x
|
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended March 31, 2016
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from ________ to _________
|
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
|
Large accelerated filer o
|
Accelerated filer o
|
Non-accelerated filer o
|
Smaller reporting company
x
|
Page
No.
|
||
PART I. Financial Information
|
||
Item 1.
|
Financial Statements (Unaudited)
|
|
Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015
|
3
|
|
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2016 and 2015
|
5
|
|
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015
|
6
|
|
Notes to Condensed Consolidated Financial Statements
|
8
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
21
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
30
|
Item 4.
|
Controls and Procedures
|
30
|
PART II. Other Information
|
||
Item 1.
|
Legal Proceedings
|
30
|
Item 1A.
|
Risk Factors
|
31
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
31
|
Item 3.
|
Defaults Upon Senior Securities
|
31
|
Item 4.
|
Mine Safety Disclosures
|
31
|
Item 5.
|
Other Information
|
31
|
Item 6.
|
Exhibits
|
32
|
SIGNATURES
|
33
|
March 31,
|
December 31,
|
|||||||
ASSETS
|
2016
|
2015
|
||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 251 | $ | 60 | ||||
Restricted cash
|
11,581 | 8,988 | ||||||
Accounts receivable, net
|
5,249 | 5,915 | ||||||
Inventories, net
|
7,124 | 7,743 | ||||||
Prepaid taxes
|
- | 147 | ||||||
Prepaid expenses and other current assets
|
575 | 574 | ||||||
Total current assets
|
24,780 | 23,427 | ||||||
Property, plant and equipment, net
|
34,766 | 35,893 | ||||||
Land use rights, net
|
8,935 | 8,930 | ||||||
Other assets:
|
||||||||
Distribution fees, net
|
6,599 | 6,959 | ||||||
Intangible assets, net
|
2,423 | 2,513 | ||||||
Goodwill
|
316 | 314 | ||||||
Due from related party
|
1,635 | 1,614 | ||||||
Total other assets
|
10,973 | 11,400 | ||||||
Total assets
|
$ | 79,454 | $ | 79,650 |
March 31,
|
December 31,
|
|||||||
2016
|
2015
|
|||||||
LIABILITIES AND DEFICIENCY
|
||||||||
Current liabilities:
|
||||||||
Short term loans
|
$ | 7,507 | $ | 7,702 | ||||
Accounts payable
|
21,500 | 21,486 | ||||||
Senior convertible debt
|
21,465 | 21,465 | ||||||
Accrued liabilities
|
3,820 | 4,000 | ||||||
Notes payable
|
17,249 | 14,366 | ||||||
Advances from customers
|
6,663 | 7,391 | ||||||
Taxes payable
|
1,295 | 1,638 | ||||||
Due to related party
|
15,760 | 13,978 | ||||||
Other payables
|
2,269 | 2,256 | ||||||
Total current liabilities
|
97,528 | 94,282 | ||||||
Long term liabilities:
|
||||||||
Accrued liabilities and others
|
152 | 152 | ||||||
Total long term liabilities
|
152 | 152 | ||||||
Total liabilities
|
97,680 | 94,434 | ||||||
Commitments and contingencies
|
||||||||
Deficiency
|
||||||||
Common stock, no par value; 800 million shares authorized;
|
||||||||
578,465,159 and 578,465,159 shares issued and outstanding
|
||||||||
at March 31, 2016 and December 31, 2015, respectively
|
251,707 | 251,689 | ||||||
Accumulated other comprehensive income
|
1,334 | 1,359 | ||||||
Accumulated deficit
|
(266,439 | ) | (264,144 | ) | ||||
Total ZAP shareholders' deficiency
|
(13,398 | ) | (11,096 | ) | ||||
Non-controlling interest
|
(4,828 | ) | (3,688 | ) | ||||
Total deficiency
|
(18,226 | ) | (14,784 | ) | ||||
Total liabilities and deficiency
|
$ | 79,454 | $ | 79,650 |
For the Three months Ended March 31
|
||||||||
2016
|
2015
|
|||||||
Net sales
|
$ | 3,382 | $ | 8,362 | ||||
Cost of goods sold
|
(3,316 | ) | (8,874 | ) | ||||
Gross profit (loss)
|
66 | (512 | ) | |||||
Operating expenses:
|
||||||||
Sales and marketing
|
585 | 992 | ||||||
General and administrative
|
2,261 | 1,879 | ||||||
Research and development
|
119 | 613 | ||||||
Total operating expenses
|
2,965 | 3,484 | ||||||
Loss from operations
|
(2,899 | ) | (3,996 | ) | ||||
Other income (expense):
|
||||||||
Interest expense, net
|
(554 | ) | (761 | ) | ||||
Other income
|
64 | 81 | ||||||
Total expense
|
(490 | ) | (680 | ) | ||||
Loss before income taxes
|
(3,389 | ) | (4,676 | ) | ||||
Income tax expense
|
- | - | ||||||
Net loss
|
$ | (3,389 | ) | $ | (4,676 | ) | ||
Less: loss attributable to non-controlling interest
|
1,094 | 1,603 | ||||||
Net loss attributable to ZAP’s common shareholders
|
$ | (2,295 | ) | $ | (3,073 | ) | ||
Net loss
|
$ | (3,389 | ) | $ | (4,676 | ) | ||
Other comprehensive loss
|
||||||||
Foreign currency translation adjustments
|
(71 | ) | 46 | |||||
Total comprehensive loss
|
(3,460 | ) | (4,630 | ) | ||||
Less: Comprehensive loss attributable to non-controlling interest
|
1,140 | 1,581 | ||||||
Comprehensive loss attributable to ZAP
|
$ | (2,320 | ) | $ | (3,049 | ) | ||
Net loss per share attributable to common shareholders:
|
||||||||
Basic and diluted
|
$ | (0.00 | ) | $ | (0.01 | ) | ||
Weighted average number of common shares outstanding:
|
||||||||
Basic and diluted
|
578,465 | 460,673 |
For the Three months Ended March 31
|
||||||||
2016
|
2015
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net loss
|
$ | (3,389 | ) | $ | (4,676 | ) | ||
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
|
||||||||
(Gain) loss from disposal of equipment
|
- | (7 | ) | |||||
Stock-based employee compensation
|
18 | 19 | ||||||
Depreciation and amortization
|
1,561 | 2,092 | ||||||
Amortization of distribution agreement
|
361 | - | ||||||
Provision for doubtful accounts
|
417 | 6 | ||||||
Changes in inventory reserve
|
(38 | ) | 87 | |||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable
