10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x	QUARTERLY REPORT UNDER SECTION  13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2014

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, California	95401
(Address of principal executive offices)	(Zip Code))
Registrant’s telephone number, including area code: (707) 525-8658

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 November 12, 2014, there were 427,477,489 shares outstanding of the registrant’s common stock.

1

INDEX

		Page No.
PART I. Financial Information
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013	3
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2014 and 2013	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and 2013	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31
Item 4.	Controls and Procedures	31
PART II. Other Information
Item 1.	Legal Proceedings	32
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

2

ZAP

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

	September 30,		December 31,
ASSETS	2014		2013
Current assets:
Cash and cash equivalents	$	818	$	2,629
Restricted Cash		12,997		10,758
Notes receivable		244		185
Accounts receivable		4,607		5,351
Inventories, net		9,872		8,034
Prepaid expenses and other current assets		587		1,007
Total current assets		29,125		27,964
Property, plant and equipment, net		44,105		48,004
Land use rights, net		9,757		10,008
Other assets:
Distribution fees, net		14,729		9,839
Intangible assets, net		3,926		4,280
Goodwill		332		334
Due from related party		3,973		6,061
Deposits and other assets		569		543
Total other assets		23,529		21,057
Total assets	$	106,516	$	107,033

See accompanying notes to the unaudited condensed consolidated financial statements

3

ZAP

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

	September 30,			December 31,
	2014			2013
LIABILITIES AND  EQUITY
Current liabilities:
Short term loans	$	16,092		$	14,961
Convertible Bond		1,100			1,153
Senior convertible debt		20,679			20,679
Accounts payable		20,899			23,648
Accrued liabilities		7,016			7,874
Notes payable		16,155			15,695
Advances from customers		7,231			5,233
Taxes payable		775			1,704
Due to related party		7,081			2,409
Other payables		3,037			3,574
Total current liabilities		100,065			96,930
Long term liabilities:
Accrued liabilities and others		781			752
Total liabilities		100,846			97,682
Commitments and contingencies
Equity
Common stock, no par value; 800 million shares authorized;
427,477,489 and 302,518,002 shares issued and outstanding
at September 30, 2014 and December 31, 2013, respectively		241,250			231,125
Accumulated other comprehensive income		1,645			1,707
Accumulated deficit		(241,976	)		(232,417	)
Total ZAP shareholders’ equity		919			415
Non-controlling interest		4,751			8,936
Total equity		5,670			9,351
Total liabilities and equity	$	106,516		$	107,033

See accompanying notes to the unaudited condensed consolidated financial statements

4

ZAP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands; except per share data)

(Unaudited)

	For the Three Months ended Sept 30,							For the Nine Months ended Sept 30,
		2014			2013			2014			2013
Net sales		$	5,220		$	9,929		$	19,630		$	36,562
Cost of goods sold			(5,840	)		(9,316	)		(21,200	)		(36,254	)
Gross profit			(620	)		613			(1,570	)		308
Operating expenses:
Sales and marketing			1,703			1,224			3,183			4,744
General and administrative			1,448			1,849			5,888			6,368
Research and development			119			120			380			429
Total operating expenses			3,270			3,193			9,451			11,541
Loss from operations			(3,890	)		(2,580	)		(11,021	)		(11,233	)
Other income (expense):
Interest expense, net			(1,124	)		(955	)		(2,998	)		(2,580	)
Loss from equity in  joint venture			-			(82	)		-			(656	)
Other Income			212			263			635			791
Total income (expense)			(912	)		(774	)		(2,363	)		(2,445	)
Loss before income taxes			(4,802	)		(3,354	)		(13,384	)		(13,678	)
Income tax benefit(expense)			(1	)		8			(302	)		33
Net Loss		$	(4,803	)	$	(3,346	)	$	(13,686	)	$	(13,645	)
Less: loss attributable to non-controlling interest			1,390			843			4,127			4,097
Net loss attributable to ZAP’s common shareholders		$	(3,413	)	$	(2,503	)	$	(9,559	)	$	(9,548	)
Net Loss			(4,803	)		(3,346	)		(13,686	)		(13,645	)
Other Comprehensive income / (Loss)
Foreign currency translation adjustments			(3	)		193			(119	)		853
Total comprehensive income (loss)			(4,806	)		(3,153	)		(13,805	)		(12,792	)
Less : Comprehensive loss attributable to non-controlling interest			1,392			748			4,185			3,679
Comprehensive loss attributable to ZAP		$	(3,414	)	$	(2,405	)	$	(9,620	)	$	(9,113	)
Net loss per share
Basic and diluted		$	(0.01	)	$	(0.01	)	$	(0.03	)	$	(0.03	)
Weighted average number of common shares outstanding:
Basic and diluted			412,700			302,518			360,632			302,518

See accompanying notes to the unaudited condensed consolidated financial statements

5

ZAP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the Nine Months ended Sept 30,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Loss from operations of the company and its consolidated subsidiaries	$	(13,686	)	$	(13,645	)
Adjustments to reconcile net loss to cash (used in) operating activities:
Stock-based employee compensation		169			462
Depreciation and amortization		5,196			4,970
Amortization of Distribution agreement		1,080			1,080
Provision for (recovery of )doubtful accounts		(15	)		10
Inventory Reserve		(453	)		148
Loss from joint venture and other investments		-			643
(Gain)Loss on disposal of equipment		(18	)		34
Deferred tax benefit(expense)		301			(40	)
Amortization of debt discount		513			1,063
Changes in assets and liabilities
Accounts receivable		1,157			(348	)
Notes Receivable		(61	)		1,611
Inventories		(1,879	)		2,707
Prepaid expenses and other assets		(1	)		(505	)
Due from related parties		2,134			(547	)
Accounts payable		(2,597	)		(3,910	)
Accrued liabilities		(480	)		(187	)
Taxes Payable		(917	)		154
Advances from customers		2,036			(1,192	)
Due to related parties		5,761			2,272
Other payables		(388	)		(751	)
Net cash used in operating activities		(2,148	)		(5,971	)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment		(1,077	)		(1,581	)
Proceeds from sale of equipment		40			-
Net cash flows used in investing activities:		(1,037	)		(1,581	)

6

ZAP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the Nine Months ended Sept 30,
	2014			2013
CASH FLOWS FROM FINANCING ACTIVITIES
Change in restricted cash		(2,315	)		(1,603	)
Proceeds from issuance of common stock		1,900			-
Proceeds from notes payable		22,801			33,017
Proceeds from short term borrowings		8,640			11,858
Proceeds from convertible Bond		-			1,496
Repayments of notes payable		(22,232	)		(33,303	)
Payments on short term debt		(7,404	)		(4,889	)
Net cash provided by financing activities		1,390			6,576
Effect of exchange rate changes on cash and cash equivalents		(16	)		(110	)
NET (DECREASE) IN CASH AND CASH EQUIVALENTS		(1,811	)		(1,086	)
CASH AND CASH EQUIVALENTS, beginning of period		2,629			1,656
CASH AND CASH EQUIVALENTS, end of period	$	818		$	570
Supplemental disclosure of cash flow information:
Cash paid during period for interest	$	1,152		$	1,250
Cash paid during period for taxes		2			7
Supplemental disclosure of cash flow information
Issue 61 million shares of common stock for acquisition of IPR and Distribution
rights for Minivan and CNG products	$	5,969		$	-
Issue 6,439,552 shares of common stock to pay interest payable	$	639		$	-
Issue 7,970,983 shares of common stock to redeem Convertible  bond	$	600		$	-
Issue 17,819,783 shares of common stock to pay oustanding balance
due to related parties	$	968		$	-

See accompanying notes to the unaudited condensed consolidated financial statements

7

ZAP AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2014

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION:

ZAP (together with its subsidiaries, the “Company” or “ZAP”) was incorporated in California in September, 1994. ZAP markets electric, alternative energy, and fuel efficient automobiles and commercial vehicles, motorcycles and scooters, and other forms of personal transportation. The Company’s business strategy is 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 and 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 Auto” or “Jonway”). The Company believes its 51% acquisition of Jonway will enable it to access the rapidly-growing Chinese market for electric vehicles (“EV”) and to expand its EV business and distribution network around the world. The Company also believes Jonway’s ISO 9001 certified manufacturing facility provides the competitive production capacity and resources to support production of ZAP’s new  line of electric SUV, minivan, and Neighborhood EV (“NEV”).

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”).

The principal activities of Jonway until recently were the production and sales of gasoline models of the SUVs and minivans in China using the consigned UFO license from an affiliate of Jonway Group.  Over the past three years, Jonway continued the production and sales of its gasoline model SUV and minivan, while developing and ramping production of its EV product line. Jonway received type approval of its EV SUV and EV certification of its manufacturing facility from the Chinese government more than a year ago.  It also developed two different full electric EV models for its minivan, one with lithium batteries, which has longer range and more power, and the other with lead acid batteries, intended for lower speed and shorter range.  Jonway began production on a new NEV in April, 2014 focusing on the growing aging and young adult population in China that generally do not hold a driver’s license

Jonway Auto, as an authorized auto manufacturer in China, has access to the required licenses for China type approval for both the SUV and minivan models, providing these models with the advantage that lithium battery versions would be eligible for subsidies from the Chinese central and local governments ranging from RMB 35,000 (~US$5,000) to RMB 100,000  (~US$16,000) depending upon the range of the vehicle achieved between recharges. EVs reaching 250km in range per charge could receive up to ~$10,000 subsidies from the central government and another ~$10,000 from the local government.  Currently 88 local government cities are participating in this subsidy as required by the central government.  The Chinese government recently announced these subsidies have been extended to the year 2020, with the total amount of subsidies gradually tapering off each year.  Additionally, the Chinese government recently mandated that government vehicles must be Chinese-made and that a minimum of 30% of the vehicles purchased are required to be full electric.  ZAP believes these incentives, combined with the elimination of sales tax, consumer tax, and license plate registration fees on full electric vehicles (which can total more than US$20,000 for gas vehicles in some cities like Shanghai), are creating a strong economic incentive for the purchase of electric vehicles and a substantial market opportunity for Jonway’s new EV SUV and EV minivan product line. Jonway Auto’s EV SUV and EV minivan have been reconfigured with smaller engines to support lower power consumption. The EV SUV has a 20kwatt (40kwatt peak) engine. The EV minivan which is a much lighter vehicle has a 13.5kwatt engine. These newly reconfigured EVs adapted to maximize range at optimal speeds will be available for mass production in 1Q2015.

8

ZAP and Jonway Auto are focused on the EV fleet markets in China.  With the recent reinforced subsidies and requirements for government entities to purchase full electric vehicles, the Company believes Jonway’s new EV SUV is particularly suited for use by government officials and personnel.  Jonway’s SUV currently has an advantage in China because most auto companies to date have focused primarily on producing small electric sedans, some with only two seats, that are not very practicable for use by government officials on a daily basis.  Whereas, Jonway’s  SUV is a larger 5-person vehicle with comfortable  seating and legroom.  Jonway’s EV minivan is well-positioned for government city utility and maintenance transportation and service.  The minivan was designed with removable rear seats so that it may also serve as a delivery van for use in the projected rapid growth market of EVs used for the transport of goods and packages in China.

Jonway Auto began transforming its manufacturing plant to support mass production of several full electric vehicle models in 2014.  With the urgent priority to provide multiple manufacturing EV production lines to support multiple models of EVs, Jonway reduced its resource investment in the traditional gasoline vehicle products and cut back on funding the sales and marketing of its gasoline SUV and gasoline minivans.   Jonway is now in the process of migrating its organization to support the ramp up of electric vehicle production and preparing for sales and marketing to fleet markets, including to leasing companies and government organizations in the major cities.  2014 has been a major transitioning year for Jonway Auto, where there has been an intentional slowdown in gasoline vehicle production and sales, while Jonway is redirecting its manufacturing and sales and marketing groups to support the mass rollout of  its EVs, starting with its new Neighborhood EV model, Urbee, for city commuters. Many of the traditional gasoline vehicle dealerships that are not focused on supporting EV products will be dropped. This transition from gasoline to electric vehicles has affected the revenue and profitability of the Company.  As the sales of gasoline vehicles decreases, overhead costs are being absorbed by a smaller volume of sales, reducing gross margins.  We anticipate improvement in the gross margins as the sales volume of new EV products increases.

Another factor affecting the overall reduction in sales by many of the dealers is the shrinking bank credit lines available to smaller dealerships and business. As a result of the Chinese government’s requirement for banks to retain a larger cash reserve, credit facilities for smaller dealerships have been reduced, thus contracting the overall availability of credit for purchasing.  However, Chinese banks are being encouraged by the Chinese government to support credit facilities to promote EV sales, including EV leasing and EV fleet markets.

The combined companies’ new EV product lines include the A380 SUV EV and the minivan EV, the recently announced Urbee, and Sparkee. Both the EV SUV and EV minivan products leverage the production moldings, the manufacturing engineering infrastructure and facilities currently in place for the gasoline models of these vehicles.  The new Urbee started its first production delivery in the 2nd quarter of 2014.  The first production deliveries of the EV SUV and Minivans are projected to occur in the 1st and 2nd quarters of 2015, respectively.

9

The Company’s 3Q2014 revenues were lower when compared year over year as Jonway cut back on its gasoline vehicle sales and marketing activities in order to redirect the organization and resources to focus on developing the EV dealership networks and selling the Urbee, Jonway has received orders over twenty thousand projected sales orders, with monthly quantities ordered for the different dealerships.  Some of the orders for these Urbees will depend on availability of working capital, and Jonway Auto is delivering the Urbees based on the amount of advanced payments from the dealerships and partners.  Urbee is a low speed vehicle which is currently not a nationally recognized category in China except for a few provinces. The rate of orders placed from the pipeline will in part depend on the rate at which Jonway Auto is able to manufacture and deliver the vehicles.  Given that the EV market is just now being developed in China, Jonway Auto is partnering with a few strong dealers in order to work closely on the product service support and customer service.

The goal of the Company is to become cash flow positive in the second half of 2015 by producing and selling vehicles at a target  rate of a couple thousand Urbees per month on average and at least a few hundred SUVs or minivans per month, combining the delivery of both EVs and gasoline versions of the models. The Company’s strategy for achieving this goal is to leverage the volume sales orders and the continuing demand from the market for Urbees to drive down the cost of production in the factory for EVs and to substantially absorb the overhead of the factory.  The Company believes  mass production ramp up of the Urbees will help streamline the EV manufacturing process, provide a good training ground for the production engineers, and pave the way for volume production of the more sophisticated EV products of minivan and EV SUVs.

Jonway Auto will cut back on the number of gasoline SUV models in order to reduce the overhead costs of carrying too many different gasoline versions.  Jonway will focus on its high volume lower cost gasoline model priced at around US$10,000, replacing its 1.6 liters gasoline model with a more cost effective and efficient 1.5 liter engine model.  This will be Jonway’s mainstream gasoline model.

In the meantime, Jonway auto established its three wholly-owned subsidiaries, namely, Taizhou Selling Co., Ltd., focusing on vehicles marketing and distribution, 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.

BASIS OF PRESENTATION

 The accompanying unaudited condensed consolidated financial statements include the accounts of ZAP, and its subsidiaries: Jonway Automobile, Voltage Vehicles, ZAP Stores and ZAP Hong Kong for the three and nine months ended September 30, 2014 and 2013 and are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”).  Management considers “subsidiaries” to be companies that are over 50% owned or controlled by ZAP,.  Intercompany transactions and balances are eliminated in consolidation; profits from intercompany 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 three and nine months ended September 30, 2014 and 2013 may not be indicative of the results that may be expected for the year ending December 31, 2014 or for any other future period.  These unaudited 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, 2013 filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2014 (our “10-K”).

10

LIQUIDITY

In assessing our liquidity, we monitor and analyze our cash on-hand 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 and bank facilities from China-based banks for Jonway Auto.

              As of September 30, 2014, we had $16.1 million in short term bank loans outstanding on the approved credit line of $41.3 million with credit exposure totaling $19.6 million with four China-based banks. The loans are secured by land and buildings owned by Jonway and guaranteed by related party Jonway Group and shareholder Wang Huaiyi.  The interest rates on the loans range from 5.04% to 8.93% per annum and the loans expire at various times through September, 2015.

Jonway intends to raise funds to support working capital needs for EV production.  If additional funding is available above the amount required for working capital, Jonway may use the additional funds for the testing and homologation of new models and potentially for new EV product molds. Depending upon the amount of available capital, funds may also be used to support the Company’s expansion plans, with emphasis on  electric vehicle sales and marketing, and new product roll outs. Also our principal shareholder, Jonway Group, has agreed to provide the necessary support to meet our financial obligations through November 14, 2015 in the event that we require additional liquidity. In addition, CEVC (China Electric Vehicle Corporation) would likely renew the convertible note which has been extended to August 2015. In the event that CEVC decides to call on the repayment, the repayment would likely be paid in full or in part in Jonway Auto shares or ZAP shares unless there is a breach by the Company on the covenant of the convertible note.

We intend to fund our long term liquidity needs related to operations through additional 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.  

On September 16, 2014 the Company entered into a Placement Agency Agreement  for the purpose of identifying qualified prospective purchasers of  the Company’s debt and/or equity securities through the private placement of such securities.

NOTE 2- SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company 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, warranty costs, stock based compensation, 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.

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.

11

- 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 records revenues for Jonway sales only upon the occurrence of all of the following conditions:

- The Company has received a binding purchase order from the customer or distributor authorized by a representative empowered to commit the purchaser (evidence of a sale);

-

- The purchase price has been fixed, based on the terms of the purchase order;

- The Company has delivered the product from its factory to a common carrier acceptable to the customer; and

- The Company deems the collection of the amount invoiced probable.

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

 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 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 our 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.  The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

12

                                                                                            September 30, 2014            December 31, 2013

     Balance sheet items, except for share capital, additional        $ 1=RMB 6.1547     $1=RMB 6.1122

     paid in capital and retained earnings

     Amounts included in the statements of operations                  $ 1=RMB 6.1480   $1=RMB 6. 1171

     and cash flows for the periods

            Recent Accounting Pronouncements

In April 2014, the FASB has issued Accounting Standards Update (ASU) No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. Early adoption is permitted. The Company does not expect the adoption of this guidance will have a significant impact on the Company’s condensed consolidated financial statements.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers: Topic 606. This Update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. The guidance in this Update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to illustrate the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also includes a cohesive set of disclosure requirements that will provide users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a reporting organization’s contracts with customers. This ASU is effective retrospectively for fiscal years, and interim periods within those years beginning after December 15, 2016 for public companies and 2017 for non-public entities. Management is evaluating the impact, if any, of this ASU on the Company’s financial position, results of operations and cash flows.

