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.