|
279 | (152 | ) | |||||
Notes receivable
|
- | 81 | ||||||
Inventories
|
700 | 975 | ||||||
Prepaid expenses and other assets
|
151 | (486 | ) | |||||
Due from related parties
|
- | (70 | ) | |||||
Accounts payable
|
(116 | ) | (828 | ) | ||||
Accrued liabilities
|
(103 | ) | 62 | |||||
Taxes payable
|
(350 | ) | 360 | |||||
Advances from customers
|
(768 | ) | 2,310 | |||||
Due to related parties
|
1,607 | 2,382 | ||||||
Other payables
|
14 | (421 | ) | |||||
Net cash provided by operating activities
|
344 | 1,734 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Acquisition of property and equipment
|
(141 | ) | (33 | ) | ||||
Proceeds from disposal of equipment
|
37 | 11 | ||||||
Net cash used in investing activities
|
(104 | ) | (22 | ) |
For the Three months Ended March 31
|
||||||||
2016
|
2015
|
|||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Change in restricted cash
|
$ | (2,495 | ) | $ | 64 | |||
Proceeds from notes payable
|
3,601 | 6,189 | ||||||
Proceeds from short term loans
|
520 | 814 | ||||||
Repayment of convertible bond
|
- | (100 | ) | |||||
Repayments of notes payable
|
(856 | ) | (6,595 | ) | ||||
Repayments of short term loans
|
(795 | ) | (1,959 | ) | ||||
Net cash used in financing activities
|
(25 | ) | (1,587 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents
|
(24 | ) | 3 | |||||
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
191 | 128 | ||||||
CASH AND CASH EQUIVALENTS, beginning of period
|
60 | 238 | ||||||
CASH AND CASH EQUIVALENTS, end of period
|
$ | 251 | $ | 366 | ||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid during period for interest
|
$ | 315 | $ | 345 | ||||
Cash paid during period for income taxes
|
$ | - | $ | 2 | ||||
Non-cash transaction:
|
||||||||
Cancellation of 1,182,558 shares of common
stock issued to pay convertible bond
|
$ | - | $ | 100 |
|
·
|
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.
|
|
-
|
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 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.
|
Level 1:
|
Observable inputs such as quoted prices in active markets;
|
Level 2:
|
Inputs other than quoted prices in active markets that is directly or indirectly observable. The carrying value of the senior convertible debt (see Note 7), which approximates fair value, is influenced by interest rates and our stock price, and is determined by prices for the convertible debts observed in market trading, which are Level 2 inputs.
|
Level 3:
|
Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions and methodologies that result in management’s best estimate of fair value.
|
March 31, 2016
|
March 31, 2015
|
December 31, 2015
|
|
Balance sheet items, except for share capital, additional
paid in capital and retained earnings
|
$ 1=RMB 6.4494
|
$ 1=RMB6.1206
|
$1=RMB6.4917
|
Amounts included in the statements of operations
and cash flows
|
$ 1=RMB 6.5402
|
$ 1=RMB 6.1444
|
$1=RMB 6.2288
|
March 31,
2016
|
December 31,
2015
|
|||||||
Accounts receivable – third parties
|
$ | 2,373 | $ | 2,274 | ||||
Accounts receivable – related parties
|
4,841 | 5,172 | ||||||
7,267 | 7,446 | |||||||
Less – Allowance for doubtful accounts
|
(1,965 | ) | (1,531 | ) | ||||
Total account receivable, net
|
$ | 5,249 | $ | 5,915 |
March 31,
2016
|
December 31,
2015
|
|||||||
Balance, beginning of period
|
$ | 1,531 | $ | 439 | ||||
Write-off
|
- | (76 | ) | |||||
Current provision (recovery)
|
434 | 1,168 | ||||||
Balance, end of period
|
$ | 1,965 | $ | 1,531 |
March 31,
2016
|
December 31,
2015
|
|||||||
Work in Process
|
$
|
3,607
|
$
|
2,237
|
||||
Parts and supplies
|
3,824
|
3,616
|
||||||
Finished goods
|
957
|
3,186
|
||||||
8,388
|
9,039
|
|||||||
Less - inventory reserve
|
(1,264
|
)
|
(1,296
|
)
|
||||
Inventories, net
|
$
|
7,124
|
$
|
7,743
|
March 31,
2016
|
December 31,
2015
|
|||||||
Balance, beginning of period
|
$ | 1,296 | $ | 1,380 | ||||
Current recovery for Jonway Auto
|
(32 | ) | (132 | ) | ||||
Current provision for inventory ZAP, net
|
- | 48 | ||||||
Balance, end of period
|
$ | 1,264 | $ | 1,296 |
March 31,
2016
|
December 31,
2015
|
|||||||
Better World Products - related party
|
$
|
2,160
|
$
|
2,160
|
||||
Jonway Products
|
14,400
|
14,400
|
||||||
16,560
|
16,560
|
|||||||
Less: amortization and impairment
|
(9,961
|
)
|
(9,601
|
)
|
||||
$
|
6,599
|
$
|
6,959
|
12 months ended March 31,
|
||||
2017
|
$
|
1,440
|
||
2018
|
1,440
|
|||
2019
|
1,440
|
|||
2020
|
1,440
|
|||
Thereafter
|
839
|
|||
Total
|
$
|
6,599
|
March 31,
2016
|
December 31,
2015
|
||||||||
Loan from CITIC bank
|
(a)
|
$
|
3,629
|
$
|
3,081
|
||||
Loan from ICBC
|
(b)
|
3,878
|
4,621
|
||||||
-
|
|||||||||
$
|
7,507
|
$
|
7,702
|
|
(a)
|
In October 2015, Jonway Auto borrowed a half year short-term loan of $3.1 million at annual interest rate of 5.9%. The loan is due on April 28, 2016. On March 25, 2016, Jonway Auto further borrowed a one year loan of $0.5 million at annual interest rate of 6.0%. The loan is due on March 25, 2017. All loans are secured by a Maximum Amount Mortgage Contract between Jonway Auto and CITIC dated November 3, 2014, in which a land use right and a building with a total carrying amount of $5.2 million as of March 31, 2016 has been pledged as security for these loans. The shareholder and CEO Alex Wang also personally guaranteed these loans. Subsequent to March 31, 2016, the Company renewed the loan of $3.1 million at annual interest of 5.9% with CITIC bank upon the loan’s maturity on April 28, 2016.