In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-12 Compensation – Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The amendments stipulate that a performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, Compensation — Stock Compensation. As a result, the target is not reflected in the estimation of the award’s grant date fair value. Compensation cost should be recognized over the required service period, if it is probable that the performance condition would be achieved. The amendments in this Accounting Standards Update are effective for annual periods beginning after December 15, 2015 and interim periods within those annual periods. Early adoption is permitted. The Company does not expect the adoption of ASU 2014-12 to have a material impact on the Company’s condensed consolidated financial statements.

13

In August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15 Preparation of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. Under generally accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements-Liquidation Basis of Accounting. Even when an entity's liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this Accounting Standards Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company does not expect the adoption of ASU 2014-15 to have material impact on the Company’s condensed consolidated financial statements, although there may be additional disclosures upon adoption.

In November 2014, FASB issued Accounting Standards Update No. 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force). The amendments permit the use of the Fed Funds Effective Swap Rate (also referred to as the Overnight Index Swap Rate, or OIS) as a benchmark interest rate for hedge accounting purposes. Public business entities are required to implement the new requirements in fiscal years (and interim periods within those fiscal years) beginning after December 15, 2015. All other types of entities are required to implement the new requirements in fiscal years beginning after December 15, 2015, and interim periods beginning after December 15, 2016. The Company does not expect the adoption of ASU 2014-16 to have material impact on the Company's consolidated financial statement.

NOTE 3– INVENTORIES, NET

            Inventories are summarized as follows (in thousands):

	September 30, 2014			December 31, 2013
Work in Process	$	3,017		$	2,228
Parts and supplies		4,315			2,906
Finished goods		4,500			4,881
		11,832			10,015
Less - inventory reserve		(1,960	)		(1,981	)
Inventories, net	$	9,872		$	8,034

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 Changes in the Company’s inventory reserve are as follows (in thousands): 

	September 30, 2014			December 31, 2013
Balance  opening period	$	1,981		$	2,325
Current provision for  Jonway Auto		-			(529	)
Current provision for inventory ZAP-net		(21	)		185
Balance end of period	$	1,960		$	1,981

NOTE 4 – DISTRIBUTION AGREEMENT

Distribution agreements are presented below (in thousands):

	September 30, 2014			December 31, 2013
Better World Products-related party	$	2,160		$	2,160
CNG Products		5,969			-
Jonway Products		14,400			14,400
		22,529			16,560
Less amortization		(7,800	)		(6,721	)
	$	14,729		$	9,839

Amortization expense related to these distribution agreements for the three months ended September 30, 2014 and 2013 were $360,000 and $360,000, respectively.  Amortization expense related to these distribution agreements for the nine months ended September 30, 2014 and 2013 were $1,080,000 and $1,080,000, respectively.  Amortization is based over the term of the agreements. There were no amortization expenses for CNG products as it has not yet been marketed in the first three quarters of 2014.

Distribution Agreement with Jonway Auto for CNG Products

On June 26, 2014, ZAP entered into an International Distribution with Jonway Auto as the distributor of Jonway Auto’s compressed natural gas SUV and compressed natural gas minivan, both in the US. and internationally. In connection with the distribution agreement the Company also issued 61 million shares of ZAP common stock valued at $6.0 million to Jonway Group.  Jonway Group had to pay the outstanding minivan mold balance in exchange for the 61 million shares of ZAP’s common stock.

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NOTE 5– 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 General Partner of Cathaya Capital, which is a shareholder of Better World. In January of 2011, Holley Group’s interest in ZAP Hangzhou was purchased by Jonway Group. ZAP and Better World each own 37.5% of the equity shares of ZAP Hangzhou, and Jonway Group 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 the focus to support “EV car sharing” or EV leasing.  Zapple has a 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.

The carrying amount of the Company’s investment in the joint ventures is as follows:

	ZAP Hangzhou			Shanghai Zapple			Total
Balance as of December 31, 2012	$	437		$	461		$	898
Less: investment loss		(438	)		(461	)		(899	)
CTA		1			--			1
Balance as of December 31, 2013		--			--			--
Less: Investment loss		--			--			--
CTA		--			--			--
Balance as of September 30, 2014	$	--		$	--		$	--

The carrying amount of the Joint Venture investment had been written down to $0 as of December 31, 2013. The Company recorded a loss of $0 and $182,000 in ZAP Hangzhou for the nine months ended September 30, 2014 and 2013, respectively. The Company recorded a loss of $0 and $79,000 in ZAP Hangzhou for the three months ended September 30, 2014 and 2013, respectively. Due to the suspension of Shanghai Zapple operations, the company recorded a loss of $0 and $461,000 in Shanghai Zapple for the three and nine months ended September 30, 2014 and 2013 respectively. These losses relate to investment in non-consolidated joint ventures accounted for under the equity method of accounting because the Company does not have control.

NOTE 6 –LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

Line of credit (Credit Exposure)

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              In November 2013, we were approved up to an aggregate of $24.3 million of a credit line, with the credit exposure of $6.3 million from the Sanmen Branch of CITIC Bank (“CITIC”) through Jonway. In March 2014, the credit exposure increased by $1.0 million to $7.3 million. When drawn down, the credit line is secured by land and buildings owned by Jonway and guaranteed by the related party Jonway Group. Jonway borrowed one year short-term loans in the aggregate amount of $6.3 million in November 2013. In April 2014, the company partially repaid $0.56 million. The annual interest rate is 6.6%, and the loans are due in November 2014. In March 2014, Jonway borrowed one year short-term loan of $1.0 million. The annual interest rate is 7.08% and the loan is due in March 2015. We have also drawn down $5.6 million in the form of notes payable as of September 30, 2014. Except for a note payable utilizing the credit exposure of $0.56 million, we deposited 100% cash as restricted cash as collateral for these notes payable. These notes are due in October, 2014.  As of September 30, 2014, the credit exposure of $7.3 million has been fully used. The credit line expires in November 2015. The Company repaid the note payable due in October 2014. After September 30, 2014, the bank agreed to renew the credit line.

In December 2012, we were approved up to an aggregate of $4.1 million of a credit line from Taizhou Bank. This credit line was reduced to $2.4 million in early 2014 when it was renewed. This credit line was guaranteed by related parties. As of September 30, 2014, the total outstanding loans under this credit line were $1.1 million. The loans are due separately in November 2014 and February 2015 respectively. The annual interest rates are 8.89% and 8.93% respectively. A credit exposure of $1.2 million was used in the form of notes payable of $3.2 million with restricted cash of $2.0 million being deposited with the bank. As of September 30, 2014, a total credit exposure of $2.4 million has been used. The Company repaid the loan due in October 2014. The credit line has not renewed as of November 14, 2014.

               In December 2013, we were approved for up to an aggregate of $9.1 million of a credit line from Everbright Bank. This credit line can only been used in the form of notes payable with 50% restricted cash deposited. Thus, we were approved a credit exposure of $4.5 million. This credit line was guaranteed by the shareholder Wang Huaiyi, as well as a building and land use right at the carrying value of $2.1 million. As of September 30, 2014, $6.9 million was drawn down as notes payable. The amount of restricted cash deposited with the bank was $3.8 million.  In June 2014, Jonway borrowed a 6 months short-term loan of $0.31 million at interest rate of 7.28%. In July 2014, Jonway borrowed an 11 months short-term loan of $1.2 million at interest rate of 7.2%. As of September 30, 2014, the credit exposure of $4.5 million has been fully used. The credit line expires in December 2014 and not yet renewed as of November 14, 2014. The Company repaid the note payable due in October 2014.

                In December 2013, we were approved up to an aggregate of $5.4 million of a credit line from Industrial and Commercial Bank of China (ICBC). This credit line was secured by land and buildings owned by Jonway and guaranteed by related parties. As of September 30, 2014, the total outstanding loan under this credit line was $6.5 million with $1.6 million of restricted cash deposited with the bank. The annual interest rates are from 5.0% to 7.2%.  The loans are due in various dates from October 2014 to September 2015. Jonway also drew down $0.49 million in the form of a note payable as of June 2014. We deposited 100% cash as restricted cash for the note payable. As of September 30, 2014, a credit exposure of $4.9 million has been used, and $0.5 million was still available for use. The credit line expires in December 2014 and not yet renewed as of November 14, 2015. The Company repaid the loan due in October 2014.

In October 2014, Jonway repaid the short term debts of $2.27 million and bank acceptance notes of $7.4 million when they became due.  Except for the aforesaid repayment, there are no short term loan and bank acceptance notes due by November 14, 2014. There is no bank acceptance notes issued after September 30, 2014.

Short term debt

In November 2013, Jonway borrowed one year short-term loans in the aggregate amount of $6.3 million from CITIC. The annual interest rate is 6.6%, and the loans are due in November 2014. In April 2014, Jonway partially repaid $0.56 million. In March 2014, Jonway borrowed $0.98 million from CITIC Bank. The loan expires in March 2015 and the annual interest rate is 7.08%.The loans are secured by a Maximum Amount Mortgage Contract between Jonway and CITIC dated November 11, 2013, in which a land use right and a building with a total carrying amount of $6.1 million as of September 30, 2014 has been pledged as security for this loan. The shareholder and Co-CEO Alex Wang also personally guaranteed these loans.

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In July, August and November 2013, the company borrowed a total of $2.1 million of short term loans at interest rates of 8.46% and 8.89% from Taizhou Bank.  The loans are guaranteed by related parties including Jonway Group, the shareholder Wang Huayi and other individuals. Loans of $1.3 million were due in January and February 2014, and were repaid when due. The remaining balance of $0.8 million was repaid in May 2014. Jonway borrowed a short-term loan of $0.3 million in February 2014 at the annual interest rate of 8.89% which was repaid in August 2014. Jonway borrowed a short-term loan of $0.8 million in May 2014 at the annual interest rate of 8.89% which is due in November 2014. In August, Jonway borrowed a short-term loan of $0.3 million at the annual interest rate of 8.93% which is due in February 2015. In October 2014, Jonway repaid $0.81 million of a short term loan to Taizhou Bank when it became due. In October 2014, Jonway borrowed $0.81 million of a short term loan from Taizhou Bank. The loan expires in April 2015 and the annual interest rate is 8.496%

The Company also borrowed loans from Industrial and Commercial Bank of China (ICBC) during 2013. In June 2013, Jonway borrowed a one year short-term loan of $1.1 million at the annual interest rate of 6.9%. The loan was due and repaid in June 2014. In August 2013, Jonway borrowed a 6 months short-term loan of $0.8 million. The annual interest rate was 5.6%. The loan was repaid when due in February 2014.  In August 2013, Jonway borrowed a one year short-term loan of $ 1.1 million. The annual interest rate was 6.9%. It was due and repaid. In September 2013, Jonway borrowed a 6 months short-term loan of $0.7 million. The annual interest rate was 5.6%. The loan was repaid when due in March 2014.  In November 2013, Jonway borrowed a one year short term loan of $1.5 million.  The annual interest rate was 7.2%. In December 2013, Jonway borrowed a one year short term loan of $1.1 million. The annual interest rate was 7.2%.In March 2014, Jonway borrowed a 6-month short-term loan of $0.8 million with 100% cash deposited as collateral for the loans. The annual interest rate is 5.6% and repaid when due in September 2014. In April 2014, Jonway borrowed a 6 months short-term loan of 0.8 million with 100% cash deposited as collateral for the loans. The annual interest rate is 6%. In June 2014, Jonway borrowed a one year short-term loan of $1.1 million at the annual interest rate of 6.256%. In August 2014, Jonway borrowed a one year short-term loan of $1.1 million at the annual interest rate of 6.92%. In September 2014, Jonway borrowed a 6-month short-term loan of $0.8 million at the annual interest rate of 5.04%. These loans were guaranteed by related parties including Jonway Group, the shareholder Wang Huaiyi and the shareholder and Co-CEO Alex Wang. The Company also pledged buildings and a land use right with a carrying value of $3.58 million with ICBC and $1.6 million of restricted cash of September 30, 2014. In October 2014, Jonway repaid $1.46 million of a short term loan to ICBC when it became due. In  October 2014, Jonway borrowed $1.46 million of a short term loan from ICBC. The loan expires in October 2015 and the annual interest rate is 6.6%

In June 2014, the company borrowed a 6 month short-term loan of $0.31 million at an interest rate of 7.28% from China Everbright Bank. In July 2014, Jonway borrowed a 11 months short-term loan of $1.2 million at the annual interest rate of 7.2%. The loans were guaranteed by the shareholder Wang Huaiyi, as well as a building and land use right with a carrying value of $2.1 million.

The weighted average annual interest rate during 2013 was 7.04%, the weighted average annual interest rate for the first three quarters of 2014 was 6.95%, 7.45% and 7.0% respectively

         (in thousands)

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	September 30, 2014		December 31, 2013
Loan from CITIC bank	$	6,752		6,381
Loan from ICBC		6,476		6,381
Loan from Taizhou Bank		1,137		2,127
Loan from China Everbright Bank		1,527		-
Loan from Pay-Ins Prem		200		72
	$	16,092		14,961

Bank acceptance notes

As of September 30, 2014, the Company has bank acceptance notes payable in the amount of $16.2 million. The notes are guaranteed to be paid by the banks and are usually for a short-term period of nine months. The Company is required to maintain cash deposits of 50% or 100% of the notes payable with these banks, in order to ensure future credit availability. As of September 30, 2014, the restricted cash for the notes was $11.4 million.

– 3 to 6 month term for each note issued (in thousands)

	September 30, 2014		December 31, 2013
a) Bank acceptance notes payable to China Everbright bank	$	6,856	$	8,891
b) Bank acceptance notes payable to Taizhou bank		3,246		3,927
c) Bank acceptance notes payable to CITIC bank		5,566		2,700
d) Bank acceptance notes payable to ICBC		487		177
	$	16,155	$	15,695

a.   Notes payable to China Everbright bank have various maturity dates from October 2014 to March 2015. The notes payable are guaranteed by a land use right and a building with a total carrying value of $2.1 million. The Company is also required to maintain cash deposits at 50% of the notes payable with the bank, in order to ensure future credit availability. In October 2014, the company repaid the note payable when it became due.

b.   Notes payable to Taizhou bank have various maturity dates from October 2014 to February, 2015. The Company is required to maintain cash deposits at 50% to 100% of the notes payable with the bank, in order to ensure future credit availability. In October 2014, the company repaid the note payable when it became due.

c.   Notes payable to CITIC bank will be due from October 2014 to March 2015.  Except for a note payable utilizing credit exposure of $1.12 million, the Company is required to maintain cash deposits at 100% of the notes payable with the bank, in order to ensure future credit availability. In October 2014, the company repaid the note payable when it became due.

d.   Notes payable to ICBC will be due in December 2014. The Company is required to maintain cash deposits at 50% to 100% of the notes payable with the bank, in order to ensure future credit availability.

In October 2014, approximately $7.4 million of notes payable matured and repaid. There is no notes payable issued after September 30, 2014.

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 NOTE 7- CONVERTIBLE BOND

On June 12, 2013, the Company signed a convertible bond agreement, pursuant to which a Convertible Bond would be put in place to fund the formation of JAZ (Jonway and ZAP) from the ZAP Hangzhou Joint Venture that was formed in 2010 in China, Hangzhou. The Convertible Bond was to be funded at US$2 million with the option to convert to ZAP shares. The Company received $1.7 million of the $2 million. As of October 27th, 2014, US$500,000 of the convertible bond has been repaid to one of the bond holders (Korea Yung), and US$600,000 has been converted to ZAP shares by the other bond holders, leaving an outstanding principal amount of $600,000 on the bond yet to be repaid in cash or in ZAP shares.

Effective September 29, 2014, the Company and Korea Yung amended their original agreement dated August 12, 2014. Under the amendment, the Company made a payment totaling $528,500 to Yung as of October 27th, 2014.  The payment represented a principal reduction of $500,000 and $28,500 of interest on the Company’s outstanding convertible bond held by Yung. Per the agreement, the Company will release 7,095,344 shares from escrow and deliver the shares to Yung, or repay the remaining $600,000 principal in cash in part or in full, on or before December 31, 2014 or within five (5) business days thereafter.

NOTE 8 – SEGMENT REPORTING

Operating Segments

                In accordance with ASC 280, the Company has identified four reportable segments consisting of Jonway Vehicles, Advanced Technology Vehicles, ZAP (Consumer Product) and ZAP Hong Kong. The Jonway Vehicles segment represents sales of the gas fueled and electric vehicles of Jonway A380 three and five-door sports utility vehicles, minivans and spare parts principally through distributors in China. The Advanced Technology Vehicles segment represents EV sales and marketing outside of China. The Consumer Product segment represents our ZAPPY3 personal transporters. 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. Segment results are summarized as follows (in thousands):

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	Jonway			Electric						Advanced
	Conventional			Consumer						Technology
	Vehicles			Products			Car outlet			Vehicles			ZAP HK		Total
For the three months ended September 30, 2014:
Net sales	$	4,951		$	269		$	-		$	-		$	-	$	5,220
Gross profit (loss)	$	(692	)	$	72		$	-		$	-		$	-	$	(620	)
Depreciation and amortization	$	1,445		$	655		$	-		$	-		$	-	$	2,100
Net profit (loss)	$	(2,837	)	$	(1,966	)	$	-		$	-		$	-	$	(4,803	)
Total assets	$	82,207		$	22,870		$	-		$	-		$	1,439	$	106,516
For the three months ended September 30, 2013
Net sales	$	9,660		$	252		$			$	17		$	-	$	9,929
Gross profit (loss)	$	512		$	107		$			$	(6	)	$	-	$	613
Depreciation and amortization	$	1389		$	657		$			$	-		$	-	$	2,046
Net loss	$	(1,719	)	$	(1,622	)	$			$	(5	)	$	-	$	(3,346	)
Total assets	$	88,226		$	22,692		$			$	0		$	-	$	110,918
For the nine  months ended September 30, 2014:
Net sales	$	18,926		$	704		$	-		$	-		$	-	$	19,630
Gross profit (loss)	$	(1,759	)	$	189		$	-		$	-		$	-	$	(1,570	)
Depreciation and amortization	$	4,309		$	1,967		$	-		$	-		$	-	$	6,276
Net profit (loss)	$	(8,424	)	$	(5,262	)	$	-		$	-		$	-	$	(13,686	)
Total assets	$	82,207		$	22,870		$	-		$	-		$	1,439	$	106,516
For the nine months ended September 30, 2013
Net sales	$	35,878		$	639		$	-		$	45		$	-	$	36,562
Gross profit (loss)	$	166		$	174		$	-		$	(32	)	$	-	$	308
Depreciation and amortization	$	4,079		$	1,970		$	-		$	0		$	-	$	6,049
Net loss	$	(8,360	)	$	(5,078	)	$	(174	)	$	(33	)	$	-	$	(13,645	)
Total assets	$	88,226		$	22,692		$	-		$	0		$	-	$	110,918

Operating segments do not sell products to each other, and accordingly, there is no inter-segment revenue to be reported.

