x
|
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended June 30, 2015
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from ________ to _________
|
ZAP
|
|
(Exact name of registrant as specified in its charter)
|
|
California
|
94-3210624
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification Number)
|
2 West 3rd Street
Santa Rosa, California
|
95401
|
(Address of principal executive offices)
|
(Zip Code))
|
Registrant’s telephone number, including area code: (707) 525-8658
|
Large accelerated filer o
|
Accelerated filer o
|
Non-accelerated filer o
|
Smaller reporting
company x
|
Page
No.
|
||
PART I. Financial Information
|
||
Item 1.
|
Financial Statements (Unaudited)
|
|
Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014
|
3
|
|
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and
six months ended June 30, 2015 and 2014
|
5
|
|
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and
2014
|
6
|
|
Notes to Condensed Consolidated Financial Statements
|
8
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
22
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
29
|
Item 4.
|
Controls and Procedures
|
29
|
PART II. Other Information
|
||
Item 1.
|
Legal Proceedings
|
29
|
Item 1A.
|
Risk Factors
|
29
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
30
|
Item 3.
|
Defaults Upon Senior Securities
|
30
|
Item 4.
|
Mine Safety Disclosures
|
30
|
Item 5.
|
Other Information
|
30
|
Item 6.
|
Exhibits
|
30
|
SIGNATURES
|
31
|
PART I – FINANCIAL INFORMATION
|
ITEM 1. FINANCIAL STATEMENTS
|
ZAP
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In thousands, except share data)
|
(Unaudited)
|
June 30,
|
December 31,
|
|||||||
ASSETS
|
2015
|
2014
|
||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
131
|
$
|
238
|
||||
Restricted cash
|
11,161
|
10,673
|
||||||
Bank notes receivable
|
4
|
81
|
||||||
Accounts receivable, net
|
1,789
|
2,724
|
||||||
Inventories, net
|
7,609
|
8,380
|
||||||
Prepaid taxes
|
15
|
110
|
||||||
Prepaid expenses and other current assets
|
1,023
|
377
|
||||||
Total current assets
|
21,732
|
22,583
|
||||||
Property, plant and equipment, net
|
39,853
|
42,595
|
||||||
Land use rights, net
|
9,670
|
9,711
|
||||||
Other assets:
|
||||||||
Distribution fees, net
|
8,679
|
9,399
|
||||||
Intangible assets, net
|
3,021
|
3,195
|
||||||
Goodwill
|
332
|
332
|
||||||
Due from related party
|
2,920
|
2,791
|
||||||
Deposits and other assets
|
-
|
390
|
||||||
Total other assets
|
14,952
|
16,107
|
||||||
Total assets
|
$
|
86,207
|
$
|
90,996
|
ZAP
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(In thousands, except share and per share data)
|
(Unaudited)
|
June 30,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
LIABILITIES AND EQUITY (DEFICIENCY)
|
||||||||
Current liabilities:
|
||||||||
Short term loans
|
$
|
5,912
|
$
|
9,849
|
||||
Accounts payable
|
19,995
|
21,389
|
||||||
Senior convertible debt | - | 20,679 | ||||||
Accrued liabilities
|
4,035
|
3,848
|
||||||
Notes payable
|
19,196
|
17,747
|
||||||
Advances from customers
|
9,092
|
7,139
|
||||||
Taxes payable
|
1,352
|
1,266
|
||||||
Due to related party
|
14,273
|
7,121
|
||||||
Other payables
|
2,857
|
3,094
|
||||||
Total current liabilities
|
76,712
|
92,132
|
||||||
Long term liabilities:
|
||||||||
Senior convertible debt
|
20,679
|
-
|
||||||
Accrued liabilities and others
|
855
|
745
|
||||||
Total long term liabilities
|
21,534
|
745
|
||||||
Total liabilities
|
98,246
|
92,877
|
||||||
Commitments and contingencies
|
||||||||
Equity (Deficiency)
|
||||||||
Common stock, no par value; 800 million shares authorized;
|
||||||||
460,212,950 and 461,395,508 shares issued and outstanding
|
||||||||
at June 30, 2015 and December 31, 2014, respectively
|
244,305
|
244,368
|
||||||
Accumulated other comprehensive income
|
1,668
|
1,655
|
||||||
Accumulated deficit
|
(258,416
|
)
|
(250,000
|
)
|
||||
Total ZAP shareholders' equity (deficiency)
|
(12,443
|
)
|
(3,977
|
)
|
||||
Non-controlling interest
|
404
|
2,096
|
||||||
Total equity (deficiency)
|
(12,039
|
)
|
(1,881
|
)
|
||||
Total liabilities and equity (deficiency)
|
$
|
86,207
|
$
|
90,996
|
ZAP
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|
(In thousands, except share and per share data)
|
(Unaudited)
|
For the Three Months ended June 30,
|
For the Six Months ended June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Net sales
|
$ |
5,356
|
$ |
7,588
|
$ |
13,718
|
$ |
14,409
|
||||||||
Cost of goods sold
|
(5,627
|
)
|
(7,567
|
)
|
(14,501
|
)
|
(15,359
|
)
|
||||||||
Gross profit (loss)
|
(271
|
)
|
21
|
(783
|
)
|
(950
|
)
|
|||||||||
Operating expenses:
|
||||||||||||||||
Sales and marketing
|
(890
|
)
|
(746
|
)
|
(1,882
|
)
|
(1,480
|
)
|
||||||||
General and administrative
|
(2,770
|
)
|
(2,377
|
)
|
(4,649
|
)
|
(4,440
|
)
|
||||||||
Research and development
|
(1,070
|
)
|
(74
|
)
|
(1,683
|
)
|
(260
|
)
|
||||||||
Total operating expenses
|
(4,730
|
)
|
(3,197
|
)
|
(8,214
|
)
|
(6,180
|
)
|
||||||||
Loss from operations
|
(5,001
|
)
|
(3,176
|
)
|
(8,997
|
)
|
(7,130
|
)
|