|
(b)
|
In March 2015, the company borrowed a one year short-term loan of $0.8 million from ICBC at an annual interest of 5.4% and fully repaid the loan upon maturity in March 2016. In June 2015, the company borrowed a one year short-term loan of $0.3 million from ICBC at an annual interest rate of 5.92%. In July 2015, the Company borrowed a one year short-term loan of $1.1 million from ICBC at an annual interest rate of 6.7%. In October 2015, the Company borrowed a one year short-term loan of $1.4 million at an annual interest of 6.4%. In November 2015, the Company borrowed a one year short-term loan of $1.1 million at an annual interest rate of 6.1%. These loans were guaranteed by related parties including Jonway Group, the shareholder Wang Huaiyi and the shareholder and CEO Alex Wang. The Company also pledged buildings and a land use right with a carrying value of $1.4 million with ICBC.
|
March 31,
2016
|
December 31,
2015
|
||||||||
Bank acceptance notes payable to China Everbright Bank
|
(a)
|
$
|
7,135
|
$
|
7,086
|
||||
Bank acceptance notes payable to CITIC Bank
|
(b)
|
9,345
|
6,428
|
||||||
Bank acceptance notes payable to Shanghai Pudong
Development bank
|
(c)
|
769
|
852
|
||||||
$
|
17,249
|
$
|
14,366
|
(a)
|
Notes payable to China Everbright bank have various maturity dates in June 2016. The notes payable are guaranteed by a land use right and a building with a total carrying value of $2.0 million. The Company is also required to maintain cash deposits at 50% of the notes payable with the bank, in order to ensure future credit availability.
|
(b)
|
Notes payable to CITIC bank will be due in April to September 2016. Except for the note payable utilizing credit exposure of $2.1 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.
|
|
(c)
|
Notes payable to Shanghai Pudong Development Bank will be due in May and June, 2016. The company is required to maintain cash deposits at 100% of the notes payable with the bank.
|
March 31,
2016
|
December 31,
2015
|
|||||||
Senior convertible debt – CEVC (a)
|
$
|
20,679
|
$
|
20,679
|
||||
Convertible debt – Mr. Luo Hua Liang (b)
|
786
|
786
|
||||||
$
|
21,465
|
$
|
21,465
|
|
(a)
|
Senior convertible debt - CEVC
|
|
(b)
|
convertible debt – Mr. Luo Hua Liang
|
For the three months ended March 31, 2016
|
Jonway
Auto
|
ZAP
|
ZAP Hong
Kong
|
Total
|
||||||||||||
Net sales
|
$
|
3,378
|
$
|
4
|
$
|
-
|
$
|
3,382
|
||||||||
Gross profit
|
$
|
65
|
$
|
1
|
$
|
-
|
$
|
66
|
||||||||
Depreciation and amortization
|
$
|
1,271
|
$
|
651
|
$
|
-
|
$
|
1,922
|
||||||||
Net loss
|
$
|
(2,230
|
)
|
$
|
(1,159
|
)
|
$
|
-
|
$
|
(3,389
|
)
|
|||||
Total assets
|
$
|
62,443
|
$
|
14,011
|
$
|
-
|
$
|
79,454
|
||||||||
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 profit (loss)
|
$
|
(3,272
|
)
|
$
|
(1,404
|
)
|
$
|
-
|
$
|
(4,676
|
)
|
|||||
Total assets
|
$
|
69,799
|
$
|
19,077
|
$
|
8
|
$
|
88,884
|
March 31,
2016
|
December 31,
2015
|
|||||||
Sanmen Branch of Zhejiang UFO Automobile
Manufacturing Co., Ltd
|
$
|
1,015
|
$
|
998
|
||||
Jonway Economy and Trade Co., Ltd.
|
620
|
616
|
||||||
$
|
1,635
|
$
|
1,614
|
March 31,
2016
|
December 31,
2015
|
|||||||
Jonway EV selling Ltd.
|
$
|
4,379
|
$
|
4,659
|
||||
Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co., Ltd
|
160
|
212
|
||||||
Jonway Motorcycle
|
302
|
301
|
||||||
$
|
4,841
|
$
|
5,172
|
March 31,
2016
|
December 31,
2015
|
|||||||
Jonway Group
|
$
|
14,064
|
$
|
12,606
|
||||
Jonway Motor Cycle
|
64
|
64
|
||||||
Taizhou Huadu
|
1,096
|
846
|
||||||
Shanghai Zapple
|
35
|
35
|
||||||
Mr. Alex Wang
|
74
|
74
|
||||||
Mr. Huaiyi Wang
|
14
|
-
|
||||||
Betterworld
|
149
|
149
|
||||||
Zhejiang Jonway Painting Co., Ltd.
|
23
|
11
|
||||||
Cathaya Operations Management Ltd.
|
241
|
193
|
||||||
$
|
15,760
|
$
|
13,978
|
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
|
|
·
|
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”.
|
Three Months
Ended March 31,
|
||||||||
Statements of Operations Data:
|
2016
|
2015 | ||||||
Net sales
|
100.0 | % | 100.0 | % | ||||
Cost of sales
|
-98.1 | % | -106.1 | % | ||||
Operating expenses
|
-87.7 | % | -41.7 | % | ||||
Loss from operations
|
-85.7 | % | -47.8 | % | ||||
Net loss attributable to ZAP
|
-67.9 | % | -36.7 | % |
|
·
|
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.