Customer information

Approximately 96% or $18.9 million of our revenues for the nine months ended September 30, 2014 are from sales in China. Jonway Auto distributes its products to an established network of over 50 factory level dealers in China. Approximately 98% or $35.9 million of our revenues for the nine months ended September 30, 2013 are from sales in China. Jonway Auto distributed its products to an established network of over 50 factory level dealers in China.

Supplier information

For the three and nine months ended September 30, 2014 and 2013, approximately 96.6% or $5.6 million and  97.6% or $20.6 million and 98.2% or $9.1 million and 98.5% or $35.7 million of the consolidated cost of goods sold were purchased in China.

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NOTE 9– RELATED PARTIES

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:
	September 30, 2014		December 31, 2013
Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd	$	2,767	$	4,973
JAZ		1,166		961
ZAP Hangzhou		40		127
Total	$	3,973	$	6,061
Amount due to related parties are follows:
	September 30, 2014		December 31, 2013
Jonway Group	$	4,213	$	303
Jonway Motor Cycle		134		113
Taizhou Huadu		701		631
Shanghai Zapple		37		36
Ms. Lu		-		30
Mr. Wang		560		-
Betterworld		149		149
Taizhou Jonway Electric Vehicle Selling Co		953		-
Cathaya Capital		334		1147
Total	$	7,081	$	2,409

Transactions with Jonway Group

Jonway Group is considered 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 nine months ended September 30, 2014 and 2013, Jonway made purchases from Jonway Group of $915,000 and $916,000. For the three months ended September 30, 2014 and 2013, Jonway made purchases from Jonway Group of $241,000 and $236,000.

Jonway Agreement with Zhejiang UFO

                Based on a contract by and among 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):

22

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.

NOTE 10 – SHAREHOLDERS’ EQUITY

              Cathaya Operations Management Limited and China Electric Vehicle Corp have elected to convert the amounts recorded as due to related parties to common stock.  The amount of $967,543 due to Cathaya Operations Management Limited have been converted into 17,819,783 shares of common stock at 30% below market price based on the average trading prices of the previous 120 days after notification. The 17,819,783 shares of common stock have been issued in April 2014

China Electric Vehicle Corporation (CEVC) has elected to convert the interest of $639,068 due on the $20.7 million convertible note to 6,439,552 shares of common stock at the average of the closing prices for each trading day during such fiscal quarter ended on (and including) the last trading day of such fiscal quarter. The 6,439,552 shares of common stock have been issued in April 2014.

In March 2014, Jonway Group agreed to pay all of the outstanding mold expenses of the Minivan that is currently still outstanding, and in return ZAP will share half of the asset value and share the IPR (50%) of the Minivan with Jonway Auto. The Minivan was purchased by ZAP from a prior agreement between ZAP and Jonway Group which was signed on January 18, 2012.  In return for ZAP receiving worldwide exclusivity for the sales, distribution, and product IPR rights for all current and future models of the compressed natural gas (“CNG”) versions of Jonway Auto’s Products, including, but not limited to, SUV, minivan, and all other models, the Company’s Board of Directors authorized on March 28, 2014 to issue 61,000,000 shares of common stock to the companies owned by the Co-CEO and shareholder Alex Wang, including 20,000,000 shares to Major Management Limited, 20,000,000 shares to Max Reliance Management Limited and 21,000,000 shares to New Dragon Management Limited. The 61,000,000 shares of common stock have been issued in April 2014.

In May 2014, ZAP issued 62,500 shares of common stock to Jeffery and Karen Bank, who paid $5,000 in cash on behalf of ZAP to address a lawsuit from Jackson Long.

On February 26, 2014, a binding letter of commitment in equity investment in ZAP was signed between the Company and four individual investors. The four individual investors are the representatives of the employees of Jonway Auto and Jonway Group in China and they will hold the issued stocks on behalf of these employees. The shares were issued at discounted share price based on averaged price over the last 60 days from the date of signing the agreement. As of September 30, 2014, $1.9 million was received by ZAP. The number of stock issued on August 14, 2014 was 31,666,668.

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NOTE 11– LITIGATION

1. On January 11, 2013, Cathaya Capital, L.P., a ZAP shareholder (“Cathaya”), and Priscilla Lu, Chairman of the ZAP Board of Directors (“Lu”) (collectively “Plaintiffs”), filed a lawsuit in the Superior Court of California, County of Los Angeles, styled Cathaya Capital, L.P. et al. v.  ZAP, et al., Case No. BC499106 (the “Cathaya Lawsuit”).  By the Cathaya Lawsuit, Plaintiffs, derivatively on behalf of the nominally-named defendant ZAP, asserted claims for breach of fiduciary duty and conversion against the following three members of the ZAP Board of Directors:  Mark Abdou (“Abdou”), Steven Schneider (“Schneider”) and Wang Gang a/k/a Alex Wang (the “Minority Board Member Defendants”).  In addition, Plaintiffs, derivatively on ZAP’s behalf, sought declaratory and injunctive relief against the Minority Board Member Defendants for their alleged tortious misconduct and breaches of fiduciary duty.  Plaintiffs also asserted causes of action on their own behalf pursuant to California Corporations Code sections 304 and 709, for a judgment as to the rightful composition of the Board and to remove the Minority Board Member Defendants from the Board.

Lu and ZAP filed a Demurrer to the Second Amended Cross-Complaint’s first, fifth, sixth, seventh and eighth claims.  On March 3, 2014, the Court granted the Demurrer in its entirety and dismissed all claims asserted by Abdou and Schneider against Lu, without leave to amend.  In addition, the Court dismissed all tort claims against ZAP.  However, the Court’s ruling does not dismiss all claims against ZAP regarding unpaid employee compensation.  The Abdou/Schneider claims against ZAP for unpaid compensation were not before the Court and therefore were not affected by the Court’s ruling and have not been dismissed. These contract-based claims are against ZAP only and do not allow for punitive damages.

            ZAP intends to vigorously defend the Second Amended Cross-Complaint. 

On March 13, 2014, the Company filed its own operative First Amended Cross-Complaint in the Cathaya Lawsuit (the “ZAP Cross-Complaint”) against Abdou and Schneider, alleging causes of action for (1) breach of fiduciary duty; (2) conversion; (3) imposition of a constructive trust; and (4) an accounting.  By the ZAP Cross-Complaint, the Company is, among other things, pursuing Schneider and Abdou for return of inventory and assets that were removed from the Company’s warehouse, as well as cash that was redirected to another account.

The Court set January 15, 2015 as the trial date for all parties’ claims asserted in the Cathaya Lawsuit. 

On May 15, 2014, Abdou’s and Schneider’s counsel filed a motion to be relieved as counsel in the Cathaya Lawsuit, which was granted on August 4, 2014.  Consequently, Abdou and Schneider were unrepresented in the Cathaya Law suit as of August 4, 2014 

On June 6, 2014, the Court entered an Order Granting Plaintiff’s Motion for Sanctions due to Violations of Court’s Discovery Order, which imposed certain monetary and evidentiary sanctions against Abdou and Schneider, including, among other things, precluding Abdou and Schneider from calling certain witnesses and offering evidence of or relating to certain issues at trial. 

2. 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.  A tolling agreement was reached between the Company and shareholder on October 22, 2012 whereas the company, through its legal council shall provide a written summary of the actions taken during the preceding month with respect to the matters regarding the prior transactions in question by the shareholder.  These transactions include, but are not limited to, a) ZAP, Jonway Group, Jonway Auto and Cathaya Capital shall each in all respects comply with their executory obligations with respect to the continued funding of ZAP, b) resolve the litigation regarding  the former contracted employee, c) use reasonable efforts to defend, compromise and/or settle any pending and future litigations and ZAP shall use all reasonable efforts to cause all officers, directors and such other individuals who are or were employees, agents or representatives of ZAP to fully cooperate in the defense  of future arbitrations or litigations.  This agreement is binding through December 31, 2015.

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Other Regulatory Compliance Matters

ZAP has filed with the National Highway Transportation Safety Agency (NHTSA) that it is in non- compliance with Department of Transportation (DOT) requirements potential hazard may exist because the Model -Year 2008 XEBRA sedan and pickup does not stop in the required distance at 30 miles per hour and the master cylinder does not have separate brake fluid reservoirs with proper labeling and other miscellaneous non- compliance issues.

ZAP and the United States reached a settlement that is incorporated into a Consent Decree that was entered and approved by the U.S. District Court on July 17, 2013.  Pursuant to the Consent Decree, ZAP agreed to initiate a buy-back program whereby it will offer to provide a refund of $3,100 to each eligible MY 2008 ZAP Xebra owner.  The Consent Decree also contains notification and reporting requirements and requires ZAP to take specified actions regarding the disposition of repurchased vehicles and MY 2008 Xebras that remain in ZAP’s possession.  In accordance with the Consent Decree, the Company mailed the required notification letters to registered vehicle owners and ZAP Xebra dealers, along with a Refund Request Form.  The repurchase offer extends to 691 vehicles that have been sold by ZAP.

As of September 30, 2014 the Company had deemed 317 vehicle owners eligible for a refund and picked up 315 of the vehicles. The Company had paid out $1,059,755 to owners of the recalled 2008 Xebras as of September 30, 2014.  This amount includes refunds and the cost to transport and destroy vehicles.  The period for vehicle owners to qualify for refunds has expired and ZAP believes it has no obligation to issue further refunds.

               The Company has accrued for estimated expenses related to above claims last year, and the amount refunded is less than the accrued estimated amount. The excess amount will be reversed into income when the relevant authority satisfies that the company has met the obligation.

 NOTE 12– COMMITMENTS AND CONTINGENCIES

Guarantees

Jonway Auto guaranteed certain financial obligations of outside third parties including suppliers and dealers 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 Jonway Auto would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guarantee. Maximum potential payments under guarantees total $1.9 million and $6.8 million as of September 30, 2014 and 2013, respectively. This is a reduction of $4.9 million from 2013. The guarantee expires in December 2014. Our performance risk under these guarantees is reviewed regularly, and has resulted in no changes to our initial valuations.

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

This quarterly report 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 Annual Report on Form 10-K 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.

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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.

Recent Developments

 Jonway signed an OEM contract with AIMA, the largest producer of EV motorcycles in the world, to manufacture and produce a new version of the Urbee for AIMA.  AIMA will be selling the new Urbee model through its network of over 2,000 EV motorcycle dealers throughout China.  AIMA is headquartered in Tianjin, China, and had sales of over 3 million electric motorcycles last year.  AIMA funded a new design for the Urbee to provide a unique look for AIMA’s brand.  Sales of the new models are projected to commence in January, 2015 and the products will be manufactured by Jonway. 

AIMA is one of five major OEM partners with whom Jonway has signed strategic agreements.  The other OEM partners are Sunra from Jiangsu Province, third largest EV motorcycle manufacturer in China, Zongshen, the largest EV 3-wheel motorcycle manufacturer in China, based out of Jiangsu, Da Jiang from Hebei Province, and Wu Yang from Henan Province.

Jonway received type approval certification for its SUV in Brazil and signed an annual sales contract with its partner Agra 8000, a Brazilian company headquartered in Rio de Janeiro.  After several years of extensive work by the joint partners, Jonway’s SUV has been calibrated to meet the E22 requirements, with complete type approval and certification issued for Brazil, and meeting all crash, safety, and emissions requirements.  The annual sales contract starts with initial monthly shipments of 50 SUVs per month.

In regard to Aptera, the board of ZAP has demanded that Co-CEO Alex Wang resolve the conflict of interest in Jonway Group’s purchase of the Aptera assets 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 issue currently remains unresolved.

Results of Operations

The following table sets forth, as a percentage of net sales, certain items included in ZAP’s condensed consolidated statements of operations (see Condensed Consolidated Financial Statements and Notes) for the periods indicated:

	Three Months							Nine Months
	Ended September 30,							Ended September 30,
		2014			2013			2014			2013
Statements of Operations Data:
Net sales			100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales			111.9	%		93.8	%		108.0	%		99.2	%
Operating expenses			62.6	%		32.2	%		48.1	%		31.6	%
Loss from operations			-74.6	%		-26.0	%		-56.1	%		-30.7	%
Net loss attributable to ZAP			-65.4	%		-25.2	%		-48.7	%		-26.1	%

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These results of operations that have been derived from our condensed consolidated 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 since the date of ZAP’s acquisition of 51% of the equity shares of Jonway on January 21, 2011.

Three Months Ended September 30, 2014 Compared to the Three Months Ended September 30, 2013

              Net sales for the three months ended September 30, 2014 were $5.2 million as compared to $10.0 million for the three months ended September 30, 2013.

             Jonway Auto’s revenue for the three months ended September 30, 2014 decreased by $4.7 million from $9.7 million for the quarter ended September 30, 2013 compared to $5.0 million for the quarter ended September 30, 2014. 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) Although Jonway ‘s upgraded A380, which was launched  into the market to compete with these competitors, the resulting sales volume ramped up in this 3rd  quarter did not reach the expected volume (iii) China’s overall economic condition worsened during the quarter (the GDP increase rate for this quarter compared to same quarter in 2013 was 7.3%, which is unexpectedly low).

Our third quarter sales of our Advanced Technology segment sales decreased by $17,000 from $17,000 for the three months ended September 30, 2013 to $0 for the three months ended September 30, 2014.

       In our Consumer Product segment, sales increased $17,000 to $269,000 from $252,000 for the three months ended September 30, 2014 and 2013 respectively.  

             Gross profit decreased by $1.2 million from a gross profit of $0.6 million for the three months ended September 30, 2013 to a gross loss of $0.6 million for the three months ended September 30, 2014.  Our margins dropped from 6.2% to negative 11.9%.

       Jonway Auto’s gross profit decreased by $1.2 million from a gross profit of $512,000 in the third quarter of 2013 to a gross loss of $692,000 for the third quarter ended September 30, 2014. The sales volume for both SUV and minivan dropped in comparing with last year. The low sales volume did not generate sufficient contribution to absorb the operating cost leading to increase in gross loss

          The Consumer Products segment experienced a decrease in gross profit of $35,000 from a gross profit of $107,000 in the three months ended September 30, 2013 to $72,000 in the three months ended September 30, 2014. The decrease was due to bulk sales to major customers carried out in 3rd quarter of 2014.

Sales and marketing expenses increased $0.5 million from $1.2 million for the three months ended September 30, 2013, to $1.7 million for the three months ended September 30, 2014.  As a percentage of sales the expense increased from 12.3% for the three months ended September 30, 2013 to 32.6% for the three months ended September 30, 2014 due to the decrease in net sales and carrying out the promotion program for 1.5 liter model of SUV in the third quarter.

General and administrative expenses decreased by $0.4 million from $1.8 million for the quarter ended September 30, 2013 to $1.4 million in 2014. It was due to cost control and a drop in subcontracting fees as sales volume dropped.

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              Research and development expenses decreased by $1,000 from $120,000 for the three months ended September 30, 2013 to $119,000 for the three months ended September 30, 2014.

               Interest expense increased by $169,000, from $955,000 in the third quarter of 2013 to $1.1 million in the third quarter of 2014. In 2014, the amortization of the previous year’s discount on the convertible debt was significantly higher and we are incurring interest on our notes and short term borrowings.

               Other income decreased by $51,000 from $263,000 for the three months ended September 30, 2013 to $212,000 for the three months ended September 30, 2014. It was due to a decrease in sales of scrap.

Nine months Ended September 30, 2014 Compared to Nine months Ended September 30, 2013

              Net sales decreased by $17.0 million from $36.6 million for the nine months ended September 30, 2013 to $19.6 million in September 30, 2014.  

               Jonway auto’s revenue for the nine months ended September 30, 2014 decreased by $17.0 million from $35.9 million for the nine months ended September 30, 2013 to $18.9 million for the nine months ended September 30, 2014. 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) China’s overall economic condition worsened during the three quarters of 2014 (the GDP increase rate for the three quarters of 2014 compared to same period in 2013 was 7.4%, which is unexpectedly low).

  There were no sales in the Advanced Technology segment in the three quarters of 2014. Sales dropped by $45,000 from September 30, 2013 to $0 of September 30, 2014.

Sales of consumer products comparing the first nine months of 2014 increased by $65,000 from $639,000 of the first nine months of 2013 to $704,000 in the three quarters of 2014.

Gross profit decreased by $1.9 million from gross profit of $308,000 for the nine months ended September 30, 2013 to gross loss of $1.6 million for the nine months ended September 30, 2014.  The decrease in gross profit in the nine months ended September 30, 2014 principally related to the lower sales volume on both SUV and minivan.

Jonway auto’s gross profit decreased by $2.0 million from a gross profit of $0.2 million for the first nine months of 2013 to a gross loss of $1.8 million for the nine months ended September 30, 2014. The decrease was primarily due to sales drop.

            Sales and marketing expenses decreased by $1.5 million from $4.7 million for the nine months ended September 30, 2013 to $3.2 million for the same period ended September 30, 2014.  As a percentage of sales the expense increased from 13.0% for the nine months ended September 30, 2013 to 16.2% for the nine months ended September 30, 2014 due to drop in net sales.  The company has been continuously trying to reduce the expenditures in 2014. There was a decrease in sales volume and overall decrease in sales and marketing expenses

               General and administrative expenses for the nine months ended September 30, 2014 decreased by approximately $0.5 million, from $6.4 million in 2013 to $5.9 million in 2014. It was due to cost control and dropped in subcontracting fees.

            Research and development expenses decreased by $49,000 from $429,000 for the nine months ended September 30, 2013 to $380,000 for the same period ended September 30, 2014. There were fewer projects carried out

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                   Interest expense, net increased by $0.4 million from $2.6 million for the first nine months of 2013 to $3.0 million in the nine months ended September 30, 2014.The increase was due to increased borrowings in China and amortization of convertible debt costs.

