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 March 31, 2015

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)
2 West 3rd 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 May 15, 2015, there were 460,213,050 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 March 31, 2015 and December 31, 2014	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three  months ended March 31, 2015 and 2014	5
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	28
Item 4.	Controls and Procedures	28
PART II. Other Information
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	29
SIGNATURES		30

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ZAP

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

	March 31,		December 31,
ASSETS	2015		2014
Current assets:
Cash and cash equivalents	$	366	$	238
Restricted Cash		10,653		10,673
Notes receivable		-		81
Accounts receivable, net		2,886		2,724
Inventories, net		7,348		8,380
Prepaid taxes		238		110
Prepaid expenses and other current assets		722		377
Total current assets		22,213		22,583
Property, plant and equipment, net		41,211		42,595
Land use rights, net		9,697		9,711
Other assets:
Distribution fees, net		9,039		9,399
Intangible assets, net		3,119		3,195
Goodwill		332		332
Due from related party		2,868		2,791
Deposits and other assets		405		390
Total other assets		15,763		16,107
Total assets	$	88,884	$	90,996

See accompanying notes to the unaudited condensed consolidated financial statements

3

ZAP

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

	March 31,			December 31,
	2015			2014
LIABILITIES AND  EQUITY ( DEFICIENCY)
Current liabilities:
Short term loans	$	8,741		$	9,849
Notes payable		17,413			17,747
Senior convertible debt		20,679			20,679
Accounts payable		20,377			21,389
Accrued liabilities		3,796			3,848
Advances from customers		9,488			7,139
Taxes payable		1,628			1,266
Due to related party		9,529			7,121
Other payables		2,950			3,094
Total current liabilities		94,601			92,132
Long term liabilities:
Accrued liabilities and others		875			745
Total liabilities		95,476			92,877
Commitments and contingencies
Equity (Deficiency)
Common stock, no par value; 800 million shares authorized;
460,213,050 and 461,395,508 shares issued and outstanding
at March 31, 2015 and December 31, 2014, respectively		244,287			244,368
Accumulated other comprehensive income		1,679			1,655
Accumulated deficit		(253,073	)		(250,000	)
Total ZAP shareholders’ equity (deficiency)		(7,107	)		(3,977	)
Non-controlling interest		515			2,096
Total equity (deficiency)		(6,592	)		(1,881	)
Total liabilities and equity (deficiency)	$	88,884		$	90,996

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 March 31,
	2015			2014
Net sales	$	8,362		$	6,821
Cost of goods sold		(8,874	)		(7,792	)
Gross profit (loss)		(512	)		(971	)
Operating expenses:
Sales and marketing		(992	)		(734	)
General and administrative		(1,879	)		(2,064	)
Research and development		(613	)		(186	)
Total operating expenses		(3,484	)		(2,984	)
Loss from operations		(3,996	)		(3,955	)
Other income (expense):
Interest expense, net		(761	)		(876	)
Other Income		81			124
Total income (expense)		(680	)		(752	)
Loss before income taxes		(4,676	)		(4,707	)
Income tax		-			304
Net Loss	$	(4,676	)	$	(5,011	)
Less: loss attributable to non-controlling interest		1,603			1,634
Net loss attributable to ZAP’s common shareholders	$	(3,073	)	$	(3,377	)
Net Loss	$	(4,676	)	$	(5,011	)
Other Comprehensive Income (Loss)
Foreign currency translation adjustments		46			(118	)
Total comprehensive loss		(4,630	)		(5,129	)
Less : Comprehensive loss attributable to non-controlling interest		1,581			1,692
Comprehensive loss attributable to ZAP	$	(3,049	)	$	(3,437	)
Net loss per share attributable to common shareholders:
Basic and diluted	$	(0.01	)	$	(0.01	)
Weighted average number of common shares outstanding:
Basic and diluted		460,673			302,518

See accompanying notes to the unaudited condensed consolidated financial statements

5

ZAP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the Three months ended March 31,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(4,676	)	$	(5,011	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Gain from disposal of equipment		(7	)		-
Stock-based employee compensation		19			34
Depreciation and amortization		2,092			2,079
Provision for doubtful accounts		6			2
Changes in inventory reserve		87			(32	)
Deferred tax expenses(benefit)		-			304
Amortization of debt discount		-			91
Changes in assets and liabilities:
Accounts receivable		(152	)		282
Notes Receivable		81			185
Inventories		975			73
Prepaid expenses and other assets		(486	)		177
Due from related parties		(70	)		2,887
Accounts payable		(828	)		(2,666	)
Accrued liabilities		62			(52	)
Taxes Payable		360			(901	)
Advances from customers		2,310			(550	)
Due to related parties		2,382			2,451
Other payables		(421	)		(154	)
Net cash provided by (used for) operating activities		1,734			(801	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of equipment		11			-
Acquisition of property and equipment		(33	)		(480	)
Net cash flows used in investing activities:		(22	)		(480	)

6

ZAP AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the Three months ended March 31,
	2015			2014
CASH FLOWS FROM FINANCING ACTIVITIES
Change in restricted cash	$	64		$	2,910
Proceeds from notes payable		6,189			6,643
Proceeds from short term loans		814			2,109
Proceeds from equity investment		-			1,500
Repayment of convertible bond		(100	)		-
Repayments of notes payable		(6,595	)		(9,748	)
Payments on short term loans		(1,959	)		(2,837	)
Net cash provided by (used in) financing activities		(1,587	)		577
Effect of exchange rate changes on cash and cash equivalents		3			(7	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		128			(711	)
CASH AND CASH EQUIVALENTS, beginning of period		238			2,629
CASH AND CASH EQUIVALENTS, end of period	$	366		$	1,918
Supplemental disclosure of cash flow information:
Cash paid during period for interest	$	345		$	314
Cash paid during period for income taxes	$	-		$	-
Non-cash transaction:
Cancellation of 1,182,558 shares of common stock issued to pay convertible bond	$	100		$	-

See accompanying notes to the unaudited condensed consolidated financial statements

7

ZAP AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 several 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.  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, the “Urbee”, in 2014.  The primary market for the Urbee is 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.

8

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 the first half of 2015.

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 was a major transition year for Jonway Auto, where there was an intentional slowdown in gasoline vehicle production and sales, while Jonway redirected its manufacturing and sales and marketing groups to support the mass rollout of its EVs, starting with the Urbee for city commuters.

                The combined companies’ new EV product lines now include the A380 SUV EV, minivan EV, and the Urbee. Both the EV SUV and EV minivan products leverage the production moldings and 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 2014.  The first production deliveries of the EV SUV and Minivans are projected to occur in the first half of 2015.

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 few 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 is cutting 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.

9

Jonway auto established 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 AND CONSOLIDATION

 The accompanying consolidated financial statements include the financial statements of ZAP, and its subsidiaries: Jonway Automobile, ZAP and ZAP Hong Kong for the three months ended March 31, 2015 and the year ended December 31, 2014 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% controlled. Significant intercompany transactions and balances are eliminated in consolidation; profits from intercompany sales, are also eliminated; non –controlling interests are included in equity.  We account for our 37.5% interest in the ZAP Hangzhou and our 50% interest in Shanghai Zapple using the equity method of accounting because we have significant influence but not control.

          ZAP’s common stock is quoted on the OTC Bulletin Board under the symbol “ZAAP.OB.”

.Liquidity and Capital Resources

As of March 31, 2015, our current liabilities exceeded the current assets by approximately $72.0 million and our equity deficiency was $6.6 million, which raise substantial doubt about our ability to continue as a going concern. In addition, we have recurring net losses. Given our expected capital expenditure in the foreseeable future, we have comprehensively considered our available sources of funds as follows:

· Financial support and credit guarantee from related parties; and

· Other available sources of financing from domestic banks and other financial institutions given our credit history.

Based on the above considerations, management projects that we have sufficient funds to meet our working capital requirements and debt obligations as they become due. However these projections are based on the demand of our products, economic conditions, the overcapacity issue in the automobile industry and our operating results not continuing to deteriorate and our vendors and related parties being able to provide continued liquidity. As a result our consolidated financial statements for the quarter ended March 31, 2015 have been prepared on a going concern basis.

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.

As of March 31, 2015, we were approved up to an aggregate of $16.3 million of a credit line, with the credit exposure of $6.05 million from the Sanmen Branch of CITIC Bank (“CITIC”) through Jonway. As of March 31, 2015, the credit exposure of $6.05 million has been fully used. The credit line expires in March 2016.

In early 2014, we were approved up to an aggregate of $2.4 million of a credit line from Taizhou Bank. In February 2015, the company settled the loan and the bank did not renew the credit line to the company.

               In December 2013, we were approved for up to an aggregate of $9.2 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 $4.6 million. This credit line has expired as of January 2015. In April 2015, we were approved for up to an aggregate of 7.5 million of a credit line from Everbright Bank, with 50% restricted cash deposited and credit exposure of $3.75 million. As of March 31, 2015, the credit line has been fully used. The credit line expires in April 2016.

10

In March 2014, we were approved up to an aggregate of $5.4 million of a credit line from Industrial and Commercial Bank of China (ICBC) with credit exposure of $5.4 million. This credit line expires in March 2017. As of March 31, 2015, a credit exposure of $4.9 million has been used.

Jonway intends to utilize the above credit lines to expand its electric vehicle business as well as other future vehicle models.  This includes on-going working capital needs, electric vehicle production equipment requirements, testing, homologation and new EV product molds. Also our principal shareholder, Jonway Group, has agreed to provide the necessary support to meet our financial obligations through May 20, 2016 in the event that we require additional liquidity. In addition, CEVC (China Electric Vehicle Corporation) would likely renew this convertible note and 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 will require additional capital to expand our current operations.  In particular, we require additional capital to expand our presence across the world, to continue development of our electric vehicle business, to continue strengthening our dealer network and after-sale service centers and expanding our market initiatives.  We also require financing the investment for the continued roll-out of new products and to add qualified sales and professional staff to execute on our business plan and pursue our efforts in the research and development of advanced technology vehicles, such as the new ZAP Alias, the electric and other fuel efficient vehicles.

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.  

 NOTE-2 SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements include the accounts of all directly, indirectly owned subsidiaries and the variable interest entities. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the financial statements have been included. Interim results are not necessarily indicative of results to be expected for the full year. The information included in this Form 10- Q should be read in conjunction with information included in the 2014 annual report on Form 10-K filed on April 15, 2015.

             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.

11

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.”

12

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:

	March 31, 2015	December 31, 2014
Balance sheet items, except for share capital, additional paid in capital and retained earnings	$ 1=RMB 6.1206	$1=RMB 6.1460
Amounts included in the statements of operations and cash flows	$ 1=RMB 6.1444	$1=RMB6.1457

 Recent Accounting Pronouncements

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 January 2015, FASB issued ASU No. 2015-01, Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.  This Update is issued as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). The objective of the Simplification Initiative is to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to the users of financial statements. This Update eliminates from GAAP the concept of extraordinary items.  The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The effective date is the same for both public business entities and all other entities.  The Company does not expect the adoption of ASU 2015-01 to have material impact on the Company’s consolidated financial statements.

In February 2015, FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This Update focuses on the consolidation evaluation for reporting organizations that are required to evaluate consolidation of certain legal entities by reducing the number of consolidation models from four to two and is intended to improve current GAAP. The amendments in the ASU are effective beginning after December 15, 2016. We do not expect the adoption of ASU 2015-02 to have material impact on our consolidated financial statements.

13

In April 2015, FASB issued ASU 2015-03, interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in the ASU are effective beginning after December 15, 2015. We do not expect the adoption of ASU 2015-03 to have material impact on our consolidated financial statements.