||||||||
Other income (expense):
|
||||||||||||||||
Interest expense, net
|
(674
|
)
|
(998
|
)
|
(1,435
|
)
|
(1,873
|
)
|
||||||||
Other income
|
198
|
300
|
279
|
423
|
||||||||||||
Total income (expense)
|
(476
|
)
|
(698
|
)
|
(1,156
|
)
|
(1,450
|
)
|
||||||||
Loss before income taxes
|
(5,477
|
)
|
(3,874
|
)
|
(10,153
|
)
|
(8,580
|
)
|
||||||||
Income tax benefit (expense)
|
-
|
3
|
-
|
(301
|
)
|
|||||||||||
Net loss
|
$
|
(5,477
|
)
|
$
|
(3,871
|
)
|
$
|
(10,153
|
)
|
$
|
(8,881
|
)
|
||||
Less: loss attributable to non-controlling interest
|
1,930
|
1,103
|
3,614
|
2,737
|
||||||||||||
Net loss attributable to ZAP’s common shareholders
|
$
|
(3,547
|
)
|
$
|
(2,768
|
)
|
$
|
(6,539
|
)
|
$
|
(6,144
|
)
|
||||
Net loss
|
$
|
(5,477
|
)
|
$
|
(3,871
|
)
|
$
|
(10,153
|
)
|
$
|
(8,881
|
)
|
||||
Other comprehensive income (loss)
|
||||||||||||||||
Foreign currency translation adjustments
|
83
|
2
|
129
|
(116
|
)
|
|||||||||||
Total comprehensive loss
|
(5,394
|
)
|
(3,869
|
)
|
(10,024
|
)
|
(8,997
|
)
|
||||||||
Less: Comprehensive loss attributable to non-controlling interest
|
1,930
|
1,102
|
3,511
|
|
2,794
|
|
||||||||||
Comprehensive loss attributable to ZAP
|
$
|
(3,464
|
)
|
$
|
(2,767
|
)
|
$
|
(6,513
|
)
|
$
|
(6,203
|
)
|
||||
Net loss per share attributable to common shareholders:
|
||||||||||||||||
Basic and diluted
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.02
|
)
|
$
|
(0.02
|
)
|
||||
Weighted average number of common shares outstanding:
|
||||||||||||||||
Basic and diluted
|
460,213
|
365,252
|
460,448
|
333,712
|
ZAP AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In thousands)
|
(Unaudited)
|
For the six months ended June 30,
|
||||||||
2015
|
2014
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net loss
|
$
|
(10,153
|
)
|
$
|
(8,881
|
)
|
||
Adjustments to reconcile net loss to cash (used in) operating activities:
|
||||||||
Stock-based employee compensation
|
37
|
114
|
||||||
Depreciation and amortization
|
4,198
|
4,176
|
||||||
Provision for (recovery of) doubtful accounts
|
533
|
(34
|
)
|
|||||
Changes in inventory reserve
|
(89
|
)
|
(454
|
)
|
||||
Gain from disposal of equipment
|
(6
|
)
|
(6
|
)
|
||||
Deferred tax provision
|
-
|
302
|
||||||
Amortization of debt discount
|
-
|
268
|
||||||
Changes in assets and liabilities:
|
||||||||
Notes receivable
|
78
|
184
|
||||||
Accounts receivable
|
428
|
657
|
||||||
Inventories
|
933
|
(1,957
|
)
|
|||||
Due from related parties
|
(115
|
)
|
2,273
|
|||||
Prepaid expenses and other assets
|
(155
|
)
|
(193
|
)
|
||||
Accounts payable
|
(1,311
|
)
|
(2,059
|
)
|
||||
Accrued liabilities
|
267
|
(438
|
)
|
|||||
Taxes payable
|
82
|
(851
|
)
|
|||||
Advances from customers
|
1,880
|
293
|
||||||
Due to related parties
|
7,090
|
4,250
|
||||||
Other payables
|
(535
|
)
|
(327
|
)
|
||||
Net cash provided by (used in) operating activities
|
3,162
|
(2,683
|
)
|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Acquisition of property and equipment
|
(92
|
)
|
(644
|
)
|
||||
Proceeds from disposal of equipment
|
17
|
16
|
||||||
Net cash flows used in investing activities
|
(75
|
)
|
(628
|
)
|
ZAP AND SUBSIDIARIES
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In thousands)
|
(Unaudited)
|
For the six months ended June 30,
|
||||||||
2015
|
2014
|
|||||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Change in restricted cash
|
$
|
(386
|
)
|
$
|
(1,071
|
)
|
||
Proceeds from equity investment
|
-
|
1,900
|
||||||
Proceeds from notes payable
|
14,631
|
16,232
|
||||||
Proceeds from short term loans
|
1,146
|
5,173
|
||||||
Repayment of convertible bonds
|
(100
|
)
|
-
|
|||||
Repayments of notes payable
|
(13,355
|
)
|
(15,682
|
)
|
||||
Payments on short term loans
|
(5,162
|
)
|
(5,345
|
)
|
||||
Net cash (used in) provided by financing activities
|
(3,226
|
)
|
1,207
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
32
|
(16
|
)
|
|||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
(107
|
)
|
(2,120
|
)
|
||||
CASH AND CASH EQUIVALENTS, beginning of period
|
238
|
2,629
|
||||||
CASH AND CASH EQUIVALENTS, end of period
|
$
|
131
|
$
|
509
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid during period for interest
|
$
|
602
|
$
|
795
|
||||
Cash paid during period for income taxes
|
$
|
-
|
$
|
2
|
||||
Non-cash transaction:
|
||||||||
Cancellation of 1,182,558 shares of common stock issued to pay convertible bond
|
$
|
100
|
$
|
-
|
||||
Issue 61 million shares of common stock for acquisition of IPR and
Distribution right for Minxan and CNG products
|
$ |
-
|
$ | 5,969 | ||||
Issue 6,439,552 shares of common stock to pay interest payable
|
$ |
-
|
$ | 639 | ||||
Issue 7,970,983 share of common stock to redeem Convertible bond
|
$ |
-
|
$ | 600 | ||||
Issue 17,819,783 share of common stock to pay outstanding
balance due to related party
|
$ |
-
|
$ | 968 |
|
·
|
Financial support and credit guarantee from related parties; and
|
|
·
|
Other available sources of financing from domestic banks and other financial institutions given our credit history.