|
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.
|
|
31.2
|
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
|
Dated: May 16, 2016
|
By: /s/ Alex Wang
|
||
Name: Alex Wang
|
|||
Title: Chief Executive Officer
|
|||
(Principal Executive Officer).
|
Dated: May 16, 2016
|
By: /s/ Michael Ringstad
|
||
Name: Michael Ringstad
|
|||
Title: Interim Chief Financial Officer
|
|||
(Interim Principal Financial Officer)
|
(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
|
(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.
|
(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
|
(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.
|
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
May. 16, 2016 |
|
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2016 | |
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 | 578,465,159 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract] | ||
Common stock, par value | ||
Common stock, shares authorized | 800,000,000 | 800,000,000 |
Common stock, shares issued | 578,465,159 | 578,465,159 |
Common stock, shares outstanding | 578,465,159 | 578,465,159 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) |
3 Months Ended |
---|---|
Mar. 31, 2015
shares
| |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS [Abstract] | |
Shares cancelled | 1,182,558 |
ORGANIZATION AND BASIS OF PRESENTATION |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
ORGANIZATION AND BASIS OF PRESENTATION [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION ZAP was incorporated in California in September, 1994 (together with its subsidiaries, the Company or ZAP Group). ZAP Group 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). The Company believes its 51% acquisition of Jonway Auto 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 Auto's ISO 9001 certified manufacturing facility provides the competitive production capacity and resources to support production of ZAP Group's new line of electric SUV, minivan, and Neighborhood EV (NEV). Jonway Auto 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 Xiaoying (the daughter of Wang Huaiyi and all three individuals collectively referred to as the Wang Family). ZAP has a wholly owned subsidiary, ZAP Hong Kong, a Hong Kong limited company. ZAP Hong Kong was established in 2011 as a wholly foreign owned enterprises (WOFE) and has no operation since incorporated. 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. |
LIQUIDITY AND CAPITAL RESOURCES |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Mar. 31, 2016 | |||||||
LIQUIDITY AND CAPITAL RESOURCES [Abstract] | |||||||
LIQUIDITY AND CAPITAL RESOURCES | NOTE 2 LIQUIDITY AND CAPITAL RESOURCES As of March 31, 2016, our current liabilities exceeded the current assets by approximately $73.4 million and our equity deficiency was $13.4 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:
The Company does not currently have sufficient cash or commitments for financing to sustain its operations for the next twelve months. The Company plans to substantially increase our cash flows from operations and revenue derived from our products. If the Company's revenues do not reach the level anticipated in our plan and the Company may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all, the Company may be unable to implement its current plans for expansion, repay our debt obligations or respond to competitive pressures, any of which would have a material adverse effect on its business, prospects, financial condition and results of operations. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 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. In June 2015, we were approved for up to an aggregate of $7.2 million of a credit line from Everbright Bank, with 50% restricted cash deposited and credit exposure of $3.6 million. The credit line expires in June 2016. As of March 31, 2016 and December 31, 2015, $7.1 million was drawn down as notes payable. The amount of restricted cash deposited with the bank was $3.6 million. As of March 31, 2016, the line of credit has been fully utilized. In March 2014, the Company has obtained up to an aggregate of $15.5 million of credit line with the credit exposure of $5.7 million from CITIC Sanmen Branch through Jonway Auto. The line is secured by land and building owned by Jonway Auto and guaranteed by the related party Jonway Group. As of March 31, 2016, the Company borrowed aggregated $3.6 million loans with various due dates in April 28, 2016 to March 25, 2017. The loans carried at annual interests from 5.92% to 5.96%. The Company has also drawn down $9.3 million in the form of notes payable as of March 31, 2016. The Company deposited $7.2 million restricted cash as collateral for these notes payable. These notes are due from April 2016 to September 2016. As of March 31, 2016, the unused line of credit was approximately $8,000. The Company renewed the credit line of approximately $23.3 million from CITIC Sanmen Branch through Jonway Auto. The new credit line is secured by a land use right and a building with a total carrying amount of $5.2 million as of March 31, 2016. The shareholder and CEO Alex Wang also personally guaranteed on this credit line. The credit line expires on March 31, 2018. In March 2014, we were approved up to an aggregate of $5.1 million of a credit line from ICBC. This credit line was secured by land and buildings owned by Jonway Auto and guaranteed by related parties. As of March 31, 2016, the total outstanding loan under this credit line was $3.9 million. The annual interest rates are from 5.9% to 6.7%. The loans are due in various dates from June 2016 to November 2016. As of March 31, 2016, the unused line of credit was approximately $1.2 million. Jonway Auto 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 December 31, 2016 in the event that we require additional liquidity. In addition, China Electric Vehicle Corporation (CEVC) has renewed the convertible note with an extension through December 31, 2016, as of July 30th, 2015 (see Note 8). We will require additional capital to expand our current operations. In particular, we require additional capital 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. 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. Jonway Group has continued to provide support in financing the capital requirements of Jonway Auto. For the year ended December 31, 2015, Wang Gang, the Chief Executive Officer (CEO) and Jonway Group injected $5.4 million to the Company and plans to inject additional capital to support the critical on-going manufacturing operations to meet the delivery of the EV minivans and SUV orders in the pipeline. |
SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | NOTE - 3 SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements include the financial statements of ZAP, and its subsidiaries, Jonway Auto and ZAP Hong Kong for the three months ended March 31, 2016 and the year ended December 31, 2015 and are prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). 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. 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 2015 annual report on Form 10-K filed on April 14, 2016.
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 Auto sales when all of the following criteria have been met:
The Company records revenues for Jonway Auto sales only upon the occurrence of all of the following conditions:
The Company provides no price protection. Sales are recognized net of sale discounts, rebates and return allowances.
