group for a total of $1.4 million and $1.2 million for the years ended December 31, 2013 and 2012, respectively.

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 (historical exchange rate):

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. For the years ended December 31, 2013 and 2012, $706,000and $807,000 were recorded as assembling fees, respectively. Also during 2013, Jonway sold SUVs in the amount of $95,000 and spare parts in the amount of $8,255,000 to Zhejiang UFO. During 2012, Jonway sold SUVs in the amount of $415,000 and spare parts in the amount of $3,516,000 to Zhejiang UFO.

Other Related Party Transactions

During 2013, Jonway purchased spare parts in the amount of $55,000 and $1,214,000 from Jonway Motor Cycle and Taizhou Huadu, respectively. During 2012, Jonway purchased spare parts in the amount of $154,000 and $1,173,000 from Jonway Motor Cycle and Taizhou Huadu, respectively.