|
|
-
|
Persuasive evidence of an arrangement exists. The Company generally relies upon sales contracts or agreements, and customer purchase orders to determine the existence of an arrangement.
|
|
-
|
Sales price is fixed or determinable. The Company assesses whether the sales price is fixed or determinable based on the payment terms and whether the sales price is subject to refund or adjustment.
|
|
-
|
Delivery has occurred. The Company uses shipping terms and related documents, or written evidence of customer acceptance, when applicable, to verify delivery or performance. The Company’s customary shipping terms are FOB shipping point.
|
|
-
|
Collectability is reasonably assured. The Company assesses collectability based on creditworthiness of customers as determined by our credit checks and their payment histories. The Company records accounts receivable net of allowance for doubtful accounts and estimated customer returns.
|
|
-
|
The Company has received a binding purchase order from the customer or distributor authorized by a representative empowered to commit the purchaser (evidence of a sale);
|
|
-
|
The purchase price has been fixed, based on the terms of the purchase order;
|
|
-
|
The Company has delivered the product from its factory to a common carrier acceptable to the customer; and
|
|
-
|
The Company deems the collection of the amount invoiced probable.
|
Level 1:
|
Observable inputs such as quoted prices in active markets;
|
Level 2: |
Inputs other than quoted prices in active markets that is directly or indirectly observable. The carrying value of the senior convertible debt (see Note 7), which approximates fair value, is influenced by interest rates and our stock price, and is determined by prices for the convertible debts observed in market trading, which are Level 2 inputs.
|
Level 3: |
Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions and methodologies that result in management’s best estimate of fair value.
|
June 30, 2015
|
December 31, 2014
|
|
Balance sheet items, except for share capital, additional
paid in capital and retained earnings
|
$1=RMB 6.0888
|
$1=RMB 6.1460
|
Amounts included in the statements of operations
and cash flows
|
$1=RMB 6.1088
|
$1=RMB 6.1457
|
June 30,
2015
|
December 31,
2014
|
|||||||
Work in Process
|
$
|
1,914
|
$
|
3,054
|
||||
Parts and supplies
|
2,868
|
3,601
|
||||||
Finished goods
|
4,128
|
3,105
|
||||||
8,910
|
9,760
|
|||||||
Less - inventory reserve
|
(1,301
|
)
|
(1,380
|
)
|
||||
Inventories, net
|
$
|
7,609
|
$
|
8,380
|
June 30,
2015
|
December 31,
2014
|
|||||||
Balance, beginning of period
|
$
|
1,380
|
$
|
1,981
|
||||
Current provision for Jonway Auto
|
(78
|
)
|
251
|
|||||
Current recovery for inventory ZAP, net
|
(1
|
)
|
(852
|
)
|
||||
Balance, end of period
|
$
|
1,301
|
$
|
1,380
|
June 30,
2015
|
December 31,
2014
|
|||||||
Better World Products - related party
|
$
|
2,160
|
$
|
2,160
|
||||
CNG Products
|
1,000
|
1,000
|
||||||
Jonway Products
|
14,400
|
14,400
|
||||||
17,560
|
17,560
|
|||||||
Less: amortization and impairment
|
(8,881
|
)
|
(8,161
|
)
|
||||
$
|
8,679
|
$
|
9,399
|
12 months ended June 30,
|
||||
2016
|
$
|
1,540
|
||
2017
|
1,540
|
|||
2018
|
1,540
|
|||
2019
|
1,540
|
|||
2020
|
1,540
|
|||
Thereafter
|
979
|
|||
Total
|
$
|
8,679
|
June 30,
2015
|
December
31, 2014 |
||||||||
Loan from CITIC bank
|
(a)
|
$
|
985
|
$
|
976
|
||||
Loan from ICBC
|
(b)
|
4,927
|
6,484
|
||||||
Loan from China Everbright Bank
|
(c)
|
-
|
1,220
|
||||||
Loan from Taizhou Bank
|
(d)
|
-
|
1,139
|
||||||
Loan from Pay-Ins Prem
|
-
|
30
|
|||||||
$
|
5,912
|
$
|
9,849
|
|
(a)
|
In December 2014, the company borrowed a one year short term loan of $0.98 million from CITIC at the annual interest rate of 6.69%. The loans are secured by a Maximum Amount Mortgage Contract between Jonway Auto and CITIC dated November 3, 2014, in which a land use right and a building with a total carrying amount of $5.5 million as of June 30, 2015 has been pledged as security for this loan. The shareholder and Co-CEO Alex Wang also personally guaranteed these loans.
|
|
(b)
|
In April 2014, the Company borrowed a one year short-term loan from ICBC of $0.8 million with 100% cash deposited as collateral for the loans. The annual interest rate was 6%. The loan was repaid when due in April 2015. In June 2014, the Company borrowed a one year short-term loan from ICBC of $1.1 million at the annual interest rate of 6.26%. The loan was repaid when due in June 2015. In August 2014, the Company borrowed a one year short-term loan from ICBC of $1.1 million at the annual interest rate of 6.92%, the loan has been fully repaid in July 2015. In September 2014, the Company borrowed a 6-month short-term loan from ICBC of $0.8 million at the annual interest rate of 5.04%. The loan of $0.8 million has been paid when due in March, 2015. In October 2014, the Company borrowed $1.48 million of a short term loan from ICBC. The loan will expire in October 2015 and the annual interest rate is 6.6%. The Company borrowed a one year short term loan of $1.15 million in November 2014 at an annual interest of 6.6%. In March 2015, the Company borrowed a one year short-term loan of $0.8 million from ICBC at an annual interest of 5.6%. In June 2015, the Company borrowed a one year short-term loan of $0.33 million from ICBC at an annual interest rate of 6.07%. These loans were guaranteed by related parties including Jonway Group, the shareholder Wang Huaiyi and the shareholder and Co-CEO Alex Wang. The Company also pledged buildings and a land use right with a carrying value of $3.28 million with ICBC and $0.82 million of restricted cash was deposited of June 30, 2015.