NOTE 3– INVENTORIES, NET

Inventories, net at March 31, 2015 and December 31, 2014 are summarized as follows (in thousands):

Inventory
	March 31, 2015			December 31, 2014
Work in Process	$	1,898		$	3,054
Parts and supplies		3,334			3,601
Finished goods		3,587			3,105
		8,819			9,760
Less - inventory reserve		(1,471	)		(1,380	)
Inventories, net	$	7,348		$	8,380

Changes in the Company’s inventory reserve during the three months ended March 31, 2015 and the year ended December 31, 2014 are as follows (in thousands):

Provision
	March 31, 2015		December 31, 2014
Balance  opening period	$	1,380	$	1,981
Current provision for Jonway Auto		91		251
Current recovery for inventory ZAP- net		-		(852	)
Balance end of period	$	1,471	$	1,380

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NOTE 4 - DISTRIBUTION AGREEMENTS

Distribution agreements as of March 31, 2015 and 2014 are presented below (in thousands):

	March 31, 2015			December 31, 2014
Better World Products-related party	$	2,160		$	2,160
CNG Products		1,000			1,000
Jonway Products		14,400			14,400
		17,560			17,560
Less amortization and impairment		(8,521	)		(8,161	)
	$	9,039		$	9,399

Amortization expenses related to these distribution agreements for the three months ended March 31, 2015 and 2014 was $360,000 and $360,000, respectively.  Amortization is based over the term of the agreements. As of December 31, 2014, the company recognized an impairment loss of $5.0 million for the distribution right of CNG products. No impairment loss was recorded for the three months ended March 31, 2015 and 2014, respectively. The estimated future amortization expense is as follows (in thousands):

12 months  ended March 31,
2016	$	1,540
2017		1,540
2018		1,540
2019		1,540
2020		1,540
Thereafter		1,339
Total	$	9,039

NOTE 5–LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

Line of credit (Credit Exposure)

In March 2014, the Company has obtained up to an aggregate of $16.3 million of credit line with the credit exposure of $6.05 million from Citic Bank (“CITIC”) Sanmen Branch through Jonway. The  line is secured by land and building owned by Jonway and guaranteed by the related party – Jonway Group. In March 2014, Jonway borrowed one year short-term loan of $1.0 million. The annual interest rate was 7.08% and the loan was due in March 2015. The company early settled the loan in December 2014. The company borrowed a one year short term loan in December 2014 of $0.98 million at an annual interest rate of 6.69% with an expiration date of December 2015. We have also drawn down $10.6 million in the form of notes payable as of March 31, 2015. Except for a note payable utilizing the credit exposure of $5.05 million, we deposited 50% to 100% cash as restricted cash as collateral for these notes payable. These notes are due from July, 2015 to March, 2016.  As of March 31, 2015, the credit exposure of $6.05 million has been fully used. The credit line expires in March 2016.

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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, and has expired in January, 2015. This credit line was guaranteed by related parties. As of December 31, 2014, the total outstanding loans from Taizhou Bank under this credit line were $1.1 million. The loans are due separately in February and April 2015 respectively, and have been settled in February  2015.

In December 2013, we were approved for up to an aggregate of $9.2 million of a credit line from China 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 $4.6 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. This credit line has expired as of January, 2015. In April 2015, we were approved for up to an aggregate of 7.5 million of a credit line from Everbright Bank, with 50% restricted cash deposited and credit exposure of $3.75 million. The credit line expires in April 2016.As of March 31, 2015, $6.69 million was drawn down as notes payable. The amount of restricted cash deposited with the bank was $3.35 million.  In July 2014, Jonway borrowed an 11 months short-term loan of $1.2 million at interest rate of 7.2%. As of March 31, 2015, the credit exposure of $3.75 million has been fully used.

 In March 2014, 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 March 31, 2015, 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 6.9%.  The loans are due in various dates from April 2015 to March 2016.  As of March 31, 2015, a credit exposure of $4.9 million has been used, and $0.5 million was still available for use. The credit line expires in March 2017.

 Short term debt (in thousands)

	March 31, 2015		December 31, 2014
Loan from CITIC bank	$	980	$	976
Loan from ICBC		6,535		6,484
Loan from Taizhou Bank		-		1,139
Loan from China Everbright Bank		1,226		1,220
Loan from Pay-Ins Prem		-		30
	$	8,741	$	9,849

In December 2014, the company borrowed a one year short term loan of $0.98 million from CITIC at the annual interest rate of 6.69%. The loans are secured by a Maximum Amount Mortgage Contract between Jonway and CITIC dated November 3, 2014, in which a land use right and a building with a total carrying amount of $5.5 million as of March 31, 2015 has been pledged as security for this loan. The shareholder and Co-CEO Alex Wang also personally guaranteed these loans.

In August 2014, Jonway borrowed a short-term loan from Taizhou Bank of $0.3 million at the annual interest rate of 8.93% which was due in February 2015. The loan was repaid when due. In October 2014, Jonway borrowed $0.81 million of a short term loan from Taizhou Bank. The loan was to expire in April 2015 and the annual interest rate was 8.496%.The loan was settled early in February 2015.

In April 2014, Jonway borrowed a one year short-term loan from Industrial and Commercial Bank of China (ICBC) of 0.8 million which was repaid in April 2015.. The annual interest rate was 6%. In June 2014, Jonway borrowed a one year short-term loan from ICBC of $1.1 million at the annual interest rate of 6.256%. In August 2014, Jonway borrowed a one year short-term loan from ICBC of $1.1 million at the annual interest rate of 6.92%. In September 2014, Jonway borrowed a 6-month short-term loan from ICBC of $0.8 million at the annual interest rate of 5.04%. The loan of $0.8 million has been paid when due in March, 2015. In October 2014, Jonway borrowed $1.47 million of a short term loan from ICBC. The loan will expire in October 2015 and the annual interest rate is 6.6%. The company borrowed a one year short term loan of $1.1 million in November 2014 at an annual interest of 6.6%. In March 2015, Jonway borrowed a one year short-term loan of $0.8 million from ICBC at an annual interest of 5.6%. 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 $3.52 million with ICBC and $1.6 million of restricted cash of March 31, 2015.

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In July 2014, Jonway obtained an 11 months short-term loan of $1.2 million from China Everbright Bank 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.This loan is due in June 2015.

The weighted average interest rates were 6.9% and 6.95% for the three months ended March 31, 2015 and 2014 respectively.

Bank acceptance notes

As of March 31, 2015, the Company has bank acceptance notes payable in the amount of $17.4 million. The notes are guaranteed to be paid by the banks and are usually for a short-term period of six (6) 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 March 31, 2015, the restricted cash for the notes was $9.0 million.

(In thousands)

	3/31/2015		12/31/2014
a) Bank acceptance notes payable to China Everbright bank	$	6,699	$	11,372
b) Bank acceptance notes payable to Taizhou bank		-		651
c) Bank acceptance notes payable to CITIC bank		10,553		5,724
d) Bank acceptance notes payable to China Merchants Bank		161		-
	$	17,413	$	17,747

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

b. Notes payable to Taizhou bank were required to maintain cash deposits at 50% to 100% of the notes payable with the bank as of December 31, 2014.

c. Notes payable to CITIC bank will be due from July 2015 to March 2016.  Except for the note payable utilizing credit exposure of $6.05 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

d. Notes payable to China Merchants Bank is due in September 2015. 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 April 2015, the Company issued $0.16 million of note payable with 100% cash deposit.

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NOTE 6 -SENIOR CONVERTIBLE DEBT-China Electric Vehicle Corporation (“CEVC”) Note

On January 12, 2011, the Company entered into a Senior Secured Convertible Note and Warrant Purchase Agreement (the “Agreement”) with China Electric Vehicle Corporation (“CEVC”), a British Virgin Island company whose sole shareholder is Cathaya Capital, L.P., and a Cayman Islands exempted limited partnership (“Cathaya”).  Priscilla Lu is the chairman of the board of directors of ZAP, a managing partner of Cathaya and a director of CEVC.

               Pursuant to the Agreement, (i) CEVC purchased from the Company a Senior Secured Convertible Note (the “Note”) in the principal amount of US$19 million, as amended, (ii) the Company issued to CEVC a warrant (the “Warrant”) exercisable for two years for the purchase up to 20 million shares of the Company’s Common Stock at $0.50 per share, as amended  (iii) the Company, certain investors and CEVC entered into an Amended and Restated Voting Agreement that amended and restated that certain Voting Agreement, dated as of August 6, 2009 that was previously granted to Cathaya Capital L.P., (iv) the Company, certain investors and CEVC entered into an Amended and Restated Registration Rights Agreement that amended and restated that certain Registration Rights Agreement, dated as of August 6, 2009, that was previously granted to Cathaya Capital L.P which grants certain registration rights relating to the Note and the Warrant, and (v) the Company and CEVC entered into a Security Agreement that secures the Note with all of the Company’s assets other than those assets specifically excluded from the lien created by the Security Agreement.

            The note is convertible upon the option of CEVC at any time, into (a) shares of Jonway capital stock owned by ZAP at a conversion rate of 0.003743% of shares of Jonway capital stock owned by ZAP for each $1,000 principal amount of the Note being converted or (b) shares of ZAP common stock at a conversion rate of 4,435 shares of common stock for each $1,000 principal amount of the Note being converted.

This convertible note was extended until August 12, 2015 with interest accrual at 8% per annum with original maturing date of February 12, 2012. According to ASC 470-10, the market interest should be imputed for the non-interest bearing loan between the related parties; therefore in the extended agreement the Convertible Note bears a market interest rate at 8%. With the new extension, the principal of $20.7 million has the same conversion terms to cash, and will also be convertible in part or in whole to shares of ZAP or Jonway Auto at maturity date or at any time with a 90 day notice. Beginning August 12, 2013 within 10 calendar days following the end of each fiscal quarter, the Company is required to pay Holder the Additional Interest accrued during such fiscal quarter by issuing the Holder or a party designated by the Holder, the number of shares of the Company’s Common Stock equal to (i) the Additional Interest accrued during such fiscal quarter divided by (ii) the average of the Closing Prices for each trading day during such fiscal quarter ending on (and including) the last Trading Day of such fiscal quarter. The Additional Interest Rate may be amended from time to time with the written consent of the Holder and the Company. In addition, the warrants issued in connection with the CEVC note were amended for the change of the terms of conversion and for the extension of the maturity date until August 12, 2015.

Upon expiration date of the CEVC note, this convertible note will likely be repaid by ZAP in the form of Jonway Auto shares in order to reduce the liability of ZAP.  If the CEVC note is repaid, ZAP’s ownership of Jonway Auto would be reduced to less than majority interest, resulting in need to reconsider eligibility for consolidation.  Due to the increasing accumulation of debt from Jonway Auto, largely because of the lack of working capital to fulfill orders, Jonway Auto may seek equity funding in order to meet its operational financial needs.  If this were to happen, then the additional equity investment into Jonway Auto would also reduce ZAP’s majority equity ownership in Jonway Auto.  The qualification to meet consolidation for ZAP would have to be reassessed based on ZAP’s financial control, board and management control of Jonway Auto.

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NOTE 7 – 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 Jonway A380 three and five-door sports utility vehicles, minivans and spare parts principally through distributors in China. The Advanced Technology Vehicles segment represents sales and marketing outside of China of the ZAPTRUCK XL, the ZAPVAN Shuttle and the Xebra® Sedan and will transition to selling mostly Jonway’s EV A380SUV and EV minivan in 2013. The Consumer Product segment represents rechargeable portable energy products, our Zapino scooter, and our ZAPPY3 personal transporters. These segments are strategic business units that offer different services. They are managed separately because each business requires different resources and strategies. 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 Auto			ZAP			ZAP Hong Kong		Totals
For the three months ended March 31,2015
Net sales	$	8,186		$	176			-	$	8,362
Gross profit (loss)	$	(587	)	$	75			-	$	(512	)
Depreciation and amortization	$	1,435		$	657			-	$	2,092
Net loss	$	(3,272	)	$	(1,404	)		-	$	(4,676	)
Total assets	$	69,799		$	19,077			8	$	88,884
For the three months ended March 31, 2014
Net sales	$	6,733		$	88			-	$	6,821
Gross profit (loss)	$	(994	)	$	23			-	$	(971	)
Depreciation and amortization	$	1,423		$	656			-	$	2,079
Net loss	$	(3,334	)	$	(1,677	)			$	(5,011	)
Total assets	$	77,722		$	19,464			138	$	97,324

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      Customer information

Approximately 97.9% or $8.2 million of our revenues for the three months ended March 31, 2015 are from sales in China.  Jonway Auto distributes its products to an established network of over 63 factory level dealers in China with no customer contributing to more than 10% of our consolidated revenue. Approximately 99% or $6.7 million of our revenues for the three months ended March 31, 2014 are from sales in China. Jonway Auto distributes its products to an established network of over 70 factory level dealers in China with one customer contributing to 14% of our consolidated revenue.

