NOTE 16 – 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):

	December 31, 2015		December 31, 2014
Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd	$	998	$	1,427
JAZ		-		1,311
Jonway Motor Cycle		-		53
Jonway Economy and Trade Co,. Ltd		616		-
Total	$	1,614	$	2,791

In addition, accounts receivable included in accounts receivable due from related parties as follows:

	December 31, 2015		December 31, 2014
Jonway EV Selling Ltd	$	4,659	$	-
Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd		212		-
Jonway Motor Cycle		301		-
	$	5,172	$	-

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

	December 31, 2015		December 31, 2014
Jonway Group	$	12,606	$	2,648
Jonway Motor Cycle		64		64
Taizhou Huadu		846		652
Shanghai Zapple		35		37
Mr. Wang		74		146
Betterworld		149		149
Taizhou Jonway Electric Vehicle Selling Co		-		2,306
Zhejiang Jonway Painting Co. Ltd.		11		472
Cathaya Operations Management Ltd.		193		297
Cathaya Management Ltd.		-		350
Total	$	13,978	$	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 Auto and gave guarantees on Jonway short term bank facilities from China-based banks. Jonway made such purchase from Jonway Group for a total of $5.3 million and $2.9 million for the years ended December 31, 2015 and 2014, respectively. In addition, Jonway sold Jonway Group in the amount of $5,000 and nil for the years ended December 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. For the years ended December 31, 2015 and 2014, $223,000 and $281,000 were recorded as assembling fees, respectively. Also during 2015 and 2014, Jonway sold SUVs and parts in the amount of $295,000 and $1,431,000 to Zhejiang UFO.

Other Related Party Transactions

During 2015, Jonway purchased parts in amount of $2,000 and $894,000 from Jonway Motor Cycle and Taizhou Huadu, respectively. During 2014, Jonway purchased spare parts in the amount of $18,000 and $352,000 from Jonway Motor Cycle and Taizhou Huadu, respectively. In 2014, Jonway commenced business of Urbee and it sold Urbee in the amount of $8,755,000 to Taizhou Jonway Electric Vehicle Selling Company.

In 2014, 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.

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