Other income (expense) decreased $0.2 million from $0.8 million for the first nine months of 2013 to other income of $0.6 million for the first nine months of 2014. It was due to a decrease in sales of scrap.

Net loss for the nine months ended September 30, 2014 was $13.7 million loss compared to a $13.6 million loss for the nine months ended September 30, 2013.

               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 September 30, 2014, we believe that we will have sufficient liquidity required to conduct operations through September 30, 2015.

In January 2011, ZAP issued $19.0 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 without interest 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. 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 $20.7 million with 8% interest rate per annum will have a new maturity date of August 12 2015.  It is likely that we will be able to extend the maturity of the debt upon the expiration date. 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 August 12, 2015.

           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.

  On September 16, 2014 the Company entered into a Placement Agency Agreement with a company under which prospective purchasers of debt and equity securities issued by ZAP would be identified.  ZAP intends to raise capital in the future through the private placement of such securities.

              In the first nine months of 2014, net cash used in operating activities was $2.1 million.  Cash used in the first nine months of 2014 was comprised of the net loss incurred for the nine months of $13.7 million plus net non-cash expenses of $6.8 million including the depreciation of $5.2 million and amortization of $1.1 million and the net decrease of $4.8 million in operating assets and liabilities including the changes in due to related parties of $5.8 million, advance from customers of $2.0 million and due from related parties of $2.1 million. In the first nine months of 2013, net cash used for operating activities was $6.0 million. The drop in net cash used in operating activities was due to the financial support provided from Jonway Group to Jonway auto. The decrease in sales volume in this quarter had negative impact on Jonway Auto’s liquidity. As a shareholder of the company, Jonway Group will provide additional liquidity to the company and its subsidiaries in order to meet the financial obligations. Thus, the amount due to Jonway Group on September 30, 2014 was much higher than on December 31, 2013.

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              Investing activities used cash of $1.0 million and $1.6 million in the first nine months ended September 30, 2014 and 2013, respectively. Investing activities were used for the purchase of equipment, offset by $40,000 proceeds from the sales of motor vehicles.

              Financing activities for the nine months ended September 30, 2014 provided cash of $1.4 million compared with financing activities that provided cash of $6.6 million for the nine months ended September 30, 2013. During the first nine months of 2014, we provided cash of $31.4 million in short term loan and notes.  We used cash of $29.6 million in repayment of notes and short term borrowings. The issuance of common stocks provided funds of $1.9 million. Restricted cash changed by $2.3 million for the nine months ended September 30, 2014. For the nine months ended September 30, 2013, financing activities provided cash of $6.6 million, which was mostly contributed by the short term loan and notes.

              The Company had cash of $0.8 million at September 30, 2014 as compared to $2.6 million at December 31, 2013. The Company had working capital deficits of $70.9 million and $69.0 million for the periods ended September 30, 2014 and December 31, 2013 respectively.

In the event that we require additional liquidity, our Principal shareholders and related parties, Jonway Group, Alex Wang and Huaiyi Wang have agreed to provide the necessary support to meet our financial obligations through November 14, 2015.  In addition, CEVC (China Electric Vehicle Corporation) has renewed the convertible note and in the event that CEVC decides to call on the repayment, the repayment would be paid in full or in part in Jonway Auto shares or ZAP shares unless there is a breach by the Company on the covenant of the convertible note. 

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

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

As discussed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2013, 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.

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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 this quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

   PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

            1. On January 11, 2013, Cathaya Capital, L.P., a ZAP shareholder (“Cathaya”), and Priscilla Lu, Chairman of the ZAP Board of Directors (“Lu”) (collectively “Plaintiffs”), filed a lawsuit in the Superior Court of California, County of Los Angeles, styled Cathaya Capital, L.P. et al. v.  ZAP, et al., Case No. BC499106 (the “Cathaya Lawsuit”).  By the Cathaya Lawsuit, Plaintiffs, derivatively on behalf of the nominally-named defendant ZAP, asserted claims for breach of fiduciary duty and conversion against the following three members of the ZAP Board of Directors:  Mark Abdou (“Abdou”), Steven Schneider (“Schneider”) and Wang Gang a/k/a Alex Wang (the “Minority Board Member Defendants”).  In addition, Plaintiffs, derivatively on ZAP’s behalf, sought declaratory and injunctive relief against the Minority Board Member Defendants for their alleged tortious misconduct and breaches of fiduciary duty.  Plaintiffs also asserted causes of action on their own behalf pursuant to California Corporations Code sections 304 and 709, for a judgment as to the rightful composition of the Board and to remove the Minority Board Member Defendants from the Board.

Lu and ZAP filed a Demurrer to the Second Amended Cross-Complaint’s first, fifth, sixth, seventh and eighth claims.  On March 3, 2014, the Court granted the Demurrer in its entirety and dismissed all claims asserted by Abdou and Schneider against Lu, without leave to amend.  In addition, the Court dismissed all tort claims against ZAP.  However, the Court’s ruling does not dismiss all claims against ZAP regarding unpaid employee compensation.  The Abdou/Schneider claims against ZAP for unpaid compensation were not before the Court and therefore were not affected by the Court’s ruling and have not been dismissed. These contract-based claims are against ZAP only and do not allow for punitive damages.

            ZAP intends to vigorously defend the Second Amended Cross-Complaint. 

On March 13, 2014, the Company filed its own operative First Amended Cross-Complaint in the Cathaya Lawsuit (the “ZAP Cross-Complaint”) against Abdou and Schneider, alleging causes of action for (1) breach of fiduciary duty; (2) conversion; (3) imposition of a constructive trust; and (4) an accounting.  By the ZAP Cross-Complaint, the Company is, among other things, pursuing Schneider and Abdou for return of inventory and assets that were removed from the Company’s warehouse, as well as cash that was redirected to another account.

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The Court set January 15, 2015 as the trial date for all parties’ claims asserted in the Cathaya Lawsuit. 

On May 15, 2014, Abdou’s and Schneider’s counsel filed a motion to be relieved as counsel in the Cathaya Lawsuit, which was granted on August 4, 2014.  Consequently, Abdou and Schneider were unrepresented in the Cathaya Law suit as of August 4, 2014 

On June 6, 2014, the Court entered an Order Granting Plaintiff’s Motion for Sanctions due to Violations of Court’s Discovery Order, which imposed certain monetary and evidentiary sanctions against Abdou and Schneider, including, among other things, precluding Abdou and Schneider from calling certain witnesses and offering evidence of or relating to certain issues at trial. 

2. 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.  A tolling agreement was reached between the Company and shareholder on October 22, 2012 whereas the company, through its legal council shall provide a written summary of the actions taken during the preceding month with respect to the matters regarding the prior transactions in question by the shareholder.  These transactions include, but are not limited to, a) ZAP, Jonway Group, Jonway Auto and Cathaya Capital shall each in all respects comply with their executory obligations with respect to the continued funding of ZAP, b) resolve the litigation regarding  the former contracted employee, c) use reasonable efforts to defend, compromise and/or settle any pending and future litigations and ZAP shall use all reasonable efforts to cause all officers, directors and such other individuals who are or were employees, agents or representatives of ZAP to fully cooperate in the defense  of future arbitrations or litigations.  This agreement is binding through December 31, 2015.

Other Regulatory Compliance Matters

ZAP has filed with the National Highway Transportation Safety Agency (NHTSA) that it is in non- compliance with Department of Transportation (DOT) requirements potential hazard may exist because the Model -Year 2008 XEBRA sedan and pickup does not stop in the required distance at 30 miles per hour and the master cylinder does not have separate brake fluid reservoirs with proper labeling and other miscellaneous non- compliance issues.

ZAP and the United States reached a settlement that is incorporated into a Consent Decree that was entered and approved by the U.S. District Court on July 17, 2013.  Pursuant to the Consent Decree, ZAP agreed to initiate a buy-back program whereby it will offer to provide a refund of $3,100 to each eligible MY 2008 ZAP Xebra owner.  The Consent Decree also contains notification and reporting requirements and requires ZAP to take specified actions regarding the disposition of repurchased vehicles and MY 2008 Xebras that remain in ZAP’s possession.  In accordance with the Consent Decree, the Company mailed the required notification letters to registered vehicle owners and ZAP Xebra dealers, along with a Refund Request Form.  The repurchase offer extends to 691 vehicles that have been sold by ZAP.

As of September 30, 2014 the Company had deemed 317 vehicle owners eligible for a refund and picked up 315 of the vehicles. The Company had paid out $1,059,755 to owners of the recalled 2008 Xebras as of September 30, 2014.  This amount includes refunds and the cost to transport and destroy vehicles.  The period for vehicle owners to qualify for refunds has expired and ZAP believes it has no obligation to issue further refunds.

33

               The Company has accrued for estimated expenses related to above claims last year, and the amount refunded is less than the accrued estimated amount. The excess amount will be reversed into income when the relevant authority satisfies that the company has met the obligation.

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, 2013.

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

None

Item 6.  Exhibits

(b) Exhibits.

Exhibit 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.
31.3	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 Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension 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.

34

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: November 14, 2014	By: /s/ Alex Wang
	Name: Alex Wang
	Title: Co-Chief Executive Officer
	(Co-Principal Executive Officer).

Dated: November 14, 2014	By: /s/ Chuck Schillings
	Name: Chuck Schillings
	Title: Co-Chief Executive Officer
	(Co-Principal Executive Officer).

Dated: November 14, 2014	By:	/s/ Fung Chi Kwong
		Name: Fung Chi Kwong
		Title: Chief Financial Officer
		(Principal Financial Officer)

 35

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 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/ Alex Wang 

Alex Wang

Title: Chief Executive Officer (Co-Principal Executive Officer)

Date: November 14, 2014

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, Charles Schillings, 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/ Chuck Schillings

Chuck Schillings

Title: Co-Chief Executive Officer

Date: November 14, 2014

EX-32.3

EXHIBIT 31.3

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/ Fung Chi Kowng

Fung Chi Kwong

Title: Chief Financial Officer (Principal Financial and Accounting Officer)

Date: November 14, 2014

EX-32.2

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 September 30, 2014 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:  November 14, 2014 By: /s/ Alex Wang

Alex Wang

Co-Chief Executive Officer

 (Co-Principal Executive Officer).

Dated:  November 14, 2014 By: /s/ Charles Schillings

Chuck Schillings

Co-Chief Executive Officer

 (Co-Principal Executive Officer).

Dated: November 14, 2014 By: /s/ Fung Chi Kwong

Fung Chi Kwong

Chief Financial Officer

(Principal Financial Officer)

XML

CONVERTIBLE BOND (Details) (Convertible Bond [Member], USD $)	9 Months Ended		0 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Oct. 27, 2014 Subsequent Event [Member]	Oct. 27, 2014 Korea Yung [Member] Subsequent Event [Member]	Dec. 31, 2014 Korea Yung [Member] Subsequent Event [Member]
Short-term Debt [Line Items]
Debt instrument, face amount		$ 2,000,000
Repayment of principal amount of convertible note				500,000
Conversion of debt			600,000
Outstanding amount yet to be repaid			600,000
Repayment of principal and interest of convertible note				528,500
Interest expense				28,500
Number of shares to be released from escrow for repayment of convertible note					7,095,344
Proceeds from convertible bond, net of interest	$ 1,700,000

XML

SUBSEQUENT EVENTS (Details) (Letter Of Commitment [Member])	0 Months Ended
	Aug. 14, 2014
Letter Of Commitment [Member]
Subsequent Event [Line Items]
Common stock to be issued, shares	31,666,668

XML

LITIGATION (Details) (USD $)	9 Months Ended
	Sep. 30, 2014
LITIGATION [Abstract]
Refund payments	$ 1,059,755
Number of vehicles subject to remedy	691
Civil penalties amount per vehicle	$ 3,100,000

XML

DISTRIBUTION AGREEMENTS (Schedule of Distribution Agreements) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Distribution Agreements [Line Items]
Distribution agreements	$ 22,529	$ 16,560
Less amortization	(7,800)	(6,721)
Distribution agreements, net	14,729	9,839
Better World [Member]
Distribution Agreements [Line Items]
Distribution agreements	2,160	2,160
Jonway Products [Member]
Distribution Agreements [Line Items]
Distribution agreements	14,400	14,400
CNG Products [Member]
Distribution Agreements [Line Items]
Distribution agreements	$ 5,969

XML

SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2014

SEGMENT REPORTING [Abstract]

Schedule of Segment Results

	Jonway			Electric						Advanced
	Conventional			Consumer						Technology
	Vehicles			Products			Car outlet			Vehicles			ZAP HK		Total
For the three months ended September 30, 2014:
Net sales	$	4,951		$	269		$	-		$	-		$	-	$	5,220
Gross profit (loss)	$	(692	)	$	72		$	-		$	-		$	-	$	(620	)
Depreciation and amortization	$	1,445		$	655		$	-		$	-		$	-	$	2,100
Net profit (loss)	$	(2,837	)	$	(1,966	)	$	-		$	-		$	-	$	(4,803	)
Total assets	$	82,207		$	22,870		$	-		$	-		$	1,439	$	106,516
For the three months ended September 30, 2013
Net sales	$	9,660		$	252		$	-		$	17		$	-	$	9,929
Gross profit (loss)	$	512		$	107		$	-		$	(6	)	$	-	$	613
Depreciation and amortization	$	1,389		$	657		$	-		$	-		$	-	$	2,046
Net loss	$	(1,719	)	$	(1,622	)	$	-		$	(5	)	$	-	$	(3,346	)
Total assets	$	88,226		$	22,692		$	-		$	0		$	-	$	110,918
For the nine months ended September 30, 2014:
Net sales	$	18,926		$	704		$	-		$	-		$	-	$	19,630
Gross profit (loss)	$	(1,759	)	$	189		$	-		$	-		$	-	$	(1,570	)
Depreciation and amortization	$	4,309		$	1,967		$	-		$	-		$	-	$	6,276
Net profit (loss)	$	(8,424	)	$	(5,262	)	$	-		$	-		$	-	$	(13,686	)
Total assets	$	82,207		$	22,870		$	-		$	-		$	1,439	$	106,516
For the nine months ended September 30, 2013
Net sales	$	35,878		$	639		$	-		$	45		$	-	$	36,562
Gross profit (loss)	$	166		$	174		$	-		$	(32	)	$	-	$	308
Depreciation and amortization	$	4,079		$	1,970		$	-		$	0		$	-	$	6,049
Net loss	$	(8,360	)	$	(5,078	)	$	(174	)	$	(33	)	$	-	$	(13,645	)
Total assets	$	88,226		$	22,692		$	-		$	0		$	-	$	110,918

XML

RELATED PARTIES (Narrative) (Details) (Jonway Group [Member], USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Jonway Group [Member]
Related Party Transaction [Line Items]
Purchases	$ 241,000	$ 236,000	$ 915,000	$ 916,000

XML

LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Schedule of Short-Term Debt) (Details) (USD $)	9 Months Ended					9 Months Ended		9 Months Ended		1 Months Ended	9 Months Ended		9 Months Ended					1 Months Ended	9 Months Ended		9 Months Ended											1 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2014 CITIC [Member]	Dec. 31, 2013 CITIC [Member]	Sep. 30, 2014 Citic Transaction One [Member]	Sep. 30, 2014 Citic Transaction Two [Member]	Oct. 31, 2014 Taizhou Bank [Member]	Sep. 30, 2014 Taizhou Bank [Member]	Dec. 31, 2013 Taizhou Bank [Member]	Sep. 30, 2014 Taizhou Bank [Member] Minimum [Member]	Sep. 30, 2014 Taizhou Bank [Member] Maximum [Member]	Sep. 30, 2014 Taizhou Bank Transaction One [Member]	Sep. 30, 2014 Taizhou Bank Transaction Two [Member]	Sep. 30, 2014 Taizhou Bank Transaction Three [Member]	Oct. 31, 2014 ICBC [Member]	Sep. 30, 2014 ICBC [Member]	Dec. 31, 2013 ICBC [Member]	Sep. 30, 2014 ICBC [Member] Minimum [Member]	Sep. 30, 2014 ICBC [Member] Maximum [Member]	Sep. 30, 2014 ICBC Transaction One [Member]	Sep. 30, 2014 ICBC Transaction Two [Member]	Sep. 30, 2014 ICBC Transaction Three [Member]	Sep. 30, 2014 ICBC Transaction Four [Member]	Sep. 30, 2014 ICBC Transaction Five [Member]	Sep. 30, 2014 ICBC Transaction Six [Member]	Sep. 30, 2014 ICBC Transaction Seven [Member]	Sep. 30, 2014 ICBCTransaction Eight [Member]	Sep. 30, 2014 ICBCTransaction Nine [Member]	Jul. 31, 2014 China Everbright Bank [Member]	Sep. 30, 2014 China Everbright Bank [Member]	Sep. 30, 2014 Insurance Premiums [Member]	Dec. 31, 2013 Insurance Premiums [Member]
Short-term Debt [Line Items]
Short term debt	$ 16,092,000				$ 14,961,000	$ 6,752,000	$ 6,381,000				$ 1,137,000	$ 2,127,000			$ 800,000				$ 6,476,000	$ 6,381,000													$ 1,527,000	$ 200,000	$ 72,000
Debt instrument, face amount								6,300,000	980,000						2,100,000	300,000	800,000						1,100,000	800,000	1,100,000	700,000	1,500,000	1,100,000	800,000	800,000	1,100,000		310,000
Term								1 year	1 year														1 year	6 months	1 year	6 months	1 year	1 year	6 months	6 months	1 year	11 months	6 months
Issuance date								Nov. 30, 2013	Mar. 31, 2014							Feb. 28, 2014	May 31, 2014						Jun. 30, 2013	Aug. 31, 2013	Aug. 31, 2013	Sep. 30, 2013	Nov. 30, 2013	Dec. 31, 2013	Mar. 31, 2014	Apr. 30, 2014	Jun. 30, 2014
Maturity date								Nov. 30, 2014	Mar. 31, 2015						May 31, 2014	Aug. 30, 2014	Mar. 31, 2015		Dec. 31, 2014				Jun. 30, 2014	Feb. 28, 2014		Mar. 31, 2014			Sep. 30, 2014
Beginning maturity date						Oct. 31, 2014					Oct. 31, 2014																						Oct. 31, 2014
Ending maturity date						Mar. 31, 2015					Feb. 28, 2015																						Mar. 31, 2015
Interest rate								6.60%	7.08%	8.496%						8.89%	8.89%	6.60%					6.90%	5.60%	6.90%	5.60%	7.20%	7.20%	5.60%	6.00%	6.256%	7.20%	7.28%
Interest rate, minimum	5.04%														8.46%
Interest rate, maximum	8.93%														8.89%
Collateral amount									6,100,000										3,650,000														2,100,000
Restricted cash deposit	11,400,000
Required cash deposit						100.00%							50.00%	100.00%							50.00%	100.00%							100.00%	100.00%			50.00%
Weighted average interest rate		7.00%	7.45%	6.95%	7.04%
Repayment of short term loans	7,404,000	4,889,000						560,000		7,400,000					1,300,000									800,000
Proceeds from short term borrowings	$ 8,640,000	$ 11,858,000								$ 810,000								$ 1,460,000														$ 1,200,000