|
|
(c)
|
In July 2014, the company borrowed an 11 months short-term loan of $1.2 million from China Everbright Bank at the annual interest rate of 7.2%. The loan was guaranteed by the shareholder Wang Huaiyi, and secured by a building and land use right with a carrying value of $2.1 million. The loan has been fully repaid in June 2015 upon maturity.
|
|
(d)
|
In August 2014, the company borrowed a short-term loan from Taizhou Bank of $0.3 million at the annual interest rate of 8.93% which was due in February 2015 and repaid when due. In October 2014, the company borrowed $0.81 million from Taizhou Bank at an annual interest rate of 8.496%. The loan expired in April 2015 and was settled early in February 2015.
|
June 30,
2015
|
December
31, 2014 |
||||||||
Bank acceptance notes payable to China Everbright Bank
|
(a)
|
$
|
7,555
|
$
|
11,372
|
||||
Bank acceptance notes payable to Taizhou Bank
|
(b)
|
498
|
651
|
||||||
Bank acceptance notes payable to CITIC Bank
|
(c)
|
10,608
|
5,723
|
||||||
Bank acceptance notes payable to China Merchants Banks
|
(d)
|
328
|
-
|
||||||
Bank acceptance notes payable to Shanghai Pudong Development bank
|
(e)
|
207
|
-
|
||||||
$
|
19,196
|
$
|
17,747
|
|
(a)
|
Notes payable to China Everbright bank have various maturity dates in December 2015. The notes payable are guaranteed by a land use right and a building with a total carrying value of $2.1 million. The Company is also required to maintain cash deposits at 50% of the notes payable with the bank, in order to ensure future credit availability.
|
|
(b)
|
Notes payable to Taizhou bank will be due in December 2015. The Company is required to maintain cash deposits at 100% of the notes payable with the bank.
|
|
(c)
|
Notes payable to CITIC bank will be due from July 2015 to March 2016. Except for the note payable utilizing credit exposure of $5.08 million, the Company is required to maintain cash deposits at 100% of the notes payable with the bank, in order to ensure future credit availability. In July 2015, the company repaid the note payable of $5.0 million upon maturity.
|
|
(d)
|
Notes payable to China Merchants Bank have various maturity dates from September 2015 to October 2015. The company is required to maintain cash deposits at 100% of the notes payable with the bank.
|
(e)
|
Notes payable to Shanghai Pudong Development Bank will be due in October 2015. The company is required to maintain cash deposits at 100% of the notes payable with the bank. In July 2015, the company issued a note payable of $94,000 with 100% cash deposits.
|
Jonway
Auto
|
ZAP
|
ZAP
Hong Kong
|
Total
|
|||||||||||||
For the three months ended June 30, 2015
|
||||||||||||||||
Net sales
|
$
|
5,331
|
$
|
25
|
$
|
-
|
$
|
5,356
|
||||||||
Gross profit (loss)
|
$
|
(278
|
)
|
$
|
7
|
$
|
-
|
$
|
(271
|
)
|
||||||
Depreciation and amortization
|
$
|
1,455
|
$
|
651
|
$
|
-
|
$
|
2,106
|
||||||||
Net profit (loss)
|
$
|
(4,023
|
)
|
$
|
(1,454
|
)
|
$
|
-
|
$
|
(5,477
|
)
|
|||||
Total assets
|
$
|
67,925
|
$
|
18,273
|
$
|
9
|
$
|
86,207
|
||||||||
For the three months ended June 30, 2014
|
||||||||||||||||
Net sales
|
$
|
7,240
|
$
|
348
|
$
|
-
|
$
|
7,588
|
||||||||
Gross profit (loss)
|
$
|
(74
|
)
|
$
|
95
|
$
|
-
|
$
|
21
|
|||||||
Depreciation and amortization
|
$
|
1,428
|
$
|
656
|
$
|
-
|
$
|
2,084
|
||||||||
Net loss
|
$
|
(2,252
|
)
|
$
|
(1,619
|
)
|
$
|
-
|
$
|
(3,871
|
)
|
|||||
Total assets
|
$
|
82,487
|
$
|
24,357
|
$
|
139
|
$
|
106,983
|
||||||||
For the six months ended June 30, 2015
|
||||||||||||||||
Net sales
|
$
|
13,517
|
$
|
201
|
$
|
-
|
$
|
13,718
|
||||||||
Gross profit (loss)
|
$
|
(865
|
)
|
$
|
82
|
$
|
-
|
$
|
(783
|
)
|
||||||
Depreciation and amortization
|
$
|
2,890
|
$
|
1,308
|
$
|
-
|
$
|
4,198
|
||||||||
Net loss
|
$
|
(7,294
|
)
|
$
|
(2,859
|
)
|
$
|
-
|
$
|
(10,153
|
)
|
|||||
Total assets
|
$
|
67,925
|
$
|
18,273
|
$
|
9
|
$
|
86,207
|
||||||||
For the six months ended June 30, 2014
|
||||||||||||||||
Net sales
|
$
|
13,974
|
$
|
435
|
$
|
-
|
$
|
14,409
|
||||||||
Gross profit (loss)
|
$
|
(1,066
|
)
|
$
|
116
|
$
|
-
|
$
|
(950
|
)
|
||||||
Depreciation and amortization
|
$
|
2,864
|
$
|
1,312
|
$
|
-
|
$
|
4,176
|
||||||||
Net loss
|
$
|
(5,585
|
)
|
$
|
(3,296
|
)
|
$
|
-
|
$
|
(8,881
|
)
|
|||||
Total assets
|
$
|
82,487
|
$
|
24,357
|
$
|
139
|
$
|
106,983
|
June 30,
2015
|
December
31, 2014 |
|||||||
Sanmen Branch of Zhejiang UFO Automobile Manufacturing Co.,Ltd
|
$
|
1,321
|
$
|
1,427
|
||||
JAZ
|
1,291
|
1,311
|
||||||
Jonway Motor Cycle
|
176
|
53
|
||||||
Jonway EV selling Ltd.
|
132
|
-
|
||||||
$
|
2,920
|
$
|
2,791
|
June 30,
2015
|
December
31, 2014 |
|||||||
Jonway Group
|
$
|
9,950
|
$
|
2,648
|
||||
Jonway Economy and Trade Co., Ltd.
