WWW.EXFILE.COM, INC. -- 888-775-4789 -- ZAP -- FORM 10-Q
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-Q
(Mark
One)
x
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the quarterly period ended March 31,
2009
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from ________ to
_________
|
Commission
File Number
001-32534
ZAP
(Exact
name of registrant as specified in its charter)
|
California
|
94-3210624
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification No.)
|
501
4th
Street, Santa Rosa,
CA
95401
(Address
of principal executive offices) (Zip Code)
(707)
525-8658
(Registrant’s
telephone number)
(Former
name, former address and former fiscal year, if changed since last
report)
Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days.
Yes x No
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting
company.
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Small
reporting company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes o No
x
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check
whether the registrant filed all documents and reports required to be filed by
Section l2, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court. Yes o No x
State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date.
71,560,100
shares of common stock as of May 12, 2009.
ZAP
FORM
10-Q
INDEX
|
|
|
Page
No.
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PART
I.
|
Financial
Information
|
|
|
|
|
|
|
Item
1.
|
Condensed
Consolidated Financial Statements (unaudited) :
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets as of March 31, 2009 and December 31,
2008, unaudited.
|
1
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Operations for the three Months Ended March 31,
2009 and 2008, unaudited.
|
2
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows for the three Months Ended March 31,
2009 and 2008, unaudited.
|
3
|
|
|
|
|
|
|
Notes
to Condensed Consolidated Financial Statements
|
4
|
|
|
|
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
12
|
|
|
|
|
|
Item
4T.
|
Controls
and Procedures
|
26
|
|
|
|
|
PART
II.
|
Other
Information
|
|
|
|
|
|
|
Item
1.
|
Legal
Proceedings
|
26
|
|
|
|
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
28
|
|
|
|
|
|
Item
3.
|
Defaults
Upon Senior Securities
|
28
|
|
|
|
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
28
|
|
|
|
|
|
Item
5.
|
Other
Information
|
28
|
|
|
|
|
|
Item
6.
|
Exhibits
|
28
|
|
|
|
|
SIGNATURES
|
|
32
|
Part I.
FINANCIAL INFORMATION
Item
1. Financial Statements
ZAP AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In
thousands, except per share data)
|
|
March
31, 2009
|
|
|
December
31, 2008
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
374
|
|
|
$
|
341
|
|
Accounts
receivable, net of allowance for doubtful accounts of $29 and
$33
|
|
|
312
|
|
|
|
377
|
|
Inventories,
net
|
|
|
3,031
|
|
|
|
3,043
|
|
Prepaid
non-cash professional fees
|
|
|
81
|
|
|
|
105
|
|
Other
prepaid expenses and other current assets
|
|
|
807
|
|
|
|
765
|
|
Total
current assets
|
|
|
4,605
|
|
|
|
4,631
|
|
Property,
and equipment, net of accumulated depreciation
|
|
|
4,040
|
|
|
|
4,335
|
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
|
|
|
|
|
|
Deposits
and other assets
|
|
|
231
|
|
|
|
260
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
8,876
|
|
|
$
|
9,226
|
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Current
portion of long-term debt and short-term notes
|
|
$
|
5,892
|
|
|
$
|
2,976
|
|
Accounts
payable
|
|
|
300
|
|
|
|
474
|
|
Accrued
liabilities
|
|
|
1,340
|
|
|
|
1,575
|
|
Deferred
revenue
|
|
|
534
|
|
|
|
587
|
|
Total
current liabilities
|
|
|
8,066
|
|
|
|
5,612
|
|
LONG-TERM
LIABILITIES
|
|
|
|
|
|
|
|
|
Long-term
debt, less current portion
|
|
|
—
|
|
|
|
1,772
|
|
Total
liabilities
|
|
|
8,066
|
|
|
|
7,384
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock, authorized 400 million shares; no par value; and 70,019,837 shares
and 64,630,608 shares issued and outstanding at March 31,
2009 and December 31, 2008, respectively
|
|
|
127,324
|
|
|
|
126,347
|
|
Accumulated
deficit
|
|
|
(126,514
|
)
|
|
|
(124,505
|
)
|
Total
shareholders’ equity
|
|
|
810
|
|
|
|
1,842
|
|
Total
liabilities and shareholders’ equity
|
|
$
|
8,876
|
|
|
$
|
9,226
|
|
See
accompanying notes to condensed consolidated financial statements.
ZAP
AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Thousands,
except net loss per share amounts)
|
|
Three Months
ended
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
NET
SALES
|
|
$
|
1,076
|
|
|
$
|
1,056
|
|
|
|
|
|
|
|
|
|
|
COST
OF GOODS SOLD
|
|
|
786
|
|
|
|
962
|
|
GROSS
PROFIT
|
|
|
290
|
|
|
|
94
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
Sales
and marketing
|
|
|
406
|
|
|
|
390
|
|
|
|
|
|
|
|
|
|
|
General
and administrative (non-cash stock-based compensation of $1 million and
$1.5 million for the three months ended March 31, 2009 and 2008,
respectively)
|
|
|
1,460
|
|
|
|
1,999
|
|
|
|
|
|
|
|
|
|
|
Impairment
of assets
|
|
|
260
|
|
|
|
|
|
Research
and development
|
|
|
31
|
|
|
|
15
|
|
|
|
|
2,157
|
|
|
|
2,404
|
|
LOSS
FROM OPERATIONS
|
|
|
(1,867
|
)
|
|
|
(2,310
|
)
|
OTHER
INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
Interest
expense, net
|
|
|
(137
|
)
|
|
|
(46
|
)
|
Other
Income
|
|
|
—
|
|
|
|
1
|
|
|
|
|
(137
|
)
|
|
|
(45
|
)
|
LOSS
BEFORE INCOME TAXES
|
|
|
(2,004
|
)
|
|
|
(2,355
|
)
|
|
|
|
|
|
|
|
|
|
PROVISION
FOR INCOME TAXES
|
|
|
(4
|
)
|
|
|
(4
|
)
|
NET
LOSS
|
|
$
|
(2,008
|
)
|
|
$
|
(2,359
|
)
|
|
|
|
|
|
|
|
|
|
NET
LOSS PER COMMON SHARE
|
|
|
|
|
|
|
|
|
BASIC
AND DILUTED
|
|
$
|
(0.03
|
)
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING --
|
|
|
|
|
|
|
|
|
BASIC
AND DILUTED
|
|
|
67,045
|
|
|
|
57,355
|
|
See
accompanying notes to condensed consolidated financial statements.
ZAP
AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
|
|
Three Months
ended
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(2,008 |
) |
|
$ |
(2,359 |
) |
|
|
|
|
|
|
|
|
|
Items
not requiring the use of cash:
|
|
|
|
|
|
|
|
|
Amortization
of note discount and deferred offering costs
|
|
|
—
|
|
|
|
65 |
|
Stock-based
compensation for consulting and other services
|
|
|
286 |
|
|
|
1,209 |
|
Stock-based
employee compensation
|
|
|
715 |
|
|
|
318 |
|
Excess
tax benefits from share-based payment arrangements |
|
|
250 |
|
|
|
111 |
|
Depreciation
and amortization
|
|
|
56 |
|
|
|
60 |
|
Allowance
for doubtful accounts
|
|
|
(4 |
) |
|
|
(3 |
) |
Changes
in other items affecting operations:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
69 |
|
|
|
219 |
|
Inventories
|
|
|
12 |
|
|
|
(522 |
) |
Prepaid
expenses and other assets
|
|
|
(12 |
) |
|
|
(211 |
) |
Accounts
payable
|
|
|
(174 |
) |
|
|
(53 |
) |
Accrued
liabilities
|
|
|
(240 |
) |
|
|
(610 |
) |
Deferred
revenue
|
|
|
(52 |
) |
|
|
(42 |
) |
Net
cash (used in) operating activities
|
|
|
(1,102 |
) |
|
|
(1,818 |
) |
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITES
|
|
|
|
|
|
|
|
|
Purchase
of equipment
|
|
|
—
|
|
|
|
130 |
|
Disposal of equipment
|
|
|
240 |
|
|
|
— |
|
Net
cash provided by investing activities
|
|
|
240 |
|
|
|
130 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds
from short-term debt
|
|
|
1,145 |
|
|
|
—
|
|
Repayments
of long-term debt
|
|
|
—
|
|
|
|
(26 |
) |
Excess
tax benefits from share-based payment arrangements |
|
|
(250 |
) |
|
|
(111 |
) |
Net
cash provided by (used in) financing activities
|
|
|
895 |
|
|
|
(137 |
) |
|
|
|
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
33 |
|
|
|
(1,825 |
) |
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS,
beginning of period
|
|
|
341 |
|
|
|
4,339 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS,
end of period
|
|
$ |
374 |
|
|
$ |
2,514 |
|
See
accompanying notes to condensed consolidated financial statements.
ZAP
AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE
1 BASIS OF PRESENTATION
The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with U.S. generally accepted accounting principles
(“GAAP”) for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by U.S. GAAP for complete financial
statements. All adjustments (all of which are of a normal recurring nature)
considered necessary for a fair presentation have been included. Operating
results for the three months ended March 31, 2009 are not indicative of the
results that may be expected for the year ending December 31, 2009 or for any
other future period. These condensed consolidated financial statements and the
notes thereto should be read in conjunction with the audited financial
statements and notes thereto included in our Annual Report on Form 10-K for the
year ended December 31, 2008 filed with the Securities and Exchange Commission
(the “SEC”) on March 31, 2009 (our “2008 10-K”).
Going
Concern
Please note the indebtness is due to
a related party—Al Yousuf LLC whose President Mr Eqbal Al Yousuf who is also a
Director of ZAP and our current Chairman of the Board of ZAP. The management of
ZAP is currently in dispute with Al Yousuf regarding the timing of advance
repayments.
The
accompanying condensed consolidated financial statements have been prepared
assuming we will continue as a going concern. However, on May 14, 2009 we
received a Notice of Delinquent Payments from Mr. Hossein Haghighi, the Chief
Financial Officer of Al Yousuf LLC, notifying us that an outstanding principle
for inventory advances of $2.3 million plus monthly interest payments has not
been paid as required by a $10 million Promissory Note. Mr.Haghighi further
indicated that AL Yousuf LLC intends to enforce the collection of the total
amounts due under the terms of the note against the Company. The collateral for
the note is our corporate headquarters building and land located in Santa Rosa
California.
The note
with its terms and conditions were arranged for the Company by Mr.
Eqbal Al Yousuf, after becoming our Director and Chairman of the Board of
Directors. Mr Eqbal Al Yousuf is also the President of Al Yousuf LLC.
This $10 million Promissory Note was discussed in Notes 5 and 11 in our Form 10K
as of December 31, 2008 filed with the SEC on March 31, 2009. The note matures
on February 28, 2010.
Unless
the Company receives modifications of the note from Mr. Eqbal Al Yousuf, our
current Chairman of our Board of Directors and Al Yousuf LLC, it is unlikely
that the Company will be able to meet its obligations. The Company is currently
seeking modifications of the note with the aforementioned parties.
The
Company is currently seeking outside financing . There can be no assurances that
additional financing would be available, or if it is available, that it would be
on terms acceptable to the Company. The Company’s future liquidity and capital
requirements will depend on numerous factors, including successful development,
marketing and sale of advanced technology vehicles, protection of intellectual
property rights, costs of developing its new products, including the necessary
intellectual property rights, obtaining regulatory approvals for its new
products, market acceptance of all of its products, existence of competing
products in its current and anticipated markets, and its ability to raise
capital in a timely manner. Management expects to be able to raise capital;
however the Company may not be able to obtain additional
financing
on acceptable terms or at all. The financial statements do not
include any adjustments that may result from the outcome of these uncertainties.
These matters raise substantial doubt about our ability to continue as a going
concern.