Supplier information

For the three months ended March 31 2015 and 2014, approximately 98.8% or $8.7 million and 99% or $7.7 million of the consolidated cost of goods sold were purchased in China. For the three months ended March 31, 2015, Taizhou Geely a tong engine Manufacturing Co. Ltd accounted for 11% of the total purchase. For the three months ended March 31, 2014, and Haerbin Dongan Auto, Engine Manufacturing Co., Ltd. account for 29% of the total purchase.,

NOTE 8 – RELATED PARTY TRANSACTIONS

Due from (to) related parties

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

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

Amount due from related parties are as follows:
	March 31, 2015		December 31, 2014
Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd	$	1,429	$	1,427
JAZ		1,291		1,311
Jonway Motor Cycle		148		53
Total	$	2,868	$	2,791

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

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Amount due to related parties are follows:
	March 31, 2015		December 31, 2014
Jonway Group	$	4,913	$	2,648
Jonway Motor Cycle		-		64
Taizhou Huadu		613		652
Shanghai Zapple		37		37
Mr. Wang		276		146
Betterworld		149		149
Taizhou Jonway Electric Vehicle Selling Co		2,063		2,306
Zhejiang Jonway Painting Co. Ltd.		628		472
Cathaya Operations Management Ltd.		500		297
Cathaya Management Ltd.		350		350
Total	$	9,529	$	7,121

      Transactions with `Jonway Group

       Jonway Group is considered as a related party as the Wang Family, one of the principal shareholders of the Company, has controlling interests in Jonway Group. Jonway Group supplies some of plastics spare parts to Jonway and gave guarantees on Jonway short term bank facilities from China-based banks. Jonway made such purchase from Jonway Group for a total of $755,000 and $217,000 for the three months ended March 31, 2015 and 2014, respectively.

        Jonway Agreement with Zhejiang UFO

        Based on a contract by and among the Zhejiang UFO, Jonway Group and Jonway dated as of January 1, 2006, Zhejiang UFO has authorized Jonway to operate its Sanmen Branch to assemble and sell UFO branded SUVs for a period of 10 years starting from January 1, 2006.

       According to the contract, Jonway shall pay Zhejiang UFO a variable contractual fee which is calculated based on the number of SUVs that Jonway assembles in the Sanmen Branch every year, at the following rates (historical exchange rate):

The first 3,000 vehicles	$44 per vehicle
Vehicles from 3,001 to 5,000	$30 per vehicle
Vehicles over 5,000	$22 per vehicle

        Zhejiang UFO is considered a related party because the Wang Family, who are shareholders of Jonway, has certain non-controlling equity interests in Zhejiang UFO.

NOTE 9-SHAREHOLDERS’ EQUITY

Common stock

2015 ISSUANCES

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On February 11, 2015, the Company cancelled 1,182,558 shares of common stock which was originally issued to settle $100,000 of convertible notes in 2014. The balance of the outstanding note issued to Korea Yung was settled by 5,912,786shares of common stock after the payment and cancellation of shares in February, 2015. Yung is allowed to engage in open market sales of the shares through June 30, 2015. In the event the gross proceeds realized from the sale of the shares by Yung is greater than the principal and interest due on the bond as of the maturity date, Yung will be entitled to retain all proceeds. If the proceeds from the sale of shares is less than the principal and interest due on the bond as of the maturity date, ZAP will pay the shortfall to Yung in cash within five business days of written notice from Yung. In the event that on June 30, 2015, Yung holds unsold shares and there is an unpaid balance remaining on the bond, ZAP will repurchase from Yung all of the unsold shares at the price they were issued to Yung.

2014 ISSUANCES

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. In December, 2014, the company issued 4,513,163 shares to settle the cash advance of $410,800 from Cathaya Operations Management Limited.

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 December 2014, the company issued 8,727,099 shares to settle the interest of $1,237,345 due on the convertible note.

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 Banks, 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 December 31, 2014, $1.9 million was received by ZAP. The number of stock issued on August 14, 2014 was 31,666,668 shares.

On December 31, 2014, the company issued 10,915,748 shares and 2,666,666 shares at $0.06 per share to Alex Wang, the CO-CEO of the company and an individual for the cash advance of $654,945 and 160,000 respectively. The cash advance provided working capital to finance the operations of the company.

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NOTE 10– LITIGATION

1) ZAP is in arrears with the settlement payment to Hogan & Lovells. The current negotiated balance  due is $779,500.  Hogan & Lovells agreed to reduce the total amount owed by $453,827, as long as we did not default on our payment agreement,  If Hogan $ Lovells does seek a judgement, the total balance due immediatedly would be $1,233,327. Currently ZAP is seeking additional funding, and is working with prospective investors or lenders so ZAP can resume the installment payments to Hogan & Lovells.

NOTE 11– COMMITMENTS AND CONTINGENCIES

Guarantees

Jonway Auto guaranteed certain financial obligations of outside third parties including suppliers and customers to support our business and economic growth. Guarantees will terminate on payment and/or cancellation of the obligation once it is repaid. A payment by us would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guarantee. Maximum potential payments under guarantees total $2.4 million at March 31, 2015. The guarantee expires at variance dates from April 2015 to December 2015. Our performance risk under these guarantees is reviewed regularly, and has resulted in no changes to our initial valuations.

Jonway Auto pledged a land use right and a building to Shanghai Pu Dong Development Bank to secure a bank loan of $1.8 million offered to a related company, Taizhou  Jonway Jing Mao Trading Ltd., which is a subsidiary of Jonway Group. The period of guarantee was five years from 2014 to 2019. The net value of the land use right and the building pledged as at March 31, 2015 was $526,000.

NOTE 12- SUBSEQUENT EVENTS

Roy Fung has resigned as CFO of ZAP and Jonway due to personal reasons as of April 15th, 2015. Michael Ringstad steps in as interim CFO of ZAP and Jonway, while ZAP and Jonway Auto seeks replacement of the CFO.

Jonway Auto is currently considering a 3rd board listing in Shenzhen, China.  The objective is to have an additional source for raising the required funding for working capital.  In considering the 3rd board listing, Jonway Auto will work with local stock agents in China who will facilitate the process of registration for the 3rd board listing.  Upon listing on the 3rd board, Jonway Auto would be able to market Jonway Auto’s shares in China’s public market to raise capital. The target is to get on the 3rd board and complete the process of registration before the end of the year.

In preparation for the 3rd board listing, ZAP plans to appoint two new independent directors to its board upon the resignation of two Cathaya board members.  The two new proposed directors are Ms. Tian Ming and Otto Bai.

Ms. Tian Ming is currently CEO of Bling Bling Health Center, and formerly Group VP of FAB Enterprise Group in China, with FAB Group being the largest AV chain store group in China with 22 years history and over 806 chain stores throughout China.  Ms. Tian received MBA from School of Economics and Management at Tsinghua University, and is the Chairman of Tsinghua MBA Student Union and received Tsinghua SEM Comprehensive Scholarship (First Place) and Teaching Award.  Ms. Tian brings to the Company extensive business and financial experience in China, and can provide advice on the pending plans to list Jonway Auto in China.

Mr.  Otto Bai’s background is also business and finance and is a Partner at Unicorn Insights Consulting in Beijing.  Mr. Bai provides consulting for international companies in China, supporting business development and consumer and business commerce for international companies.

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These two new proposed independent directors will be appointed to replace Goman Chong who will step down May 30, 2015 and Dr. Priscilla Lu who will become Chairman Emeritus.  The Chairman position will be assigned to Alex Wang (Wang Gang) who will take over from Dr. Lu.  Dr. Lu will remain actively supporting the transition over a period of time to  bring on board the independent directors and to hand over the Chairmanship position to Wang Gang, Ms. Tian and Mr. Bai will also be appointed to the Audit Committee as the replacement directors.

Effective April 30, 2015, the Company and Korea Yung amended their original agreement, dated August 12, 2014, to the Yung convertible bond.   Under the amendment, the minimum share price at which Ms. Yung is able to sell the stock issued to her was revised from the price at which Ms. Yung was originally issued the stock from $0.085 to $.07 per share.

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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.

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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.

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

On April 10, 2015, ZAP received notification from USPS that ZAP has been selected as one of the pre-qualified companies to participate in the USPS Federal Business Opportunity (FBO) RFP.  In January 2015, USPS had issued a new request for response to its FBO for its Next Generation Delivery Vehicle (NGDV) Program.  ZAP submitted a new proposal based on new guidelines for a complete new USPS delivery truck designed to use clean energy and environmentally friendly technologies.  ZAP’s proposal submitted for this new USPS NGDV Program has been accepted for consideration.  As one of the pre-qualified companies, ZAP will proceed with detailed response to the RFP, and undergo trial for the product proposed.  This trial is anticipated to last for more than one year.

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 Ended March 31,
	2015			2014
Statements of Operations Data:
Net sales		100.0	%		100.0	%
Cost of sales		-106.1	%		-114.2	%
Operating expenses		-41.7	%		-43.7	%
Loss from operations		-47.8	%		-58.0	%
Net loss attributable to ZAP		-36.7	%		-49.5	%

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 March 31, 2015 Compared to the Three Months Ended March 31, 2014

              Net sales for the three months ended March 31, 2015 were $8.4 million as compared to $6.8 million for the three months ended March 31, 2014.

             Jonway Auto’s revenue for the three months ended March 31, 2015 increased by $1.5 million from $6.7 million for the quarter ended March 31, 2014 compared to $8.2 million for the quarter ended March 31, 2015. The sales volume increased because of the launch of the Urbee, a low speed electric vehicle.  Urbee sales contributed $2.4 million for the three months ended March 31, 2015.

26

Gross profit (loss) increased by $0.4 million from a gross loss of $0.9 million for the three months ended March 31, 2014 to a gross loss of $0.5 million for the three months ended March 31, 2015.   Our margins increased from a  -14.2% to a  - 6.1%.

Jonway Auto’s gross loss decreased by $407,000 from a gross loss $994,000 for the three months ended March 31, 2014 to a gross loss of $587,000 for the first quarter ended March 31, 2015. The sales volume for both SUV and minivan dropped in comparing with last year but the launch of the Urbee, a low speed electric vehicle generated contributions to the company’s sales for the three months ended March 31, 2015.

Sales and marketing expenses increased $0.26 million from $0.73 million for the three months ended March 31, 2014, to $0.99 million for the three months ended March 31, 2015.  The percentage of sales and marketing expense to net sales increased from 10.76% for the three months ended March 31, 2014 to 11.86% for the three months ended March 31, 2015 due to the increase in net sales and carrying out the promotion program for 1.5 liter model of SUV in the first quarter of 2015.

General and administrative expenses decreased by $0.2 million from $2.1 million for the quarter ended March 31, 2014 to $1.9 million for the quarter ended March 31, 2015. It was due to cost control and a drop in subcontracting fees as sales volume increased.

                Research and development expenses increased by $0.4 million from $186,000 for the three months ended March 31, 2014 to $613,000 for the three months ended March 31, 2015.

Interest expense decreased $0.1 million, from $0.88 million in the first quarter of 2014 to $0.76 million in the first quarter of 2015. In the first quarter of 2015, the amortization of the previous year’s discount on the convertible debt was lower and we are incurring interest on our notes and short term borrowings.

                Other income decreased by $43,000 from $124,000 for the three months ended March 31, 2014 to $81,000 for the three months ended March 31, 2015. It was due to a decrease in sales of scrap.

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

Recent Accounting Pronouncements

In April 2015, FASB issued ASU 2015-03, interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in the ASU are effective beginning after December 15, 2015. We do not expect the adoption of ASU 2015-03 to have material impact on our consolidated financial statements.

27

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, 2014, 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.