XML

COMMITMENTS AND CONTINGENCIES (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
COMMITMENTS AND CONTINGENCIES [Abstract]
Potential payments under guarantee	$ 1.9	$ 6.8
Reduction of guarantee	$ 4.9

XML

INVENTORIES, NET

9 Months Ended

Sep. 30, 2014

INVENTORIES, NET [Abstract]

INVENTORIES, NET

NOTE 3– INVENTORIES, NET

Inventories are summarized as follows (in thousands):

	September 30, 2014			December 31, 2013
Work in Process	$	3,017		$	2,228
Parts and supplies		4,315			2,906
Finished goods		4,500			4,881
		11,832			10,015
Less - inventory reserve		(1,960	)		(1,981	)
Inventories, net	$	9,872		$	8,034

Changes in the Company's inventory reserve are as follows (in thousands): 

	September 30, 2014			December 31, 2013
Balance opening period	$	1,981		$	2,325
Current provision for Jonway Auto		-			(529	)
Current provision for inventory ZAP-net		(21	)		185
Balance end of period	$	1,960		$	1,981

XML

RELATED PARTIES (Schedule of Related Party Balances) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Related Party Transaction [Line Items]
Amount due from related party	$ 3,973	$ 6,061
Amount due to related party	7,081	2,409
Sanmen Branch [Member]
Related Party Transaction [Line Items]
Amount due from related party	2,767	4,973
JAZ [Member]
Related Party Transaction [Line Items]
Amount due from related party	1,166	961
ZAP Hangzhou [Member]
Related Party Transaction [Line Items]
Amount due from related party	40	127
Jonway Group [Member]
Related Party Transaction [Line Items]
Amount due to related party	4,213	303
Jonway Motor Cycle [Member]
Related Party Transaction [Line Items]
Amount due to related party	134	113
Taizhou Huadu [Member]
Related Party Transaction [Line Items]
Amount due to related party	701	631
Shanghai Zapple [Member]
Related Party Transaction [Line Items]
Amount due to related party	37	36
Ms. Lu [Member]
Related Party Transaction [Line Items]
Amount due to related party		30
Better World [Member]
Related Party Transaction [Line Items]
Amount due to related party	149	149
Taizhou Jonway [Member]
Related Party Transaction [Line Items]
Amount due to related party	953
Cathaya Capital [Member]
Related Party Transaction [Line Items]
Amount due to related party	$ 334	$ 1,147

XML

SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2014 CNY	Dec. 31, 2013 CNY
SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES [Abstract]
Currency exchange rate	6.1547	6.1122
Average currency exchange rate	6.1480	6.1171

XML

ORGANIZATION AND BASIS OF PRESENTATION (Liquidity and Capital Resources) (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014 item	Sep. 30, 2013
Line of Credit Facility [Line Items]
Amount outstanding	$ 16.1
Credit exposure	19.6
Maximum borrowing capacity		$ 41.3
Number of banks from which loans outstanding on credit exposure	4
Interest rate, minimum	5.04%
Interest rate, maximum	8.93%

XML

RELATED PARTIES (Schedule of Contract Fees) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
First 3,000 Vehicles [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled
Over 5,000 Vehicles [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled
Sanmen Branch [Member] | First 3,000 Vehicles [Member]
Related Party Transaction [Line Items]
Contractual fee per vehicle	$ 44
Sanmen Branch [Member] | First 3,000 Vehicles [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	3,000
Sanmen Branch [Member] | Vehicles 3,001 to 5,000 [Member]
Related Party Transaction [Line Items]
Contractual fee per vehicle	30
Sanmen Branch [Member] | Vehicles 3,001 to 5,000 [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	3,001
Sanmen Branch [Member] | Vehicles 3,001 to 5,000 [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	5,000
Sanmen Branch [Member] | Over 5,000 Vehicles [Member]
Related Party Transaction [Line Items]
Contractual fee per vehicle	$ 22
Sanmen Branch [Member] | Over 5,000 Vehicles [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	5,000

XML

INVENTORIES, NET (Schedule of Inventories) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013	Dec. 31, 2012
INVENTORIES, NET [Abstract]
Work in Process	$ 3,017	$ 2,228
Parts and supplies	4,315	2,906
Finished goods	4,500	4,881
Inventories	11,832	10,015
Less - inventory reserve	(1,960)	(1,981)	(2,325)
Inventories, net	$ 9,872	$ 8,034

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INVENTORIES, NET (Schedule of Inventory Reserve) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
INVENTORIES, NET [Abstract]
Beginning balance	$ 1,981	$ 2,325
Current provision for Jonway Auto		(529)
Current provision for inventory ZAP-net	(21)	185
Ending balance	$ 1,960	$ 1,981

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SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES

9 Months Ended

Sep. 30, 2014

SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES [Abstract]

SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES

NOTE 2- SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company 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, warranty costs, stock based compensation, 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.

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 records revenues for Jonway sales only upon the occurrence of all of the following conditions:

- The Company has received a binding purchase order from the customer or distributor authorized by a representative empowered to commit the purchaser (evidence of a sale);

- The purchase price has been fixed, based on the terms of the purchase order;

- The Company has delivered the product from its factory to a common carrier acceptable to the customer; and

- The Company deems the collection of the amount invoiced probable.

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

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 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 our 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.  The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

	September 30, 2014		December 31, 2013
Balance sheet items, except for share capital, additional paid in capital and retained earnings	$	1=RMB 6.1547	$	1=RMB 6.1122
Amounts included in the statements of operations and cash flows for the periods	$	1=RMB 6.1480	$	1=RMB 6. 1171

Recent Accounting Pronouncements

In April 2014, the FASB has issued Accounting Standards Update (ASU) No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. Early adoption is permitted. The Company does not expect the adoption of this guidance will have a significant impact on the Company's condensed consolidated financial statements.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers: Topic 606. This Update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. The guidance in this Update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to illustrate the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also includes a cohesive set of disclosure requirements that will provide users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a reporting organization's contracts with customers. This ASU is effective retrospectively for fiscal years, and interim periods within those years beginning after December 15, 2016 for public companies and 2017 for non-public entities. Management is evaluating the impact, if any, of this ASU on the Company's financial position, results of operations and cash flows. 

In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-12 Compensation – Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The amendments stipulate that a performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, Compensation — Stock Compensation. As a result, the target is not reflected in the estimation of the award's grant date fair value. Compensation cost should be recognized over the required service period, if it is probable that the performance condition would be achieved. The amendments in this Accounting Standards Update are effective for annual periods beginning after December 15, 2015 and interim periods within those annual periods. Early adoption is permitted. The Company does not expect the adoption of ASU 2014-12 to have a material impact on the Company's condensed consolidated financial statements.  

In August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15 Preparation of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. Under generally accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements-Liquidation Basis of Accounting. Even when an entity's liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this Accounting Standards Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company does not expect the adoption of ASU 2014-15 to have material impact on the Company's condensed consolidated financial statements, although there may be additional disclosures upon adoption.

In November 2014, FASB issued Accounting Standards Update No. 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force). The amendments permit the use of the Fed Funds Effective Swap Rate (also referred to as the Overnight Index Swap Rate, or OIS) as a benchmark interest rate for hedge accounting purposes. Public business entities are required to implement the new requirements in fiscal years (and interim periods within those fiscal years) beginning after December 15, 2015. All other types of entities are required to implement the new requirements in fiscal years beginning after December 15, 2015, and interim periods beginning after December 15, 2016. The Company does not expect the adoption of ASU 2014-16 to have material impact on the Company's consolidated financial statement.

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DISTRIBUTION AGREEMENTS (Narrative) (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Distribution Agreements [Line Items]
Depreciation and amortization	$ 2,100,000	$ 2,046,000	$ 5,196,000	$ 4,970,000
Stock issued for acquisition of IPR and Distribution rights for Minivan and CNG products, shares			61,000,000
Issue 61 million shares of common stock for acquisition of IPR and Distribution rights for Minivan and CNG products			5,969,000
Percentage ownership in Jonway	51.00%		51.00%
Distribution Agreements [Member]
Distribution Agreements [Line Items]
Depreciation and amortization	360,000	360,000	1,080,000	1,080,000
Distribution Agreements [Member] | Jonway Auto [Member]
Distribution Agreements [Line Items]
Stock issued for acquisition of IPR and Distribution rights for Minivan and CNG products, shares			61,000,000
Issue 61 million shares of common stock for acquisition of IPR and Distribution rights for Minivan and CNG products			$ 6,000,000

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SEGMENT REPORTING (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Concentration Risk [Line Items]
Revenues	$ 5,220	$ 9,929	$ 19,630	$ 36,562
Cost of goods sold	5,840	9,316	21,200	36,254
Geographic Concentration Risk [Member] | Revenue [Member]
Concentration Risk [Line Items]
Concentration risk percentage			96.00%	98.00%
Revenues			18,900	35,900
Geographic Concentration Risk [Member] | Cost of Goods Sold [Member]
Concentration Risk [Line Items]
Concentration risk percentage	96.60%	98.20%	97.60%	98.50%
Cost of goods sold	$ 5,600	$ 9,100	$ 20,600	$ 35,700

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 818	$ 2,629
Restricted Cash	12,997	10,758
Notes receivable	244	185
Accounts receivable	4,607	5,351
Inventories, net	9,872	8,034
Prepaid expenses and other current assets	587	1,007
Total current assets	29,125	27,964
Property, plant and equipment, net	44,105	48,004
Land use rights, net	9,757	10,008
Other assets:
Distribution fees, net	14,729	9,839
Intangible assets, net	3,926	4,280
Goodwill	332	334
Due from related party	3,973	6,061
Deposits and other assets	569	543
Total other assets	23,529	21,057
Total assets	106,516	107,033
Current liabilities:
Short term loans	16,092	14,961
Convertible Bond	1,100	1,153
Senior convertible debt	20,679	20,679
Accounts payable	20,899	23,648
Accrued liabilities	7,016	7,874
Notes payable	16,155	15,695
Advances from customers	7,231	5,233
Taxes payable	775	1,704
Due to related party	7,081	2,409
Other payables	3,037	3,574
Total current liabilities	100,065	96,930
Long term liabilities:
Accrued liabilities and others	781	752
Total liabilities	100,846	97,682
Equity
Common stock, no par value; 800 million shares authorized; 427,477,489 and 302,518,002 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively	241,250	231,125
Accumulated other comprehensive income	1,645	1,707
Accumulated deficit	(241,976)	(232,417)
Total ZAP shareholders' equity	919	415
Non-controlling interest	4,751	8,936
Total equity	5,670	9,351
Total liabilities and equity	$ 106,516	$ 107,033

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SHAREHOLDERS' EQUITY (Narrative) (Details) (USD $)	9 Months Ended		0 Months Ended	9 Months Ended	1 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Aug. 14, 2014 Letter Of Commitment [Member]	Sep. 30, 2014 Letter Of Commitment [Member]	Apr. 30, 2014 Cathaya Operations [Member]	Apr. 30, 2014 CEVC [Member]	Apr. 30, 2014 Jeffery And Karen Bank [Member]	Apr. 30, 2014 Major Management Limited [Member]	Apr. 30, 2014 Max Reliance Management Limited [Member]	Apr. 30, 2014 New Dragon Management Limited [Member]
Stock issued for due to related parties	$ 968,000				$ 967,543
Stock issued for due to related parties, shares	17,819,783				17,819,783
Conversion of debt, percentage below market price					30.00%
Stock issued to pay interest	639,000					639,068
Stock issued to pay interest, shares	6,439,552					6,439,552
Convertible notes payable						20,700,000
Stock issued for asset acquisition	5,969,000
Shares issued for asset acquisition, shares	61,000,000							20,000,000	20,000,000	21,000,000
Stock issued for addressing a lawsuit							5,000
Stock issued for addressing a lawsuit, shares							62,500
Common stock to be issued, shares			31,666,668
Proceeds from issuance of common stock	$ 1,900,000			$ 1,900,000

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical)	9 Months Ended
	Sep. 30, 2014
CONSOLIDATED STATEMENTS OF CASH FLOWS [Abstract]
Stock issued for acquisition of IPR and Distribution rights for Minivan and CNG products, shares	61,000,000
Stock issued to pay interest payable, shares	6,439,552
Stock issued to redeem Convertible bond, shares	7,970,983
Stock issued for due to related parties, shares	17,819,783

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INVESTMENT IN JOINT VENTURES (Schedule of Carrying Amounts) (Details) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Schedule of Equity Method Investments [Line Items]
Beginning balance				$ 898,000	$ 898,000
Less: investment loss		(82,000)		(656,000)	(899,000)
CTA					1,000
Ending balance
Shanghai Zapple [Member]
Schedule of Equity Method Investments [Line Items]
Beginning balance				461,000	461,000
Less: investment loss	0	(461,000)	0	(461,000)	(461,000)
CTA
Ending balance
ZAP Hangzhou [Member]
Schedule of Equity Method Investments [Line Items]
Beginning balance				437,000	437,000
Less: investment loss	0	(79,000)	0	(182,000)	(438,000)
CTA					1,000
Ending balance

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DISTRIBUTION AGREEMENTS (Tables)

9 Months Ended

Sep. 30, 2014

DISTRIBUTION AGREEMENTS [Abstract]

Schedule of Distribution Agreements

Distribution agreements are presented below (in thousands):

	September 30, 2014			December 31, 2013
Better World Products-related party	$	2,160		$	2,160
CNG Products		5,969			-
Jonway Products		14,400			14,400
		22,529			16,560
Less amortization		(7,800	)		(6,721	)
	$	14,729		$	9,839

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LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Line of Credit) (Details) (USD $)	9 Months Ended					1 Months Ended	9 Months Ended			1 Months Ended		9 Months Ended	12 Months Ended	9 Months Ended				1 Months Ended			9 Months Ended	1 Months Ended	9 Months Ended	1 Months Ended			9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Sep. 30, 2014 Interest rate 8.89% due November 2014	Sep. 30, 2014 Interest rate 8.93% due February 2015	Oct. 31, 2014 CITIC [Member]	Sep. 30, 2014 CITIC [Member]	Nov. 14, 2014 CITIC [Member]	Dec. 31, 2013 CITIC [Member]	Oct. 31, 2014 CITIC [Member] Bankers Acceptance [Member]	Sep. 30, 2014 CITIC [Member] Bankers Acceptance [Member]	Sep. 30, 2014 Citic Transaction One [Member]	Dec. 31, 2013 Citic Transaction One [Member]	Sep. 30, 2014 Citic Transaction Two [Member]	Sep. 30, 2014 Citic Transaction Three [Member]	Sep. 30, 2014 Taizhou Bank [Member]	Dec. 31, 2012 Taizhou Bank [Member]	Oct. 31, 2014 Taizhou Bank Transaction One [Member]	Aug. 31, 2014 Taizhou Bank Transaction One [Member]	Sep. 30, 2014 Taizhou Bank Transaction One [Member]	Sep. 30, 2014 Everbright Bank [Member]	Jul. 31, 2014 Everbright Transaction One [Member]	Sep. 30, 2014 Everbright Transaction One [Member]	Oct. 31, 2014 ICBC [Member]	Sep. 30, 2014 ICBC [Member]	Aug. 31, 2014 ICBC [Member]	Sep. 30, 2014 ICBC [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity		$ 41,300,000							$ 24,300,000							$ 2,400,000	$ 4,100,000				$ 9,100,000				$ 5,400,000		$ 5,400,000
Increase (decarese) in line of credit							1,000,000
Credit exposure	19,600,000						7,300,000		6,300,000						560,000	2,400,000				1,200,000	4,500,000				4,900,000		4,900,000
Amount outstanding	16,100,000												6,300,000	1,000,000		1,100,000					6,900,000				6,500,000		6,500,000
Repayment of short term loans	7,404,000	4,889,000				2,270,000				7,400,000		560,000						810,000						1,460,000
Proceeds from short term debt	8,640,000	11,858,000																	300,000			1,200,000	310,000		800,000	1,100,000
Interest rate				8.89%	8.93%								6.60%	7.08%					8.93%			7.20%	7.28%		5.04%	6.92%	5.04%
Interest rate, minimum	5.04%																										5.00%
Interest rate, maximum	8.93%																										7.20%
Available borrowing capacity																									500,000		500,000
Collateral amount																					2,100,000				3,580,000		3,580,000
Restricted cash deposit	11,400,000																			2,000,000	3,800,000				1,600,000		1,600,000
Notes payable utilizing credit exposure															560,000
Required cash deposit																					50.00%						100.00%
Notes payable	16,155,000		15,695,000					0							5,600,000					3,200,000					490,000		490,000
Debt Instrument, Face Amount											$ 0
Term																						11 months			6 months	1 year
Expiration																					Dec. 31, 2014						Dec. 31, 2014
Maturity date													Nov. 30, 2014	Mar. 31, 2015
Beginning maturity date															Apr. 24, 2014	Aug. 31, 2014											Aug. 31, 2014
Ending maturity date															Apr. 29, 2014	Nov. 30, 2014											Jun. 30, 2015

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LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Tables)

9 Months Ended

Sep. 30, 2014

LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES [Abstract]

Schedule of Short-Term Debt

(in thousands)

	September 30, 2014		December 31, 2013
Loan from CITIC bank	$	6,752		6,381
Loan from ICBC		6,476		6,381
Loan from Taizhou Bank		1,137		2,127
Loan from China Everbright Bank		1,527		-
Loan from Pay-Ins Prem		200		72
	$	16,092		14,961

Schedule of Bank Acceptance Notes

– 3 to 6 month term for each note issued (in thousands)

	September 30, 2014		December 31, 2013
a) Bank acceptance notes payable to China Everbright bank	$	6,856	$	8,891
b) Bank acceptance notes payable to Taizhou bank		3,246		3,927
c) Bank acceptance notes payable to CITIC bank		5,566		2,700
d) Bank acceptance notes payable to ICBC		487		177
	$	16,155	$	15,695

a. Notes payable to China Everbright bank have various maturity dates from October 2014 to March 2015. The notes payable are guaranteed by a land use right and a building with a total carrying value of $2.1 million. The Company is also required to maintain cash deposits at 50% of the notes payable with the bank, in order to ensure future credit availability. In October 2014, the company repaid the note payable when it became due .

b. Notes payable to Taizhou bank have various maturity dates from October 2014 to February, 2015. The Company is required to maintain cash deposits at 50% to 100% of the notes payable with the bank, in order to ensure future credit availability. In October 2014, the company repaid the note payable when it became due.

c. Notes payable to CITIC bank will be due from October 2014 to March 2015.  Except for a note payable utilizing credit exposure of $1.12 million, the Company is required to maintain cash deposits at 100% of the notes payable with the bank, in order to ensure future credit availability. In October 2014, the company repaid the note payable when it became due.