We face
intense competition, which could cause us to lose market share. Changes in the
market for electrical or fuel-efficient vehicles could cause our products to
become obsolete or lose popularity. We cannot assure you that growth in the
electric vehicle industry or fuel-efficient cars will continue and our business
may suffer if growth in the electric vehicle industry or fuel-efficient market
decreases or if we are unable to maintain the pace of industry demands. We may
be unable to keep up with changes in electric vehicle or fuel-efficient
technology and, as a result, may suffer a decline in our competitive position.
The failure of certain key suppliers to provide us with components could have a
severe and negative impact upon our business. Product liability or other claims
could have a material adverse effect on our business. We may not be able to
protect our Internet address. Our success is heavily dependent upon protecting
our intellectual property rights.
NOTE
2 SIGNIFICANT ACCOUNTING POLICIES
NET
INCOME (LOSS) PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS
Basic and
diluted net income (loss) per common share is based on net income (loss) for the
relevant period, divided by the weighted average number of common shares
outstanding in each period. Diluted net income per share gives effect to all
potentially dilutive common shares outstanding during the period such as
options, warrants, convertible preferred stock, and contingently issuable
shares. Potentially dilutive securities associated with stock options, warrants
have been excluded from the diluted net loss per share amounts, since the effect
of these securities would be anti-dilutive. At March 31, 2009, these potentially
dilutive securities include options for 12 million shares of common
stock, warrants for 48 million shares of common stock.
PRINCIPLES OF CONSOLIDATION -
The accounts of the Company and its consolidated subsidiaries are
included in the condensed consolidated financial statements after elimination of
significant inter-company accounts and transactions.
REVENUE
RECOGNITION
The
Company records revenues only upon the occurrence of all of the following
conditions:
-The
Company has received a binding purchase order or similar commitment 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 distribution center to a common
carrier acceptable to the purchaser. The Company’s customary shipping terms are
FOB shipping point; and
-The
Company deems the collection of the amount invoiced probable.
The
Company provides no price protection. Product sales are net of promotional
discounts, rebates and return allowances.
The
Company does not recognize sales taxes collected from customers as
revenue.
DEFERRED REVENUE - One of the
Company’s subsidiaries, Voltage Vehicles, sold licenses to auto dealerships
under the ZAP name. The license agreements call for the licensee to purchase a
minimum number of vehicles from ZAP each year. As the Company
collects monies related to these agreements, it is classified as deferred
revenue until the Company begins delivering a substantial number of vehicles to
these dealerships on a regular basis over the terms of the agreement. The
Company has recognized approximately $53,000 of license revenue and other
adjustments for the three month period ended March 31, 2009, resulting in an
ending balance of $534,000.
USE OF ESTIMATES - The
preparation of financial statements in accordance with U.S. generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the Company’s consolidated financial
statements and accompanying notes. Estimates were made relating to
the useful lives of fixed assets, valuation allowances, impairment of assets and
valuation of stock-based compensation and contingencies. Actual results could
differ materially from those estimates.
ACCOUNTS RECEIVABLE - The
Company performs ongoing credit evaluations of its customers’ financial
condition and generally requires no collateral from its customers. The Company
maintains allowances for doubtful accounts for estimated losses resulting from
the inability of its customers to make required payments. If the financial
condition of the Company’s customers should deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required.
INVENTORY - The Company
maintains reserves for estimated excess, obsolete and damaged inventory based on
projected future shipments using historical selling rates, and taking into
account market conditions, inventory on-hand, purchase commitments, product
development plans and life expectancy, and competitive factors. If markets for
the Company’s products and corresponding demand were to decline, then additional
reserves may be deemed necessary. Inventories consist primarily of
vehicles, both gas and electric, parts and supplies, and finished goods and are
carried at the lower of cost (first-in, first-out method) or
market.
RECOVERY OF GOODWILL AND LONG-LIVED
ASSETS - The Company evaluates the recovery of its goodwill and
long-lived assets at least annually by analyzing its operating results and
considering significant events or changes in the business
environment.
WARRANTY - The Company
provides 30 to 90 day warranties on its personal electric products and records
the estimated cost of the product warranties at the date of sale. The estimated
cost of warranties has not been significant to date. Should actual failure rates
and material usage differ from our estimates, revisions to the warranty
obligation may be required.
The
Company has provided a 6 month warranty for the Xebra® vehicles and other
varying product warranties. At March 31, 2009, the Company has recorded a
warranty liability for $243,000 for estimated repair costs, down from $253,000
at December 31, 2008.
CASH AND CASH EQUIVALENTS -
The Company considers highly liquid investments with maturities from the date of
purchase of three months or less to be cash equivalents.
NOTE
3 STOCK-BASED COMPENSATION
We have
stock compensation plans for employees and directors, which are described in
Note 7 to our consolidated financial statements in our 2008Annual Report on Form
10-KSB as filed with the SEC on March 31, 2009. We recognize the stock-based
compensation expense over the requisite service period of the individual
grantees, which generally equals the vesting period. All of our stock-based
compensation is accounted for as an equity instrument.
Under the
provisions of SFAS 123R, we recorded $ 139,000 of stock compensation, net of
estimated forfeitures, in general and administrative expenses, in our
unaudited condensed consolidated statement of operations for the three months
ended March 31, 2009 . We utilized the Black-Scholes valuation model for
estimating the fair value of the stock compensation granted after the adoption
of SFAS 123R, with the following range of assumptions.
|
|
Three
Months Ended
March
31, 2009
|
|
Expected
Dividend yield
|
|
0%
|
|
Expected
volatility
|
|
|
109.68-106.38
|
|
Risk-free
interest rate
|
|
|
1.99-3.31%
|
|
Expected
life (in years) from grant date
|
|
|
2.5
to 6.00
|
|
Exercise
price
|
|
|
$0.50
to$1.26
|
|
The
dividend yield of zero is based on the fact that we have never paid cash
dividends and have no present intention to pay cash dividends. Expected
volatility is based upon historical volatility of our common stock over the
period commensurate with the expected life of the options. The risk-free
interest rate is derived from the average U.S. Treasury Constant Maturity Rate
during the period, which approximates the rate in effect at the time of the
grant. Our unvested options vest over the next three years. Our options
generally have a 10-year term. The expected term is calculated using the
simplified method prescribed by the SEC’s Staff Accounting Bulletin 107. There
was no activity in the stock option plans in the first quarter of 2009. We
estimate forfeitures of employee stock options and recognize compensation cost
only for those awards expected to vest. Forfeiture rates are determined based on
historical experience. Estimated forfeitures are adjusted to actual
forfeiture experience as needed.
A summary
of options under the Company’s stock option plans where there has been no
activity from December 31, 2008 through March 31, 2009 is as
follows:
|
Number
of
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
(in
years)
|
|
Aggregate
Intrinsic
Value
|
Outstanding
December 31, 2008
|
11,666,000
|
|
$
|
.96
|
|
8.0
|
|
|
Options
granted under the plan
|
—
|
|
|
|
|
|
|
|
Options
exercised
|
|
|
|
|
|
|
|
|
Options
forfeited and expired
|
|
|
|
|
|
|
|
|
Outstanding
March 31, 2009
|
11,666,000
|
|
$
|
1.03
|
|
8.0
|
|
|
Aggregate
intrinsic value is the sum of the amounts by which the quoted market price of
our stock exceeded the exercise price of the options at March 31, 2009, for
those options for which the quoted market price was in excess of the exercise
price (“in-the-money-options”). There were no options in the money at March 31,
2009.
As of
March 31, 2009, total compensation cost of unvested employee stock options is
$668,000. This cost is
expected to be recognized through September 2011. We recorded no income tax
benefits for stock-based compensation expense arrangements for the three months
ended March 31, 2009, as we have cumulative operating losses, for which a
valuation allowance has been established.
NOTE 4 INVENTORIES, NET-
Inventories are summarized as follows (thousands):
|
|
March
31,
2009
|
|
|
December
31,
2008
|
|
Vehicles
- conventional
|
|
$ |
494 |
|
|
$ |
518 |
|
Advanced
transportation vehicles
|
|
|
2,054 |
|
|
|
1,977 |
|
Parts
and supplies
|
|
|
736 |
|
|
|
721 |
|
Finished
goods
|
|
|
270 |
|
|
|
353 |
|
|
|
$ |
3,554 |
|
|
$ |
3,569 |
|
Less
- inventory reserve
|
|
$ |
(523 |
) |
|
$ |
(526 |
) |
|
|
$ |
3,031 |
|
|
$ |
3,043 |
|
NOTE
5 FINANCING ARRANGEMENT
PROMISSORY
NOTE
On July
30, 2008, ZAP (the “Company”) executed a Promissory Note for a $10 million
credit line (the “Note”) and a Deed of Trust, Assignment of Leases and Rents and
Security Agreement and Fixture Filing (the “Security Agreement”), both in favor
of Al Yousuf LLC (the “Lender”). The Al Yousuf Group is a Dubai-based
conglomerate and a major shareholder of ZAP. The President of Al Yousuf LLC is
Mr. Eqbal Al Yousuf who is also the Chairman of the Board of ZAP.
The
following description is a summary of the material terms and conditions of both
the Note and the Security Agreement.
The
maximum principal loan under the Note is $10,000,000. The initial outstanding
principal sum advanced to the Company is $1,760,000. This advance was used to
pay-off the existing secured note
payable
on the building which was held by an outside party. The Note matures February
28, 2010. Interest only payments are due under the Note monthly commencing
August 30, 2008. Other advances shall be for (i) the purposes of inventory from
June 1, 2008 consistent with the currently applicable budget of the Company, as
approved by its board of directors (an “Inventory Advance”) or (ii) general
working capital to be used consistently with the Company’s budget (a “Working
Capital Advance”). The interest rate shall accrue daily at a rate per annum
equal to the greater of (i) one month LIBOR plus 3% per annum and (ii) eight
percent (8.00%) per annum, commencing on the date of the
Note.
The Note
matures February 28, 2010. Interest only payments are due under the Note monthly
commencing August 30, 2008. Repayment of an Inventory Advance is due four (4)
months after the date of such Advance. Repayment of a Working Capital Advance is
due six (6) months after the date of such Advance. The repayment term may be
extended upon written request of the Company and at the Lender’s sole
discretion. The Note is pre-payable in whole or in part without penalty and upon
30 days’ written notice to Lender. All principal and interest due under the Note
is secured by the corporate headquarters building in Santa Rosa, California.
The Note
contains customary Events of Default, including but not limited to the
following: (i) failure by the Company to make any scheduled payment of
principal, interest or other amounts due under the Note, (ii) failure to pay-off
the Note upon the Maturity Date, (iii) any representation or warranty made in
the Loan Documents by the Company being found false in any material respect,
(iv) consent by the Company to appoint a conservator or liquidator in a
bankruptcy proceeding relating to the Company or all or substantially all of its
assets and (v) failure of the Company to maintain insurance required pursuant to
the Loan Documents. Upon the occurrence of an Event of Default, the Note shall
become due and payable and the interest rate shall increase by 3.00% per annum.
All principal and interest due under the Note is secured by the Company’s
corporate headquarters building.
The
majority of the Company’s Short-term and Long –Term debt is due on the
Promissory Note due to Al Yousuf.
SHORT-TERM
DEBT
As of
March 31, 2009 the Company had borrowed $3.5 million on the financing
facility with Al Yousuf for inventory and funding of operations. On July
30, 2008 the Company was also advanced $1.7 million on the promissory note with
Al Yousuf to pay-off the existing secured note on the Company’s
corporate headquarters building which was previously held by an outside
party. The total
indebtness due to Al Yousuf was $5.2 million and $4 million at March 31, 2009
and December 31, 2008 respectively. The note matures on February 28,
2010.
In
addition the Company borrowed $660,000 from Portable Energy LLC , a private
equity company equally owned 50% by ZAP and Al Yousuf. These borrowings are due
on demand.