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) ZAP is in arrears with the settlement payment to Hogan & Lovells. The current negotiated balance  due is $779,500.  Hogan & Lovells agreed to reduce the total amount owed by $453,827, as long as we did not default on our payment agreement,  If Hogan $ Lovells does seek a judgement, the total balance due immediatedly would be $1,233,327. Currently ZAP is seeking additional funding, and is working with prospective investors or lenders so ZAP can resume the installment payments to Hogan & Lovells.

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, 2014.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

None

28

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.

29

                                                                  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: May 20, 2015	By: /s/ Alex Wang
	Name: Alex Wang
	Title: Co-Chief Executive Officer
	(Co-Principal Executive Officer).

Dated: May 20, 2015	By: /s/ Chuck Schillings
	Name: Chuck Schillings
	Title: Co-Chief Executive Officer
	(Co-Principal Executive Officer).

Dated: May 20, 2015	By: /s/ Michael Ringstad
	Name: Michael Ringstad
	Title: Interim Chief Financial Officer
	(Interim Principal Financial Officer)

30

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: May 20, 2015

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: May 20, 2015

EX-31.3

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/ Michael Ringstad

Michael Ringstad

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

Date: May 20, 2015

EX-32.1

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 March 31, 2015 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:  May 20, 2015 By: /s/ Alex Wang

Alex Wang

Co-Chief Executive Officer

 (Co-Principal Executive Officer).

Dated:  May 20, 2015 By: /s/ Charles Schillings

Chuck Schillings

Co-Chief Executive Officer

 (Co-Principal Executive Officer).

Dated: May 20, 2015  By: /s/ Michael Ringstad

Michael Ringstad

Interim Chief Financial Officer

(Interim Principal Financial Officer)

XML

SEGMENT REPORTING (Schedule of Segment Results) (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Segment Reporting Information [Line Items]
Net sales	$ 8,362,000	$ 6,821,000
Gross profit (loss)	(512,000)	(971,000)
Depreciation and amortization	2,092,000	2,079,000
Net Loss	(4,676,000)	(5,011,000)
Total assets	88,884,000	97,324,000	90,996,000
Jonway Auto [Member]
Segment Reporting Information [Line Items]
Net sales	8,186,000	6,733,000
Gross profit (loss)	(587,000)	(994,000)
Depreciation and amortization	1,435,000	1,423,000
Net Loss	(3,272,000)	(3,334,000)
Total assets	69,799,000	77,722,000
ZAP [Member]
Segment Reporting Information [Line Items]
Net sales	176,000	88,000
Gross profit (loss)	75,000	23,000
Depreciation and amortization	657,000	656,000
Net Loss	(1,404,000)	(1,677,000)
Total assets	19,077,000	19,464,000
ZAP Hong Kong [Member]
Segment Reporting Information [Line Items]
Net sales
Gross profit (loss)
Depreciation and amortization
Net Loss
Total assets	$ 8,000	$ 138,000

XML

SUBSEQUENT EVENTS (Details) (USD $)	Dec. 31, 2014	May 30, 2015 item	Apr. 30, 2015
Subsequent Event [Line Items]
Share price (in dollars per share)	$ 0.06
Subsequent Event [Member]
Subsequent Event [Line Items]
Number of new independent directors to appoint		2
Number of Cathaya board members to be resigned		2
Korea Yung [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Share price before revision (in dollars per share)			$ 0.085
Share price (in dollars per share)			$ 0.07

XML

DISTRIBUTION AGREEMENTS (Schedule of Future Amortization Expense) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Estimated future amortization expense:
Intangible assets, net	$ 9,697	$ 9,711
Distribution Agreements [Member]
Estimated future amortization expense:
2016	1,540
2017	1,540
2018	1,540
2019	1,540
2020	1,540
Thereafter	1,339
Intangible assets, net	$ 9,039

XML

RELATED PARTY TRANSACTIONS (Tables)

3 Months Ended

Mar. 31, 2015

RELATED PARTY TRANSACTIONS [Abstract]

Schedule of Amount Due To/From Related Parties

	March 31, 2015		December 31, 2014
Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd	$	1,429	$	1,427
JAZ		1,291		1,311
Jonway Motor Cycle		148		53
Total	$	2,868	$	2,791

	March 31, 2015		December 31, 2014
Jonway Group	$	4,913	$	2,648
Jonway Motor Cycle		-		64
Taizhou Huadu		613		652
Shanghai Zapple		37		37
Mr. Wang		276		146
Betterworld		149		149
Taizhou Jonway Electric Vehicle Selling Co		2,063		2,306
Zhejiang Jonway Painting Co. Ltd.		628		472
Cathaya Operations Management Ltd.		500		297
Cathaya Management Ltd.		350		350
Total	$	9,529	$	7,121

Schedule of Contract Rates

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

XML

RELATED PARTY TRANSACTIONS (Schedule of Contract Fees) (Details) (Sanmen Branch [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
First 3,000 Vehicles [Member]
Related Party Transaction [Line Items]
Contractual fee per vehicle	$ 44
First 3,000 Vehicles [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	3,000
Vehicles 3,001 to 5,000 [Member]
Related Party Transaction [Line Items]
Contractual fee per vehicle	30
Vehicles 3,001 to 5,000 [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	3,001
Vehicles 3,001 to 5,000 [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	5,000
Over 5,000 Vehicles [Member]
Related Party Transaction [Line Items]
Contractual fee per vehicle	$ 22
Over 5,000 Vehicles [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Number of vehicles assembled	5,000

XML

SENIOR CONVERTIBLE DEBT (Details) (Senior Convertible Debt [Member], USD $) In Millions, except Share data, unless otherwise specified	0 Months Ended	3 Months Ended
	Jan. 12, 2011	Mar. 31, 2015
Senior Convertible Debt [Member]
Debt Instrument [Line Items]
Face amount	$ 19.00
Shares called by warrant	20,000,000
Term	2 years
Exercise price	$ 0.50
Amount outstanding		$ 20.7
Conversion ratio		0.003743
Number of shares		4,435
Interest rate		8.00%

XML

INVENTORIES, NET

3 Months Ended

Mar. 31, 2015

INVENTORIES, NET [Abstract]

INVENTORIES, NET

NOTE 3– INVENTORIES, NET

               Inventories, net at March 31, 2015 and December 31, 2014 are summarized as follows (in thousands):

Inventory
	March 31, 2015			December 31,  2014
Work in Process	$	1,898		$	3,054
Parts and supplies		3,334			3,601
Finished goods		3,587			3,105
		8,819			9,760
Less - inventory reserve		(1,471	)		(1,380	)
Inventories, net	$	7,348		$	8,380

Changes in the Company's inventory reserve during the three months ended March 31, 2015

and the year ended December 31, 2014 are as follows (in thousands): 

Provision
	March 31, 2015		December 31,  2014
Balance  opening period	$	1,380	$	1,981
Current provision        for  Jonway Auto		91		251
Current recovery for inventory ZAP- net		-		(852	)
Balance end of period	$	1,471	$	1,380

XML

SHAREHOLDERS' EQUITY (Narrative) (Details) (USD $)	3 Months Ended	12 Months Ended	0 Months Ended		1 Months Ended			0 Months Ended
	Mar. 31, 2015	Dec. 31, 2014	Dec. 31, 2014	Aug. 14, 2014	Dec. 31, 2014	Apr. 30, 2014	May 31, 2014	Feb. 11, 2015
Share-based Goods and Nonemployee Services Transaction [Line Items]
Shares issued for asset acquisition, shares		61,000,000
Share price (in dollars per share)		$ 0.06	$ 0.06		$ 0.06
Shares cancelled	1,182,558
Chief Executive Officer [Member]
Share-based Goods and Nonemployee Services Transaction [Line Items]
Stock issued to settle the cash advance, shares			10,915,748
Stock issued to settle the cash advance			$ 654,945
Individual [Member]
Share-based Goods and Nonemployee Services Transaction [Line Items]
Stock issued to settle the cash advance, shares			2,666,666
Stock issued to settle the cash advance			160,000
Letter Of Commitment [Member]
Share-based Goods and Nonemployee Services Transaction [Line Items]
Common stock to be issued, shares				31,666,668
Proceeds from issuance of common stock		1,900,000
Cathaya Operations [Member]
Share-based Goods and Nonemployee Services Transaction [Line Items]
Stock issued for due to related parties						967,543
Stock issued for due to related parties, shares						17,819,783
Stock issued to settle the cash advance, shares					4,513,163
Stock issued to settle the cash advance					410,800
Conversion of debt, percentage below market price						30.00%
CEVC [Member]
Share-based Goods and Nonemployee Services Transaction [Line Items]
Stock issued to pay interest					1,237,345	639,068
Stock issued to pay interest payable, shares					8,727,099	6,439,552
Convertible notes payable						20,700,000
Jeffery And Karen Bank [Member]
Share-based Goods and Nonemployee Services Transaction [Line Items]
Stock issued for addressing a lawsuit							5,000
Stock issued for addressing a lawsuit, shares							62,500
Major Management Limited [Member]
Share-based Goods and Nonemployee Services Transaction [Line Items]
Shares issued for asset acquisition, shares						20,000,000
Max Reliance Management Limited [Member]
Share-based Goods and Nonemployee Services Transaction [Line Items]
Shares issued for asset acquisition, shares						20,000,000
New Dragon Management Limited [Member]
Share-based Goods and Nonemployee Services Transaction [Line Items]
Shares issued for asset acquisition, shares						21,000,000
Korea Yung [Member] | Convertible Debt [Member]
Share-based Goods and Nonemployee Services Transaction [Line Items]
Shares cancelled								1,182,558
Repayment of principal amount								$ 100,000
Outstanding shares issued								5,912,786

XML

INVENTORIES, NET (Schedule of Inventories) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
INVENTORIES, NET [Abstract]
Work in Process	$ 1,898	$ 3,054
Parts and supplies	3,334	3,601
Finished goods	3,587	3,105
Inventories	8,819	9,760
Less - inventory reserve	(1,471)	(1,380)	(1,981)
Inventories, net	$ 7,348	$ 8,380

XML

SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details)	3 Months Ended	12 Months Ended
	Mar. 31, 2015 CNY	Dec. 31, 2014 CNY
SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Currency exchange rate	6.1206	6.1460
Average currency exchange rate	6.1444	6.1457

XML

LITIGATION (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
LITIGATION [Abstract]
Settlement payment	$ 779,500
Reduction in settlement payment	453,827
Damages would be sought	$ 1,233,327

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INVENTORIES, NET (Schedule of Inventory Reserve) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
INVENTORIES, NET [Abstract]
Beginning balance	$ 1,380	$ 1,981
Current provision for Jonway Auto	91	251
Current provision for inventory ZAP-net		(852)
Ending balance	$ 1,471	$ 1,380

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DISTRIBUTION AGREEMENTS (Narrative) (Details) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Distribution Agreements [Line Items]
Depreciation and amortization	$ 2,092,000	$ 2,079,000
CNG Products [Member]
Distribution Agreements [Line Items]
Impairment loss on Distribution rights			5,000,000
Distribution Agreements [Member]
Distribution Agreements [Line Items]
Depreciation and amortization	$ 360,000	$ 360,000

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SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2015

SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

NOTE-2 SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements include the accounts of all directly, indirectly owned subsidiaries and the variable interest entities. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the financial statements have been included. Interim results are not necessarily indicative of results to be expected for the full year. The information included in this Form 10- Q should be read in conjunction with information included in the 2014 annual report on Form 10-K filed on April 15, 2015.

                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:

	March 31, 2015	December 31, 2014
Balance sheet items, except for share capital, additional	$ 1=RMB 6.1206	$1=RMB 6.1460
paid in capital and retained earnings
Amounts included in the statements of operations	$ 1=RMB 6.1444	$1=RMB6.1457
and cash flows

Recent Accounting Pronouncements

 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 January 2015, FASB issued ASU No. 2015-01, Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.  This Update is issued as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). The objective of the Simplification Initiative is to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to the users of financial statements. This Update eliminates from GAAP the concept of extraordinary items.  The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The effective date is the same for both public business entities and all other entities.  The Company does not expect the adoption of ASU 2015-01 to have material impact on the Company's consolidated financial statements.

