SHAREHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2016

Stockholders' Equity Note [Abstract]

SHAREHOLDERS' EQUITY

NOTE 11 - SHAREHOLDERS’ EQUITY

Common stock

2016 ISSUANCES

In August 2016, the amount of $443,630 due to Cathaya Management Co Ltd, a related party, has been converted into 8,872,602 shares of common stock at price of $0.05. In addition, China Electric Vehicle Corporation (CEVC), a related party, has elected to convert the interest of $1,246,410 due on the $20.7 million convertible note to 18,399,316 shares of ZAP’s common stock at the average share price of related interest period (see Note 8). The Company also issued 200,000 shares of common stock to the CFO in August 2016.

The Company planned to issue an aggregated of 9,994,038 shares of the Company’s common stock to settle certain existing debts of $476,561 in accordance with the Board approval in July 2016, which including the amount of $412,448 due to CEVC, a related party, to be converted into 8,711,779 shares of common stock at price of $0.047, and the amount of $64,113 due to a debt holder to be converted into 1,282,259 shares of common stock at price of $0.05. These shares have not been issued as of the reporting date.

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 was 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 was greater than the principal and interest due on the bond as of the maturity date, Yung would have been 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 would 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. Alex Wang, 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, a related party, 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), a related party, 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.

Stock-based Compensation

The Company has stock compensation plans for employees and directors. The Company recognizes the stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. All of the stock-based compensation is accounted for as an equity instrument.

In June 2015, the Company granted 200,000 restricted shares to Michael Ringstad in lieu of salary compensation and also for his acceptance for the position of Interim CFO. The stock was set at average of last 30 trading days, and the vesting period is for a period of 3 years from the date of grant. Michael Ringstad cannot sell the shares within nine months from the date of grant and the Company retains the right to buy back the shares at any time at the market price.

For the three and nine months ended September 30, 2016, $18,000 and $54,000 was recorded as stock-based compensation expense, respectively. For the three and nine months ended September 30, 2015, $18,000 and $55,000 was recorded as stock-based compensation expense, respectively.