CONVERTIBLE
DEBT
8% Senior
Convertible Notes
On
December 5, 2006, when the market price of the Company’s common stock was $0.89
per share, the Company entered into a Securities Purchase Agreement with three
institutional and accredited investors or purchasers pursuant to which the
Company sold to the purchasers $1.5 million aggregate principal amount of 8%
senior convertible notes due December 5, 2008 (the “Notes due 2008”) and
warrants to purchase 450,000 shares of common stock of the Company (the “Initial
Warrants”) in a private placement. The Notes due 2008 were originally
convertible at $1.00 per share (the “Conversion Price”) into 1,500,000 shares of
the Company’s common stock, subject to anti-dilution and other adjustments. The
Initial Warrants, each immediately exercisable and expiring on December 5, 2011,
are exercisable at $1.10 per share, subject to anti-dilution and other
adjustments.
On
February 20, 2007, when the market price of the Company’s common stock was $1.08
per share, the Company entered into a Purchase and Amendment Agreement (the
“Amendment”), amending the Securities Purchase Agreement entered into by the
Company on December 5, 2006 (the “Original Agreement” and as amended by the
Amendment, the “Agreement”), with several institutional and accredited investors
or purchasers pursuant to which the Company sold to the purchasers $1.2 million
aggregate principal amount of 8% senior convertible notes due February 2009 (the
“Notes due 2009” and with the Notes due 2008, the “Notes”) and warrants to
purchase 360,000 shares of the common stock of the Company (the “Additional
Warrants” and with the Initial Warrants, the “Warrants”), in a private
placement. The transaction closed on February 22, 2007 (the “February 2007
financing”). The Notes due 2009 were originally convertible at $1.00 per share
into 1,200,000 shares of the Company’s common stock, subject to anti-dilution
and other adjustments.
On June
26, 2007, the Company entered into an Amendment Agreement (the “Second
Amendment”) with the purchasers to adjust certain provisions of the Notes and
Initial Warrants as a consequence of selling shares to a third party investor
for per share consideration less than the conversion price of the Notes and
exercise price of the Initial Warrants. As a result, the conversion price of the
Notes was reduced to $0.72 per share.
On May 7,
2008, the Company entered into a settlement with Gemini Master Fund ,LTD and
Gemini Strategies, LLC, the holders of the 8% Senior Convertible
Notes. The agreement reached requires the termination and cancellation of the
notes in exchange for $475,000 in cash and 100,000 common shares of ZAP common
stock. In connection with the aforementioned agreement ZAP has obtained the
funds necessary for the payment of $475,000 through a note payable to Al Yousuf
LLC. Eqbal Al Yousuf, who is the Chairman of the Board of ZAP, is also the
President of Al Yousuf LLC.
The note
bears interest at the greater of 6 month LIBOR plus 250 basis points or 6% per
annum and may be converted in whole or in part into securities of the Company
November of 2008 in accordance with the terms of the note. The price
was agreed to be at 90% of the closing market price on the date selected for
conversion. As on November 13, 2008. On November 28, 2008, AL Yousuf converted
the debt of $492,000, which represents principle and interest into 2.1 million
shares of ZAP common Stock.
NOTE
7 INCOME TAXES
We
adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes – an Interpretation of FASB Statement No. 109, or FIN 48, on
January 1, 2007. Upon adoption of FIN 48, we commenced a review of our
tax position taken in our tax returns that remain subject to examination. Based
upon our review, we do not believe we have any unrecognized tax benefits or that
there is a material impact on our financial condition or results of operations
as a result of implementing FIN 48.
We file
income tax returns in the U.S. federal jurisdiction and various state and
foreign jurisdictions. We are subject to U.S. federal or state income tax
examinations by tax authorities for all years in which we reported net operating
losses that are being carried forward. We do not believe there will be any
material changes in our unrecognized tax positions over the next 12
months.
We
recognize interest and penalties accrued on any unrecognized tax benefits as a
component of income tax expense. As of the date of adoption of FIN 48, we did
not have any accrued interest or penalties associated with any unrecognized tax
benefits, nor was any interest expense recognized for the period ended March 31,
2009.
NOTE
8 SHAREHOLDERS’ EQUITY
ZAP’s
common stock is quoted on the OTC Bulletin Board under the symbol “ZAAP.
OB”
NOTE
9 RELATED PARTY TRANSACTIONS
Rental
arrangement
The
Company rents the retail car lot land and office from Mr. Steven Schneider, its
CEO and a major shareholder. These properties are used to operate the car outlet
and to store inventory. Rental expense was approximately $21,000 for both the
three months ended March 31, 2009 and 2008.
Financing provided to
the Company by Al Yousuf LLC
The
company entered into various financing arrangements during the second and third
quarter 2008 with The Al Yousuf Group who is a Dubai-based conglomerate and
a major shareholder of ZAP. The President of Al Yousuf LLC is Mr. Eqbal Al
Yousuf, who is also the Chairman of the Board of ZAP who arranged for the note
terms and provisions.
On July
30, 2008 we received a $10 million financing arrangement from the Al Yousuf
Group, a Dubai-based conglomerate to provide future working capital to ZAP and
help meet the growing demand for ZAP electric vehicles. The financing
arrangement allows for advances by ZAP over the next few years commencing
on the date of the Note. The initial outstanding principal sum advanced to the
Company is $1,760,000. This advance was used to pay-off the existing secured
note payable on the building. The Note matures February 28, 2010. Interest only
payments are due under the Note monthly commencing August 30, 2008. All
principal and interest due under the Note is secured by the corporate
headquarters building in Santa Rosa, California.
As of
March 31, 2009, the Company had borrowed $3.4 million for inventory and
operational funding. The total amounts due Al Yousuf including the building
mortgage mentioned above was $5.2 million.
On May
14, 2009 we received a Notice of Delinquent Payments from Mr. Hossein Haghighi,
the Chief Financial Officer of Al Yousuf LLC, notify us that an outstanding
principle for inventory advances of $2.3 million plus monthly interest payments
has not been paid as required by a $10 million Promissory Note. Mr.Haghighi
further indicated that AL Yousuf LLC intends to enforce the collection of the
total amounts due under the terms of the note against the Company. The
collateral for the note is our corporate headquarters building and land located
in Santa Rosa California.
The note
and terms and conditions of the note were arranged for the Company by Mr. Eqbal
Al Yousuf, after becoming our Director and Chairman of the Board of Directors.
Mr Eqbal Al Yousuf is also the President of Al Yousuf LLC. This $10 million
Promissory Note was discussed in Notes 5 and 11 in our Form 10K as of December
31, 2008 filed with the SEC on March 31, 2009.
Unless
the Company receives modifications of the note from Mr. Eqbal Al Yousuf, our
current Chairman of our Board of Directors and Al Yousuf LLC, it is unlikely
that the Company will be able to meet its obligations. The Company is currently
seeking modifications of the note with the aforementioned parties. The
management of ZAP is currently in dispute with Al Yousuf regarding the timing of
advance repayments.
The
Company is currently seeking outside financing . There can be no assurances that
additional financing would be available,or if it is available, that it would be
on terms acceptable to the Company. The Company’s future liquidity and capital
requirements will depend on numerous factors, including successful development,
marketing and sale of advanced technology vehicles, protection of intellectual
property rights, costs of developing its new products, including the necessary
intellectual property rights, obtaining regulatory approvals for its new
products, market acceptance of all of its products, existence of competing
products in its current and anticipated markets, and its ability to raise
capital in a timely manner. Management expects to be able to raise capital;
however the Company may not be able to obtain additional
financing
on acceptable terms or at all.
In
addition the Company borrowed $660,000 from Portable Energy LLC , a private
equity company equally owned 50% by ZAP and Al Yousuf. These borrowings are due
on demand.
NOTE 10 SEGMENT
REPORTING
In
accordance with the provisions of SFAS No. 131, the Company has identified three
reportable segments consisting of sales and marketing of electronic consumer
products, the Zappy 3 scooters and ATV’s, Rechargeable portable energy products,
operation of a retail car outlet and sales to and sales of advanced technology
vehicles for the Xebra (™) electric vehicles. These segments are
strategic business units that offer different services. They are
managed separately because each business requires different resources and
strategies. The Company’s chief operating decision making group,
which is comprised of the Chief Executive Officer and the senior executives of
each of ZAP’s strategic segments, regularly evaluate the financial information
about these segments in deciding how to allocate resources and in assessing
performance. The performance of each segment is measured based on its
profit or loss from operations before income taxes.
Electric
Consumer products and corporate expenses represent sales of our ZAPPY 3 which is
a three wheeled electric scooter and the overall corporate expenses for the
company. Many of these expenses relate to the overall development of our core
business, Electric Consumer Products.
Car
outlet represents the activity of a retail outlet that sells pre-owned
conventional vehicles and advanced technology vehicles, now the Xebra a
three-wheeled plug in electric vehicle to retail customers.
Advanced
Technology Vehicles represents the sales activity of advanced technology
vehicles, now the Xebra a three-wheeled plug in electric vehicle to ZAP Dealers
through-out the U.S.
SEGMENT
REPORTING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electronic
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
and
|
|
|
|
|
|
Advanced
|
|
|
|
|
|
|
Corporate
|
|
|
Car
|
|
|
Technology
|
|
|
|
|
|
|
Expenses
|
|
|
Outlet
|
|
|
Vehicles
|
|
|
Totals
|
|
For
the 3 months ended of March 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
$ |
158 |
|
|
$ |
582 |
|
|
$ |
336 |
|
|
$ |
1,076 |
|
Gross
profit
|
|
|
59 |
|
|
|
139 |
|
|
|
92 |
|
|
|
290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Net
Income (Loss)
|
|
|
(1,700 |
) |
|
|
35 |
|
|
|
(343 |
) |
|
|
(2,008 |
) |
Total
Assets
|
|
|
5,654 |
|
|
|
613 |
|
|
|
2,609 |
|
|
|
8,876 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For
the 3 months ended of March 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
$ |
129 |
|
|
$ |
292 |
|
|
$ |
635 |
|
|
$ |
1,056 |
|
Gross
profit (Loss)
|
|
|
(60 |
) |
|
|
51 |
|
|
|
103 |
|
|
|
94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
|
(2,281 |
) |
|
|
(55 |
) |
|
|
(23 |
) |
|
|
(2,359 |
) |
Total
Assets
|
|
|
8,523 |
|
|
|
593 |
|
|
|
1,197 |
|
|
|
10,313 |
|
NOTE
11 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
|
Three
Months Ended
March
31,
(in
thousands)
|
|
|
|
2009
|
|
|
2008
|
|
Cash
paid during the period for interest
|
|
$
|
76
|
|
|
$
|
15
|
|
Cash
paid during the period for income taxes
|
|
$
|
4
|
|
|
$
|
4
|
|
Non-cash
investing and financing activities:
|
|
|
|
|
|
|
|
|
Stock
and warrants issued for:
|
|
|
|
|
|
|
|
|
Re-payment
of 8% Senior debt
|
|
$
|
|
|
|
$
|
250
|
|
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
THIS
QUARTERLY REPORT OF FORM 10-Q, INCLUDING THE FOLLOWING MANAGEMENT’S DISCUSSION
AND ANALYSIS, AND OTHER REPORTS FILED BY THE REGISTRANT FROM TIME TO TIME WITH
THE SECURITIES AND EXCHANGE COMMISSION (COLLECTIVELY THE “FILINGS”) CONTAIN
FORWARD-LOOKING STATEMENTS WHICH ARE INTENDED TO CONVEY OUR EXPECTATIONS OR
PREDICTIONS REGARDING THE OCCURRENCE OF POSSIBLE FUTURE EVENTS OR THE EXISTENCE
OF TRENDS AND FACTORS THAT MAY IMPACT OUR FUTURE PLANS AND OPERATING RESULTS.