In February 2015, FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This Update focuses on the consolidation evaluation for reporting organizations that are required to evaluate consolidation of certain legal entities by reducing the number of consolidation models from four to two and is intended to improve current GAAP. The amendments in the ASU are effective beginning after December 15, 2016. We do not expect the adoption of ASU 2015-02 to have material impact on our consolidated financial statements.

In April 2015, FASB issued ASU 2015-03, interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in the ASU are effective beginning after December 15, 2015. We do not expect the adoption of ASU 2015-03 to have material impact on our consolidated financial statements.

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DISTRIBUTION AGREEMENTS (Schedule of Distribution Agreements) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Distribution Agreements [Line Items]
Distribution agreements	$ 17,560	$ 17,560
Less amortization	(8,521)	(8,161)
Distribution agreements, net	9,039	9,399
Better World Products [Member]
Distribution Agreements [Line Items]
Distribution agreements	2,160	2,160
CNG Products [Member]
Distribution Agreements [Line Items]
Distribution agreements	1,000	1,000
Jonway Products [Member]
Distribution Agreements [Line Items]
Distribution agreements	$ 14,400	$ 14,400

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RELATED PARTY TRANSACTIONS (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Jonway Group [Member]
Related Party Transaction [Line Items]
Purchases	$ 755,000	$ 217,000
Sanmen Branch [Member]
Related Party Transaction [Line Items]
Period to operate branch to assemble and sell branded products	10 years

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 366	$ 238
Restricted Cash	10,653	10,673
Notes receivable		81
Accounts receivable, net	2,886	2,724
Inventories, net	7,348	8,380
Prepaid taxes	238	110
Prepaid expenses and other current assets	722	377
Total current assets	22,213	22,583
Property, plant and equipment, net	41,211	42,595
Land use rights, net	9,697	9,711
Other assets:
Distribution fees, net	9,039	9,399
Intangible assets, net	3,119	3,195
Goodwill	332	332
Due from related party	2,868	2,791
Deposits and other assets	405	390
Total other assets	15,763	16,107
Total assets	88,884	90,996
Current liabilities:
Short term loans	8,741	9,849
Notes payable	17,413	17,747
Senior convertible debt	20,679	20,679
Accounts payable	20,377	21,389
Accrued liabilities	3,796	3,848
Advances from customers	9,488	7,139
Taxes payable	1,628	1,266
Due to related party	9,529	7,121
Other payables	2,950	3,094
Total current liabilities	94,601	92,132
Long term liabilities:
Accrued liabilities and others	875	745
Total liabilities	95,476	92,877
Commitments and contingencies
Equity (Deficiency)
Common stock, no par value; 800 million shares authorized; 460,213,050 and 461,395,508 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively	244,287	244,368
Accumulated other comprehensive income	1,679	1,655
Accumulated deficit	(253,073)	(250,000)
Total ZAP shareholders' equity (deficiency)	(7,107)	(3,977)
Non-controlling interest	515	2,096
Total equity (deficiency)	(6,592)	(1,881)
Total liabilities and equity (deficiency)	$ 88,884	$ 90,996

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COMMITMENTS AND CONTINGENCIES (Details) (USD $)	3 Months Ended
	Mar. 31, 2015
Shanghai PuDong Development Bank [Member] | Taizhou Jonway Jing Mao Trading Ltd. [Member]
Guarantees [Line Items]
Face amount	$ 1,800,000
Period of guarantee	5 years
Collateral amount	526,000
Jonway Auto [Member]
Guarantees [Line Items]
Potential payments under guarantee	$ 2,400,000

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical)	3 Months Ended
	Mar. 31, 2015
CONSOLIDATED STATEMENTS OF CASH FLOWS [Abstract]
Shares cancelled	1,182,558

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LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Schedule of Short-Term Debt) (Details) (USD $)	3 Months Ended		1 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014	Mar. 31, 2015	Nov. 30, 2014	Sep. 30, 2014	Aug. 31, 2014	Jun. 30, 2014	Apr. 30, 2014	Jul. 31, 2014	Oct. 31, 2014
Short-term Debt [Line Items]
Short term debt	$ 8,741,000		$ 9,849,000	$ 8,741,000
Weighted average interest rate	6.90%	6.95%		6.90%
Repayment of short term loans	1,959,000	2,837,000
CITIC [Member]
Short-term Debt [Line Items]
Short term debt	980,000		976,000	980,000
Face amount			980,000
Term			1 year
Interest rate			6.69%
Collateral amount	5,500,000			5,500,000
ICBC [Member]
Short-term Debt [Line Items]
Short term debt	6,535,000		6,484,000	6,535,000
Face amount	800,000			800,000	1,100,000	800,000	1,100,000	1,100,000	800,000		1,470,000
Term				1 year	1 year	6 months	1 year	1 year	1 year
Interest rate	5.60%			5.60%	6.60%	5.04%	6.92%	6.256%	6.00%		6.60%
Collateral amount	3,520,000			3,520,000
Restricted cash deposit	1,600,000			1,600,000
Taizhou Bank [Member]
Short-term Debt [Line Items]
Short term debt			1,139,000
Face amount							300,000				810,000
Interest rate							8.93%				8.496%
China Everbright Bank
Short-term Debt [Line Items]
Short term debt	1,226,000		1,220,000	1,226,000
Face amount										1,200,000
Term										11 months
Interest rate										7.20%
Collateral amount										2,100,000
Insurance Premiums [Member]
Short-term Debt [Line Items]
Short term debt			$ 30,000

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DISTRIBUTION AGREEMENTS (Tables)

3 Months Ended

Mar. 31, 2015

DISTRIBUTION AGREEMENTS [Abstract]

Schedule of Distribution Agreements

	March 31, 2015			December 31, 2014
Better World Products-related party	$	2,160		$	2,160
CNG Products		1,000			1,000
Jonway Products		14,400			14,400
		17,560			17,560
Less amortization and impairment		(8,521	)		(8,161	)
	$	9,039		$	9,399

Schedule of Estimated Future Amortization Expense Related to Agreements

12 months  ended March 31,
2016	$	1,540
2017		1,540
2018		1,540
2019		1,540
2020		1,540
Thereafter		1,339
Total	$	9,039

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LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Schedule of Bank Acceptance Notes) (Details) (USD $)	3 Months Ended	1 Months Ended
	Mar. 31, 2015	Apr. 30, 2015	Dec. 31, 2014	Jul. 31, 2014	Oct. 31, 2014	Aug. 31, 2014	Nov. 30, 2014	Sep. 30, 2014	Jun. 30, 2014	Apr. 30, 2014
Short-term Debt [Line Items]
Bank acceptance notes payable	17,413,000		$ 17,747,000
Everbright Bank [Member]
Short-term Debt [Line Items]
Collateral amount				2,100,000
Face amount				1,200,000
Taizhou Bank [Member]
Short-term Debt [Line Items]
Face amount					810,000	300,000
CITIC [Member]
Short-term Debt [Line Items]
Collateral amount	5,500,000
Face amount			980,000
ICBC [Member]
Short-term Debt [Line Items]
Collateral amount	3,520,000
Restricted cash deposit	1,600,000
Face amount	800,000				1,470,000	1,100,000	1,100,000	800,000	1,100,000	800,000
Bank acceptance notes [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	17,400,000
Restricted cash deposit	9,000,000
Bank acceptance notes [Member] | Minimum [Member]
Short-term Debt [Line Items]
Required cash deposit	50.00%
Bank acceptance notes [Member] | Maximum [Member]
Short-term Debt [Line Items]
Required cash deposit	100.00%
Bank acceptance notes [Member] | Everbright Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	6,699,000		11,372,000
Beginning maturity date	May 01, 2015
Ending maturity date	Jun. 30, 2015
Collateral amount	2,100,000
Required cash deposit	50.00%
Bank acceptance notes [Member] | Taizhou Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable			651,000
Bank acceptance notes [Member] | Taizhou Bank [Member] | Minimum [Member]
Short-term Debt [Line Items]
Required cash deposit	50.00%
Bank acceptance notes [Member] | Taizhou Bank [Member] | Maximum [Member]
Short-term Debt [Line Items]
Required cash deposit	100.00%
Bank acceptance notes [Member] | CITIC [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	10,553,000		5,724,000
Beginning maturity date	Jul. 01, 2015
Ending maturity date	Mar. 31, 2016
Required cash deposit	100.00%
Credit exposure	6,050,000
Bank acceptance notes [Member] | China Merchants Bank [Member]
Short-term Debt [Line Items]
Bank acceptance notes payable	161,000
Required cash deposit	100.00%
Bank acceptance notes [Member] | China Merchants Bank [Member] | Subsequent Event [Member]
Short-term Debt [Line Items]
Required cash deposit		100.00%
Face amount		$ 160,000

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SEGMENT REPORTING (Tables)

3 Months Ended

Mar. 31, 2015

SEGMENT REPORTING [Abstract]

Schedule of Segment Results

	Jonway Auto			ZAP			ZAP Hong Kong		Totals
For the three months ended March 31,2015
Net sales	$	8,186		$	176			-	$	8,362
Gross profit (loss)	$	(587	)	$	75			-	$	(512	)
Depreciation and amortization	$	1,435		$	657			-	$	2,092
Net loss	$	(3,272	)	$	(1,404	)		-	$	(4,676	)
Total assets	$	69,799		$	19,077			8	$	88,884
For the three months ended March 31, 2014
Net sales	$	6,733		$	88			-	$	6,821
Gross profit (loss)	$	(994	)	$	23			-	$	(971	)
Depreciation and amortization	$	1,423		$	656			-	$	2,079
Net loss	$	(3,334	)	$	(1,677	)			$	(5,011	)
Total assets	$	77,722		$	19,464			138	$	97,324

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ORGANIZATION AND BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2015

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 several 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.  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, the “Urbee”, in 2014.  The primary market for the Urbee is 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 the first half of 2015.

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 was a major transition year for Jonway Auto, where there was an intentional slowdown in gasoline vehicle production and sales, while Jonway redirected its manufacturing and sales and marketing groups to support the mass rollout of its EVs, starting with the Urbee for city commuters.

               The combined companies' new EV product lines now include the A380 SUV EV, minivan EV, and the Urbee. Both the EV SUV and EV minivan products leverage the production moldings and 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 2014.  The first production deliveries of the EV SUV and Minivans are projected to occur in the first half of 2015.

              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 few 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 is cutting 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.

Jonway auto established 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 AND CONSOLIDATION

 The accompanying consolidated financial statements include the financial statements of ZAP, and its subsidiaries: Jonway Automobile, ZAP and ZAP Hong Kong for the three months ended March 31, 2015 and the year ended December 31, 2014 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% controlled. Significant intercompany transactions and balances are eliminated in consolidation; profits from intercompany sales, are also eliminated; non –controlling interests are included in equity.  We account for our 37.5% interest in the ZAP Hangzhou and our 50% interest in Shanghai Zapple using the equity method of accounting because we have significant influence but not control.

          ZAP's common stock is quoted on the OTC Bulletin Board under the symbol “ZAAP.OB.”

.Liquidity and Capital Resources

As of March 31, 2015, our current liabilities exceeded the current assets by approximately $72.0 million and our equity deficiency was $6.6 million, which raise substantial doubt about our ability to continue as a going concern. In addition, we have recurring net losses. Given our expected capital expenditure in the foreseeable future, we have comprehensively considered our available sources of funds as follows:

• Financial support and credit guarantee from related parties; and
• Other available sources of financing from domestic banks and other financial institutions given our credit history.

Based on the above considerations, management projects that we have sufficient funds to meet our working capital requirements and debt obligations as they become due. However these projections are based on the demand of our products, economic conditions, the overcapacity issue in the automobile industry and our operating results not continuing to deteriorate and our vendors and related parties being able to provide continued liquidity. As a result our consolidated financial statements for the quarter ended March 31, 2015 have been prepared on a going concern basis.

          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.

                As of March 31, 2015, we were approved up to an aggregate of $16.3 million of a credit line, with the credit exposure of $6.05 million from the Sanmen Branch of CITIC Bank (“CITIC”) through Jonway. As of March 31, 2015, the credit exposure of $6.05 million has been fully used. The credit line expires in March 2016.

In early 2014, we were approved up to an aggregate of $2.4 million of a credit line from Taizhou Bank. In February 2015, the company settled the loan and the bank did not renew the credit line to the company.