Fair Value of Financial Instruments
Accounting Standards Update (ASU) 820, Fair Value Measurements and ASC 825, Financial Instruments, requires an entity to use observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:
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 condensed consolidated financial statements in this report:
Recent Accounting Pronouncements
In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which amends certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Changes to the current guidance include the accounting for equity investments, the presentation and disclosure requirements for financial instruments, and the assessment of valuation allowance on deferred tax assets related to available-for-sale securities. In addition, ASU 2016-01 establishes an incremental recognition and disclosure requirement related to the presentation of fair value changes of financial liabilities for which the fair value option has been elected. Under this guidance, an entity would be required to separately present in other comprehensive income the portion of the total fair value change attributable to instrument-specific credit risk as opposed to reflecting the entire amount in earnings. ASU 2016-01 is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adoption on our consolidated financial statements.
In February 2016, the FASB issued Accounting Standards Codification (ASC) 842 (ASC 842), Leases which replaces the existing guidance in ASC 840, Leases. ASC 842 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. ASC 842 requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use (ROU) asset and a corresponding lease liability. For finance leases the lessee would recognize interest expense and amortization of the ROU asset and for operating leases the lessee would recognize a straight-line total lease expense. The Company is currently evaluating the impact of adoption on the consolidated financial statements.
In March 2016, the FASB issued Accounting Standards Update No. 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments. The amendments apply to all entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options. The amendments clarify what steps are required when assessing whether the economic characteristics and risks of call (put) options are clearly and closely related to the economic characteristics and risks of their debt hosts, which is one of the criteria for bifurcating an embedded derivative. Consequently, when a call (put) option is contingently exercisable, an entity does not have to assess whether the event that triggers the ability to exercise a call (put) option is related to interest rates or credit risks. Public business entities must apply the new requirements for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years. All entities have the option of adopting the new requirements early, including adoption in an interim period. If an entity early adopts the new requirements in an interim period, it must reflect any adjustments as of the beginning of the fiscal year that includes that interim period. The Company does not expect any material impact of this new standard on its consolidated financial statements.
In April 2016, the FASB released ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. While aimed at reducing the cost and complexity of the accounting for share-based payments, the amendments are expected to significantly impact net income, EPS, and the statement of cash flows. Implementation and administration may present challenges for companies with significant share-based payment activities. The ASU is effective for public companies in annual periods beginning after December 15, 2016, and interim periods within those years. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.
In April 2016, FASB issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606. Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.
|
ACCOUNTS RECEIVABLE |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS RECEIVABLE [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCOUNTS RECEIVABLE | NOTE 4 ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following:
Changes in the Company's allowance for doubtful accounts during the nine months ended March 31, 2016 and the year ended December 31, 2015 are as follows:
|
INVENTORIES, NET |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES, NET [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES, NET | NOTE 5 INVENTORIES, NET
Inventories, net are summarized as follows:
Changes in the Company's inventory reserve during the three months ended March 31, 2016 and the year ended December 31, 2015 are as follows:
|
DISTRIBUTION AGREEMENTS |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DISTRIBUTION AGREEMENTS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DISTRIBUTION AGREEMENTS | NOTE 6 - DISTRIBUTION AGREEMENTS
Distribution agreements are presented below:
Amortization expenses related to these distribution agreements for the three months ended March 31, 2016 and 2015 was $360,000. Amortization is based over the term of the agreements. No impairment loss was recorded for the three months ended March 31, 2016 and 2015, respectively. The estimated future amortization expense is as follows:
|
LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES | NOTE 7 LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES
Line of credit (Credit Exposure)
In June 2015, we were approved for up to an aggregate of $7.1 million of a credit line from Everbright Bank, with 50% restricted cash deposited and credit exposure of $3.6 million. The credit line expires in June 2016. As of March 31, 2016 and December 31, 2015, $7.1 million was drawn down as notes payable. The amount of restricted cash deposited with the bank was $3.6 million. As of March 31, 2016, the line of credit has been fully utilized.
In March 2014, the Company has obtained up to an aggregate of $15.5 million of credit line with the credit exposure of $5.7 million from CITIC Sanmen Branch through Jonway Auto. The line is secured by land and building owned by Jonway Auto and guaranteed by the related party Jonway Group. As of March 31, 2016, the Company borrowed aggregated $3.6 million loans with various due dates in April 28, 2016 to March 25, 2017. The loans carried at annual interests from 5.92% to 5.96%. The Company has also drawn down $9.3 million in the form of notes payable as of March 31, 2016. The Company deposited $7.2 million restricted cash as collateral for these notes payable. These notes are due from April 2016 to September 2016. As of March 31, 2016, the unused line of credit was approximately $8,000. The Company renewed the credit line of approximately $23.3 million from CITIC Sanmen Branch through Jonway Auto. The new credit line is secured by a land use right and a building with a total carrying amount of $5.2 million as of March 31, 2016. The shareholder and CEO Alex Wang also personally guaranteed on this credit line. The credit line expires on March 31, 2018.
Short term loans as of March 31, 2016 and December 31, 2015 are presented below:
.
The weighted average interest rates were 6.1% and 6.9% for the three months ended March 31, 2016 and 2015, respectively.
Bank acceptance notes
As of March 31, 2016, the Company has bank acceptance notes payable in the amount of $17.2 million. The notes are guaranteed to be paid by the banks and are usually for a short-term period of nine months. The Company is required to maintain cash deposits of 50% or 100% of the notes payable with these bank, in order to ensure future credit availability. As of March 31, 2016, the restricted cash for the notes was $11.6 million. Bank acceptance notes are presented below:
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CONVERTIBLE DEBT |
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CONVERTIBLE DEBT [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONVERTIBLE DEBT | NOTE 8 - CONVERTIBLE DEBT
Convertible debts are presented below:
On January 12, 2011, the Company entered into a Senior Secured Convertible Note and Warrant Purchase Agreement (the Agreement) with CEVC, a British Virgin Island company whose sole shareholder is Cathaya Capital, L.P., and a Cayman Islands exempted limited partnership (Cathaya). Priscilla Lu was the former chairwoman 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 $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 December 31, 2016 with interest accrual at 8% per annum with original maturing date of February 12, 2012. According to Accounting Standard Codification (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 the Additional Interest accrued during such fiscal quarter divided by 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 December 31, 2016.