THESE FORWARD-LOOKING STATEMENTS ARE DERIVED, IN PART, FROM VARIOUS ASSUMPTIONS
AND ANALYSES WE HAVE MADE IN THE CONTEXT OF OUR CURRENT BUSINESS PLAN AND
INFORMATION CURRENTLY AVAILABLE TO US AND IN LIGHT OF OUR EXPERIENCE AND
PERCEPTIONS OF HISTORICAL TRENDS, CURRENT CONDITIONS AND EXPECTED FUTURE
DEVELOPMENTS AND OTHER FACTORS WE BELIEVE TO BE APPROPRIATE IN THE
CIRCUMSTANCES. YOU CAN GENERALLY IDENTIFY FORWARD-LOOKING STATEMENTS THROUGH
WORDS AND PHRASES SUCH AS “SEEK”, “ANTICIPATE”, “BELIEVE”, “ESTIMATE”, “EXPECT”,
“INTEND”, “PLAN”, “BUDGET”, “PROJECT”, “MAY BE”, “MAY CONTINUE”, “MAY LIKELY
RESULT”, AND SIMILAR EXPRESSIONS. WHEN READING ANY FORWARD-LOOKING STATEMENT
YOU
SHOULD
REMAIN MINDFUL THAT ALL FORWARD-LOOKING STATEMENTS ARE INHERENTLY UNCERTAIN AS
THEY ARE BASED ON CURRENT EXPECTATIONS AND ASSUMPTIONS CONCERNING FUTURE EVENTS
OR FUTURE PERFORMANCE OF OUR COMPANY, AND ARE SUBJECT TO RISKS, UNCERTAINTIES,
ASSUMPTIONS AND OTHER FACTORS RELATING TO OUR INDUSTRY AND RESULTS OF
OPERATIONS, INCLUDING BUT NOT LIMITED TO THE FOLLOWING FACTORS:
o
|
WHETHER
THE ALTERNATIVE ENERGY AND GAS-EFFICIENT VEHICLE MARKET FOROUR PRODUCTS
CONTINUES TO GROW AND, IF IT DOES, THE PACE AT WHICH IT MAY
GROW;
|
o
|
OUR
ABILITY TO ATTRACT AND RETAIN THE PERSONNEL QUALIFIED TO IMPLEMENTOUR
GROWTH STRATEGIES,
|
o
|
OUR
ABILITY TO OBTAIN APPROVAL FROM GOVERNMENT AUTHORITIES FOR
OURPRODUCTS;
|
o
|
OUR
ABILITY TO PROTECT THE PATENTS ON OUR PROPRIETARY
TECHNOLOGY;
|
o
|
OUR
ABILITY TO FUND OUR SHORT-TERM AND LONG-TERM FINANCING
NEEDS;
|
o
|
OUR
ABILITY TO COMPETE AGAINST LARGE COMPETITORS IN A RAPIDLY CHANGINGMARKET
FOR ELECTRIC AND GAS-EFFICIENT
VEHICLES;
|
o
|
CHANGES
IN OUR BUSINESS PLAN AND CORPORATE STRATEGIES;
AND
|
o
|
OTHER
RISKS AND UNCERTAINTIES DISCUSSED IN GREATER DETAIL IN VARIOUS SECTIONS OF
THIS REPORT, PARTICULARLY THE SECTION CAPTIONED “RISK
FACTORS.”
|
SHOULD
ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD THE
UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY
FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, EXPECTED, INTENDED OR
PLANNED.
EACH
FORWARD-LOOKING STATEMENT SHOULD BE READ IN CONTEXT WITH, AND WITH AN
UNDERSTANDING OF, THE VARIOUS OTHER DISCLOSURES CONCERNING OUR COMPANY AND OUR
BUSINESS MADE IN OUR FILINGS. YOU SHOULD NOT PLACE UNDUE RELIANCE ON ANY
FORWARD-LOOKING STATEMENT AS A PREDICTION OF ACTUAL RESULTS OR DEVELOPMENTS. WE
ARE NOT OBLIGATED TO UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENT CONTAINED IN
THIS REPORT TO REFLECT NEW EVENTS OR CIRCUMSTANCES UNLESS AND TO THE EXTENT
REQUIRED BY APPLICABLE LAW.
In this
quarterly report on Form 10-Q the terms “ZAP,” “Company,” “we,” “us” and “our”
refer to ZAP and its subsidiaries.
Overview
GENERAL
ZAP
stands for Zero Air Pollution(R). With its new product offerings,
the Company is positioned to become a leading brand and distribution portal
of electric and other advanced technology vehicles. ZAP is committed to
running its business based on a strong philosophical foundation that
supports the environment, social responsibility and
profitability.
ZAP’s
strategy is to serve the growing and underrepresented consumer that
seeks electric and fuel efficient vehicles. With the recent increases in
the cost of oil and increasing concern about the environment and the
effects of global warming, we believe there is a large and untapped demand in
the areas of transportation and consumer products. During the energy crisis
of the 1970s, Japanese automobile manufacturers penetrated the United
States market when domestic automobile manufacturers failed to anticipate
changes. ZAP believes a similar opportunity is present today, enhanced by
heightened environmental awareness, climate changes and economic pressures.
ZAP has assembled a complete line of products to meet the growing demands
of the environmentally conscious consumer focused on two primary businesses: ZAP
Automotive and ZAP Power Systems.
ZAP was
incorporated under the laws of the State of California, on September 23, 1994,
as “ZAP Power Systems.” The name of the Company was changed to “ZAPWORLD.COM” on
May 16, 1999 in order to increase our visibility in the world of electronic
commerce. We subsequently changed our name to ZAP on June 18, 2001 in order to
reflect our growth and entry into larger, more traditional markets. Our
principal executive offices are located at 501 Fourth Street Santa Rosa,
California, 95401. Our telephone number is (707) 525-8658. Our website is www.zapworld.com.
Please refer to it for further information on ZAP.
SUBSIDIARIES
We have
the following wholly owned subsidiaries : Voltage Vehicles, a
Nevada company (“Voltage Vehicles”), ZAP Rental Outlet, a Nevada company
(“ZAP Rentals”), ZAP Stores, Inc., a California company (“ZAP Stores”), ZAP
Manufacturing, Inc., a Nevada company (“ZAP Manufacturing”) and ZAP World
Outlet, Inc., a California company (“ZAP World”) ; Voltage Vehicles is engaged
primarily in the distribution and sale of advanced technology and
conventional automobiles; ZAP Stores is engaged primarily in consumer sales
of ZAP products at one location and ZAP Manufacturing is engaged primarily
in the distribution of ZAP products
Recent
Developments
Some of
the noteworthy events for the Company that occurred during the First quarter of
2009 and through the date of this report are as follows:
1.
|
We introduced a new XL Truck that
was designed with a cab for two and a sturdy bed platform capable of
transporting 800 lbs. for on-road use. This 100 percent plug-in electric
workhorse has convertible, drop-side bed construction to convert to a
flatbed.
|
2.
|
To
help fleets reduce emissions and operating expenses, we introduced a
five-passenger, 4-wheel, 100 percent, plug-in electric van. ZAP’s new
Shuttle was designed for passenger transport or cargo. The seats are
removable so it can convert into a cargo vehicle. The ZAP Shuttle was
designed for transportation around large campuses, to and from parking
lots, and, because it produces zero emissions, through factories,
warehouses and other indoor uses
|
3.
|
The
tax Stimulus Act signed into law by President Barack Obama recently
carries a provision in which buyers of our electric cars,
motorcycles and trucks can receive a 10 percent tax
credit.
|
Results
of Operations
The
following table sets forth, as a percentage of net sales, certain items included
in the Company’s Statements of Operations (see Financial Statements and
Notes) for the periods indicated:
|
Three
months ended March 31,
|
|
2009
|
|
2008
|
Statements of Operations
Data:
|
|
|
|
Net
sales
|
100%
|
|
100%
|
Cost
of sales
|
(73.0)
|
|
(91.1)
|
Operating
expenses
|
(200.5)
|
|
(227.6)
|
Loss
from operations
|
(173.5)
|
|
(218.7)
|
Net
loss
|
(186.7)
|
|
(223.2)
|
Quarter
Ended March 31, 2009 Compared to Quarter Ended March 31, 2008
Net sales for the quarter
ended March 31, 2009 were approximately $1.1million for both periods ended
March 31, 2009 and 2008. See Below.
Our first
quarter sales of Advanced Technology vehicles such as the Xebra, our three
wheeled electric car and Zapino, a full size electric road scooter decreased by
$299,000 from $635,000 in 2008 to $336,000 in 2009. The tight US credit
market and general economic conditions negatively impacted our dealer
sales in 2009.
In our
Consumer Product segment first quarter sales increased by $32,000 from $129,000
in 2008 to $161,000 in 2009. The increase was due to sales of our new model of
the ZAPPY PRO received in the first quarter of 2009.
We
experienced an increase in retail sales by our car lot in the first quarter of
$290,000 from $292,000 in 2008 to $582,000 in 2009. The increase was due to a
better mix of energy efficient cars and lower cost car models.
Gross profit increased by
$196,000 from $94,000 for the first quarter ended March 31, 2008 to $290,000 for
the quarter ended March 31, 2009. The gross margin for the first
quarter on 2009 was 27% versus 9% in 2008. See Below.
The first
quarter gross profits for our Advanced Technology vehicles
decreased by $11,000 from $103,000 in 2008 to $92,000 in 2009. The
decrease was primarily due to less vehicles sales in 2009.
The
Consumer Products segment experienced a increase of $119,000 in gross profits in
the first quarter of 2009 from a gross loss of $59,000 in 2008
to a gross profit of $60,000 in 2009. The primary reason for the increase was
due to new ZAPPY Pro Scooters with better quality.
The gross
profits in the first quarter for our car lot sales increased from $51,000 or 20%
of sales in 2008 to $139,000 or 24% of sales in 2009. The higher profits are due
to the mix of vehicle models sold during the quarter.
Sales and marketing expenses
increased by $16,000 from $390,000 for the quarter ended March 31, 2008 to
$406,000 in 2009. As a percentage of sales it represents an increase
from 36% to 37%. The primary reason for the increase was increased incentives
for salespeople to partially offset the very tight credit economy in
2009.
General and
administrative expenses decreased by $539,000
from $2 million for the quarter ended March 31, 2008 to $1.5 million
in 2009. The decrease was due to less professional fees and other operational
expenses as a result of cut-backs in personnel.
Impairment of assets
represents amounts paid by us to outside contract manufactures that are being
disputed by them. The disputes represent pricing and shipping issues. We are
uncertain if these disputes can be favorably resolved by us. We are however
seeking full repayment of the amounts.
Research and development
expenses increased by $16,000 from $15,000
in 2008 to $31,000 in 2009. The increase was primarily due to the building of
another working prototype of our concept vehicle the Alias.
Interest expense, net
increased from an expense of $46,000 in first quarter 2008 to
$137,000 in first quarter of 2009. The increase was due to interest expense
on higher loan advances from Al Yousuf.
Other income (expense), net
the change in other income was minor at
$1,000.
Net Loss for the quarter ended
March 31, 2009 was $2 million compared to a net loss of $2.4 million for period
ended March 31, 2008.
Liquidity and Capital
Resources
In the
first three months of 2009 net cash used for operating activities was $1.4
million. Cash used in the first three months of 2009 was comprised of the net
loss incurred for the first three months of $2 million plus net non-cash
expenses of $1.1 million and the net decrease of $450,000 in operating assets
and liabilities. In the first three months of 2008, the Company used cash for
operations of $1.9 million was comprised of the net loss of $2.4 million plus
net non-cash expenses of $1.6 million, and the net decrease in operating assets
and liabilities of $1.1 million.