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ORGANIZATION AND BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2014

ORGANIZATION AND BASIS OF PRESENTATION [Abstract]

ORGANIZATION AND BASIS OF PRESENTATION

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION:

ZAP (together with its subsidiaries, the “Company” or “ZAP”) was incorporated in California in September, 1994. ZAP markets electric, alternative energy, and fuel efficient automobiles and commercial vehicles, motorcycles and scooters, and other forms of personal transportation. The Company's business strategy is 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 and 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 Auto” or “Jonway”). The Company believes its 51% acquisition of Jonway will enable it to access the rapidly-growing Chinese market for electric vehicles (“EV”) and to expand its EV business and distribution network around the world. The Company also believes Jonway's ISO 9001 certified manufacturing facility provides the competitive production capacity and resources to support production of ZAP's new line of electric SUV, minivan, and Neighborhood EV (“NEV”).

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”).

The principal activities of Jonway until recently were the production and sales of gasoline models of the SUVs and minivans in China using the consigned UFO license from an affiliate of Jonway Group. Over the past three years, Jonway continued the production and sales of its gasoline model SUV and minivan, while developing and ramping production of its EV product line. Jonway received type approval of its EV SUV and EV certification of its manufacturing facility from the Chinese government more than a year ago. It also developed two different full electric EV models for its minivan, one with lithium batteries, which has longer range and more power, and the other with lead acid batteries, intended for lower speed and shorter range. Jonway began production on a new NEV in April, 2014 focusing on the growing aging and young adult population in China that generally do not hold a driver's license

Jonway Auto, as an authorized auto manufacturer in China, has access to the required licenses for China type approval for both the SUV and minivan models, providing these models with the advantage that lithium battery versions would be eligible for subsidies from the Chinese central and local governments ranging from RMB 35,000 (~US$5,000) to RMB 100,000 (~US$16,000) depending upon the range of the vehicle achieved between recharges. EVs reaching 250km in range per charge could receive up to ~$10,000 subsidies from the central government and another ~$10,000 from the local government. Currently 88 local government cities are participating in this subsidy as required by the central government. The Chinese government recently announced these subsidies have been extended to the year 2020, with the total amount of subsidies gradually tapering off each year. Additionally, the Chinese government recently mandated that government vehicles must be Chinese-made and that a minimum of 30% of the vehicles purchased are required to be full electric. ZAP believes these incentives, combined with the elimination of sales tax, consumer tax, and license plate registration fees on full electric vehicles (which can total more than US$20,000 for gas vehicles in some cities like Shanghai), are creating a strong economic incentive for the purchase of electric vehicles and a substantial market opportunity for Jonway's new EV SUV and EV minivan product line. Jonway Auto's EV SUV and EV minivan have been reconfigured with smaller engines to support lower power consumption. The EV SUV has a 20kwatt (40kwatt peak)engine. The EV minivan which is a much lighter vehicle has a 13.5kwatt engine. These newly reconfigured EVs adapted to maximize range at optimal speeds will be available for mass production in 1Q2015.

ZAP and Jonway Auto are focused on the EV fleet markets in China. With the recent reinforced subsidies and requirements for government entities to purchase full electric vehicles, the Company believes Jonway's new EV SUV is particularly suited for use by government officials and personnel. Jonway's SUV currently has an advantage in China because most auto companies to date have focused primarily on producing small electric sedans, some with only two seats, that are not very practicable for use by government officials on a daily basis. Whereas, Jonway's SUV is a larger 5-person vehicle with comfortable seating and legroom. Jonway's EV minivan is well-positioned for government city utility and maintenance transportation and service. The minivan was designed with removable rear seats so that it may also serve as a delivery van for use in the projected rapid growth market of EVs used for the transport of goods and packages in China.

Jonway Auto began transforming its manufacturing plant to support mass production of several full electric vehicle models in 2014. With the urgent priority to provide multiple manufacturing EV production lines to support multiple models of EVs, Jonway reduced its resource investment in the traditional gasoline vehicle products and cut back on funding the sales and marketing of its gasoline SUV and gasoline minivans. Jonway is now in the process of migrating its organization to support the ramp up of electric vehicle production and preparing for sales and marketing to fleet markets, including to leasing companies and government organizations in the major cities. 2014 has been a major transitioning year for Jonway Auto, where there has been an intentional slowdown in gasoline vehicle production and sales, while Jonway is redirecting its manufacturing and sales and marketing groups to support the mass rollout of its EVs, starting with its new Neighborhood EV model, Urbee, for city commuters. Many of the traditional gasoline vehicle dealerships that are not focused on supporting EV products will be dropped. This transition from gasoline to electric vehicles has affected the revenue and profitability of the Company.  As the sales of gasoline vehicles decreases, overhead costs are being absorbed by a smaller volume of sales, reducing gross margins.  We anticipate improvement in the gross margins as the sales volume of new EV products increases.

Another factor affecting the overall reduction in sales by many of the dealers is the shrinking bank credit lines available to smaller dealerships and business. As a result of the Chinese government's requirement for banks to retain a larger cash reserve, credit facilities for smaller dealerships have been reduced, thus contracting the overall availability of credit for purchasing. However, Chinese banks are being encouraged by the Chinese government to support credit facilities to promote EV sales, including EV leasing and EV fleet markets.

The combined companies' new EV product lines include the A380 SUV EV and the minivan EV, the recently announced Urbee, and Sparkee. Both the EV SUV and EV minivan products leverage the production moldings, the manufacturing engineering infrastructure and facilities currently in place for the gasoline models of these vehicles. The new Urbee started its first production delivery in the 2nd quarter of 2014. The first production deliveries of the EV SUV and Minivans are projected to occur in the 1st and 2nd quarters of 2015, respectively.

The Company's 3Q2014 revenues were lower when compared year over year as Jonway cut back on its gasoline vehicle sales and marketing activities in order to redirect the organization and resources to focus on developing the EV dealership networks and selling the Urbee, Jonway has received orders over twenty thousand projected sales orders, with monthly quantities ordered for the different dealerships. Some of the orders for these Urbees will depend on availability of working capital, and Jonway Auto is delivering the Urbees based on the amount of advanced payments from the dealerships and partners. Urbee is a low speed vehicle which is currently not a nationally recognized category in China except for a few provinces. The rate of orders placed from the pipeline will in part depend on the rate at which Jonway Auto is able to manufacture and deliver the vehicles. Given that the EV market is just now being developed in China, Jonway Auto is partnering with a few strong dealers in order to work closely on the product service support and customer service.

The goal of the Company is to become cash flow positive in the second half of 2015 by producing and selling vehicles at a target rate of a couple thousand Urbees per month on average and at least a few hundred SUVs or minivans per month, combining the delivery of both EVs and gasoline versions of the models. The Company's strategy for achieving this goal is to leverage the volume sales orders and the continuing demand from the market for Urbees to drive down the cost of production in the factory for EVs and to substantially absorb the overhead of the factory. The Company believes mass production ramp up of the Urbees will help streamline the EV manufacturing process, provide a good training ground for the production engineers, and pave the way for volume production of the more sophisticated EV products of minivan and EV SUVs.

Jonway Auto will cut back on the number of gasoline SUV models in order to reduce the overhead costs of carrying too many different gasoline versions.  Jonway will focus on its high volume lower cost gasoline model priced at around US$10,000, replacing its 1.6 liters gasoline model with a more cost effective and efficient 1.5 liter engine model.  This will be Jonway's mainstream gasoline model.

In the meantime, Jonway auto established its three wholly-owned subsidiaries, namely, Taizhou Selling Co., Ltd. focusing on vehicles marketing and distribution, 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.

BASIS OF PRESENTATION

 The accompanying unaudited condensed consolidated financial statements include the accounts of ZAP, and its subsidiaries: Jonway Automobile, Voltage Vehicles, ZAP Stores and ZAP Hong Kong for the three and nine months ended September 30, 2014 and 2013 and are prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”).  Management considers “subsidiaries” to be companies that are over 50% owned or controlled by ZAP,.  Intercompany transactions and balances are eliminated in consolidation; profits from intercompany 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 three and nine months ended September 30, 2014 and 2013 may not be indicative of the results that may be expected for the year ending December 31, 2014 or for any other future period.  These unaudited 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, 2013 filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2014 (our “10-K”).

LIQUIDITY

In assessing our liquidity, we monitor and analyze our cash on-hand 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 and bank facilities from China-based banks for Jonway Auto.

As of September 30, 2014, we had $16.1 million in short term bank loans outstanding on the approved credit line of $41.3 million with credit exposure totaling $19.6 million with four China-based banks. The loans are secured by land and buildings owned by Jonway and guaranteed by related party Jonway Group and shareholder Wang Huaiyi. The interest rates on the loans range from 5.04% to 8.93% per annum and the loans expire at various times through September 2015.

Jonway intends to raise funds to support working capital needs for EV production.  If additional funding is available above the amount required for working capital, Jonway may use the additional funds for the testing and homologation of new models and potentially for new EV product molds. Depending upon the amount of available capital, funds may also be used to support the Company's expansion plans, with emphasis on  electric vehicle sales and marketing, and new product roll outs. Also our principal shareholder, Jonway Group, has agreed to provide the necessary support to meet our financial obligations through November 14, 2015 in the event that we require additional liquidity. In addition, CEVC (China Electric Vehicle Corporation) would likely renew the convertible note which has been extended to August 2015 . In the event that CEVC decides to call on the repayment, the repayment would likely be paid in full or in part in Jonway Auto shares or ZAP shares unless there is a breach by the Company on the covenant of the convertible note.

We intend to fund our long term liquidity needs related to operations through additional 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.

On September 16, 2014 the Company entered into a Placement Agency Agreement for the purpose of identifying qualified prospective purchasers of the Company's debt and/or equity securities through the private placement of such securities.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract]
Common stock, shares authorized	800,000,000	800,000,000
Common stock, par value	$ 0	$ 0
Common stock, shares issued	427,477,489	302,518,002
Common stock, shares outstanding	427,477,489	302,518,002

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LITIGATION

9 Months Ended

Sep. 30, 2014

LITIGATION [Abstract]

LITIGATION

NOTE 11– LITIGATION

1. On January 11, 2013, Cathaya Capital, L.P., a ZAP shareholder (“Cathaya”), and Priscilla Lu, Chairman of the ZAP Board of Directors (“Lu”) (collectively “Plaintiffs”), filed a lawsuit in the Superior Court of California, County of Los Angeles, styled Cathaya Capital, L.P. et al. v.  ZAP, et al., Case No. BC499106 (the “Cathaya Lawsuit”).  By the Cathaya Lawsuit, Plaintiffs, derivatively on behalf of the nominally-named defendant ZAP, asserted claims for breach of fiduciary duty and conversion against the following three members of the ZAP Board of Directors:  Mark Abdou (“Abdou”), Steven Schneider (“Schneider”) and Wang Gang a/k/a Alex Wang (the “Minority Board Member Defendants”).  In addition, Plaintiffs, derivatively on ZAP's behalf, sought declaratory and injunctive relief against the Minority Board Member Defendants for their alleged tortious misconduct and breaches of fiduciary duty.  Plaintiffs also asserted causes of action on their own behalf pursuant to California Corporations Code sections 304 and 709, for a judgment as to the rightful composition of the Board and to remove the Minority Board Member Defendants from the Board.

Lu and ZAP filed a Demurrer to the Second Amended Cross-Complaint's first, fifth, sixth, seventh and eighth claims.  On March 3, 2014, the Court granted the Demurrer in its entirety and dismissed all claims asserted by Abdou and Schneider against Lu, without leave to amend.  In addition, the Court dismissed all tort claims against ZAP.  However, the Court's ruling does not dismiss all claims against ZAP regarding unpaid employee compensation.  The Abdou/Schneider claims against ZAP for unpaid compensation were not before the Court and therefore were not affected by the Court's ruling and have not been dismissed. These contract-based claims are against ZAP only and do not allow for punitive damages.

ZAP intends to vigorously defend the Second Amended Cross-Complaint. 

On March 13, 2014, the Company filed its own operative First Amended Cross-Complaint in the Cathaya Lawsuit (the “ZAP Cross-Complaint”) against Abdou and Schneider, alleging causes of action for (1) breach of fiduciary duty; (2) conversion; (3) imposition of a constructive trust; and (4) an accounting.  By the ZAP Cross-Complaint, the Company is, among other things, pursuing Schneider and Abdou for return of inventory and assets that were removed from the Company's warehouse, as well as cash that was redirected to another account.

The Court set January 15, 2015 as the trial date for all parties' claims asserted in the Cathaya Lawsuit. 

On May 15, 2014, Abdou's and Schneider's counsel filed a motion to be relieved as counsel in the Cathaya Lawsuit, which was granted on August 4, 2014.  Consequently, Abdou and Schneider were unrepresented in the Cathaya Law suit as of August 4, 2014 

On June 6, 2014, the Court entered an Order Granting Plaintiff's Motion for Sanctions due to Violations of Court's Discovery Order, which imposed certain monetary and evidentiary sanctions against Abdou and Schneider, including, among other things, precluding Abdou and Schneider from calling certain witnesses and offering evidence of or relating to certain issues at trial. 

2. 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.  A tolling agreement was reached between the Company and shareholder on October 22, 2012 whereas the company, through its legal council shall provide a written summary of the actions taken during the preceding month with respect to the matters regarding the prior transactions in question by the shareholder.  These transactions include, but are not limited to, a) ZAP, Jonway Group, Jonway Auto and Cathaya Capital shall each in all respects comply with their executory obligations with respect to the continued funding of ZAP, b) resolve the litigation regarding  the former contracted employee, c) use reasonable efforts to defend, compromise and/or settle any pending and future litigations and ZAP shall use all reasonable efforts to cause all officers, directors and such other individuals who are or were employees, agents or representatives of ZAP to fully cooperate in the defense  of future arbitrations or litigations.  This agreement is binding through December 31, 2015.

Other Regulatory Compliance Matters

ZAP has filed with the National Highway Transportation Safety Agency (NHTSA) that it is in non- compliance with Department of Transportation (DOT) requirements potential hazard may exist because the Model -Year 2008 XEBRA sedan and pickup does not stop in the required distance at 30 miles per hour and the master cylinder does not have separate brake fluid reservoirs with proper labeling and other miscellaneous non- compliance issues.

          ZAP and the United States reached a settlement that is incorporated into a Consent Decree that was entered and approved by the U.S. District Court on July 17, 2013.  Pursuant to the Consent Decree, ZAP agreed to initiate a buy-back program whereby it will offer to provide a refund of $3,100 to each eligible MY 2008 ZAP Xebra owner.  The Consent Decree also contains notification and reporting requirements and requires ZAP to take specified actions regarding the disposition of repurchased vehicles and MY 2008 Xebras that remain in ZAP's possession.  In accordance with the Consent Decree, the Company mailed the required notification letters to registered vehicle owners and ZAP Xebra dealers, along with a Refund Request Form.  The repurchase offer extends to 691 vehicles that have been sold by ZAP. 

As of September 30, 2014, the Company had deemed 317 vehicle owners eligible for a refund and picked up 315 of the vehicles. The Company had paid out $1,059,755 to owners of the recalled 2008 Xebras as of September 30, 2014.  This amount includes refunds and the cost to transport and destroy vehicles.  The period for vehicle owners to qualify for refunds has expired and ZAP believes it has no obligation to issue further refunds.

               The Company has accrued for estimated expenses related to above claims last year, and the amount refunded is less than the accrued estimated amount. The excess amount will be reversed into income when the relevant authority satisfies that the company has met the obligation.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 12, 2014
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2014
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		427,477,489

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2014

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 12– COMMITMENTS AND CONTINGENCIES

Guarantees

Jonway Auto guaranteed certain financial obligations of outside third parties including suppliers and dealers 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 Jonway Auto would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guarantee. Maximum potential payments under guarantees total $1.9 million and $6.8 million as of September 30, 2014 and 2013, respectively. This is a reduction of $4.9 million from 2013. The guarantee expires in December 2014. Our performance risk under these guarantees is reviewed regularly, and has resulted in no changes to our initial valuations.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS [Abstract]
Net sales	$ 5,220	$ 9,929	$ 19,630	$ 36,562
Cost of goods sold	(5,840)	(9,316)	(21,200)	(36,254)
Gross profit	(620)	613	(1,570)	308
Operating expenses:
Sales and marketing	1,703	1,224	3,183	4,744
General and administrative	1,448	1,849	5,888	6,368
Research and development	119	120	380	429
Total operating expenses	3,270	3,193	9,451	11,541
Loss from operations	(3,890)	(2,580)	(11,021)	(11,233)
Other income (expense):
Interest expense, net	(1,124)	(955)	(2,998)	(2,580)
Loss from equity in joint venture		(82)		(656)
Other Income	212	263	635	791
Total income (expense)	(912)	(774)	(2,363)	(2,445)
Loss before income taxes	(4,802)	(3,354)	(13,384)	(13,678)
Income tax benefit(expense)	(1)	8	(302)	33
Net Loss	(4,803)	(3,346)	(13,686)	(13,645)
Less: loss attributable to non-controlling interest	1,390	843	4,127	4,097
Net loss attributable to ZAP's common shareholders	(3,413)	(2,503)	(9,559)	(9,548)
Net Loss	(4,803)	(3,346)	(13,686)	(13,645)
Other Comprehensive income / (Loss)
Foreign currency translation adjustments	(3)	193	(119)	853
Total comprehensive income (loss)	(4,806)	(3,153)	(13,805)	(12,792)
Less : Comprehensive loss attributable to non-controlling interest	1,392	748	4,185	3,679
Comprehensive loss attributable to ZAP	$ (3,414)	$ (2,405)	$ (9,620)	$ (9,113)
Net loss per share
Basic and diluted	$ (0.01)	$ (0.01)	$ (0.03)	$ (0.03)
Weighted average number of common shares outstanding:
Basic and diluted	412,700	302,518	360,632	302,518

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LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

9 Months Ended

Sep. 30, 2014

LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES [Abstract]

LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

NOTE 6 –LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

Line of credit (Credit Exposure)

In November 2013, we were approved up to an aggregate of $24.3 million of a credit line, with the credit exposure of $6.3 million from the Sanmen Branch of CITIC Bank (“CITIC”) through Jonway. In March 2014, the credit exposure increased by $1.0 million to $7.3 million. When drawn down, the credit line is secured by land and buildings owned by Jonway and guaranteed by the related party Jonway Group. Jonway borrowed one year short-term loans in the aggregate amount of $6.3 million in November 2013. In April 2014, the company partially repaid $0.56 million. The annual interest rate is 6.6%, and the loans are due in November 2014. In March 2014, Jonway borrowed one year short-term loan of $1.0 million. The annual interest rate is 7.08% and the loan is due in March 2015. We have also drawn down $5.6 million in the form of notes payable as of September 30, 2014. Except for a note payable utilizing the credit exposure of $0.56 million, we deposited 100% cash as restricted cash as collateral for these notes payable. These notes are due in October, 2014.  As of September 30, 2014, the credit exposure of $7.3 million has been fully used. The credit line expires in November 2015. The Company repaid the note payable due in October 2014. After September 30, 2014, the bank agreed to renew the credit line.