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 by Jonway Auto shares, 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.
On September 3, 2015, the board approved issuance of a convertible note to Mr. Luo Hua Liang (Mr. Wang Alex's brother in-law) for his investment of RMB 5 million immediately deposited within one week of signing of the agreement and another investment up to RMB 5 million within one month of signing of the agreement. Both notes have one year terms at the interest rate of 12% per annum. The investment was transferred to Jonway Auto as the loan from the Company to Jonway Auto. The convertible note shall either be repaid in cash from Jonway Auto or be paid in ZAP shares. The convertible note's conversion price is $0.06 per share.
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SEGMENT REPORTING |
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SEGMENT REPORTING [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | NOTE 9 SEGMENT REPORTING
Operating Segments
The Company has identified three reportable segments consisting of Jonway Auto, ZAP (Consumer Product) and ZAP Hong Kong. The Jonway Auto segment represents sales of the gas fueled Jonway A380 three and five-door sports utility vehicles, EV minivan and EV SUVs and spare parts principally through distributors in China. The ZAP 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 CEO 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:
Customer information
Approximately 99.9% or $3.4 million of our revenues for the three months ended March 31, 2016 are from sales in China. Jonway Auto distributes its products to an established network of over 70 factory level dealers in China with two customers contributing to 33% and 11% of our consolidated revenue, respectively. 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.
Supplier information
For the three months ended March 31, 2016 and 2015, approximately 99.9% or $3.4 million and 98.8% or $8.7 million of the consolidated cost of goods sold were purchased in China. For the three months ended March 2016, two venders contributed to 19% and 17% of our purchases, respectively. For the three months ended March 31, 2015, one supplier accounted for 11% of the total purchases.
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RELATED PARTY TRANSACTIONS |
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RELATED PARTY TRANSACTIONS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS | NOTE 10 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):
In addition, accounts receivable included in accounts receivable due from related parties as follows (in thousands):
Amount due to related parties are follows (in thousands):
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 $0.6 million and $0.8 million as for the three months ended March 31, 2016 and 2015, 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 Auto 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):
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 three months ended March 31, 2016 and 2015, $0.1 million and $Nil were recorded as assembling fees, respectively.
Other Related Party Transactions
For the three months ended March 31, 2016, Jonway purchased parts in amount of $0.4 million and $1.8 million from Jonway Motor Cycle and Taizhou Huadu, respectively. For the three months ended March 31, 2015, Jonway did not purchased spare parts from Jonway Motor Cycle and Taizhou Huadu.
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SHAREHOLDERS' EQUITY |
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Mar. 31, 2016 | |
SHAREHOLDERS' EQUITY [Abstract] | |
SHAREHOLDERS' EQUITY | NOTE 11 - SHAREHOLDERS' EQUITY Common stock 2015 ISSUANCES On February 11, 2015, the cancellation of 1,182,558 shares of common stock was processed to pay back the proceeds from convertible notes, and a partial repayment representing a principal reduction of $100,000 and $8,433 of interest was paid on the Company's outstanding convertible bond held by Yung. For the year ended December 31, 2015, the Company repurchased 4,811,633 shares of common stock at cost of $406,872 from Yung and cancelled those shares. The balance of the outstanding note issued to Korea Yung was $133,116 after the payment and cancellation of these shares. Yung is allowed to engage in open market sales of the shares through December 31, 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 are 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 September 2015, the Company issued 89,194,715 shares to Mr. Wang Alex, the Chief Executive Officer of the Company for his investment of $5,351,683 in the Company (approximately $4.5 million investment was loan by the Company to its subsidiary Jonway Auto). In September 2015, the amount of $814,863 investment from Cathaya Management Co Ltd and $350,000 due to Cathaya Management Co Ltd have been converted into 13,581,051 and 5,833,333 shares of common stock at price of $0.06, respectively. In September 2015, China Electric Vehicle Corporation (CEVC) has elected to convert the interest of $1,237,345 due on the $20.7 million convertible note to 14,454,743 shares of common stock at the average price of $0.086. |
LITIGATION |
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Mar. 31, 2016 | |
LITIGATION [Abstract] | |
LITIGATION | NOTE 12 LITIGATION 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 judgment, the total balance due immediately 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. As of March 31, 2016 and December 31, 2015, the Company accrued approximately $0.7 million for this litigation. |
COMMITMENTS AND CONTINGENCIES |
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Mar. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 13 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 $2.2 million at March 31, 2016 (December 31, 2015 - $2.3 million). The guarantee expires at variance dates from March 31, 2016 to December 2019. 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 $1.0 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, 2016 and December 31, 2015 were $0.4 million and $0.5 million, respectively. |
SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||
Basis of Presentation and Consolidation | Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements include the financial statements of ZAP, and its subsidiaries, Jonway Auto and ZAP Hong Kong for the three months ended March 31, 2016 and the year ended December 31, 2015 and are prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). 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. 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 2015 annual report on Form 10-K filed on April 14, 2016.
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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.
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Revenue Recognition | Revenue Recognition
The Company records revenues for non-Jonway Auto sales when all of the following criteria have been met:
The Company records revenues for Jonway Auto sales only upon the occurrence of all of the following conditions:
The Company provides no price protection. Sales are recognized net of sale discounts, rebates and return allowances.
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Fair Value of Financial Instruments | Fair Value of Financial Instruments
Accounting Standards Update (ASU) 820, Fair Value Measurements and ASC 825, Financial Instruments, requires an entity to use observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:
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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 condensed consolidated financial statements in this report:
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Recent Accounting Pronouncements | Recent Accounting Pronouncements
In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which amends certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Changes to the current guidance include the accounting for equity investments, the presentation and disclosure requirements for financial instruments, and the assessment of valuation allowance on deferred tax assets related to available-for-sale securities. In addition, ASU 2016-01 establishes an incremental recognition and disclosure requirement related to the presentation of fair value changes of financial liabilities for which the fair value option has been elected. Under this guidance, an entity would be required to separately present in other comprehensive income the portion of the total fair value change attributable to instrument-specific credit risk as opposed to reflecting the entire amount in earnings. ASU 2016-01 is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adoption on our consolidated financial statements.