Investing
activities provided cash of $241,000 and $130,000 in the first three months
ended March 31, 2009 and 2008 respectively. The increase in cash was due to
disposal of property and equipment.
Financing
activities for the first three months ended March 31, 2009 provided cash of $1.1
million compared with investing activities using cash of $26,000 in 2008. In
2009, we borrowed $2.9 million in advances from the credit facility from Al
Yousuf LLC. In 2008 we use cash to make payments on long term
debt.
The
Company had cash of $374,000 at March 31, 2009 as compared to $2.5 million at
March 31, 2008. The Company had working capital deficit of $1.1
million and working capital of $2.9 million for the periods ended March 31, 2009
and 2008 respectively.
On July
30, 2008 we received a $10 million financing arrangement from the Al Yousuf
Group, a Dubai-based conglomerate to provide future working capital to ZAP and
help meet the growing demand for ZAP electric vehicles. The Al-Yousuf group is a
major investor of ours and the President of Al-Yousuf, Mr. Eqbal Al-Yousuf is
our Chairman of the Board. The financing arrangement allows for advances by ZAP
over the next few years commencing on the date of the Note.
CRITICAL
ACCOUNTING POLICIES
Revenue
Recognition
The
Company records revenues only upon the occurrence of all of the following
conditions:
The
Company has received a binding purchase order or similar commitment 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 distribution center to a common
carrier acceptable to the purchaser. The Company’s customary shipping terms are
FOB shipping point; and
The
Company deems the collection of the amount invoiced probable.
The
Company provides no price protection. Product sales are net of promotional
discounts, rebates and return allowances.
The
Company does not recognize sales taxes collected from customers as
revenue.
Allowance for Doubtful
Accounts
The
Company performs ongoing credit evaluations of its customers’ financial
condition and, generally, requires no collateral from its customers. The Company
records an allowance for doubtful accounts receivable for credit losses at the
end of each period based on an analysis of individual aged accounts receivable
balances. As a result of this analysis, the Company believes that its allowance
for doubtful accounts is adequate at March 31, 2009 and 2008, respectively. If
the financial condition of the Company’s customers should deteriorate, resulting
in an impairment of their ability to make payments, additional allowances may be
required.
Inventory
Valuation
We adjust
the value of our inventory for estimated obsolescence or unmarketable inventory
equal to the difference between the cost of inventory and the estimated market
value based upon assumptions about future demand and market conditions and
development of new products by our competitors. Inventories consist
primarily of vehicles, both gas and electric, parts and supplies, and finished
goods, and are carried at the lower of cost (first-in, first-out method) or
market.
Deferred Tax Asset
Realization
We record
a full valuation allowance to reduce our deferred tax assets to the amount that
is more likely than not to be realized. While we have considered
future taxable income and ongoing prudent and feasible tax planning strategies
in assessing the need for the valuation allowance, in the event we were to
determine that we would be able to realize our deferred tax assets in the future
in excess of its net recorded amount, an adjustment to the deferred tax asset
would increase income in the period such determination was made.
BUSINESS
DEVELOPMENT
Founded
in 1994, ZAP has invented, designed, manufactured, and marketed
numerous innovative products since the Company’s inception. In 1995, ZAP
began marketing electric transportation on the Internet through our
website, www.zapworld.com. ZAP
has been a pioneer in developing and marketing electric vehicles such as
a zero-emission ZAP(R) electric bicycle, ZAP Power System, which adapts to
most bicycles, and the ZAPPY(R) folding electric scooter. From 1996 through
1998, we continued to add to our product line; in 1999, ZAP added electric
motorbikes; in 2001, it added electric dive scooters; in 2003, ZAP
announced its first electric automobiles, including the first-ever
production electric automobile imported from its manufacturing partner in
China; in 2004 ZAP introduced electric all-terrain vehicles and the
fuel-efficient Smart Car; and in 2005 ZAP introduced multi-fuel vehicles,
capable of running on ethanol and/or gasoline. To date, we have delivered
more than 100,000 electric vehicles and consumer products to customers in
more than 75 countries, which we believe establishes us as one of the
leaders in the alternative transportation marketplace.
Today,
ZAP is continuing its focus as one of the pioneers of
advanced transportation technologies and leveraging its place in the market
as a magnet for new technologies. The Company believes there is a growing
and underrepresented market for fuel efficient transportation vehicles and
we are capitalizing on the opportunities enhanced by heightened
environmental awareness, climate changes and economic pressures. The
technology is available to deliver transportation solutions that are
practical and affordable. With our products such as the XEBRA and ZAPPY 3,
ZAP is already delivering such solutions to the market. Our goal is to
become one of the largest and most complete brand and distribution portals
in the United States for advanced technology vehicles and 100% plug-in
electrics.
To
distribute our practical, affordable and advanced
transportation technologies, we have established and are growing both our
portal of qualified automotive dealers and our relationships with specialty
dealers/distributors for our power system products. Through these distribution
channels, coupled with the continued establishment of partnerships with select
manufacturers, we intend to expand our market recognition by building
awareness of the evolving technologies available for automotive
transportation and in reducing our nation’s dependency on foreign
oil.
PRODUCT
SUMMARY
Our
existing product line, which includes completed, market ready products
and planned introductions, is as follows:
ZAP
AUTOMOTIVE
ZAP
believes it is positioned to become one of the leading distributors of
fuel efficient alternative energy vehicles in the United States. We believe
that we are one of only a few companies distributing a 100% production
electric vehicle capable of speeds up to 40 mph. Within the next twelve to
thirty-six months, we hope to have distribution agreements in place with
vehicle manufacturers whose products fit ZAP’s mission. To distribute
our product to end consumers and fleets, we have established more than 50
licensed automotive dealers and intend to grow this base significantly over
the next several years.
In 2006,
ZAP Automotive introduced the following automobile products:
o
|
the
100% electric XEBRA sedan with an MSRP of
approximately$11,000;
|
o
|
the
100% electric XEBRA utility vehicle truck with an MSRP of approximately
$12,000; and
|
In 2007,
ZAP Automotive introduced a new electric scooter, the ZAPINO, with an advanced
3,000 watt brushless DC hub motor, perfect for city commuting and able to
reach speeds of 30 MPH with an MSRP of $3,500.
Our
future offerings that are currently in the developmental stage
include:
o
|
The
ZAP Alias, which has a target price of $32,500 per vehicle and an
estimated range of 100 miles per charge. This vehicle launch date is for
late in 2009.
|
o
|
The
ZAP Truck XL, which is a low speed 4 wheel utility truck and having a MSRP
of approximately $14,900.
|
We are
also in discussions with other foreign manufacturers and hope to establish
additional relationships within the next twelve to thirty-six months for
other vehicle platforms.
XEBRA
We
believe that XEBRA is the only series production electric vehicle in
the United States that can legally travel faster than 25 mph. The car’s
suggested retail price of $11,000 is significantly less expensive than most
of its competitors, some of which cost more than $100,000 and are not yet
widely available today. XEBRA has three wheels and is being imported as a
motor-driven cycle, yet, unlike most other motor-driven cycles, the XEBRA
is enclosed with windows and a roof, affording it protection from inclement
weather.
XEBRA
Sedan (ZAPCAR (R))
ZAP
launched the sedan version of its XEBRA ZAPCAR on July 11, 2006. The
sedan has a seating capacity for four and is being targeted for
city/commuter use. Based on initial feedback, ZAP will be marketing the
XEBRA sedan to government and corporate fleets as well as to families with
two or more cars, but with plenty of occasion to use their vehicles for
short, city drives.
XEBRA PK
(ZAPTRUCK(R))
ZAP
launched its utility pick-up truck version of the XEBRA, the XEBRA
ZAPTRUCK, on August 24, 2006. This electric vehicle seats two with a
multi-purpose platform behind the passenger compartment that serves as a
hauler, dump truck or flatbed. The XEBRA ZAPTRUCK is targeted to
municipalities, maintenance facilities, universities, ranches and
warehouses. Since its launch, we have received overwhelming inquiries for
test drives. To date, we have focused on our west coast market and sales
have exceeded our initial distribution and sales plans.
LOTUS
In 2007,
we announced and entered into a development and feasibility contract with
Lotus Engineering to develop an electric all-wheel drive crossover high
performance vehicle for the U.S. market.
We
are developing a $35,000 all electric vehicle with a targeted 100
mile range, the ZAP Alias (TM).
Future Automotive
Offerings
Over the
next 36 months, we hope to establish relationships with additional manufacturers
who can supply automobiles and related vehicles that meet our mission of
affordable, advanced transportation technologies that are socially
responsible and environmentally sustainable. In 2008, we have identified
the following products as potential future offerings for the Company: (1)
an affordable 100% electric two-seater sports coupe; (2) a high performance
highway all electric vehicle and (3) electric trucks.
ZAP Power
Systems
We
launched the Company in 1994 with the invention of the ZAPPY electric
scooter and quickly established a presence as one of the market leaders in
the electric “personal” transportation product segment. Since inception,
the Company has been able to maintain a steady business and committed
buyers in this segment. In keeping with our initial product offerings, at
the beginning of 2006, we revitalized our consumer products line (recently
renamed “Power Systems”), including an updated version of the electric
scooter. As part of the segment’s revitalization, we reduced the number of
suppliers and placed more
emphasis
on upgrading existing models with newer component technology and more
robust features in order to provide a higher quality consumer experience
and product.
Our
current product offerings include:
o
|
Three-wheeled
personal transporters (ZAPPY3, ZAPPY3 Pro,
ZAPPY3 EZ);
|
o
|
Off-road
vehicles (electric quads and motorcycles);
and
|
o
|
Portable
energy (universal recharge-it-all batteries and auxiliary
batteries).
|
The ZAPPY
3 Personal Transporters
Seaway’s
highly publicized “human transporter to change the world” unearthed
a growing need for a “scooter for adults,” better known as personal
electric transportation. The Company responded to this demand by designing
the ZAPPY3. Unlike the Segway, the ZAPPY3’s 3-wheeled vehicle design
provides stability and maneuverability allowing just about anyone to ride
this vehicle without training. It has a top speed of 15 mph.
The
ZAPPY3 retail focus has continued strong in 2009. As the product line
has gained momentum and market acceptance, we plan to grow distribution in
the retail channel through larger regional and specialized chain
stores.
The
material handling, warehousing, fabrication, and construction industries
are the ideal markets for the ZAPPY3 Pro. We are not currently aware of any
major competitors in this market. The traditional solution for short
distance transportation has been bicycles. The ZAPPY Pro offers the perfect
utility vehicle for shuttling, picking and packing and getting into small
areas like elevators. While the Company’s entrance into this market is
still in the early stages, the product response has been very favorable,
demonstrated by our newly established relationship with Indoff, the largest
distributor of material handling equipment in the United
States.
The
Zapino is an electric scooter that is a great link between ZAP’s
personal transporters and electric cars. Not only economical and
eco-friendly, the Zapino is powerful with an advanced 3000-watt brushless
DC hub motor, perfect for city commuting. Able to reach speeds of 30 MPH,
the Zapino is able to keep up with city traffic without contributing to
city pollution. The rear wheel hub motor on the Zapino creates more room on
board for additional batteries and performance. This innovative drive
system eliminates the need for belts or chains with lower overall maintenance.
It also delivers a more enjoyable ride because it is nearly silent,
accelerates smoothly with no shifting, has no engine vibration, no tailpipe
or heat exhaust -- just good, clean fun.
Off-Road
Vehicles
All
terrain vehicle (“ATV”) manufacturers recognized in excess of $5.0
billion in revenues in 2006 with the market for ATVs. In the United States
alone, approximately 800,000 units were sold in 2006. To date, most of the
ATV’s on the market are gas-powered. We believe electric ATV’s have
practical environmental benefits over their gas-powered counterparts: they
are silent and generate no emissions. Moreover, there are now over 8,000
organic farms in the United States which are committed to reducing
pollutants that may put organic certification at risk. The electric ATVs
can provide the ruggedness of the traditional ATV in areas never before
accessible, while being more versatile than golf carts.