|
1,517
|
-
|
||||||
Jonway Motor Cycle
|
64
|
64
|
||||||
Taizhou Huadu
|
764
|
652
|
||||||
Shanghai Zapple
|
37
|
37
|
||||||
Mr. Wang
|
326
|
146
|
||||||
Betterworld
|
149
|
149
|
||||||
Taizhou Jonway Electric Vehicle Selling Co., Ltd.
|
-
|
2,306
|
||||||
Zhejiang Jonway Painting Co., Ltd.
|
388
|
472
|
||||||
Cathaya Operations Management Ltd.
|
728
|
297
|
||||||
Cathaya Management Ltd.
|
350
|
350
|
||||||
$
|
14,273
|
$
|
7,121
|
The first 3,000 vehicles
|
$44 per vehicle
|
Vehicles from 3,001 to 5,000
|
$30 per vehicle
|
Vehicles over 5,000
|
$22 per vehicle
|
|
·
|
our ability to establish, maintain and strengthen our brand;
|
|
·
|
our ability to successfully integrate acquired subsidiaries, particularly Jonway Auto, into our company and business;
|
|
·
|
our ability to maintain effective disclosure controls and procedures;
|
|
·
|
our limited operating history, particularly of ZAP and Jonway Auto on a consolidated basis;
|
|
·
|
whether the alternative energy and gas-efficient vehicle market for our electric products continues to grow and, if it does, the pace at which it may grow;
|
|
·
|
our ability to attract and retain the personnel qualified to implement our growth strategies;
|
|
·
|
our ability to obtain approval from government authorities for our products;
|
|
·
|
our ability to protect the patents on our proprietary technology;
|
|
·
|
our ability to fund our short-term and long-term financing needs;
|
|
·
|
our ability to compete against large competitors in a rapidly changing market for electric and conventional fuel vehicles;
|
|
·
|
changes in our business plan and corporate strategies; and
|
|
·
|
Other risks and uncertainties discussed in greater detail in various sections of this report, or set forth in part I, Item 1A of our Annual Report on Form 10-K under the heading “Risk Factors”.
|
Three Months
|
Six Months
|
|||||||||||||||
Ended June 30,
|
Ended June 30,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Statements of Operations Data:
|
||||||||||||||||
Net sales
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||||
Cost of sales
|
-105.1
|
%
|
-99.7
|
%
|
-105.7
|
%
|
-106.6
|
%
|
||||||||
Operating expenses
|
-88.3
|
%
|
-42.1
|
%
|
-59.9
|
%
|
-42.9
|
%
|
||||||||
Loss from operations
|
-93.4
|
%
|
-41.9
|
%
|
-65.6
|
%
|
-49.5
|
%
|
||||||||
Net loss attributable to ZAP
|
-66.2
|
%
|
-36.5
|
%
|
-47.7
|
%
|
-43.0
|
%
|
|
·
|
Financial support and credit guarantee from related parties; and
|
|
·
|
Other available sources of financing from domestic banks and other financial institutions given our credit history.
|
Exhibit Number
|
Description
|
|
31.1/31.2
|
Certification of Principal Executive Officer pursuant to Rule 13a-14/15d-14 of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.3
|
Certification of Principal Financial Officer pursuant to 13a-14/15d-14 of the Exchange Act as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS
|
XBRL Instance Document
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
Dated: August 14, 2015
|
By: /s/ Alex Wang
|
||
Name: Alex Wang
|
|||
Title: Co-Chief Executive Officer
|
|||
(Co-Principal Executive Officer).
|
Dated: August 14, 2015
|
By: /s/ Chuck Schillings
|
||
Name: Chuck Schillings
|
|||
Title: Co-Chief Executive Officer
|
|||
(Co-Principal Executive Officer).
|
Dated: August 14, 2015
|
By: /s/ Michael Ringstad
|
||
Name: Michael Ringstad
|
|||
Title: Interim Chief Financial Officer
|
|||
(Interim Principal Financial Officer).
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or its reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or its reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or its reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.
|
SEGMENT REPORTING (Narrative) (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2015
USD ($)
|
Jun. 30, 2014
USD ($)
|
Jun. 30, 2015
USD ($)
item
|
Jun. 30, 2014
USD ($)
|
|
SEGMENT REPORTING [Abstract] | ||||
Number of reportable segments | item | 3 | |||
Concentration Risk [Line Items] | ||||
Revenues | $ 5,356 | $ 7,588 | $ 13,718 | $ 14,409 |
Geographic Concentration Risk [Member] | Revenue [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 99.60% | 95.40% | 98.50% | 97.00% |
Revenues | $ 5,300 | $ 7,200 | $ 13,500 | $ 14,000 |
Geographic Concentration Risk [Member] | Cost of Goods Sold [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 100.00% | 99.00% | ||
Revenues | $ 5,600 | $ 7,600 | ||
Customer Concentration Risk [Member] | Revenue [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 10.00% | 10.00% | 14.00% | |
Supplier Concentration Risk [Member] | Cost of Goods Sold [Member] | ||||
Concentration Risk [Line Items] | ||||
Concentration risk percentage | 11.00% | 29.00% | 21.00% |
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COMMITMENTS AND CONTINGENCIES (Details) - Jun. 30, 2015 - USD ($) |
Total |
---|---|
Shanghai PuDong Development Bank [Member] | Taizhou Jonway Jing Mao Trading Ltd. [Member] | |
Guarantees [Line Items] | |
Face amount | $ 1,800,000 |
Period of guarantee | 5 years |
Collateral amount | $ 566,000 |
Jonway Auto [Member] | |
Guarantees [Line Items] | |
Potential payments under guarantee | $ 2,400,000 |
DISTRIBUTION AGREEMENTS (Schedule of Distribution Agreements) (Details) - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
---|---|---|
Distribution Agreements [Line Items] | ||
Distribution agreements | $ 17,560 | $ 17,560 |
Less: amortization and impairment | (8,881) | (8,161) |
Distribution agreements, net | 8,679 | 9,399 |
Better World Products [Member] | ||
Distribution Agreements [Line Items] | ||
Distribution agreements | 2,160 | 2,160 |
CNG Products [Member] | ||
Distribution Agreements [Line Items] | ||
Distribution agreements | 1,000 | 1,000 |
Jonway Products [Member] | ||
Distribution Agreements [Line Items] | ||
Distribution agreements | $ 14,400 | $ 14,400 |
SEGMENT REPORTING (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Results |
|
SUBSEQUENT EVENTS (Details) - USD ($) $ in Thousands |
1 Months Ended | |
---|---|---|
Jul. 31, 2015 |
Jun. 30, 2015 |
|
Mr. Wang [Member] | ||
Subsequent Event [Line Items] | ||
Additional capital injected | $ 2,640 | |
Jonway Group [Member] | Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Additional capital injected | $ 1,850 |
SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | NOTE - 3 SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements include the financial statements of ZAP, and its subsidiaries. Jonway Auto and ZAP Hong Kong for the six months ended June 30, 2015 and the year ended December 31, 2014 and are prepared in accordance with both generally accepted accounting principles in the United States of America (U.S.GAAP) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Management considers subsidiaries to be companies that are over 50% controlled. Intercompany transactions and balances are eliminated in consolidation; profits from intercompany sales, are also eliminated; non-controlling interests are included in equity. We account for our 37.5% interest in the ZAP Hangzhou and our 50% interest in Shanghai Zapple using the equity method of accounting because we have significant influence but not control. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of the financial statements have been included. Interim results are not necessarily indicative of results to be expected for the full year. The information included in this Form 10-Q should be read in conjunction with information included in the 2014 annual report on Form 10-K filed on April 15, 2015.