               In December 2013, we were approved for up to an aggregate of $9.2 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 $4.6 million. This credit line has expired as of January 2015. In April 2015, we were approved for up to an aggregate of 7.5 million of a credit line from Everbright Bank, with 50% restricted cash deposited and credit exposure of $3.75 million. As of March 31, 2015, the credit line has been fully used. The credit line expires in April 2016.  In March 2014, we were approved up to an aggregate of $5.4 million of a credit line from Industrial and Commercial Bank of China (ICBC) with credit exposure of $5.4 million. This credit line expires in March 2017. As of March 31, 2015, a credit exposure of $4.9 million has been used.

        Jonway intends to utilize the above credit lines to expand its electric vehicle business as well as other future vehicle models.  This includes on-going working capital needs, electric vehicle production equipment requirements, testing, homologation and new EV product molds. Also our principal shareholder, Jonway Group, has agreed to provide the necessary support to meet our financial obligations through May 20, 2016 in the event that we require additional liquidity. In addition, CEVC (China Electric Vehicle Corporation) would likely renew this convertible note and 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 will require additional capital to expand our current operations.  In particular, we require additional capital to expand our presence across the world, to continue development of our electric vehicle business, to continue strengthening our dealer network and after-sale service centers and expanding our market initiatives.  We also require financing the investment for the continued roll-out of new products and to add qualified sales and professional staff to execute on our business plan and pursue our efforts in the research and development of advanced technology vehicles, such as the new ZAP Alias, the electric and other fuel efficient vehicles.

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.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2015	Dec. 31, 2014
CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract]
Common stock, par value
Common stock, shares authorized	800,000,000	800,000,000
Common stock, shares issued	460,213,050	461,395,508
Common stock, shares outstanding	460,213,950	461,395,508

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2015

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 11– COMMITMENTS AND CONTINGENCIES

Guarantees

Jonway Auto guaranteed certain financial obligations of outside third parties including suppliers and customers to support our business and economic growth. Guarantees will terminate on payment and/or cancellation of the obligation once it is repaid. A payment by us would be triggered by failure of the guaranteed party to fulfill its obligation covered by the guarantee. Maximum potential payments under guarantees total $2.4 million at March 31, 2015. The guarantee expires at variance dates from April 2015 to December 2015. Our performance risk under these guarantees is reviewed regularly, and has resulted in no changes to our initial valuations.

Jonway Auto pledged a land use right and a building to Shanghai Pu Dong Development Bank to secure a bank loan of $1.8 million offered to a related company, Taizhou  Jonway Jing Mao Trading Ltd., which is a subsidiary of Jonway Group. The period of guarantee was five years from 2014 to 2019. The net value of the land use right and the building pledged as at March 31, 2015 was $526,000.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2015	May 15, 2015
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2015
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		460,213,050

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2015

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

NOTE 12- SUBSEQUENT EVENTS

Roy Fung has resigned as CFO of ZAP and Jonway due to personal reasons as of April 15th, 2015. Michael Ringstad steps in as interim CFO of ZAP and Jonway, while ZAP and Jonway Auto seeks replacement of the CFO.

Jonway Auto is currently considering a 3rd board listing in Shenzhen, China.  The objective is to have an additional source for raising the required funding for working capital.  In considering the 3rd board listing, Jonway Auto will work with local stock agents in China who will facilitate the process of registration for the 3rd board listing.  Upon listing on the 3rd board, Jonway Auto would be able to market Jonway Auto's shares in China's public market to raise capital. The target is to get on the 3rd board and complete the process of registration before the end of the year.

In preparation for the 3rd board listing, ZAP plans to appoint two new independent directors to its board upon the resignation of two Cathaya board members.  The two new proposed directors are Ms. Tian Ming and Otto Bai.

Ms. Tian Ming is currently CEO of Bling Bling Health Center, and formerly Group VP of FAB Enterprise Group in China, with FAB Group being the largest AV chain store group in China with 22 years history and over 806 chain stores throughout China.  Ms. Tian received MBA from School of Economics and Management at Tsinghua University, and is the Chairman of Tsinghua MBA Student Union and received Tsinghua SEM Comprehensive Scholarship (First Place) and Teaching Award.  Ms. Tian brings to the Company extensive business and financial experience in China, and can provide advice on the pending plans to list Jonway Auto in China.

Mr.  Otto Bai's background is also business and finance and is a Partner at Unicorn Insights Consulting in Beijing.  Mr. Bai provides consulting for international companies in China, supporting business development and consumer and business commerce for international companies.

These two new proposed independent directors will be appointed to replace Goman Chong who will step down May 30, 2015 and Dr. Priscilla Lu who will become Chairman Emeritus.  The Chairman position will be assigned to Alex Wang (Wang Gang) who will take over from Dr. Lu.  Dr. Lu will remain actively supporting the transition over a period of time to  bring on board the independent directors and to hand over the Chairmanship position to Wang Gang,  Ms. Tian and Mr. Bai will also be appointed to the Audit Committee as the replacement directors.

Effective April 30, 2015, the Company and Korea Yung amended their original agreement, dated August 12, 2014, to the Yung convertible bond.  Under the amendment, the minimum share price at which Ms. Yung is able to sell the stock issued to her was revised from the price at which Ms. Yung was originally issued the stock from $0.085 to $.07 per share.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) [Abstract]
Net sales	$ 8,362	$ 6,821
Cost of goods sold	(8,874)	(7,792)
Gross profit (loss)	(512)	(971)
Operating expenses:
Sales and marketing	(992)	(734)
General and administrative	(1,879)	(2,064)
Research and development	(613)	(186)
Total operating expenses	(3,484)	(2,984)
Loss from operations	(3,996)	(3,955)
Other income (expense):
Interest expense, net	(761)	(876)
Other Income	81	124
Total income (expense)	(680)	(752)
Loss before income taxes	(4,676)	(4,707)
Income tax		304
Net Loss	(4,676)	(5,011)
Less: loss attributable to non-controlling interest	1,603	1,634
Net loss attributable to ZAP's common shareholders	(3,073)	(3,377)
Net Loss	(4,676)	(5,011)
Other Comprehensive Income (Loss)
Foreign currency translation adjustments	46	(118)
Total comprehensive loss	(4,630)	(5,129)
Less : Comprehensive loss attributable to non-controlling interest	1,581	1,692
Comprehensive loss attributable to ZAP	$ (3,049)	$ (3,437)
Net loss per share attributable to common shareholders:
Basic and diluted	$ (0.01)	$ (0.01)
Weighted average number of common shares outstanding:
Basic and diluted	460,673	302,518

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SENIOR CONVERTIBLE DEBT

3 Months Ended

Mar. 31, 2015

SENIOR CONVERTIBLE DEBT [Abstract]

SENIOR CONVERTIBLE DEBT

NOTE 6 -SENIOR CONVERTIBLE DEBT-China Electric Vehicle Corporation (“CEVC”) Note

On January 12, 2011, the Company entered into a Senior Secured Convertible Note and Warrant Purchase Agreement (the “Agreement”) with China Electric Vehicle Corporation (“CEVC”), a British Virgin Island company whose sole shareholder is Cathaya Capital, L.P., and a Cayman Islands exempted limited partnership (“Cathaya”).  Priscilla Lu is the chairman of the board of directors of ZAP, a managing partner of Cathaya and a director of CEVC.

                  Pursuant to the Agreement, (i) CEVC purchased from the Company a Senior Secured Convertible Note (the “Note”) in the principal amount of US$19 million, as amended, (ii) the Company issued to CEVC a warrant (the “Warrant”) exercisable for two years for the purchase up to 20 million shares of the Company's Common Stock at $0.50 per share, as amended  (iii) the Company, certain investors and CEVC entered into an Amended and Restated Voting Agreement that amended and restated that certain Voting Agreement, dated as of August 6, 2009 that was previously granted to Cathaya Capital L.P., (iv) the Company, certain investors and CEVC entered into an Amended and Restated Registration Rights Agreement that amended and restated that certain Registration Rights Agreement, dated as of August 6, 2009, that was previously granted to Cathaya Capital L.P which grants certain registration rights relating to the Note and the Warrant, and (v) the Company and CEVC entered into a Security Agreement that secures the Note with all of the Company's assets other than those assets specifically excluded from the lien created by the Security Agreement.

       The note is convertible upon the option of CEVC at any time, into (a) shares of Jonway capital stock owned by ZAP at a conversion rate of 0.003743% of shares of Jonway capital stock owned by ZAP for each $1,000 principal amount of the Note being converted or (b) shares of ZAP common stock at a conversion rate of 4,435 shares of common stock for each $1,000 principal amount of the Note being converted.

This convertible note was extended until August 12, 2015with interest accrual at 8% per annum with original maturing date of February 12, 2012. According to ASC 470-10, the market interest should be imputed for the non-interest bearing loan between the related parties; therefore in the extended agreement the Convertible Note bears a market interest rate at 8%. With the new extension, the principal of $20.7 million has the same conversion terms to cash, and will also be convertible in part or in whole to shares of ZAP or Jonway Auto at maturity date or at any time with a 90 day notice. Beginning August 12, 2013 within 10 calendar days following the end of each fiscal quarter, the Company is required to pay Holder the Additional Interest accrued during such fiscal quarter by issuing the Holder or a party designated by the Holder, the number of shares of the Company's Common Stock equal to (i) the Additional Interest accrued during such fiscal quarter divided by (ii) the average of the Closing Prices for each trading day during such fiscal quarter ending on (and including) the last Trading Day of such fiscal quarter. The Additional Interest Rate may be amended from time to time with the written consent of the Holder and the Company. In addition, the warrants issued in connection with the CEVC note were amended for the change of the terms of conversion and for the extension of the maturity date until August 12, 2015.

Upon expiration date of the CEVC note, this convertible note will likely be repaid by ZAP in the form of Jonway Auto shares in order to reduce the liability of ZAP.  If the CEVC note is repaid, ZAP's ownership of Jonway Auto would be reduced to less than majority interest, resulting in need to reconsider eligibility for consolidation.  Due to the increasing accumulation of debt from Jonway Auto, largely because of the lack of working capital to fulfill orders, Jonway Auto may seek equity funding in order to meet its operational financial needs.  If this were to happen, then the additional equity investment into Jonway Auto would also reduce ZAP's majority equity ownership in Jonway Auto.  The qualification to meet consolidation for ZAP would have to be reassessed based on ZAP's financial control, board and management control of Jonway Auto.

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LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

3 Months Ended

Mar. 31, 2015

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

LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

NOTE 5–LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES

Line of credit (Credit Exposure)

In March 2014, the Company has obtained up to an aggregate of $16.3 million of credit line with the credit exposure of $6.05 million from Citic Bank(“CITIC”) Sanmen Branch through Jonway. The line is secured by land and building owned by Jonway and guaranteed by the related party – Jonway Group. In March 2014, Jonway borrowed one year short-term loan of $1.0 million. The annual interest rate was 7.08% and the loan was due in March 2015. The company early settled the loan in December 2014. The company borrowed a one year short term loan in December 2014 of $0.98 million at an annual interest rate of 6.69% with an expiration date of December 2015. We have also drawn down $10.6 million in the form of notes payable as of March 31, 2015. Except for a note payable utilizing the credit exposure of $5.05 million, we deposited 50% to 100% cash as restricted cash as collateral for these notes payable. These notes are due from July, 2015 to March, 2016.  As of March 31, 2015, the credit exposure of $6.05 million has been fully used. The credit line expires in March 2016.

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, and has expired in January, 2015. This credit line was guaranteed by related parties. As of December 31, 2014, the total outstanding loans from Taizhou Bank under this credit line were $1.1 million. The loans are due separately in February and April 2015 respectively, and have been settled in February 2015.

In December 2013, we were approved for up to an aggregate of $9.2 million of a credit line from China 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 $4.6 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. This credit line has expired as of January,2015. In April 2015, we were approved for up to an aggregate of 7.5 million of a credit line from Everbright Bank, with 50% restricted cash deposited and credit exposure of $3.75 million. The credit line expires in April 2016.As of March 31, 2015, $6.69 million was drawn down as notes payable. The amount of restricted cash deposited with the bank was $3.35 million.  In July 2014, Jonway borrowed an 11 months short-term loan of $1.2 million at interest rate of 7.2%. As of March 31, 2015, the credit exposure of $3.75 million has been fully used.