In February 2016, the FASB issued Accounting Standards Codification (ASC) 842 (ASC 842), Leases which replaces the existing guidance in ASC 840, Leases. ASC 842 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. ASC 842 requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use (ROU) asset and a corresponding lease liability. For finance leases the lessee would recognize interest expense and amortization of the ROU asset and for operating leases the lessee would recognize a straight-line total lease expense. The Company is currently evaluating the impact of adoption on the consolidated financial statements.
In March 2016, the FASB issued Accounting Standards Update No. 2016-06, Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments. The amendments apply to all entities that are issuers of or investors in debt instruments (or hybrid financial instruments that are determined to have a debt host) with embedded call (put) options. The amendments clarify what steps are required when assessing whether the economic characteristics and risks of call (put) options are clearly and closely related to the economic characteristics and risks of their debt hosts, which is one of the criteria for bifurcating an embedded derivative. Consequently, when a call (put) option is contingently exercisable, an entity does not have to assess whether the event that triggers the ability to exercise a call (put) option is related to interest rates or credit risks. Public business entities must apply the new requirements for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years. All entities have the option of adopting the new requirements early, including adoption in an interim period. If an entity early adopts the new requirements in an interim period, it must reflect any adjustments as of the beginning of the fiscal year that includes that interim period. The Company does not expect any material impact of this new standard on its consolidated financial statements.
In April 2016, the FASB released ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. While aimed at reducing the cost and complexity of the accounting for share-based payments, the amendments are expected to significantly impact net income, EPS, and the statement of cash flows. Implementation and administration may present challenges for companies with significant share-based payment activities. The ASU is effective for public companies in annual periods beginning after December 15, 2016, and interim periods within those years. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.
In April 2016, FASB issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments clarify the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance. The amendments do not change the core principle of the guidance in Topic 606. The effective date and transition requirements for the amendments are the same as the effective date and transition requirements in Topic 606. Public entities should apply the amendments for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018, for a calendar year entity). Early application for public entities is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of this new standard on its consolidated financial statements.
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Schedule of Foreign Currency Exchange Balance |
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ACCOUNTS RECEIVABLE (Tables) |
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Schedule of changes in allowance for doubtful accounts |
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Schedule of Estimated Future Amortization Expense Related to Agreements |
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LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Tables) |
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Schedule of Short-Term Debt |
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Schedule of Bank Acceptance Notes |
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
CONVERTIBLE DEBT [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of convertible debt |
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SEGMENT REPORTING (Tables) |
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Results |
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RELATED PARTY TRANSACTIONS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Amount Due To/From Related Parties |
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Schedule of Contract Rates |
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ORGANIZATION AND BASIS OF PRESENTATION (Basis Of Presentation) (Details) |
Mar. 31, 2016 |
---|---|
Jonway Auto [Member] | |
Organization and Basis of Presentation [Line Items] | |
Percentage ownership in Jonway | 51.00% |
SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - ¥ / $ |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||
Currency exchange rate | 6.4494 | 6.1206 | 6.4917 |
Average currency exchange rate | 6.5402 | 6.1444 | 6.2288 |
Shanghai Zapple [Member] | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity Method Investment, Ownership Percentage | 50.00% | ||
Zap Hangzhou [Member] | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity Method Investment, Ownership Percentage | 37.50% |
ACCOUNTS RECEIVABLE (Schedule Of Accounts Receivable) (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
ACCOUNTS RECEIVABLE [Abstract] | ||
Accounts receivable - third parties | $ 2,373 | $ 2,274 |
Accounts receivable - related parties | 4,841 | 5,172 |
Account receivable, gross | 7,267 | 7,446 |
Less - Allowance for doubtful accounts | (1,965) | (1,531) |
Total account receivable, net | $ 5,249 | $ 5,915 |
ACCOUNTS RECEIVABLE (Schedule Of Changes In Allowance For Doubtful Accounts) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
ACCOUNTS RECEIVABLE [Abstract] | |||
Balance, beginning of period | $ 1,531 | $ 439 | $ 439 |
Write-off | (76) | ||
Current provision (recovery) | $ 417 | $ 6 | 1,168 |
Balance, end of period | $ 1,965 | $ 1,531 |
INVENTORIES, NET (Schedule of Inventories) (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|
INVENTORIES, NET [Abstract] | |||
Work in Process | $ 3,607 | $ 2,237 | |
Parts and supplies | 3,824 | 3,616 | |
Finished goods | 957 | 3,186 | |
Inventories | 8,388 | 9,039 | |
Less - inventory reserve | (1,264) | (1,296) | $ (1,380) |
Inventories, net | $ 7,124 | $ 7,743 |
INVENTORIES, NET (Schedule of Inventory Reserve) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
INVENTORIES, NET [Abstract] | ||
Balance, beginning of period | $ 1,296 | $ 1,380 |
Current recovery for Jonway Auto | $ (32) | (132) |