Use of Estimates The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. The more significant estimates relate to revenue recognition, contractual allowances and uncollectible accounts, intangible assets, accrued liabilities, warranty costs, stock based compensation, income taxes, litigation and contingencies. Estimates are based on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for judgments about results and the carrying values of assets and liabilities. Actual results and values may differ significantly from these estimates. Revenue Recognition The Company records revenues for non-Jonway Auto sales when all of the following criteria have been met:
The Company records revenues for Jonway Auto sales only upon the occurrence of all of the following conditions:
The Company provides no price protection. Sales are recognized net of sale discounts, rebates and return allowances. Fair Value of Financial Instruments
Accounting Standards Update (ASU) 820, Fair Value Measurements and ASC 825, Financial Instruments, requires an entity to use observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:
Foreign Currency Translation The Company and its wholly owned subsidiary/investments, maintain their accounting records in United States Dollars (US$) whereas Jonway Auto maintains its accounting records in the currency of Renminbi (RMB), being the primary currency of the economic environment in which their operations are conducted. Jonway Auto's principal country of operations is the PRC. The financial position and results of our operations are determined using RMB, the local currency, as the functional currency. The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Due to the fact that cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet. Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholder's equity as Accumulated Other Comprehensive Income. The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in China's political and economic conditions, any significant revaluation of RMB may materially affect our financial condition in terms of US$ reporting. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:
Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606. This Update affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. The guidance in this Update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition and most industry-specific guidance. The core principle of the guidance is that an entity should recognize revenue to illustrate the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new guidance also includes a cohesive set of disclosure requirements that will provide users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a reporting organization's contracts with customers. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers by one year the effective date of ASU 2014-09, Revenue from Contracts with Customers. ASU 2015-14 defers the effective date of ASU 2014-09 for all entities by one year to December 15, 2017. Management is evaluating the impact, if any, of this ASU on the Company's financial position, results of operations and cash flows. In January 2015, FASB issued ASU No. 2015-01, Income StatementExtraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. This Update is issued as part of its initiative to reduce complexity in accounting standards (the Simplification Initiative). The objective of the Simplification Initiative is to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to the users of financial statements. This Update eliminates from GAAP the concept of extraordinary items. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The effective date is the same for both public business entities and all other entities. The Company does not expect the adoption of ASU 2015-01 to have material impact on the Company's consolidated financial statements. In February 2015, FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. This Update focuses on the consolidation evaluation for reporting organizations that are required to evaluate consolidation of certain legal entities by reducing the number of consolidation models from four to two and is intended to improve current GAAP. The amendments in the ASU are effective beginning after December 15, 2016. We do not expect the adoption of ASU 2015-02 to have material impact on our consolidated financial statements. In April 2015, FASB issued ASU 2015-03, interest Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in the ASU are effective beginning after December 15, 2015. We do not expect the adoption of ASU 2015-03 to have material impact on our consolidated financial statements. |
RELATED PARTY TRANSACTIONS (Schedule of Contract Fees) (Details) - 6 months ended Jun. 30, 2015 - Sanmen Branch [Member] $ in Thousands |
USD ($) |
---|---|
First 3,000 Vehicles [Member] | |
Related Party Transaction [Line Items] | |
Contractual fee per vehicle | $ 44 |
First 3,000 Vehicles [Member] | Maximum [Member] | |
Related Party Transaction [Line Items] | |
Number of vehicles assembled | 3,000 |
Vehicles 3,001 to 5,000 [Member] | |
Related Party Transaction [Line Items] | |
Contractual fee per vehicle | $ 30 |
Vehicles 3,001 to 5,000 [Member] | Minimum [Member] | |
Related Party Transaction [Line Items] | |
Number of vehicles assembled | 3,001 |
Vehicles 3,001 to 5,000 [Member] | Maximum [Member] | |
Related Party Transaction [Line Items] | |
Number of vehicles assembled | 5,000 |
Over 5,000 Vehicles [Member] | |
Related Party Transaction [Line Items] | |
Contractual fee per vehicle | $ 22 |
Over 5,000 Vehicles [Member] | Minimum [Member] | |
Related Party Transaction [Line Items] | |
Number of vehicles assembled | 5,000 |
SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details) - ¥ / $ |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2015 |
Dec. 31, 2014 |
|
SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||
Currency exchange rate | 6.0888 | 6.1460 |
Average currency exchange rate | 6.1088 | 6.1457 |
Shanghai Zapple [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity Method Investment, Ownership Percentage | 50.00% | |
Zap Hangzhou [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity Method Investment, Ownership Percentage | 37.50% |
LIQUIDITY AND CAPITAL RESOURCES (Details) - USD ($) $ in Thousands |
1 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jul. 31, 2015 |