In March 2014, 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 March 31, 2015, 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 6.9%.  The loans are due in various dates from April 2015 to March 2016. As of March 31, 2015, a credit exposure of $4.9 million has been used, and $0.5 million was still available for use. The credit line expires in March 2017.

 Short term debt (in thousands)

	March 31, 2015		December 31, 2014
Loan from CITIC bank	$	980	$	976
Loan from ICBC		6,535		6,484
Loan from Taizhou Bank		-		1,139
Loan from China Everbright Bank		1,226		1,220
Loan from Pay-Ins Prem		-		30
	$	8,741	$	9,849

In December 2014, the company borrowed a one year short term loan of $0.98 million from CITIC at the annual interest rate of 6.69%. The loans are secured by a Maximum Amount Mortgage Contract between Jonway and CITIC dated November 3, 2014, in which a land use right and a building with a total carrying amount of $5.5 million as of March 31, 2015 has been pledged as security for this loan. The shareholder and Co-CEO Alex Wang also personally guaranteed these loans.

In August 2014, Jonway borrowed a short-term loan from Taizhou Bank of $0.3 million at the annual interest rate of 8.93% which was due in February 2015. The loan was repaid when due. In October 2014, Jonway borrowed $0.81 million of a short term loan from Taizhou Bank. The loan was to expire in April 2015 and the annual interest rate was 8.496%.The loan was settled early in February 2015.

              In April 2014, Jonway borrowed a one year short-term loan from Industrial and Commercial Bank of China (ICBC) of 0.8 million which was repaid in April 2015. The annual interest rate was 6%. In June 2014, Jonway borrowed a one year short-term loan from ICBC of $1.1 million at the annual interest rate of 6.256%. In August 2014, Jonway borrowed a one year short-term loan from ICBC of $1.1 million at the annual interest rate of 6.92%. In September 2014, Jonway borrowed a 6-month short-term loan from ICBC of $0.8 million at the annual interest rate of 5.04%. The loan of $0.8 million has been paid when due in March, 2015. In October 2014, Jonway borrowed $1.47 million of a short term loan from ICBC. The loan will expire in October 2015 and the annual interest rate is 6.6%. The company borrowed a one year short term loan of $1.1 million in November 2014 at an annual interest of 6.6%. In March 2015, Jonway borrowed a one year short-term loan of $0.8 million from ICBC at an annual interest of 5.6%. 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 $3.52 million with ICBC and $1.6 million of restricted cash of March 31, 2015.

In July 2014, Jonway obtained an 11 months short-term loan of $1.2 million from China Everbright Bank 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. This loan is due in June 2015.

        The weighted average interest rates were 6.9% and 6.95% for the three months ended March 31, 2015 and 2014 respectively.

Bank acceptance notes

As of March 31, 2015, the Company has bank acceptance notes payable in the amount of $17.4 million. The notes are guaranteed to be paid by the banks and are usually for a short-term period of six (6) 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 March 31, 2015, the restricted cash for the notes was $9.0 million.

(In thousands)

	3/31/2015		12/31/2014
a) Bank acceptance notes payable to China Everbright bank	$	6,699	$	11,372
b) Bank acceptance notes payable to Taizhou bank		-		651
c) Bank acceptance notes payable to CITIC bank		10,553		5,724
d) Bank acceptance notes payable to China Merchants Bank		161		-
	$	17,413	$	17,747

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

b.     Notes payable to Taizhou bank were required to maintain cash deposits at 50% to 100% of the notes payable with the bank as of December 31, 2014.

c.     Notes payable to CITIC bank will be due from July 2015 to March 2016.  Except for the note payable utilizing credit exposure of $6.05 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

d.     Notes payable to China Merchants Bank is due in September 2015. 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 April 2015, the Company issued $0.16 million of note payable with 100% cash deposit.

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

3 Months Ended

Mar. 31, 2015

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

Schedule of Short-Term Debt

	March 31, 2015		December 31, 2014
Loan from CITIC bank	$	980	$	976
Loan from ICBC		6,535		6,484
Loan from Taizhou Bank		-		1,139
Loan from China Everbright Bank		1,226		1,220
Loan from Pay-Ins Prem		-		30
	$	8,741	$	9,849

Schedule of Bank Acceptance Notes

	3/31/2015		12/31/2014
a) Bank acceptance notes payable to China Everbright bank	$	6,699	$	11,372
b) Bank acceptance notes payable to Taizhou bank		-		651
c) Bank acceptance notes payable to CITIC bank		10,553		5,724
d) Bank acceptance notes payable to China Merchants Bank		161		-
	$	17,413	$	17,747

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2015

SIGNIFICANT ACCOUNTING POLICIES [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:

	March 31, 2015	December 31, 2014
Balance sheet items, except for share capital, additional	$ 1=RMB 6.1206	$1=RMB 6.1460
paid in capital and retained earnings
Amounts included in the statements of operations	$ 1=RMB 6.1444	$1=RMB6.1457
and cash flows

Recent Accounting Pronouncements

Recent Accounting Pronouncements

 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 January 2015, FASB issued ASU No. 2015-01, Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.  This Update is issued as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). The objective of the Simplification Initiative is to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to the users of financial statements. This Update eliminates from GAAP the concept of extraordinary items.  The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The effective date is the same for both public business entities and all other entities.  The Company does not expect the adoption of ASU 2015-01 to have material impact on the Company's consolidated financial statements.

In February 2015, FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This Update focuses on the consolidation evaluation for reporting organizations that are required to evaluate consolidation of certain legal entities by reducing the number of consolidation models from four to two and is intended to improve current GAAP. The amendments in the ASU are effective beginning after December 15, 2016. We do not expect the adoption of ASU 2015-02 to have material impact on our consolidated financial statements.

In April 2015, FASB issued ASU 2015-03, interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in the ASU are effective beginning after December 15, 2015. We do not expect the adoption of ASU 2015-03 to have material impact on our consolidated financial statements.

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SHAREHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2015

SHAREHOLDERS' EQUITY [Abstract]

SHAREHOLDERS' EQUITY

NOTE 9-SHAREHOLDERS' EQUITY

Common stock

2015 ISSUANCES

On February 11, 2015, the Company cancelled 1,182,558 shares of common stock which was originally issed to settle $100,000 convertible notes in 2014. The balance of the outstanding note issued to Korea Yung was settled by 5,912,786 shares of common stock after the payment and cancellation of shares in February, 2015. Yung is allowed to engage in open market sales of the shares through June 30, 2015. In the event the gross proceeds realized from the sale of the shares by Yung is greater than the principal and interest due on the bond as of the maturity date, Yung will be entitled to retain all proceeds. If the proceeds from the sale of shares is less than the principal and interest due on the bond as of the maturity date, ZAP will pay the shortfall to Yung in cash within five business days of written notice from Yung, In the event that on June 30, 2015, Yung holds unsold shares and there is an unpaid balance remaining on the bond, ZAP will repurchase from Yung all of the unsold shares at the price they were issued to Yung..

2014 ISSUANCES

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. In December, 2014, the company issued 4,513,163 shares to settle the cash advance of $410,800 from Cathaya Operations Management Limited.

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 December 2014, the company issued 8,727,099 shares to settle the interest of $1,237,345 due on the convertible note.

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 Banks, 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 December 31, 2014, $1.9 million was received by ZAP. The number of stock issued on August 14, 2014 was 31,666,668 shares.

On December 31, 2014, the company issued 10,915,748 shares and 2,666,666 shares at $0.06 per share to Alex Wang, the CO-CEO of the company and an individual for the cash advance of $654,945 and 160,000 respectively. The cash advance provided working capital to finance the operations of the company.

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SEGMENT REPORTING

3 Months Ended

Mar. 31, 2015

SEGMENT REPORTING [Abstract]

SEGMENT REPORTING

NOTE 7 – 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 Jonway A380 three and five-door sports utility vehicles, minivans and spare parts principally through distributors in China. The Advanced Technology Vehicles segment represents sales and marketing outside of China of the ZAPTRUCK XL, the ZAPVAN Shuttle and the Xebra® Sedan and will transition to selling mostly Jonway's EV A380SUV and EV minivan in 2013. The Consumer Product segment represents rechargeable portable energy products, our Zapino scooter, and our ZAPPY3 personal transporters. These segments are strategic business units that offer different services. They are managed separately because each business requires different resources and strategies. 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 Auto			ZAP			ZAP Hong Kong		Totals
For the three months ended March 31,2015
Net sales	$	8,186		$	176			-	$	8,362
Gross profit (loss)	$	(587	)	$	75			-	$	(512	)
Depreciation and amortization	$	1,435		$	657			-	$	2,092
Net loss	$	(3,272	)	$	(1,404	)		-	$	(4,676	)
Total assets	$	69,799		$	19,077			8	$	88,884
For the three months ended March 31, 2014
Net sales	$	6,733		$	88			-	$	6,821
Gross profit (loss)	$	(994	)	$	23			-	$	(971	)
Depreciation and amortization	$	1,423		$	656			-	$	2,079
Net loss	$	(3,334	)	$	(1,677	)			$	(5,011	)
Total assets	$	77,722		$	19,464			138	$	97,324

       Customer information

Approximately 97.9% or $8.2 million of our revenues for the three months ended March 31, 2015 are from sales in China.  Jonway Auto distributes its products to an established network of over 63 factory level dealers in China with no customer contributing to 10% of our consolidated revenue. Approximately 99% or $6.7 million of our revenues for the three months ended March 31, 2014 are from sales in China. Jonway Auto distributes its products to an established network of over 70 factory level dealers in China with one customer contributing to 14% of our consolidated revenue.

Supplier information

For the three months ended March 31 2015 and 2014, approximately 98.8% or $8.7 million and 99% or $7.7 million of the consolidated cost of goods sold were purchased in China. For the three months ended March 31, 2015, Taizhou Geely a tong engine Manufacturing Co. Ltd accounted for 11% of the total purchase. For the three months ended March 31, 2014, and Haerbin Dongan Auto, Engine Manufacturing Co., Ltd. account for 29% of the total purchase.,

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RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2015

RELATED PARTY TRANSACTIONS [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 8 – RELATED PARTY TRANSACTIONS

            Due from (to) related parties

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

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

Amount due from related parties are as follows:

	March 31, 2015		December 31, 2014
Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd	$	1,429	$	1,427
JAZ		1,291		1,311
Jonway Motor Cycle		148		53
Total	$	2,868	$	2,791

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

Amount due to related parties are follows:

	March 31, 2015		December 31, 2014
Jonway Group	$	4,913	$	2,648
Jonway Motor Cycle		-		64
Taizhou Huadu		613		652
Shanghai Zapple		37		37
Mr. Wang		276		146
Betterworld		149		149
Taizhou Jonway Electric Vehicle Selling Co		2,063		2,306
Zhejiang Jonway Painting Co. Ltd.		628		472
Cathaya Operations Management Ltd.		500		297
Cathaya Management Ltd.		350		350
Total	$	9,529	$	7,121

      Transactions with `Jonway Group

       Jonway Group is considered as a related party as the Wang Family, one of the principal shareholders of the Company, has controlling interests in Jonway Group. Jonway Group supplies some of plastics spare parts to Jonway and gave guarantees on Jonway short term bank facilities from China-based banks. Jonway made such purchase from Jonway Group for a total of $755,000 and $217,000 for the three months ended March 31, 2015 and 2014, respectively.

      Jonway Agreement with Zhejiang UFO

        Based on a contract by and among the Zhejiang UFO, Jonway Group and Jonway dated as of January 1, 2006, Zhejiang UFO has authorized Jonway to operate its Sanmen Branch to assemble and sell UFO branded SUVs for a period of 10 years starting from January 1, 2006.