In December 2012, we were approved up to an aggregate of $4.1 million of a credit line from Taizhou Bank. This credit line was reduced to $2.4 million in early 2014 when it was renewed. This credit line was guaranteed by related parties. As of September 30, 2014, the total outstanding loans under this credit line were $1.1 million. The loans are due separately in November 2014 and February 2015 respectively. The annual interest rates are 8.89% and 8.93% respectively. A credit exposure of $1.2 million was used in the form of notes payable of $3.2 million with restricted cash of $2.0 million being deposited with the bank. As of September 30, 2014, a total credit exposure of $2.4 million has been used. The Company repaid the loan due in October 2014. The credit line has not renewed as of November 14, 2014.

               In December 2013, we were approved for up to an aggregate of $9.1 million of a credit line from Everbright Bank. This credit line can only been used in the form of notes payable with 50% restricted cash deposited. Thus, we were approved a credit exposure of $4.5 million. This credit line was guaranteed by the shareholder Wang Huaiyi, as well as a building and land use right at the carrying value of $2.1 million. As of September 30, 2014, $6.9 million was drawn down as notes payable. The amount of restricted cash deposited with the bank was $3.8 million.  In June 2014, Jonway borrowed a 6 months short-term loan of $0.31 million at interest rate of 7.28%. In July 2014, Jonway borrowed an 11 months short-term loan of $1.2 million at interest rate of 7.2%. As of September 30, 2014, the credit exposure of $4.5 million has been fully used. The credit line expires in December 2014 and not yet renewed as of November 14, 2014. The Company repaid the note payable due in October 2014.

                In December 2013, we were approved up to an aggregate of $5.4 million of a credit line from Industrial and Commercial Bank of China (ICBC). This credit line was secured by land and buildings owned by Jonway and guaranteed by related parties. As of September 30, 2014, the total outstanding loan under this credit line was $6.5 million with $1.6 million of restricted cash deposited with the bank. The annual interest rates are from 5.0% to 7.2%.  The loans are due in various dates from October 2014 to September 2015. Jonway also drew down $0.49 million in the form of a note payable as of June 2014. We deposited 100% cash as restricted cash for the note payable. As of September 30, 2014, a credit exposure of $4.9 million has been used, and $0.5 million was still available for use. The credit line expires in December 2014 and not yet renewed as of November 14, 2015.The Company repaid the loan due in October 2014.

                In October 2014, Jonway repaid the short term debts of $2.27 million and bank acceptance notes of $7.4 million when they became due. Except for the aforesaid repayment, there are no short term loan and bank acceptance notes due by November 14, 2014. There is no bank acceptance notes issued after September 30, 2014.

Short term debt

In November 2013, Jonway borrowed one year short-term loans in the aggregate amount of $6.3 million from CITIC. The annual interest rate is 6.6%, and the loans are due in November 2014. In April 2014, Jonway partially repaid $0.56 million. In March 2014, Jonway borrowed $0.98 million from CITIC Bank. The loan expires in March 2015 and the annual interest rate is 7.08%.The loans are secured by a Maximum Amount Mortgage Contract between Jonway and CITIC dated November 11, 2013, in which a land use right and a building with a total carrying amount of $6.1 million as of September 30, 2014 has been pledged as security for this loan. The shareholder and Co-CEO Alex Wang also personally guaranteed these loans.

In July, August and November 2013, the company borrowed a total of $2.1 million of short term loans at interest rates of 8.46% and 8.89% from Taizhou Bank.  The loans are guaranteed by related parties including Jonway Group, the shareholder Wang Huayi and other individuals. Loans of $1.3 million were due in January and February 2014, and were repaid when due. The remaining balance of $0.8 million was repaid in May 2014. Jonway borrowed a short-term loan of $0.3 million in February 2014 at the annual interest rate of 8.89% which was repaid in August 2014. Jonway borrowed a short-term loan of $0.8 million in May 2014 at the annual interest rate of 8.89% which is due in November 2014. In August, Jonway borrowed a short-term loan of $0.3 million at the annual interest rate of 8.93% which is due in February 2015. In October 2014, Jonway repaid $0.81 million of a short term loan to Taizhou Bank when it became due. In October 2014, Jonway borrowed $0.81 million of a short term loan from Taizhou Bank. The loan expires in April 2015 and the annual interest rate is 8.496%

The Company also borrowed loans from Industrial and Commercial Bank of China (ICBC) during 2013. In June 2013, Jonway borrowed a one year short-term loan of $1.1 million at the annual interest rate of 6.9%. The loan was due and repaid in June 2014. In August 2013, Jonway borrowed a 6 months short-term loan of $0.8 million. The annual interest rate was 5.6%. The loan was repaid when due in February 2014.  In August 2013, Jonway borrowed a one year short-term loan of $ 1.1 million. The annual interest rate was 6.9%. It was due and repaid. In September 2013, Jonway borrowed a 6 months short-term loan of $0.7 million. The annual interest rate was 5.6%. The loan was repaid when due in March 2014.  In November 2013, Jonway borrowed a one year short term loan of $1.5 million.  The annual interest rate was 7.2%. In December 2013, Jonway borrowed a one year short term loan of $1.1 million. The annual interest rate was 7.2%.In March 2014, Jonway borrowed a 6-month short-term loan of $0.8 million with 100% cash deposited as collateral for the loans. The annual interest rate is 5.6% and repaid when due in September 2014. In April 2014, Jonway borrowed a 6 months short-term loan of 0.8 million with 100% cash deposited as collateral for the loans. The annual interest rate is 6%. In June 2014, Jonway borrowed a one year short-term loan of $1.1 million at the annual interest rate of 6.256%. In August 2014, Jonway borrowed a one year short-term loan of $1.1 million at the annual interest rate of 6.92%. In September 2014, Jonway borrowed a 6-month short-term loan of $0.8 million at the annual interest rate of 5.04%. These loans were guaranteed by related parties including Jonway Group, the shareholder Wang Huaiyi and the shareholder and Co-CEO Alex Wang. The Company also pledged buildings and a land use right with a carrying value of $3.58 million with ICBC and $1.6 million of restricted cash of September 30, 2014 . In October 2014, Jonway repaid $1.46 million of a short term loan to ICBC when it became due. In October 2014, Jonway borrowed $1.46 million of a short term loan from ICBC. The loan expires in October 2015 and the annual interest rate is 6.6%

In June 2014, the company borrowed a 6 month short-term loan of $0.31 million at an interest rate of 7.28% from China Everbright Bank. In July 2014, Jonway borrowed a 11 months short-term loan of $1.2 million at the annual interest rate of 7.2%. The loans were guaranteed by the shareholder Wang Huaiyi, as well as a building and land use right with a carrying value of $2.1 million.

The weighted average annual interest rate during 2013 was 7.04%., the weighted average annual interest rate for the first three quarters of 2014 was 6.95%,  7.45% and 7.0%  respectively.

(in thousands)

	September 30, 2014		December 31, 2013
Loan from CITIC bank	$	6,752		6,381
Loan from ICBC		6,476		6,381
Loan from Taizhou Bank		1,137		2,127
Loan from China Everbright Bank		1,527		-
Loan from Pay-Ins Prem		200		72
	$	16,092		14,961

Bank acceptance notes

As of September 30, 2014, the Company has bank acceptance notes payable in the amount of $16.2 million. The notes are guaranteed to be paid by the banks and are usually for a short-term period of nine months. The Company is required to maintain cash deposits of 50% or 100% of the notes payable with these banks, in order to ensure future credit availability. As of September 30, 2014, the restricted cash for the notes was $11.4 million.

– 3 to 6 month term for each note issued (in thousands)

	September 30, 2014		December 31, 2013
a) Bank acceptance notes payable to China Everbright bank	$	6,856	$	8,891
b) Bank acceptance notes payable to Taizhou bank		3,246		3,927
c) Bank acceptance notes payable to CITIC bank		5,566		2,700
d) Bank acceptance notes payable to ICBC		487		177
	$	16,155	$	15,695

a. Notes payable to China Everbright bank have various maturity dates from October 2014 to March 2015. The notes payable are guaranteed by a land use right and a building with a total carrying value of $2.1 million. The Company is also required to maintain cash deposits at 50% of the notes payable with the bank, in order to ensure future credit availability. In October 2014, the company repaid the note payable when it became due .

b. Notes payable to Taizhou bank have various maturity dates from October 2014 to February, 2015. The Company is required to maintain cash deposits at 50% to 100% of the notes payable with the bank, in order to ensure future credit availability. In October 2014, the company repaid the note payable when it became due.

c. Notes payable to CITIC bank will be due from October 2014 to March 2015.  Except for a note payable utilizing credit exposure of $1.12 million, the Company is required to maintain cash deposits at 100% of the notes payable with the bank, in order to ensure future credit availability. In October 2014, the company repaid the note payable when it became due.

d. Notes payable to ICBC will be due in December 2014. The Company is required to maintain cash deposits at 50% to 100% of the notes payable with the bank, in order to ensure future credit availability.

In October 2014, approximately $7.4 million of notes payable matured and repaid. There is no notes payable issued after September 30, 2014.

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INVESTMENT IN JOINT VENTURES

9 Months Ended

Sep. 30, 2014

INVESTMENT IN JOINT VENTURES [Abstract]

INVESTMENTS IN JOINT VENTURES

NOTE 5– 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 General Partner of Cathaya Capital, which is a shareholder of Better World. In January of 2011, Holley Group's interest in ZAP Hangzhou was purchased by Jonway Group. ZAP and Better World each own 37.5% of the equity shares of ZAP Hangzhou, and Jonway Group 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 the focus to support “EV car sharing” or EV leasing. Zapple has a 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.

The carrying amount of the Company's investment in the joint ventures is as follows:

	ZAP Hangzhou			Shanghai Zapple			Total
Balance as of December 31, 2012	$	437		$	461		$	898
Less: investment loss		(438	)		(461	)		(899	)
CTA		1			--			1
Balance as of December 31, 2013		--			--			--
Less: Investment loss		--			--			--
CTA		--			--			--
Balance as of September 30, 2014	$	--		$	--		$	--

The carrying amount of the Joint Venture investment had been written down to $0 as of December 31, 2013. The Company recorded a loss of $0 and $182,000 in ZAP Hangzhou for the nine months ended September 30, 2014 and 2013, respectively. The Company recorded a loss of $0 and $79,000 in ZAP Hangzhou for the three months ended September 30, 2014 and 2013, respectively. Due to the suspension of Shanghai Zapple operations, the company recorded a loss of $0 and $461,000 in Shanghai Zapple for the three and nine months ended September 30, 2014 and 2013 respectively. These losses relate to investment in non-consolidated joint ventures accounted for under the equity method of accounting because the Company does not have control.

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INVESTMENT IN JOINT VENTURES (Tables)

9 Months Ended

Sep. 30, 2014

INVESTMENT IN JOINT VENTURES [Abstract]

Schedule Of Joint Venture's Carrying Amount

The carrying amount of the Company's investment in the joint ventures is as follows:

	ZAP Hangzhou			Shanghai Zapple			Total
Balance as of December 31, 2012	$	437		$	461		$	898
Less: investment loss		(438	)		(461	)		(899	)
CTA		1			--			1
Balance as of December 31, 2013		--			--			--
Less: Investment loss		--			--			--
CTA		--			--			--
Balance as of September 30, 2014	$	--		$	--		$	--

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SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES (Policies)

9 Months Ended

Sep. 30, 2014

SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES [Abstract]

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company 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, warranty costs, stock based compensation, 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.

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 records revenues for Jonway sales only upon the occurrence of all of the following conditions:

- The Company has received a binding purchase order from the customer or distributor authorized by a representative empowered to commit the purchaser (evidence of a sale);

- The purchase price has been fixed, based on the terms of the purchase order;

- The Company has delivered the product from its factory to a common carrier acceptable to the customer; and

- The Company deems the collection of the amount invoiced probable.

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

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 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 our 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.  The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

	September 30, 2014		December 31, 2013
Balance sheet items, except for share capital, additional paid in capital and retained earnings	$	1=RMB 6.1547	$	1=RMB 6.1122
Amounts included in the statements of operations and cash flows for the periods	$	1=RMB 6.1480	$	1=RMB 6. 1171

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In April 2014, the FASB has issued Accounting Standards Update (ASU) No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. The new guidance also requires disclosure of the pre-tax income attributable to a disposal of a significant part of an organization that does not qualify for discontinued operations reporting. The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. Early adoption is permitted. The Company does not expect the adoption of this guidance will have a significant impact on the Company's condensed consolidated financial statements.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers: Topic 606. This Update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. The guidance in this Update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to illustrate the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also includes a cohesive set of disclosure requirements that will provide users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a reporting organization's contracts with customers. This ASU is effective retrospectively for fiscal years, and interim periods within those years beginning after December 15, 2016 for public companies and 2017 for non-public entities. Management is evaluating the impact, if any, of this ASU on the Company's financial position, results of operations and cash flows. 

In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-12 Compensation – Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The amendments stipulate that a performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, Compensation — Stock Compensation. As a result, the target is not reflected in the estimation of the award's grant date fair value. Compensation cost should be recognized over the required service period, if it is probable that the performance condition would be achieved. The amendments in this Accounting Standards Update are effective for annual periods beginning after December 15, 2015 and interim periods within those annual periods. Early adoption is permitted. The Company does not expect the adoption of ASU 2014-12 to have a material impact on the Company's condensed consolidated financial statements.  

In August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15 Preparation of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. Under generally accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements-Liquidation Basis of Accounting. Even when an entity's liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this Accounting Standards Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company does not expect the adoption of ASU 2014-15 to have material impact on the Company's condensed consolidated financial statements, although there may be additional disclosures upon adoption.

In November 2014, FASB issued Accounting Standards Update No. 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force). The amendments permit the use of the Fed Funds Effective Swap Rate (also referred to as the Overnight Index Swap Rate, or OIS) as a benchmark interest rate for hedge accounting purposes. Public business entities are required to implement the new requirements in fiscal years (and interim periods within those fiscal years) beginning after December 15, 2015. All other types of entities are required to implement the new requirements in fiscal years beginning after December 15, 2015, and interim periods beginning after December 15, 2016. The Company does not expect the adoption of ASU 2014-16 to have material impact on the Company's consolidated financial statement.

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RELATED PARTIES

9 Months Ended

Sep. 30, 2014

RELATED PARTIES [Abstract]

RELATED PARTIES

NOTE 9– RELATED PARTIES

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:
	September 30, 2014		December 31, 2013
Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd	$	2,767	$	4,973
JAZ		1,166		961
ZAP Hangzhou		40		127
Total	$	3,973	$	6,061
Amount due to related parties are follows:
	September 30, 2014		December 31, 2013
Jonway Group	$	4,213	$	303
Jonway Motor Cycle		134		113
Taizhou Huadu		701		631
Shanghai Zapple		37		36
Ms. Lu		-		30
Mr. Wang		560		-
Betterworld		149		149
Taizhou Jonway Electric Vehicle Selling Co		953		-
Cathaya Capital		334		1,147
Total	$	7,081	$	2,409

Transactions with Jonway Group

Jonway Group is considered 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 nine months ended September 30, 2014 and 2013, Jonway made purchases from Jonway Group of $915,000 and $916,000. For the three months ended September 30, 2014 and 2013, Jonway made purchases from Jonway Group of $241,000 and $236,000.

            Jonway Agreement with Zhejiang UFO

                Based on a contract by and among 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.

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CONVERTIBLE BOND

9 Months Ended

Sep. 30, 2014

CONVERTIBLE BOND [Abstract]

CONVERTIBLE BOND

NOTE 7- CONVERTIBLE BOND

On June 12, 2013, the Company signed a convertible bond agreement, pursuant to which a Convertible Bond would be put in place to fund the formation of JAZ (Jonway and ZAP) from the ZAP Hangzhou Joint Venture that was formed in 2010 in China, Hangzhou. The Convertible Bond was to be funded at US$2 million with the option to convert to ZAP shares. The Company received $1.7 million of the $2 million. As of October 27^th, 2014, US$500,000 of the convertible bond has been repaid to one of the bond holders (Korea Yung), and US$600,000 has been converted to ZAP shares by the other bond holders, leaving an outstanding principalamount of $600,000 on the bond yet to be repaid in cash or in ZAP shares.

Effective September 29, 2014, the Company and Korea Yung amended their original agreement dated August 12, 2014. Under the amendment, the Company made a payment totaling $528,500 to Yung as of October 27^th, 2014. The payment represented a principal reduction of $500,000 and $28,500 of interest on the Company's outstanding convertible bond held by Yung. Per the agreement, the Company will release 7,095,344 shares from escrow and deliver the shares to Yung, or repay the remaining $600,000 principal in cash in part or in full, on or before December 31, 2014 or within five (5) business days thereafter.