Jun. 30, 2015 |
Dec. 31, 2013 |
Mar. 31, 2014 |
|
Line of Credit Facility [Line Items] | ||||
Current liabilities exceeded current assets | $ 55,000 | |||
Equity Deficiency | 12,400 | |||
Mr. Wang [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Additional capital injected | 2,640 | |||
Subsequent Event [Member] | Jonway Group [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Additional capital injected | $ 1,850 | |||
CITIC [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | 16,400 | $ 16,400 | ||
Credit exposure | 6,070 | 6,080 | ||
Everbright Bank [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | 7,600 | $ 9,200 | ||
Credit exposure | $ 3,800 | $ 4,600 | ||
Required cash deposit | 50.00% | 50.00% | ||
ICBC [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | 5,400 | |||
Credit exposure | $ 4,100 | $ 5,400 | ||
Available borrowing capacity | $ 1,300 |
INVENTORIES, NET (Schedule of Inventories) (Details) - USD ($) $ in Thousands |
Jun. 30, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
---|---|---|---|
INVENTORIES, NET [Abstract] | |||
Work in Process | $ 1,914 | $ 3,054 | |
Parts and supplies | 2,868 | 3,601 | |
Finished goods | 4,128 | 3,105 | |
Inventories | 8,910 | 9,760 | |
Less - inventory reserve | (1,301) | (1,380) | $ (1,981) |
Inventories, net | $ 7,609 | $ 8,380 |
INVENTORIES, NET (Schedule of Inventory Reserve) (Details) - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2015 |
Dec. 31, 2014 |
|
INVENTORIES, NET [Abstract] | ||
Balance, beginning of period | $ 1,380 | $ 1,981 |
Current provision for Jonway Auto | (78) | 251 |
Current recovery for inventory ZAP, net | (1) | (852) |
Balance, end of period | $ 1,301 | $ 1,380 |
LIQUIDITY AND CAPITAL RESOURCES |
6 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Jun. 30, 2015 | |||||||
LIQUIDITY AND CAPITAL RESOURCES [Abstract] | |||||||
LIQUIDITY AND CAPITAL RESOURCES | NOTE 2 LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2015, our current liabilities exceeded the current assets by approximately $55.0 million and our equity deficiency was $12.4 million, which raise substantial doubt about our ability to continue as a going concern. In addition, we have recurring net losses. Given our expected capital expenditure in the foreseeable future, we have comprehensively considered our available sources of funds as follows:
Management projects that we have sufficient funds to meet our working capital requirements and debt obligations as they become due based on the above considerations. However, these projections are based on the demand of our EV products, economic conditions, the overall sales trends in the automobile industry in China and on our operating results not continuing to deteriorate and our vendors and related parties being able to provide continued liquidity. As a result our consolidated financial statements for the quarter ended June 30, 2015 have been prepared on a going concern basis.
In assessing our liquidity, we monitor and analyze our cash on-hand, and our operating and capital expenditure commitments. Our principal liquidity needs are to meet our working capital requirements, operating expenses and capital expenditure obligations.
As of June 30, 2015, we were approved up to an aggregate of $16.4 million of a credit line, with the credit exposure of $6.08 million from the Sanmen Branch of CITIC Bank (CITIC) through Jonway Auto. As of June 30, 2015, the credit exposure of $6.07 million has been used. The credit line expires in March 2016.
In December 2013, we were approved for up to an aggregate of $9.2 million of a credit line from Everbright Bank. This credit line can only been used in the form of notes payable with 50% restricted cash deposited. Thus, we were approved a credit exposure of $4.6 million. This credit line expired as of January 2015. In June 2015, we were approved for up to an aggregate of $7.6 million of a credit line from Everbright Bank, with 50% restricted cash deposited and credit exposure of $3.8 million. As of June 30, 2015, the credit line has been fully used. The credit line expires in April 2016.
In March 2014, we were approved up to an aggregate of $5.4 million of a credit line from Industrial and Commercial Bank of China (ICBC) with credit exposure of $5.4 million. This credit line expires in March 2017. As of June 30, 2015, a credit exposure of $4.1 million has been used.
Jonway Auto intends to utilize the above credit lines to expand its electric vehicle business as well as other future vehicle models. This includes on-going working capital needs, electric vehicle production equipment requirements, testing, homologation and new EV product molds. Also our principal shareholder, Jonway Group, has agreed to provide the necessary support to meet our financial obligations through June 30, 2016 in the event that we require additional liquidity. In addition, China Electric Vehicle Corporation (CEVC) has renewed the convertible note with an extension through December 31, 2016, as of July 30th, 2015 (see Note 7).
We will require additional capital immediately to support the working capital requirements for the current sales orders in the pipeline and to meet the delivery of the backlog as well as to support our current operations. In particular, we require additional capital to continue development of our electric vehicle business, produce new models to compete in the market, and to continue to strengthen our dealer network to support EV channels and after-sale service centers and expanding our market initiatives. We also require financing of the investment for the continued roll-out of new products and to add qualified sales and professional staff to execute our business plan and pursue our efforts in the research and development of advanced technology vehicles, the electric and other fuel efficient vehicles.
We intend to fund our long term liquidity needs related to operations through the incurrence of indebtedness, equity financing or a combination of both. Although we believe that these sources will provide sufficient liquidity for us to meet our future liquidity and capital obligations, our ability to fund these needs will depend on our future performance, which will be subject in part to general economic, financial, regulatory and other factors beyond our control, including trends in our industry and technological developments.