Current provision for inventory ZAP, net | (48) | |
Balance, end of period | $ 1,264 | $ 1,296 |
DISTRIBUTION AGREEMENTS (Narrative) (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Distribution Agreements [Line Items] | ||
Depreciation and amortization | $ 1,922,000 | $ 2,092,000 |
Distribution Agreements [Member] | ||
Distribution Agreements [Line Items] | ||
Depreciation and amortization | $ 360,000 | $ 360,000 |
DISTRIBUTION AGREEMENTS (Schedule of Distribution Agreements) (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Distribution Agreements [Line Items] | ||
Distribution agreements | $ 16,560 | $ 16,560 |
Less: amortization and impairment | (9,961) | (9,601) |
Distribution agreements, net | 6,599 | 6,959 |
Better World Products [Member] | ||
Distribution Agreements [Line Items] | ||
Distribution agreements | 2,160 | 2,160 |
Jonway Products [Member] | ||
Distribution Agreements [Line Items] | ||
Distribution agreements | $ 14,400 | $ 14,400 |
DISTRIBUTION AGREEMENTS (Schedule of Future Amortization Expense) (Details) - Distribution Agreements [Member] $ in Thousands |
Mar. 31, 2016
USD ($)
|
---|---|
Estimated future amortization expense: | |
2017 | $ 1,440 |
2018 | 1,440 |
2019 | 1,440 |
2020 | 1,440 |
Thereafter | 839 |
Total | $ 6,599 |
LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Schedule of Short-Term Debt) (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 25, 2016 |
Nov. 30, 2015 |
Oct. 31, 2015 |
Jul. 31, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
||||||
Short-term Debt [Line Items] | ||||||||||||||
Short term debt | $ 7,507 | $ 7,702 | ||||||||||||
CITIC [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Short term debt | [1] | 3,629 | 3,081 | |||||||||||
Face amount | $ 500 | $ 3,100 | ||||||||||||
Term | 1 year | |||||||||||||
Interest rate | 6.00% | 5.90% | ||||||||||||
ICBC [Member] | ||||||||||||||
Short-term Debt [Line Items] | ||||||||||||||
Short term debt | [2] | $ 3,878 | $ 4,621 | |||||||||||
Face amount | $ 1,100 | $ 1,400 | $ 1,100 | $ 300 | $ 800 | $ 800 | ||||||||
Term | 1 year | 1 year | 1 year | 1 year | 1 year | |||||||||
Interest rate | 6.10% | 6.40% | 6.70% | 5.92% | 5.40% | 5.40% | ||||||||
Weighted average interest rate | 6.10% | 6.90% | ||||||||||||
|
LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Schedule of Bank Acceptance Notes) (Details) - USD ($) $ in Thousands |
3 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
||||||||
Short-term Debt [Line Items] | |||||||||
Bank acceptance notes payable | $ 17,249 | $ 14,366 | |||||||
Everbright Bank [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Ending maturity date | Jun. 30, 2016 | ||||||||
Collateral amount | $ 2,000 | ||||||||
Required cash deposit | 50.00% | ||||||||
CITIC [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Beginning maturity date | Apr. 01, 2016 | ||||||||
Ending maturity date | Sep. 30, 2016 | ||||||||
Collateral amount | $ 2,100 | ||||||||
Required cash deposit | 100.00% | ||||||||
Shanghai Pudong Development Bank [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Beginning maturity date | May 01, 2016 | ||||||||
Ending maturity date | Jun. 30, 2016 | ||||||||
Required cash deposit | 100.00% | ||||||||
Bank acceptance notes [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Bank acceptance notes payable | $ 17,249 | 14,366 | |||||||
Restricted cash deposit | $ 11,600 | ||||||||
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 | [1] | $ 7,135 | 7,086 | ||||||
Bank acceptance notes [Member] | CITIC [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Bank acceptance notes payable | [2] | 9,345 | 6,428 | ||||||
Bank acceptance notes [Member] | Shanghai Pudong Development Bank [Member] | |||||||||
Short-term Debt [Line Items] | |||||||||
Bank acceptance notes payable | [3] | $ 769 | $ 852 | ||||||
|
CONVERTIBLE DEBT (Schedule of Convertible Debt) (Details) - USD ($) $ in Thousands |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
CONVERTIBLE DEBT [Abstract] | ||
Senior convertible debt - CEVC | $ 20,679 | $ 20,679 |
Convertible debt - Mr. Luo Hua Liang | 786 | 786 |
Convertible debt | $ 21,465 | $ 21,465 |
SEGMENT REPORTING (Schedule of Segment Results) (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
Segment Reporting Information [Line Items] | |||
Net sales | $ 3,382 | $ 8,362 | |
Gross profit (loss) | 66 | (512) | |
Depreciation and amortization | 1,922 | 2,092 | |
Net profit (loss) | (3,389) | (4,676) | |
Total assets | $ 79,454 | $ 88,884 | $ 79,650 |
ZAP Hong Kong [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | |||
Gross profit (loss) | |||
Depreciation and amortization | |||
Net profit (loss) | |||
Total assets | $ 8 | ||
Jonway Auto [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | $ 3,378 | 8,186 | |
Gross profit (loss) | 65 | (587) | |
Depreciation and amortization | 1,271 | 1,435 | |
Net profit (loss) | (2,230) | (3,272) | |
Total assets | 62,443 | 69,799 | |
ZAP [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | 4 | 176 | |
Gross profit (loss) | 1 | 75 | |
Depreciation and amortization | 651 | 657 | |
Net profit (loss) | (1,159) | (1,404) | |
Total assets | $ 14,011 | $ 19,077 |
RELATED PARTY TRANSACTIONS (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Jonway Group [Member] | ||
Related Party Transaction [Line Items] | ||
Purchases | $ 0.6 | $ 0.8 |
Sanmen Branch [Member] | ||
Related Party Transaction [Line Items] | ||
Expenses | $ 0.1 | |
Period to operate branch to assemble and sell branded products | 10 years | |
Jonway Motor Cycle [Member] | Spare Parts [Member] | ||
Related Party Transaction [Line Items] | ||
Purchases | $ 0.4 | |
Taizhou Huadu [Member] | Spare Parts [Member] | ||
Related Party Transaction [Line Items] | ||
Purchases | $ 1.8 |
RELATED PARTY TRANSACTIONS (Schedule of Contract Fees) (Details) - Sanmen Branch [Member] $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
item
| |
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 |
LITIGATION (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
LITIGATION [Abstract] | ||
Settlement payment | $ 779,500 | |
Reduction in settlement payment | 453,827 | |
Damages would be sought | 1,233,327 | |
Accrued litigation amount | $ 700,000 | $ 700,000 |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
Shanghai PuDong Development Bank [Member] | Taizhou Jonway Jing Mao Trading Ltd. [Member] | ||
Guarantees [Line Items] | ||
Face amount | $ 1.0 | |
Period of guarantee | 5 years | |
Collateral amount | $ 0.4 | $ 0.5 |
Jonway Auto [Member] | ||
Guarantees [Line Items] | ||
Potential payments under guarantee | $ 2.2 | $ 2.3 |
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