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SEGMENT REPORTING

9 Months Ended

Sep. 30, 2014

SEGMENT REPORTING [Abstract]

SEGMENT REPORTING

NOTE 8 – SEGMENT REPORTING

Operating Segments

                In accordance with ASC 280, the Company has identified four reportable segments consisting of Jonway Vehicles, Advanced Technology Vehicles, ZAP (Consumer Product) and ZAP Hong Kong. The Jonway Vehicles segment represents sales of the gas fueled and electric vehicles of Jonway A380 three and five-door sports utility vehicles, minivans and spare parts principally through distributors in China. The Advanced Technology Vehicles segment represents EV sales and marketing outside of China. The Consumer Product segment represents our ZAPPY3 personal transporters. 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. Segment results are summarized as follows (in thousands):

	Jonway			Electric						Advanced
	Conventional			Consumer						Technology
	Vehicles			Products			Car outlet			Vehicles			ZAP HK		Total
For the three months ended September 30, 2014:
Net sales	$	4,951		$	269		$	-		$	-		$	-	$	5,220
Gross profit (loss)	$	(692	)	$	72		$	-		$	-		$	-	$	(620	)
Depreciation and amortization	$	1,445		$	655		$	-		$	-		$	-	$	2,100
Net profit (loss)	$	(2,837	)	$	(1,966	)	$	-		$	-		$	-	$	(4,803	)
Total assets	$	82,207		$	22,870		$	-		$	-		$	1,439	$	106,516
For the three months ended September 30, 2013
Net sales	$	9,660		$	252		$	-		$	17		$	-	$	9,929
Gross profit (loss)	$	512		$	107		$	-		$	(6	)	$	-	$	613
Depreciation and amortization	$	1,389		$	657		$	-		$	-		$	-	$	2,046
Net loss	$	(1,719	)	$	(1,622	)	$	-		$	(5	)	$	-	$	(3,346	)
Total assets	$	88,226		$	22,692		$	-		$	0		$	-	$	110,918
For the nine months ended September 30, 2014:
Net sales	$	18,926		$	704		$	-		$	-		$	-	$	19,630
Gross profit (loss)	$	(1,759	)	$	189		$	-		$	-		$	-	$	(1,570	)
Depreciation and amortization	$	4,309		$	1,967		$	-		$	-		$	-	$	6,276
Net profit (loss)	$	(8,424	)	$	(5,262	)	$	-		$	-		$	-	$	(13,686	)
Total assets	$	82,207		$	22,870		$	-		$	-		$	1,439	$	106,516
For the nine months ended September 30, 2013
Net sales	$	35,878		$	639		$	-		$	45		$	-	$	36,562
Gross profit (loss)	$	166		$	174		$	-		$	(32	)	$	-	$	308
Depreciation and amortization	$	4,079		$	1,970		$	-		$	0		$	-	$	6,049
Net loss	$	(8,360	)	$	(5,078	)	$	(174	)	$	(33	)	$	-	$	(13,645	)
Total assets	$	88,226		$	22,692		$	-		$	0		$	-	$	110,918

Operating segments do not sell products to each other, and accordingly, there is no inter-segment revenue to be reported.

Customer information

Approximately 96% or $18.9 million of our revenues for the nine months ended September 30, 2014 are from sales in China. Jonway Auto distributes its products to an established network of over 50 factory level dealers in China. Approximately 98%  or $35.9 million of our revenues for the nine months ended September 30, 2013 are from sales in China. Jonway Auto distributed its products to an established network of over 50 factory level dealers in China.

Supplier information

            For the three and nine months ended September 30, 2014 and 2013, approximately 96.6% or $5.6 million and  97.6% or $20.6 million and 98.2% or $9.1 million and 98.5% or $35.7 million of the consolidated cost of goods sold were purchased in China.

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SHAREHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2014

SHAREHOLDERS' EQUITY [Abstract]

SHAREHOLDERS' EQUITY

NOTE 10 – SHAREHOLDERS' EQUITY

              Cathaya Operations Management Limited and China Electric Vehicle Corp have elected to convert the amounts recorded as due to related parties to common stock.  The amount of $967,543 due to Cathaya Operations Management Limited have been converted into 17,819,783 shares of common stock at 30% below market price based on the average trading prices of the previous 120 days after notification. The 17,819,783 shares of common stock have been issued in April 2014

China Electric Vehicle Corporation (CEVC) has elected to convert the interest of $639,068 due on the $20.7 million convertible note to 6,439,552 shares of common stock at the average of the closing prices for each trading day during such fiscal quarter ended on (and including) the last trading day of such fiscal quarter. The 6,439,552 shares of common stock have been issued in April 2014.

In March 2014, Jonway Group agreed to pay all of the outstanding mold expenses of the Minivan that is currently still outstanding, and in return ZAP will share half of the asset value and share the IPR (50%) of the Minivan with Jonway Auto. The Minivan was purchased by ZAP from a prior agreement between ZAP and Jonway Group which was signed on January 18, 2012.  In return for ZAP receiving worldwide exclusivity for the sales, distribution, and product IPR rights for all current and future models of the compressed natural gas (“CNG”) versions of Jonway Auto's Products, including, but not limited to, SUV, minivan, and all other models, the Company's Board of Directors authorized on March 28, 2014 to issue 61,000,000 shares of common stock to the companies owned by the Co-CEO and shareholder Alex Wang, including 20,000,000 shares to Major Management Limited, 20,000,000 shares to Max Reliance Management Limited and 21,000,000 shares to New Dragon Management Limited. The 61,000,000 shares of common stock have been issued in April 2014.  

In May 2014, ZAP issued 62,500 shares of common stock to Jeffery and Karen Bank, who paid $5,000 in cash on behalf of ZAP to address a lawsuit from Jackson Long.    

           On February 26, 2014, a binding letter of commitment in equity investment in ZAP was signed between the Company and four individual investors. The four individual investors are the representatives of the employees of Jonway Auto and Jonway Group in China and they will hold the issued stocks on behalf of these employees. The shares were issued at discounted share price based on averaged price over the last 60 days from the date of signing the agreement. As of September 30, 2014, $1.9 million was received by ZAP. The number of stock issued on August 14, 2014 was 31,666,668.

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INVESTMENT IN JOINT VENTURES (Narrative) (Details)	3 Months Ended		9 Months Ended		12 Months Ended	3 Months Ended		9 Months Ended		12 Months Ended				3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2013 USD ($)	Dec. 31, 2013 USD ($)	Sep. 30, 2014 ZAP Hangzhou [Member] USD ($)	Sep. 30, 2013 ZAP Hangzhou [Member] USD ($)	Sep. 30, 2014 ZAP Hangzhou [Member] USD ($)	Sep. 30, 2013 ZAP Hangzhou [Member] USD ($)	Dec. 31, 2013 ZAP Hangzhou [Member] USD ($)	Dec. 31, 2011 ZAP Hangzhou [Member] USD ($)	Dec. 31, 2011 ZAP Hangzhou [Member] Jonway Auto [Member]	Dec. 31, 2011 ZAP Hangzhou [Member] Better World [Member]	Sep. 30, 2014 Shanghai Zapple [Member] USD ($)	Sep. 30, 2013 Shanghai Zapple [Member] USD ($)	Sep. 30, 2014 Shanghai Zapple [Member] USD ($)	Sep. 30, 2013 Shanghai Zapple [Member] USD ($)	Dec. 31, 2013 Shanghai Zapple [Member] USD ($)	Dec. 31, 2011 Shanghai Zapple [Member] CNY	Dec. 31, 2011 Shanghai Zapple [Member] Jonway Auto [Member] CNY	Dec. 31, 2011 Shanghai Zapple [Member] Better World [Member] CNY
Schedule of Equity Method Investments [Line Items]
Ownership percentage												25.00%	37.50%							50.00%
Original registered capital of joint venture											$ 3,000,000								20,000,000
Joint venture, capital investment											1,100,000									5,000,000	3,000,000
Equity method investment losses		$ 82,000		$ 656,000	$ 899,000	$ 0	$ 79,000	$ 0	$ 182,000	$ 438,000				$ 0	$ 461,000	$ 0	$ 461,000	$ 461,000

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INVENTORIES, NET (Tables)

9 Months Ended

Sep. 30, 2014

INVENTORIES, NET [Abstract]

Schedule of Inventories

Inventories are summarized as follows (in thousands):

	September 30, 2014			December 31, 2013
Work in Process	$	3,017		$	2,228
Parts and supplies		4,315			2,906
Finished goods		4,500			4,881
		11,832			10,015
Less - inventory reserve		(1,960	)		(1,981	)
Inventories, net	$	9,872		$	8,034

Schedule of Inventory Reserve

Changes in the Company's inventory reserve are as follows (in thousands): 

	September 30, 2014			December 31, 2013
Balance opening period	$	1,981		$	2,325
Current provision for Jonway Auto		-			(529	)
Current provision for inventory ZAP-net		(21	)		185
Balance end of period	$	1,960		$	1,981

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RELATED PARTIES (Tables)

9 Months Ended

Sep. 30, 2014

RELATED PARTIES [Abstract]

Schedule of Amount Due To/From Related Parties

Amount due from related parties are as follows:
	September 30, 2014		December 31, 2013
Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd	$	2,767	$	4,973
JAZ		1,166		961
ZAP Hangzhou		40		127
Total	$	3,973	$	6,061
Amount due to related parties are follows:
	September 30, 2014		December 31, 2013
Jonway Group	$	4,213	$	303
Jonway Motor Cycle		134		113
Taizhou Huadu		701		631
Shanghai Zapple		37		36
Ms. Lu		-		30
Mr. Wang		560		-
Betterworld		149		149
Taizhou Jonway Electric Vehicle Selling Co		953		-
Cathaya Capital		334		1,147
Total	$	7,081	$	2,409

Schedule of Contract Rates

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

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SEGMENT REPORTING (Schedule of Segment Results) (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Segment Reporting Information [Line Items]
Net sales	$ 5,220,000	$ 9,929,000	$ 19,630,000	$ 36,562,000
Gross profit (loss)	(620,000)	613,000	(1,570,000)	308,000
Depreciation and amortization	2,100,000	2,046,000	5,196,000	4,970,000
Net Loss	(4,803,000)	(3,346,000)	(13,686,000)	(13,645,000)
Total assets	106,516,000	110,918,000	106,516,000	110,918,000	107,033,000
Jonway Conventional Vehicles [Member]
Segment Reporting Information [Line Items]
Net sales	4,951,000	9,660,000	18,926,000	35,878,000
Gross profit (loss)	(692,000)	512,000	(1,759,000)	166,000
Depreciation and amortization	1,445,000	1,389,000	4,309,000	4,079,000
Net Loss	(2,837,000)	(1,719,000)	(8,424,000)	(8,360,000)
Total assets	82,207,000	88,226,000	82,207,000	88,226,000
Electric Consumer Products[Member]
Segment Reporting Information [Line Items]
Net sales	269,000	252,000	704,000	639,000
Gross profit (loss)	72,000	107,000	189,000	174,000
Depreciation and amortization	655,000	657,000	1,967,000	1,970,000
Net Loss	(1,966,000)	(1,622,000)	(5,262,000)	(5,078,000)
Total assets	22,870,000	22,692,000	22,870,000	22,692,000
Car outlet [Member]
Segment Reporting Information [Line Items]
Net sales
Gross profit (loss)
Depreciation and amortization
Net Loss				(174,000)
Total assets
Advanced Technology Vehicles [Member]
Segment Reporting Information [Line Items]
Net sales		17,000		45,000
Gross profit (loss)		(6,000)		(32,000)
Depreciation and amortization				0
Net Loss		(5,000)		(33,000)
Total assets		0		0
Zap HK [Member]
Segment Reporting Information [Line Items]
Net sales
Gross profit (loss)
Depreciation and amortization
Net Loss
Total assets	$ 1,439,000		$ 1,439,000

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Loss from operations of the company and its consolidated subsidiaries	$ (13,686)	$ (13,645)
Adjustments to reconcile net loss to cash (used in) operating activities:
Stock-based employee compensation	169	462
Depreciation and amortization	5,196	4,970
Amortization of Distribution agreement	1,080	1,080
Provision for (recovery of )doubtful accounts	(15)	10
Inventory Reserve	(453)	148
Loss from joint venture and other investments		643
(Gain)Loss on disposal of equipment	(18)	34
Deferred tax benefit(expense)	301	(40)
Amortization of debt discount	513	1,063
Changes in assets and liabilities
Accounts receivable	1,157	(348)
Notes Receivable	(61)	1,611
Inventories	(1,879)	2,707
Prepaid expenses and other assets	(1)	(505)
Due from related parties	2,134	(547)
Accounts payable	(2,597)	(3,910)
Accrued liabilities	(480)	(187)
Taxes Payable	(917)	154
Advances from customers	2,036	(1,192)
Due to related parties	5,761	2,272
Other payables	(388)	(751)
Net cash used in operating activities	(2,148)	(5,971)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment	(1,077)	(1,581)
Proceeds from sale of equipment	40
Net cash flows used in investing activities:	(1,037)	(1,581)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in restricted cash	(2,315)	(1,603)
Proceeds from issuance of common stock	1,900
Proceeds from notes payable	22,801	33,017
Proceeds from short term borrowings	8,640	11,858
Proceeds from convertible Bond		1,496
Repayments of notes payable	(22,232)	(33,303)
Payments on short term debt	(7,404)	(4,889)
Net cash provided by financing activities	1,390	6,576
Effect of exchange rate changes on cash and cash equivalents	(16)	(110)
NET (DECREASE) IN CASH AND CASH EQUIVALENTS	(1,811)	(1,086)
CASH AND CASH EQUIVALENTS, beginning of period	2,629	1,656
CASH AND CASH EQUIVALENTS, end of period	818	570
Supplemental disclosure of cash flow information:
Cash paid during period for interest	1,152	1,250
Cash paid during period for taxes	2	7
Supplemental disclosure of cash flow information
Issue 61 million shares of common stock for acquisition of IPR and Distribution rights for Minivan and CNG products	5,969
Issue 6,439,552 shares of common stock to pay interest payable	639
Issue 7,970,983 shares of common stock to redeem Convertible bond	600
Issue 17,819,783 shares of common stock to pay oustanding balance due to related parties	$ 968

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DISTRIBUTION AGREEMENTS

9 Months Ended

Sep. 30, 2014

DISTRIBUTION AGREEMENTS [Abstract]

DISTRIBUTION AGREEMENTS

NOTE 4 – DISTRIBUTION AGREEMENT

Distribution agreements are presented below (in thousands):

	September 30, 2014			December 31, 2013
Better World Products-related party	$	2,160		$	2,160
CNG Products		5,969			-
Jonway Products		14,400			14,400
		22,529			16,560
Less amortization		(7,800	)		(6,721	)
	$	14,729		$	9,839

Amortization expense related to these distribution agreements for the three months ended September 30, 2014 and 2013 were $360,000 and $360,000, respectively.  Amortization expense related to these distribution agreements for the nine months ended September 30, 2014 and 2013 were $1,080,000 and $1,080,000, respectively.  Amortization is based over the term of the agreements. There were no amortization expenses for CNG products as it has not yet been marketed in the first three quarters of 2014.

Distribution Agreement with Jonway Auto for CNG Products

On June 26, 2014, ZAP entered into an International Distribution with Jonway Auto as the distributor of Jonway Auto's compressed natural gas SUV and compressed natural gas minivan, both in the US. and internationally. In connection with the distribution agreement the Company also issued 61 million shares of ZAP common stock valued at $6.0 million to Jonway Group.  Jonway Group had to pay the outstanding minivan mold balance in exchange for the 61 million shares of ZAP's common stock.

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ORGANIZATION AND BASIS OF PRESENTATION (Basis Of Presentation) (Details)	9 Months Ended
	Sep. 30, 2014 USD ($) W item	Sep. 30, 2014 CNY item
ORGANIZATION AND BASIS OF PRESENTATION [Abstract]
Percentage ownership in Jonway	51.00%	51.00%
Per electric vehicle incentive	$ 20,000
Government subsidies for lithium battery, per electric vehicle, minimum	5,000	35,000
Government subsidies for lithium battery, per electric vehicle, maximum	16,000	100,000
Central government subsidies for lithium battery, reaching 250km in range per charge	10,000
Local government subsidies for lithium battery, reaching 250km in range per charge	$ 10,000
Number of local government cities are participating in subsidy as required by the central government	88	88
Jonway Auto's EV SUV consumption in power with a smaller engine, minimum (in kwatt)	20	20
Jonway Auto's EV SUV consumption in power with a smaller engine, maximum (in kwatt)	40	40
EV minivan consumption in power with a lighter engine (in kwatt)	13.5	13.5
Target sales rate of Urbees, monthly	1,000	1,000

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LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Schedule of Bank Acceptance Notes) (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Short-term Debt [Line Items]
Bank acceptance notes payable	$ 16,155,000	$ 15,695,000
Restricted cash deposit	11,400,000
Everbright Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	6,856,000	8,891,000
Beginning maturity date	Oct. 31, 2014
Ending maturity date	Mar. 31, 2015
Collateral amount	2,100,000
Required cash deposit	50.00%
Taizhou Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	3,246,000	3,927,000
Beginning maturity date	Oct. 31, 2014
Ending maturity date	Feb. 28, 2015
Taizhou Bank [Member] | Minimum [Member]
Short-term Debt [Line Items]
Required cash deposit	50.00%
Taizhou Bank [Member] | Maximum [Member]
Short-term Debt [Line Items]
Required cash deposit	100.00%
CITIC [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	5,566,000	2,700,000
Beginning maturity date	Oct. 31, 2014
Ending maturity date	Mar. 31, 2015
Required cash deposit	100.00%
Notes payable utilizing credit exposure	1,120,000
ICBC [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	487,000	177,000
Maturity date	Dec. 31, 2014
Collateral amount	$ 3,650,000
ICBC [Member] | Minimum [Member]
Short-term Debt [Line Items]
Required cash deposit	50.00%
ICBC [Member] | Maximum [Member]
Short-term Debt [Line Items]
Required cash deposit	100.00%

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SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES (Tables)

9 Months Ended

Sep. 30, 2014

SIGNIFICANT ACCOUNTING POLICIES AND USE OF ESTIMATES [Abstract]

Schedule of Foreign Currency Exchange Balance

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.  The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

	September 30, 2014		December 31, 2013
Balance sheet items, except for share capital, additional paid in capital and retained earnings	$	1=RMB 6.1547	$	1=RMB 6.1122
Amounts included in the statements of operations and cash flows for the periods	$	1=RMB 6.1480	$	1=RMB 6. 1171