Jonway Group has continued to provide support in financing the capital requirements of Jonway Auto. Wang Gang (Alex Wang), the Co-Chief Executive Officer (Co-CEO) and Jonway Group plans to inject additional capital through ZAP to support the critical on-going manufacturing operations to meet the delivery of the EV minivans and SUV orders in the pipeline. Mr. Wang and Jonway Group have injected $2.64 million and $1.85 million in June and July 2015, respectively. |
DISTRIBUTION AGREEMENTS (Narrative) (Details) - USD ($) |
3 Months Ended | 6 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Distribution Agreements [Line Items] | |||||
Depreciation and amortization | $ 2,106,000 | $ 2,084,000 | $ 4,198,000 | $ 4,176,000 | |
Purchase of fixed assets and intangibles | 5,969,000 | ||||
CNG Products [Member] | |||||
Distribution Agreements [Line Items] | |||||
Impairment loss on Distribution rights | $ 5,000,000 | ||||
Distribution Agreements [Member] | |||||
Distribution Agreements [Line Items] | |||||
Depreciation and amortization | $ 360,000 | $ 720,000 | $ 360,000 | $ 720,000 |
SEGMENT REPORTING (Schedule of Segment Results) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Dec. 31, 2014 |
|
Segment Reporting Information [Line Items] | |||||
Net sales | $ 5,356 | $ 7,588 | $ 13,718 | $ 14,409 | |
Gross profit (loss) | (271) | 21 | (783) | (950) | |
Depreciation and amortization | 2,106 | 2,084 | 4,198 | 4,176 | |
Net profit (loss) | (5,477) | (3,871) | (10,153) | (8,881) | |
Total assets | $ 86,207 | $ 106,983 | $ 86,207 | $ 106,983 | $ 90,996 |
ZAP Hong Kong [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | |||||
Gross profit (loss) | |||||
Depreciation and amortization | |||||
Net profit (loss) | |||||
Total assets | $ 9 | $ 139 | $ 9 | $ 139 | |
Jonway Auto [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 5,331 | 7,240 | 13,517 | 13,974 | |
Gross profit (loss) | (278) | (74) | (865) | (1,066) | |
Depreciation and amortization | 1,455 | 1,428 | 2,890 | 2,864 | |
Net profit (loss) | (4,023) | (2,252) | (7,294) | (5,585) | |
Total assets | 67,925 | 82,487 | 67,925 | 82,487 | |
ZAP [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 25 | 348 | 201 | 435 | |
Gross profit (loss) | 7 | 95 | 82 | 116 | |
Depreciation and amortization | 651 | 656 | 1,308 | 1,312 | |
Net profit (loss) | (1,454) | (1,619) | (2,859) | (3,296) | |
Total assets | $ 18,273 | $ 24,357 | $ 18,273 | $ 24,357 |
LITIGATION (Details) - USD ($) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2015 |
Dec. 31, 2013 |
|
LITIGATION [Abstract] | ||
Settlement payment | $ 779,500 | |
Reduction in settlement payment | $ 453,827 | |
Damages would be sought | $ 1,233,327 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - shares |
6 Months Ended |
---|---|
Jun. 30, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS [Abstract] | |
Shares cancelled | 1,182,558 |
Stock issued for acquisition of IPR and Distribution right for Minxan and CNG products, shares | 61,000,000 |
Stock issued to pay interest payable, shares | 6,439,552 |
Stock issued to redeem Convertible bond, shares | 7,970,983 |
Stock issued for due to related parties, shares | 17,819,783 |
INVENTORIES, NET (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES, NET [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory Reserve |
|
LINE OF CREDIT, SHORT TERM DEBT AND BANK ACCEPTANCE NOTES (Schedule of Short-Term Debt) (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 31, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Nov. 30, 2014 |
Sep. 30, 2014 |
Aug. 31, 2014 |
Jul. 31, 2014 |
Jun. 30, 2014 |
Apr. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Jun. 30, 2015 |
Jun. 30, 2014 |
Oct. 31, 2014 |
|
Short-term Debt [Line Items] | |||||||||||||||
Short term debt | $ 5,912 | $ 9,849 | $ 5,912 | $ 5,912 | |||||||||||
Weighted average interest rate | 6.55% | 6.73% | 7.45% | 7.20% | |||||||||||
Repayment of short term loans | $ 5,162 | $ 5,345 | |||||||||||||
CITIC [Member] | |||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||
Short term debt | 985 | 976 | $ 985 | 985 | |||||||||||
Face amount | $ 980 | ||||||||||||||
Term | 1 year | ||||||||||||||
Interest rate | 6.69% | ||||||||||||||
Collateral amount | 5,500 | 5,500 | 5,500 | ||||||||||||
ICBC [Member] | |||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||
Short term debt | 4,927 | $ 6,484 | 4,927 | 4,927 | |||||||||||
Face amount | $ 330 | $ 800 | $ 1,150 | $ 800 | $ 1,100 | $ 1,100 | $ 800 | $ 330 | $ 1,100 | $ 330 | $ 1,100 | $ 1,480 | |||
Term | 1 year | 1 year | 1 year | 6 months | 1 year | 1 year | 1 year | ||||||||
Interest rate | 6.07% | 5.60% | 6.60% | 5.04% | 6.92% | 6.26% | 6.00% | 6.07% | 6.26% | 6.07% | 6.26% | 6.60% | |||
Collateral amount | $ 3,280 | $ 3,280 | $ 3,280 | ||||||||||||
Restricted cash deposit | $ 820 | $ 820 | $ 820 | ||||||||||||
Repayment of short term loans | $ 800 | ||||||||||||||
Required cash deposit | 100.00% | ||||||||||||||
ICBC [Member] | Subsequent Event [Member] | |||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||
Face amount | $ 1,100 | ||||||||||||||
Term | 1 year | ||||||||||||||
Interest rate | 6.62% | ||||||||||||||
Taizhou Bank [Member] | |||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||
Short term debt | 1,220 | ||||||||||||||
Face amount | $ 300 | $ 810 | |||||||||||||
Interest rate | 8.93% | 8.496% | |||||||||||||
China Everbright Bank | |||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||
Short term debt | 1,139 | ||||||||||||||
Face amount | $ 1,200 | ||||||||||||||
Term | 11 months | ||||||||||||||
Interest rate | 7.20% | ||||||||||||||
Collateral amount | $ 2,100 | ||||||||||||||
Insurance Premiums [Member] | |||||||||||||||
Short-term Debt [Line Items] | |||||||||||||||
Short term debt | $ 30 |
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