We
entered the electric ATV market in 2006 with our ZAP Buzz mini ATV. The Buzz has
a 450 watt geared-motor and a top speed of 15 mph with a range
of approximately 20 miles. In the 1st quarter of 2007, we introduced the
800 watt “mid size” ATV for sale in the United States and some of our
existing ZAP dealers already have placed preorders. We launched a
heavy duty ATV in the 4th quarter 2008 with product features and styling
comparable to existing gas-models. We believe our position as an innovator
in the electric vehicle market, coupled with first-mover advantage in the
electric ATV market, will allow us to capitalize on this market segment. If
we are able to capture 1% of the all terrain vehicle market share, it could
equate to over $40 million in revenues per year. However, there can be no
assurances that we will be able to achieve such market share.
Portable
Energy - Recharge-It -All Batteries
We
believe we were one of the first and now one of the leading producers
of rechargeable battery sources using lithium-ion and lithium polymer
technology. Through our Recharge-It-All line, we sell battery packs to
power or charge a wide range of mobile electronics such as cellular phones,
digital cameras and laptops, providing significantly more charge time than
currently available technologies. Our Portable Energy devices fall under
two product lines: universal chargers and made-for iPOD models. The
universal chargers are rechargeable battery packs that extend the use of
most small and medium-sized electronic devices up to 2 to 5 times their
normal battery life. The made-for iPOD models are a series of portable
energy devices designed to work specifically with all the major iPOD
products, including the iPOD, iPOD nano, iPOD shuffle and the iPOD with
video.
We
launched our Portable Energy products at the end of 2006 with
marketing targeted to large electronic retailers. Market statistics
indicate that there will be over two billion users of mobile electronic
devices by the end of 2007.
Our goal
with Portable Energy is to provide a solution that helps solve the energy
management challenge for electronic and mobile internet users.
In June
of 2008 we transferred the assets of the portable energy product line to a new
Company called Portable Energy LLC in return for a 50% interest.
Risk
factors
We have a
history of losses and our future profitability on a quarterly or annual basis is
uncertain, which could have a harmful effect on our business and the value of
ZAP’s common stock.
We
incurred net losses of $2 million, $9.8 million, $28 million, for the three
months ended March 31, 2009 and the years ended December 31, 2008,
2007 respectively. We can give no assurance that we will be able to
operate profitably in the future.
We
face intense competition which could cause us to lose market
share.
In the
advanced technology vehicle market in the United States, we compete with large
manufacturers, including Honda, Toyota, and Daimler-Chrysler, who have more
significant financial resources, established market positions, long-standing
relationships with customers and dealers, and who have more significant name
recognition, technical, marketing, sales, manufacturing, distribution, financial
and other resources than we do. Each of these companies is currently
working to develop, market, and sell advanced technology vehicles in the United
States market. The resources available to our competitors to develop
new products and introduce them into the marketplace exceed the resources
currently available to us. We also face competition from smaller
companies with respect to our consumer products, such as our electric bicycle
and scooter. We expect to face competition from the makers of
consumer batteries and small electronics with respect to the ZAP Portable Energy
line. This intense competitive environment may require us to make
changes in our products, pricing, licensing, services, distribution, or
marketing to develop, maintain, and extend our current technology and market
position.
Changes in the market for electric
vehicles could cause our products to become obsolete or lose
popularity.
The
electric vehicle industry is in its infancy and has experienced substantial
change in the last few years. To-date, demand for and interest in
electric vehicles has been sporadic. As a result, growth in the
electric vehicle industry depends on many factors, including:
·
|
continued
development of product technology;
|
·
|
the
environmental consciousness of
customers;
|
·
|
the
ability of electric vehicles to successfully compete with vehicles powered
by internal combustion engines;
|
·
|
widespread
electricity shortages and the resultant increase in electricity prices,
especially in our primary market, California, which could derail our past
and present efforts to promote electric vehicles as a practical solution
to vehicles which require gasoline;
and
|
·
|
whether
future regulation and legislation requiring increased use of nonpolluting
vehicles is enacted.
|
We cannot
assure you that growth in the electric vehicle industry will
continue. Our business may suffer if the electric vehicle industry
does not grow or grows more slowly than it has in recent years or if we are
unable to maintain the pace of industry demands.
We
may be unable to keep up with changes in electric vehicle technology and, as a
result, may suffer a decline in our competitive
position.
Our
current products are designed for use with, and are dependent upon, existing
electric vehicle technology. As technologies change, we plan to
upgrade or adapt our products in order to continue to provide products with the
latest technology. However, our products may become obsolete or our
research and development efforts may not be sufficient to adapt to changes in or
create necessary technology. As a result, our potential inability to
adapt and develop the necessary technology may harm our competitive
position.
The
failure of certain key suppliers to provide us with components could have a
severe and negative impact upon our business.
We rely
on a small group of suppliers to provide us with components for our products,
some of whom are located outside of the United States. If these
suppliers become unwilling or unable to provide components, there are a limited
number of alternative suppliers who could provide them. Changes in
business conditions, wars, governmental changes, and other factors beyond our
control or which we do not presently
anticipate
could affect our ability to receive components from our
suppliers. Further, it could be difficult to find replacement
components if our current suppliers fail to provide the parts needed for these
products. A failure by our major suppliers to provide these
components could severely restrict our ability to manufacture our products and
prevent us from fulfilling customer orders in a timely
fashion.
Product
liability or other claims could have a material adverse effect on our
business.
The risk
of product liability claims, product recalls, and associated adverse publicity
is inherent in the manufacturing, marketing, and sale of electrical
vehicles. Although we have product liability insurance for our
consumer products for risks of up to an aggregate of $5,000,000, that insurance
may be inadequate to cover all potential product claims. We also
carry liability insurance on our automobile products. Any product
recall or lawsuit seeking significant monetary damages either in excess of our
coverage, or outside of our coverage, may have a material adverse effect on our
business and financial condition. We may not be able to secure
additional product liability insurance coverage on acceptable terms or at
reasonable costs when needed. A successful product liability claim
against us could require us to pay a substantial monetary
award. Moreover, a product recall could generate substantial negative
publicity about our products and business and inhibit or prevent
commercialization of other future product candidates. We cannot
assure you that such claims and/or recalls will not be made in the
future.
We
must devote substantial resources to implementing a product distribution
network.
Our
dealers are often hesitant to provide their own financing to contribute to our
product distribution network. As a result, we anticipate that we may
have to provide financing or other consignment sale arrangements for dealers who
would like to participate as our regional distribution
centers.
The
further expansion of our product distribution network will require a significant
capital investment and will require extensive amounts of time from our
management. A capital investment such as this presents many risks,
foremost among them being that we may not realize a significant return on our
investment if the network is not profitable. Our inability to collect
receivables from our dealers could cause us to suffer losses. Lastly,
the amount of time that our management will need to devote to this project may
divert them from performing other functions necessary to assure the success of
our business.
Failure to manage our growth
effectively could adversely affect our business.
We plan
to increase sales and expand our operations substantially during the next
several years through internally-generated growth and the acquisition of
businesses and products.
To manage
our growth, we believe we must continue to implement and improve our
operational, manufacturing, and research and development
departments. We may not have adequately evaluated the costs and risks
associated with this expansion, and our systems, procedures, and controls may
not be adequate to support our operations. In addition, our
management may not be able to achieve the rapid execution necessary to
successfully offer our products and services and implement our business plan on
a profitable basis. The success of our future operating activities
will also depend upon our ability to expand our support system to meet the
demands of our growing business. Any failure by our management to
effectively anticipate, implement, and manage changes required to sustain our
growth would have a material adverse effect on our business, financial
condition, and results of operations. We cannot assure you that we
will be able to successfully operate acquired businesses, become profitable in
the future, or effectively manage any other change. An inability to
successfully operate recently acquired businesses and manage existing business
would harm our operations.
The loss of certain key personnel
could significantly harm our business.
The
Company’s performance is substantially dependent upon the services of its
executive officers and other key employees, as well as on its ability to
recruit, retain, and motivate other officers and key employees. Competition for
qualified personnel is intense and there are a limited number of people with
knowledge of and experience in the advanced technology vehicle industry. The
loss of services of any of our officers or key employees, or our inability to
hire and retain a sufficient number of qualified employees, will harm our
business. Specifically, the loss of Mr. Schneider, our Chief Executive Officer
or Mr. Starr, our co-founder, whose specialized knowledge of the electric
vehicle industry is essential to our business, would be detrimental. We have
employment agreements with Mr. Schneider and Mr. Starr that provide for their
continued service to the Company until October 1, 2013.
Regulatory
requirements may have a negative impact upon our business.
While our
products are subject to substantial regulation under federal, state, and local
laws, we believe that the products we have sold are materially in compliance
with all applicable laws. However, to the extent the laws change, or
if we introduce new products in the future, some or all of our products may not
comply with applicable federal, state, or local laws. Further,
certain federal, state, and local laws and industrial standards currently
regulate electrical and electronics equipment. Although standards for
electric vehicles are not yet generally available or accepted as industry
standards, our products may become subject to federal, state, and local
regulation in the future. Compliance with this regulation could be
burdensome, time consuming, and expensive.
Our
automobile products are subject to environmental and safety compliance with
various federal and state regulations, including regulations promulgated by the
EPA, NHTSA, and Air Resource Board of the State of California, and compliance
certification is required for each new model year. The cost of these
compliance activities and the delays and risks associated with obtaining
approval can be substantial. Although the Company had marketed its
Smart Car product in the United States, the car must be certified by the
California Air Resources Board before it can be sold in California, New York,
and three other states. In addition, the two models of our OBVIO
products will need to satisfy all regulatory requirements before they can be
sold in the United States. The risks, delays, and expenses incurred
in connection with such compliance could be
substantial.
Manufacturing
overseas may cause problems for us.
We have
been shifting our manufacturing overseas. There are many risks associated with
international business. These risks include, but are not limited to,
language barriers, fluctuations in currency exchange rates, political and
economic instability, regulatory compliance difficulties, problems enforcing
agreements, and greater exposure of our intellectual property to markets where a
high probability of unlawful appropriation may occur. A failure to
successfully mitigate any of these potential risks could damage our
business.
We
may not be able to protect our internet address.
We
currently hold the internet address, http://www.zapworld.com, a portal through
which we sell our products. We may not be able to prevent third
parties from acquiring internet addresses that are confusingly similar to our
address, which could adversely affect our business. Governmental
agencies and their designees generally regulate the acquisition and maintenance
of internet addresses. However, the regulation of internet addresses
in the United States and in foreign countries is subject to
change. As a result, we may not be able to acquire or maintain
relevant internet addresses in all countries where we conduct
business.
Our
success is heavily dependent on protecting our intellectual property
rights.
We rely
on a combination of patent, copyright, trademark, and trade secret protections
to protect our proprietary technology. Our success will, in part,
depend on our ability to obtain trademarks and
patents. We
hold several patents registered with the United States Patent and Trademark
Office. These registrations include both design patents and utility
patents. In addition, we have recently submitted provisional patents
which may or may not be afforded the limited protection associated with
provisional patents. We have also registered numerous trademarks with
the United States Patent and Trademark Office, and have several pending at this
time. We cannot assure you that the trademarks and patents issued to
us will not be challenged, invalidated, or circumvented, or that the rights
granted under those registrations will provide competitive advantages to
us.
We also
rely on trade secrets and new technologies to maintain our competitive
position. Although we have entered into confidentiality agreements
with our employees and consultants, we cannot be certain that others will not
gain access to these trade secrets. Others may independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to our trade secrets.
We
may be exposed to liability for infringing intellectual property rights of other
companies.
