NOTE 8 - DISTRIBUTION AGREEMENTS

Income approach was used to determine the fair value of the distribution agreements using Level 3 inputs under the fair value hierarchy. Distribution agreements as of December 31, 2016 and 2015 are presented below (in thousands):

	December 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		(16,560	)		(9,601	)
	$	-		$	6,959

Amortization expenses related to these distribution agreements for the years ended December 31, 2016 and 2015 was $1.4 million. Amortization is based over the term of the agreements. As of December 31, 2016 and 2015, the Company recognized an impairment loss of $5.5 million and $1.0 million for the distribution right, respectively. Due to the deterioration of the sales and enlarged loss from operations in fiscal 2016, which resulted into great uncertainty of future distribution of Jonway products, the Company recognized an impairment loss of $5.5 million for the distribution rights for the year ended December 31, 2016. As of December 31, 2016, the net carrying value of distribution rights with Jonway Auto was nil.

Distribution Agreement with Better World, Ltd

On January 15, 2010, ZAP entered into a Stock Purchase Agreement with a related party, Better World, Ltd., a British Virgin Islands company, whereby the Company issued 6 million shares of its common stock valued at $2.16 million in exchange for an agreement on terms relating to rights to the distribution of Better World products, such as charging stations for electric vehicles both in the U.S. and internationally. Priscilla Lu, Chairman of the Board of Directors of ZAP, is also a director of Better World, Ltd.

Distribution Agreement with Goldenstone Worldwide Limited for Jonway Products

On October 10, 2010, ZAP entered into an International Distribution with Goldenstone Worldwide Limited as the distributor of Jonway products such as gasoline SUV’s and gasoline and electric motor scooters, both in the U. S. and internationally. In connection with the distribution agreement the Company also issued 30 million shares of ZAP common stock valued at $14.4 million. The Jonway Group had previously granted exclusive worldwide distribution of Jonway products to Goldenstone Worldwide Limited. ZAP acquired a 51% equity interest in Jonway Auto but this equity interest did not include the worldwide distribution rights for Jonway Products. Therefore it was necessary for ZAP to acquire distribution rights for Jonway Products.