       According to the contract, Jonway shall pay Zhejiang UFO a variable contractual fee which is calculated based on the number of SUVs that Jonway assembles in the Sanmen Branch every year, at the following rates (historical exchange rate):

The first 3,000 vehicles	$44 per vehicle
Vehicles from 3,001 to 5,000	$30 per vehicle
Vehicles over 5,000	$22 per vehicle

        Zhejiang UFO is considered a related party because the Wang Family, who are shareholders of Jonway, has certain non-controlling equity interests in Zhejiang UFO.

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LITIGATION

3 Months Ended

Mar. 31, 2015

LITIGATION [Abstract]

LITIGATION

NOTE 10– LITIGATION

1) ZAP is in arrears with the settlement payment to Hogan & Lovells. The current negotiated balance  due is $779,500.  Hogan & Lovells agreed to reduce the total amount owed by $453,827, as long as we did not default on our payment agreement,  If Hogan $ Lovells does seek a judgement, the total balance due immediatedly would be $1,233,327. Currently ZAP is seeking additional funding, and is working with prospective investors or lenders so ZAP can resume the installment payments to Hogan & Lovells.

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LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Line of Credit) (Details) (USD $)	3 Months Ended		1 Months Ended		12 Months Ended	1 Months Ended	12 Months Ended	1 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014	Mar. 31, 2014	Dec. 31, 2014	Jul. 31, 2014	Dec. 31, 2013	Apr. 30, 2015	Mar. 31, 2015	Dec. 31, 2012
Line of Credit Facility [Line Items]
Repayment of short-term loans	$ 1,959,000	$ 2,837,000
CITIC [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity	16,300,000	16,300,000		16,300,000					16,300,000
Credit exposure	6,050,000	6,050,000		6,050,000					6,050,000
Amount outstanding	5,050,000	1,000,000		1,000,000					5,050,000
Interest rate		7.08%	6.69%	7.08%	6.69%
Restricted cash deposit	10,600,000								10,600,000
Expiration	Mar. 31, 2016
Beginning maturity date	Jul. 01, 2015
Ending maturity date	Mar. 31, 2016
Debt instrument maturity period			1 year	1 year
Face amount			980,000		980,000
CITIC [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Required cash deposit	50.00%
CITIC [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Required cash deposit	100.00%
Taizhou Bank [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity			2,400,000		2,400,000					4,100,000
Amount outstanding			1,100,000		1,100,000
Expiration					Jan. 01, 2015
Beginning maturity date	Feb. 01, 2015
Ending maturity date	Apr. 30, 2015
China Everbright Bank [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity							9,200,000
Credit exposure	3,750,000						4,600,000		3,750,000
Amount outstanding	6,690,000								6,690,000
Interest rate						7.20%
Collateral amount							2,100,000
Restricted cash deposit	3,350,000								3,350,000
Required cash deposit							50.00%
Expiration	Jan. 31, 2015
Debt instrument maturity period						11 months
Face amount						1,200,000
China Everbright Bank [Member] | Subsequent Event [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity								7,500,000
Credit exposure								3,750,000
Required cash deposit								50.00%
Expiration								Apr. 30, 2016
ICBC [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity		5,400,000		5,400,000
Credit exposure	4,900,000	5,400,000		5,400,000					4,900,000
Amount outstanding	6,500,000								6,500,000
Interest rate, minimum	5.00%
Interest rate, maximum	6.90%
Available borrowing capacity	500,000								500,000
Restricted cash deposit	1,600,000								1,600,000
Expiration	Mar. 31, 2017
Beginning maturity date	Apr. 01, 2015
Ending maturity date	Mar. 31, 2016
Repayment of short-term loans									$ 800,000

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INVENTORIES, NET (Tables)

3 Months Ended

Mar. 31, 2015

INVENTORIES, NET [Abstract]

Schedule of Inventories

Inventory
	March 31, 2015			December 31,  2014
Work in Process	$	1,898		$	3,054
Parts and supplies		3,334			3,601
Finished goods		3,587			3,105
		8,819			9,760
Less - inventory reserve		(1,471	)		(1,380	)
Inventories, net	$	7,348		$	8,380

Schedule of Inventory Reserve

Provision
	March 31, 2015		December 31,  2014
Balance  opening period	$	1,380	$	1,981
Current provision        for  Jonway Auto		91		251
Current recovery for inventory ZAP- net		-		(852	)
Balance end of period	$	1,471	$	1,380

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ORGANIZATION AND BASIS OF PRESENTATION (Basis Of Presentation) (Details)	Mar. 31, 2015 item	Mar. 31, 2015 ZAP Hangzhou [Member]	Mar. 31, 2015 Shanghai Zapple [Member]	Mar. 31, 2015 Minimum [Member] USD ($)	Mar. 31, 2015 Jonway Auto [Member] USD ($)	Mar. 31, 2015 Jonway Auto [Member] Minimum [Member] USD ($)	Mar. 31, 2015 Jonway Auto [Member] Minimum [Member] CNY	Mar. 31, 2015 Jonway Auto [Member] Maximum [Member] USD ($)	Mar. 31, 2015 Jonway Auto [Member] Maximum [Member] CNY
Organization and Basis of Presentation [Line Items]
Percentage ownership in Jonway	51.00%
Subsidies from the Chinese central and local governments						$ 5,000	35,000	$ 16,000	100,000
Subsidies from the central government, if EVs reaching 250km in range per charge								10,000
Subsidies from the local government, if EVs reaching 250km in range per charge								10,000
Number of local government cities that are participating in subsidy as required by the central government	88
Percentage of government vehicles purchased are required to be full electric	30.00%
Incentives for gas vehicles in some cities				20,000
Gasoline model price					$ 10,000
Schedule of Equity Method Investments [Line Items]
Ownership percentage		37.50%	50.00%

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RELATED PARTY TRANSACTIONS (Schedule of Related Party Balances) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Related Party Transaction [Line Items]
Amount due from related party	$ 2,868	$ 2,791
Amount due to related party	9,529	7,121
Sanmen Branch [Member]
Related Party Transaction [Line Items]
Amount due from related party	1,429	1,427
JAZ [Member]
Related Party Transaction [Line Items]
Amount due from related party	1,291	1,311
Jonway Group [Member]
Related Party Transaction [Line Items]
Amount due to related party	4,913	2,648
Jonway Motor Cycle [Member]
Related Party Transaction [Line Items]
Amount due from related party	148	53
Amount due to related party		64
Taizhou Huadu [Member]
Related Party Transaction [Line Items]
Amount due to related party	613	652
Shanghai Zapple [Member]
Related Party Transaction [Line Items]
Amount due to related party	37	37
Mr. Wang [Member]
Related Party Transaction [Line Items]
Amount due to related party	276	146
Better World [Member]
Related Party Transaction [Line Items]
Amount due to related party	149	149
Taizhou Jonway Electric Vehicle Selling Co [Member]
Related Party Transaction [Line Items]
Amount due to related party	2,063	2,306
Zhejiang Jonway Painting Co. Ltd. [Member]
Related Party Transaction [Line Items]
Amount due to related party	628	472
Cathaya Operations Management Ltd.
Related Party Transaction [Line Items]
Amount due to related party	500	297
Cathaya Management Ltd [Member]
Related Party Transaction [Line Items]
Amount due to related party	$ 350	$ 350

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$ (4,676)	$ (5,011)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Gain from disposal of equipment	(7)
Stock-based employee compensation	19	34
Depreciation and amortization	2,092	2,079
Provision for doubtful accounts	6	2
Changes in inventory reserve	87	(32)
Deferred tax expenses(benefit)		304
Amortization of debt discount		91
Changes in assets and liabilities:
Accounts receivable	(152)	282
Notes Receivable	81	185
Inventories	975	73
Prepaid expenses and other assets	(486)	177
Due from related parties	(70)	2,887
Accounts payable	(828)	(2,666)
Accrued liabilities	62	(52)
Taxes Payable	360	(901)
Advances from customers	2,310	(550)
Due to related parties	2,382	2,451
Other payables	(421)	(154)
Net cash provided by (used for) operating activities	1,734	(801)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of equipment	11
Acquisition of property and equipment	(33)	(480)
Net cash flows used in investing activities:	(22)	(480)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in restricted cash	64	2,910
Proceeds from notes payable	6,189	6,643
Proceeds from short term loans	814	2,109
Proceeds from equity investment		1,500
Repayment of convertible bond	(100)
Repayments of notes payable	(6,595)	(9,748)
Payments on short term loans	(1,959)	(2,837)
Net cash provided by (used in) financing activities	(1,587)	577
Effect of exchange rate changes on cash and cash equivalents	3	(7)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	128	(711)
CASH AND CASH EQUIVALENTS, beginning of period	238	2,629
CASH AND CASH EQUIVALENTS, end of period	366	1,918
Supplemental disclosure of cash flow information:
Cash paid during period for interest	345	314
Cash paid during period for income taxes
Non-cash transaction:
Cancellation of 1,182,558 shares of common stock issued to pay convertible bond	$ 100

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DISTRIBUTION AGREEMENTS

3 Months Ended

Mar. 31, 2015

DISTRIBUTION AGREEMENTS [Abstract]

DISTRIBUTION AGREEMENTS

NOTE 4 - DISTRIBUTION AGREEMENTS

Distribution agreements as of March 31, 2015 and 2014 are presented below (in thousands):

	March 31, 2015			December 31, 2014
Better World Products-related party	$	2,160		$	2,160
CNG Products		1,000			1,000
Jonway Products		14,400			14,400
		17,560			17,560
Less amortization and impairment		(8,521	)		(8,161	)
	$	9,039		$	9,399

Amortization expenses related to these distribution agreements for the three months ended March 31, 2015 and 2014 was $360,000 and $360,000, respectively.  Amortization is based over the term of the agreements. As of December 31, 2014, the company recognized an impairment loss of $5.0 million for the distribution right of CNG products. No impairment loss was recorded for the three months ended March 31, 2015 and 2014, respectively. The estimated future amortization expense is as follows (in thousands):

 

12 months  ended March 31,
2016	$	1,540
2017		1,540
2018		1,540
2019		1,540
2020		1,540
Thereafter		1,339
Total	$	9,039

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ORGANIZATION AND BASIS OF PRESENTATION (Liquidity and Capital Resources) (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended	1 Months Ended
	Dec. 31, 2013	Apr. 30, 2015	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014	Dec. 31, 2012
Line of Credit Facility [Line Items]
Current liabilities exceeded current assets			$ 72.0
Equity Deficiency			6.6
CITIC [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity			16.3	16.3
Credit exposure			6.05	6.05
Taizhou Bank [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity					2.4	4.1
Everbright Bank [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity	9.2
Credit exposure	4.60		3.75
Required cash deposit	50.00%
Everbright Bank [Member] | Subsequent Event [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity		7.5
Credit exposure		3.75
Required cash deposit		50.00%
ICBC [Member]
Line of Credit Facility [Line Items]
Maximum borrowing capacity				5.4
Credit exposure			4.90	5.40
Available borrowing capacity			$ 0.5

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SEGMENT REPORTING (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015 item	Mar. 31, 2014
SEGMENT REPORTING [Abstract]
Number of reportable segments	4
Concentration Risk [Line Items]
Revenues	$ 8,362	$ 6,821
Geographic Concentration Risk [Member] | Revenue [Member]
Concentration Risk [Line Items]
Concentration risk percentage	97.90%	99.00%
Revenues	8,200	6,700
Geographic Concentration Risk [Member] | Cost of Goods Sold [Member]
Concentration Risk [Line Items]
Concentration risk percentage	98.80%	99.00%
Revenues	$ 8,700	$ 7,700
Customer Concentration Risk [Member] | Revenue [Member]
Concentration Risk [Line Items]
Concentration risk percentage		14.00%
Supplier Concentration Risk [Member] | Cost of Goods Sold [Member]
Concentration Risk [Line Items]
Concentration risk percentage	11.00%	29.00%

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SIGNIFICANT ACCOUNTING POLICIES (Tables)

3 Months Ended

Mar. 31, 2015

SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Schedule of Foreign Currency Exchange Balance

	March 31, 2015	December 31, 2014
Balance sheet items, except for share capital, additional	$ 1=RMB 6.1206	$1=RMB 6.1460
paid in capital and retained earnings
Amounts included in the statements of operations	$ 1=RMB 6.1444	$1=RMB6.1457
and cash flows