Our
success will, in part, depend on our ability to operate without infringing on
the proprietary rights of others. Although we have conducted searches
and are not aware of any patents and trademarks which our products or their use
might infringe, we cannot be certain that infringement has not or will not
occur. We could incur substantial costs, in addition to the great
amount of time lost, in defending any patent or trademark infringement suits or
in asserting any patent or trademark rights, in a suit with another
party.
Risk
of Unregistered Securities Offering.
In the
past, we have had numerous sales of our securities which were not registered
under federal or state securities laws. We have strived to comply
with all applicable Federal and state securities laws in connection with our
issuances of unregistered securities. However, to the extent we have
not complied, there may be liability for the purchase price of the securities
sold together with interest and the potential of regulatory
sanctions.
Our
stock price and trading volume may be volatile, which could result in
substantial losses for our stockholders.
The
equity trading markets may experience periods of volatility, which could result
in highly variable and unpredictable pricing of equity
securities. The market price of our common stock could change in ways
that may or may not be related to our business, our industry or our operating
performance and financial condition. In addition, the trading volume
in our common stock may fluctuate and cause significant price variations to
occur. We have experienced significant volatility in the price of our
stock over the past few years. We cannot assure you that the market
price of our common stock will not fluctuate or decline significantly in the
future. In addition, the stock markets in general can experience considerable
price and volume fluctuations.
We have
not paid cash dividends on our common stock and do not anticipate paying any
cash dividends on our common stock in the foreseeable future.
We have
not achieved profitable operations and if we do realize a profit in the future,
we anticipate that we will retain all future earnings and other cash resources
for the future operation and development of our
business. Accordingly, we do not intend to declare or pay any cash
dividends on our common stock in the foreseeable future. Payment of
any future dividends will be at the direction of our board of directors after
taking into account many factors, including our operating results, financial
conditions, current and anticipated cash needs and plans for
expansion.
Seasonality
and Quarterly Results
The
Company’s business is subject to seasonal influences for consumer products.
Sales volumes in this industry typically slow down during the winter months,
November to March in the U.S. The Company’s auto distribution network is
affected by the availability of cars ready to sell to dealers.
Inflation
Our raw
materials and finished products and automobiles are sourced from stable,
cost-competitive industries. As such, we do not foresee any material
inflationary trends for our product sources.
Item
4T. Controls and Procedures
Disclosure
Controls and Procedures
Our
management, under the supervision and with the participation of the Chief
Executive Officer and Chief Financial Officer, conducted an evaluation of the
effectiveness of our disclosure controls and procedures (as such term is defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) as of the end of the period covered by this
report. Based on this evaluation, the Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of such period, our
disclosure controls and procedures are effective in recording, processing,
summarizing and reporting, on a timely basis, information required to be
disclosed by us in the reports filed, furnished or submitted under the Exchange
Act. Our Chief Executive Officer and Chief Financial Officer also concluded that
our disclosure controls and procedures are effective to ensure that information
required to be disclosed in the reports that we file or submit under the
Exchange Act is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosures.
Changes
in Internal Control Over Financial Reporting
There
were no changes in our internal control over financial reporting (as defined in
Rule 13a-15(f) of the Exchange Act) that occurred during the period covered by
this report that have materially affected, or are reasonably likely to
materially affect, our internal controls over financial reporting.
PART
II - OTHER INFORMATION
ITEM 1. LEGAL
PROCEEDINGS.
In the
normal course of business, we may become involved in various legal proceedings.
Except as stated below, we know of no pending or threatened legal proceeding to
which we are or will be a party which, if successful, might result in a material
adverse change in our business, properties or financial condition. However, as
with most businesses, we are occasionally parties to lawsuits incidental to our
business, none of which are anticipated to have a material adverse impact on our
financial position, results of operations, liquidity or cash flows. The Company
estimates the amount of potential exposure it may have with respect to
litigation claims and assessments.
Robert Chauvin;
Mary Chauvin; Rajun Cajun, Inc. dba ZAP of Carson City, dba ZAP of Reno, dba ZAP
of Sparks (“Robert Chauvin, et al.”) v. Voltage Vehicles; ZAP; ZAP Power Systems
Inc.; ZAPWORLDCOM; Elliot Winfield; Steven Schneider; Phillip Terrazzi; Max
Scheder-Breschin; Renay Cude; [sic] and Does I-XX, Second Judicial
District Court State of Nevada, County of Washoe, Case No. CV06 02767. On
November 17, 2006, Robert Chauvin, et al. filed a complaint alleging breach of
contract, breach of the covenant of good faith and fair dealing, breach of
warranties, fraud/misrepresentation, negligent misrepresentation, quantum merit
or unjust enrichment, civil conspiracy, violation of Security [sic] and Exchange
Act/federal securities law, and deceptive trade practices, pursuant to a License
Agreement (for a distribution license) entered into between
Rajun
Cajun, Inc. dba ZAP of Carson City, dba ZAP of Reno, dba ZAP of Sparks (“Rajun
Cajun”) and Voltage Vehicles. The complaint seeks general damages in an amount
in excess of $10,000, special damages in an amount in excess of $10,000,
punitive damages in an amount in excess of $10,000, attorneys’ fees and cost of
suit, for judgment in an amount equal to treble actual damages, and recession in
the amounts of $397,900 and $120,000. On January 19, 2007, defendants Voltage
Vehicles and ZAP filed a Motion to Dismiss on the grounds that the License
Agreement entered into between Rajun Cajun and Voltage contains a forum
selection clause designating Sonoma County, State of California as the only
appropriate forum. The court granted that Motion on April 13, 2007. In its order
on that motion, the court also found that all other motions pending in the
Nevada court in this matter are now moot. (As of that time, the following
motions were still pending: (1) Chauvin, et al.’s Notices of Intent to Take
Default against two of the named corporate defendants and against the individual
defendants, except Renay Cude; (2) a Motion to Quash Service of Process or
Alternatively for Dismissal by each of the individual defendants and both of the
defunct corporate defendants; and (3) Chauvin, et al.’s Motion for Publication
of Summons against the named individual defendants.)
Voltage Vehicles v.
Rajun Cajun, et al., Superior Court of California, County of Sonoma, Case No. SCV
240179, filed February 9,
2007. (This suit is related to the Nevada case of Robert Chauvin, et al.
v. Voltage Vehicles, et al. discussed immediately above.) In its complaint,
Voltage Vehicles requests Declaratory Relief against Rajun Cajun, asking the
Court to declare that the License Agreement between those two parties does not
grant Rajun Cajun an exclusive dealership in northern Nevada to distribute
Voltage Vehicle products and that Voltage Vehicles has performed its obligations
under the License Agreement. The complaint was subsequently amended a second and
third time. The Fourth Amended Cross complaint contains six causes of action,
specifically: fraudulent misrepresentation; breach of written contracts – asset
purchase agreements; negligence; negligent misrepresentation; securities fraud;
and contract rescission for fraud in the inducement. The Fourth
Amended Cross-complaint seeks general damages in an amount in excess of
$500,000, damages for Cross-complainants’ lost earnings, both past and future,
in a sum to be proven at trial, a sum in excess of $500,000 for
Cross-complainants’ mental pain, a sum in excess of $500,000 for willful and
wanton misconduct, rescission of the license agreement and consideration paid to
Cross-complainants, with interest, costs and attorneys’ fees, and such other and
further relief the court may deem just and equitable. ZAP and Voltage
Vehicles anticipate responding to the Fourth Amended Cross-complaint and filing
a motion for summary judgment, or in the alternative summary adjudication,
shortly thereafter.
CIT Communications
Finance Corporation v. ZAP, formerly known as ZapWorld.com and as Zap Power
Systems, and DOES 1-20, complaint filed on February 26, 2008, Case No.
242445, in the Superior Court of California, County of Sonoma. The
Complaint of CIT Communications Finance Corporation (“CIT”) is based on
three telephone equipment leases CIT alleges it, through its predecessors in
interest, has with ZAP. The Complaint includes five causes of
action: (1) breach of written lease agreements; (2) recovery of personal
property; (3) conversion; (4) quantum valebant; and (5) quantum meruit or unjust
enrichment. CIT alleges ZAP entered into the leases, never returned the
equipment, and, in or about June 2002, ceased payment of amounts owed under the
leases. CIT is seeking return of the equipment and a monetary award
covering amounts allegedly owed under the leases, which is in excess of
$108,967.26. CIT is also seeking reimbursement of its attorneys’ fees and
costs of suit as purportedly allowed under the leases. ZAP filed its
Answer to the Complaint on April 24, 2008. The parties litigated an
application by CIT for a writ of attachment and a motion for summary judgment
filed by ZAP, both of which the Court denied. Trial was originally
set to begin on May 1, 2009, but the parties reached a tentative agreement on a
settlement framework and agreed to continue the trial date until May 8,
2009. The parties are negotiating the language of a settlement
agreement and anticipate finalizing and executing the settlement agreement
before the new trial date. The settlement will require ZAP to pay CIT
$50,000, plus interest computed at five percent (5%) per annum, in installments
through October 2010.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
The
following lists sales of unregistered securities during the quarter ended March
31, 2009 that were not previously included in a Quarterly Report on Form 10-QSB
or a Current Report on Form 8-K. We relied on the exemption
from registration afforded by Section 4(2) of the Securities Act of 1933, as
amended (the “Securities Act”) for the issuance of these
securities. Except as stated below, no underwriting discounts or
commissions were payable with respect to any of the following transactions. The
offer and sale of the following securities was exempt from the registration
requirements of the Securities Act under Rule 506 insofar as (1) except as
stated below, each of the investors was accredited within the meaning of Rule
501(a); (2) the transfer of the securities were restricted by the company in
accordance with Rule 502(d); (3) there were no more than 35 non-accredited
investors in any transaction within the meaning of Rule 506(b), after taking
into consideration all prior investors under Section 4(2) of the Securities Act
within the twelve months preceding the transaction; and (4) none of the offers
and sales were effected through any general solicitation or general advertising
within the meaning of Rule 502(c).
On February
27, 2009, the Company issued 504,500 shares of common stock for professional
services valued at $88,500.
Item 3. Defaults Upon Senior
Securities
Please note the indebtness is due to
a related party—Al Yousuf LLC whose President Mr Eqbal Al Yousuf is also a
Director of ZAP and our current Chairman of the Board of ZAP. The management of
ZAP is currently in dispute with Al Yousuf regarding the timing of advance
repayments.
On May
14, 2009 we received a Notice of Delinquent Payments from Mr. Hossein Haghighi,
the Chief Financial Officer of Al Yousuf LLC, notifying us that an outstanding
principle for inventory advances of $2.3 million plus monthly interest payments
have not been paid as required by a $10 million Promissory Note. The
Al Yousuf LLC is a family held private entity located in Dubai of the United
Emirates and is a major shareholder of ZAP. The note with its terms
and conditions were arranged for the Company by Mr. Eqbal Al Yousuf, after
becoming our Director and Chairman of the Board of Directors. This $10 million
Promissory Note was discussed in Notes 5 and 11 in our Form 10K as of December
31, 2008 filed with the SEC on March 31, 2009. The note matures on February 28,
2010. The collateral for the note is our corporate headquarters building and
land located in Santa Rosa California.
Mr.Haghighi
further indicated that AL Yousuf LLC intends to enforce the collection of the
total amounts due under the terms of the note against the Company. The
collateral for the note is our corporate headquarters building and land located
in Santa Rosa California
Unless
the Company receives modifications of the note from Mr. Eqbal Al Yousuf, our
current Chairman of our Board of Directors and Al Yousuf LLC, it is unlikely
that the Company will be able to meet its obligations. The Company is currently
seeking modifications of the note with the aforementioned parties.
The
Company is currently seeking outside financing. There can be no assurances that
additional financing would be available, or if it is available, that it would be
on terms acceptable to the Company. The Company’s future liquidity and capital
requirements will depend on numerous factors, including successful development,
marketing and sale of advanced technology vehicles, protection of intellectual
property rights, costs of developing its new products, including the necessary
intellectual property rights, obtaining regulatory approvals for its new
products, market acceptance of all of its products, existence of competing
products in its current and anticipated markets, and its ability to raise
capital in a timely manner. Management expects to be able to raise capital;
however the Company may not be able to obtain additional
financing
on acceptable terms or at all.
Item
4. Submission of Matters to a Vote of Security Holders
Not
Applicable
Item
5. Other Information
Not
Applicable
Item
6. Exhibits
2.1
|
Approved
Second Amended Plan of Reorganization, dated as June 20, 2002.
(5)
|
3.1
|
Amended
and Restated Articles of Incorporation.
(4)
|
3.2
|
Certificate
of Determination of Series SA Convertible Preferred Stock.
(14)
|
4.1
|
Form
of common share purchase warrant of the Company held by Fusion Capital
Fund II, L.P. (6)
|
4.2
|
Form
of Series B common stock purchase warrant of the Company.
(14)
|
4.3
|
Form
of Series K common stock purchase warrant of the Company.
(14)
|
10.1
|
Settlement
Agreement between ZAPWORLD.COM, Ridgewood ZAP, LLC, and the Shareholders
dated June 27, 2001. (3)
|
10.3
|
2004
Consultant Stock Plan. (7)
|
10.4
|
Convertible
Promissory Note, dated April 26, 2004, issued to Banks Living Trust.
(1)
|
10.5
|
Purchase
and Sale Agreement dated March 7, 2003 between ATOCHA Land LLC and ZAP.
(3)
|
10.6
|
Promissory
Note $2,000,000 - Atocha Land LLC and ZAP.
(3)
|
10.7
|
Warrant
Agreement dated April 26, 2004, issued to Banks Living
Trust. (1)
|
10.8
|
Common
Stock Purchase Agreement between ZAP and Fusion Capital Fund II, LLC.
(6)
|
10.9
|
Registration
Rights Agreement between ZAP and Fusion Capital Fund II, LLC.
(6)
|
10.10
|
Form
of Common Stock Purchase Warrant between ZAP and Fusion Capital Fund II,
LLC (6)
|
10.11
|
Agreement
for Consulting Services with Evan Rapoport dated January 8, 2004.
(1)
|
10.12
|
Asset
Purchase Agreement dated April 12, 2004 with Jeffrey Banks for purchase of
various autos (1)
|
10.13
|
Agreement
for Private Placement Investment received dated April 14, 2004 with
Phi-Nest Fund LLP (1)
|
10.14
|
Consulting
Agreement dated April 21, 2004 with Elexis International
(1)
|
10.15
|
Consulting
Agreement dated April 21, 2004 with Sunshine 511 Holdings
(1)
|
10.16
|
Definitive
Stock Agreement dated October 25, 2004 with Smart-Automobile, LLC
(2)
|
10.17
|
Master
Distribution Agreement between Apollo Energy Systems, Inc. and Voltage
Vehicles Corporation, a subsidiary of ZAP.
(8)
|
10.18
|
ZAP
Floor Line and Dealer Development Agreement with Clean Air Motors, LLC for
a $45 Million Floor Plan Line of Credit for Qualified ZAP Dealers
(9)
|
10.19
|
Exclusive
Purchase, License and Supply Agreement between Smart Automobile, LLC and
ZAP. (10)
|
10.20
|
Amendment
dated November 15, 2004 to previous consulting agreement with Sunshine
Holdings 511 (14)
|
10.21
|
Secured
Promissory Note Payable dated December 30, 2004 with Phi-Nest Fund, LLP.
(14)
|
10.22
|
ZAP
assignment of 2.9 million shares of Restricted Common Stock to Phi-Nest
Fund, LLP as collateral on note payable
(14)
|
10.23
|
Promissory
note receivable dated January 6, 2005 for $1 million loan due
from Smart Automobile, LLC and Thomas Heidemann (President Smart
Automobile, LLC) (14)
|
10.24
|
Security
Agreement dated January 6, 2005 from Smart Automobile, LLC and Thomas
Heidemann (President Smart Automobile, LLC) to secure loan above.
(14)
|
10.25
|
Common
Stock Purchase Agreement between ZAP and Platinum Partners Value Arbitrage
Fund LP (14)
|
10.26
|
Form
of Common Stock Purchase Warrant between ZAP and Platinum Partners Value
Arbitrage Fund LP (14)
|
10.27
|
Common
Stock Purchase Agreement between ZAP and Lazarus Investment Partners LLP
(14)
|
10.28
|
Form
of Common Stock Purchase Warrant between ZAP and Lazarus Investment
Partners LLP (14)
|
10.29
|
Termination
of Common Stock Purchase Agreement between ZAP and Fusion Capital Fund
II, LLC
(11)
|
10.30
|
Financing
Agreement between ZAP and Surge Capital II, LLC
(12)
|
10.31
|
Exclusive
Purchase, License, and Supply Agreement between ZAP and Obvio!
Automotoveiculos S.P.E. Ltda (13)
|
10.36
|
Agreement
dated July 14, 2006 between ZAP, Thomas Heidemann and Smart Automobile
(15)
|
10.37
|
Amendment
Agreement Dated August 30, 2006 between ZAP and Smart Automobile LLC
(16)
|
10.38
|
Exclusive
Distribution Agreement dated May 1, 2005, as supplemented by a letter
dated June 9, 2006 (17)
|
10.40
|
Shandong
Jindalu Vehicle Co., Ltd. Guarantee
(19)
|
10.41
|
Joint
Venture Negotiations dated September 21, 2006
(20)
|
10.42
|
Security
Purchase Agreement between ZAP and Certain Institutional Investors
(21)
|
10.43
|
Purchase
and Amendment Agreement between ZAP and Certain Institutional Investors
(22)
|
10.44
|
Form
of Convertible
|
10.46
|
Purchase
order from the Electric Vehicle Company, LLC (“EVC”) for 10,000 of its
Xebra 2007 model year electric
vehicles
|
10.47
|
Distribution
agreement this week with PML FlightLink Limited (PML) for the purchase of
an advanced wheel motor and control
system
|
10.48
|
Joint
Venture Agreement with Youngman Automobile Co., Ltd to manufacture, market
and distribute electric a and hybrid vehicles for the worldwide passenger
car, truck and bus
|
10.49
|
Form
SB-2 Registration of Common Stock incorporated by reference to SEC filing
on September 24, 2007 effective on October 2,
2007.
|
10.50
|
Settlement
and Mutual Release Agreement with Gemini Master Fund,LTD and Gemini
Strategies,LLC dated May 7,
2008.(22)
|
10.51
|
Note
Purchase Agreement with Al Yousuf dated May 8
,2008.(22)
|
10.52
|
Promissory
Note in favor of AlYousuf LLC,dated July 30, 2008 and Deed of Trust,
Assignment of Leases, Rents and Security Agreement and Fixture Filing by
ZAP in favor of Al Yousuf LLC, dated July 30,
2008.(23)
|
21.1
|
List
of subsidiaries. (3)
|
31.1
|
Certification
of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the
Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.(22)
|
31.2
|
Certification
of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the
Exchange Act, as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. (22)
|
32.1
|
Certification
of Principal Executive Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. (22)
|
32.2
|
Certification
of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. (22)
|
(1)
|
Previously
Filed as an exhibit to the Registrant’s Form 8-K for the quarter ended
March 31, 2004 and incorporated by
reference.
|
(2)
|
Previously
filed as an exhibit to the Registrant’s Form 8-K of November 6, 2004 and
incorporated by reference.
|
(3)
|
Previously
filed as an exhibit to the Registrant’s Annual Report on Form 10-KSB for
the year ended December 31, 2003 and incorporated by
reference.
|
(4)
|
Previously
filed with Pre-effective Amendment Number 3 to Form SB-2 registration
statement filed with the Securities and Exchange Commission on October 3,
2001.
|
(5)
|
Previously
filed as an exhibit to the Registrant’s Form 8-K of October 20, 2002 and
incorporated by reference.
|
(6)
|
Previously
filed as an exhibit to the Registrant’s Current Report on Form 8-K dated
July 22, 2004 and incorporated by
reference.
|
(7)
|
Previously
filed as an exhibit to the Registrant’s Registration Statement on Form S-8
(File No. 333-117560) on July 22,
2004.
|
(8)
|
Previously
filed as an exhibit to the Registrant’s Current Report on Form 8K filed
with the Securities and Exchange Commission on October 6, 2004 and
incorporated herein by reference.
|
(9)
|
Previously
filed as an exhibit to the Registrant’s Quarterly Report on Form 10QSB for
the period ended September 30, 2004 and incorporated herein by
reference.
|
(10)
|
Previously
filed as an exhibit to the Registrant’s Current Report on Form 8K filed
with the Securities and Exchange Commission on April 21, 2004 and
incorporated herein by reference.
|
(11)
|
Previously
filed as an exhibit to the Registrant’s Current Report on Form 8K filed
with the Securities and Exchange Commission on February 25, 2005 and
incorporated herein by reference.
|
(12)
|
Previously
filed as an exhibit to the Registrant’s Current Report on Form 8K filed
with the Securities and Exchange Commission on September 16, 2005 and
incorporated herein by reference.
|
(13)
|
Previously
filed as an exhibit to the Registrant’s Current Report on Form 8K filed
with the Securities and Exchange Commission on September 21, 2005 and
incorporated herein by reference.
|
(14)
|
Previously
filed as an exhibit to the Registrant’s Current Report on Form 8K filed
with the Securities and Exchange Commission on July 20, 2006 and
incorporated herein by reference.
|
(15)
|
Previously
filed as an exhibit to the Registrant’s Current Report on Form 8K filed
with the Securities and Exchange Commission on September 6, 2006 and
incorporated herein by reference.
|
(16)
|
Previously
filed as an exhibit to the Registrant’s Current Report on Form 8K filed
with the Securities and Exchange Commission on November 6, 2006 and
incorporated herein by reference.
|
(17)
|
Previously
filed as an exhibit to the Registrant’s Current Report on Form 8K filed
with the Securities and Exchange Commission on November 6, 2006 and
incorporated herein by reference.
|
(18)
|
Previously
filed as an exhibit to the Registrant’s Current Report on Form 8K filed
with the Securities and Exchange Commission on November 6, 2006 and
incorporated herein by reference.
|
(19)
|
Previously
filed as an exhibit to the Registrant’s Current Report on Form 8K filed
with the Securities and Exchange Commission on November 6, 2006 and
incorporated herein by reference.
|
(20)
|
Previously
filed as an exhibit to the Registrant’s Current Report on Form 8K filed
with the Securities and Exchange Commission on December 11, 2006 and
incorporated herein by reference.
|
(21)
|
Previously
filed as an exhibit to the Registrant’s Current Report on Form 8K filed
with the Securities and Exchange Commission on February 26, 2007and
incorporated herein by reference.
|
(22)
|
Previously
filed as an exhibit to the Registrant’s Quarterly Report on Form 10Q for
the period ended March 31, 2008 and incorporated herein by
reference.
|
(23)
|
Previously
filed as an exhibit to the Registrant’s Current Report on Form 8K filed
with the Securities and Exchange Commission on August 5, 2008and
incorporated herein by reference.
|
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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|
|
|
ZAP
|
|
|
|
Dated:
May 20, 2009
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By:
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/s/ Steven
Schneider
|
|
Name:
Steven Schneider
|
|
Title:
Chief Executive Officer (Principal Executive
Officer)
|
|
|
|
|
ZAP
|
|
|
|
Dated:
May 20, 2009
|
By:
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/s/ William
Hartman
|
|
Name:
William Hartman
|
|
Title:
Chief Financial Officer (Principal Financial and Accounting
Officer)
|