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ZAP Jonway Reports Third Quarter 2011 Financial Results

Please note as the company acquired 51% of Jonway operations in January 2011. As such, when comparing year-to year the results of the consolidated financials this year of the combined companies, they increased compared to ZAP’s standalone financials from 2010.

Consolidated Financials for the Three Months Ended September 30: 2011 Compared to 2010

  • Net sales were $14.1 million including $13.7 million contributed by Jonway, compared to $985,000.
  • Gross profit was $2.1 million, including $2.0 million contributed by Jonway, or 15.2% of sales, compared to gross profit of $148,000, or 15.0% of sales.
  • Operating expenses were $7.3 million including both $3.9 million related to Jonway and non-cash charges of $1.2 million related to quarterly amortization of distribution agreements for Jonway products and Better World’s charging stations and quarterly fees related to a management agreement between ZAP and Cathaya Capital. This compares to operating expenses of $1.9 million. The increase from Jonway was due primarily to increases in sales and marketing, general and administrative, and research and development related to the addition of Jonway and the integration of EV technology.
  • Net loss was $8.9 million, or $0.04 per diluted share, compared to net loss of $2.3 million, or $0.02 per diluted share, including total comprehensive loss of $1.1 million contributed by Jonway.
  • At September 30, 2011, cash and cash equivalents was $1.5 million.

Consolidated Financials for the Nine Months Ended September 30: 2011 Compared to 2010

  • Net sales were $42.1 million including $40.0 million contributed by Jonway, compared to $2.7 million.
  • Gross profit was $4.8 million including $4.3 million contributed by Jonway, or 11.3% of sales, compared to gross profit of $364,000, or 14.0% of sales.
  • Operating expenses were $24.9 million, including $11.2 million related to Jonway and non-cash charges of $3.5 million related to amortization of distribution agreement for Jonway products and Better World’s charging stations and fees under a management agreement between ZAP and Cathaya Capital. This compares to operating expenses of $7.2 million. The increase from Jonway was due primarily to increases in sales and marketing, general and administrative, and research and development related to the addition of Jonway and the integration of EV technology.
  • Net loss was $29.5 million, or $0.14 per diluted share, compared to net loss of $7.6 million, or $0.07 per diluted share, including total comprehensive loss of $3.1 million contributed by Jonway

Conference Call Information

ZAP Jonway’s management team will hold a conference call today, Tuesday, November 15, 2011 at 1:30 p.m. PT / 4:30 p.m. ET (5:30 a.m. on Wednesday, November 16, 2011 in China) to discuss its third quarter 2011 earnings results, review the quarterly activity and answer questions. Investors in the United States may participate in the call by dialing (877) 280-7473, and international participants may dial (1-707) 287-9370. The conference ID is 25418272 and participants are encouraged to dial 10 minutes prior to the call to prevent a delay in joining. A live webcast of the conference call is scheduled to be available on ZAP Jonway’s corporate site at http://www.zapworld.com/Investors. For those who cannot listen to the live broadcast, a webcast replay of the call is scheduled to be available on the company’s corporate site for 90 days. A telephone replay of the call is also scheduled to be available through November 17, 2011. To listen to the telephone replay dial (855) 859-2056 or dial (1-404) 537-3406 outside the United States, and enter pass code 25418272.

About ZAP Jonway

ZAP Jonway combines the attributes of both companies, ZAP and Jonway Automobile, to design and manufacture quality, affordable gasoline and new energy electric vehicles (EVs). With Jonway Automobile’s established ISO 9000 manufacturing facilities, research and development and sales and customer services facilities in China, ZAP Jonway is well positioned to scale up production and sales for both gasoline and EVs for China and the international markets. ZAP, an early pioneer of EVs, brings to the new combined company a broad range of EV design experience that is being applied to new product lines. ZAP Jonway is focused on addressing EV fleets targeting city delivery trucks and vans used by university campuses, government and corporate markets in China and the United States, while utilizing its gasoline vehicle production quantities to gain economy of scale through its common vehicle parts and platforms. ZAP Jonway benefits from the established China dealership and customer support network developed by Jonway Automobile for its China sales and services. ZAP Jonway is headquartered in Santa Rosa, California and its production facility is located in Zhejiang Province of the People’s Republic of China. Additional information about ZAP Jonway is available at http://www.zapworld.com.

Forward-Looking Statements

This press release contains forward-looking statements. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, continued acceptance of ZAP's products, increased levels of competition, new products and technological changes, ZAP's dependence upon third-party suppliers, intellectual property rights and other risks detailed from time to time in ZAP's periodic reports filed with the Securities and Exchange Commission.

 

ZAP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 (In thousands, except share data)

(Unaudited)

         
9/30/2011

12/31/10

Current assets:
Cash and cash equivalents $ 1,451 $ 1,503
Restricted cash 3,366
Accounts receivable, net of allowance of $17 in 2011 and $27 in 2010 4,108 294
Due from related party-Jonway 3,247
Marketable securities 1,426 1,888
Notes receivable from Jonway dealers 1,477
Inventories, net of reserve of $877 in 2011 and $619 in 2010 10,294 1,822
Prepaid expenses and other current assets 2,591 266
Total current assets 27,960 5,773
 
Property and equipment, net 46,172 173
 
Other assets:
Investment in non-consolidated joint venture 601 808

Distribution fees for Jonway and Better World products net of amortization of $2.6 million in 2011 and $961 in 2010

13,979 15,599
Intangible assets, net of amortization of $905 in 2011 and $197 in 2010 17,449 97
Goodwill 6,637
Deposit on Zhejiang Jonway Auto - 11,000
Deposits and other asset, net 77 62
Total assets     $ 112,875       $ 33,512
 
Current liabilities:
8 % Senior Convertible debt, net of discount $ 12,523

 

$
Short term debt and notes 9,473 668
Accounts payable 13,881 328
Accrued liabilities 10,141 2,197
Advances from customers 1,233 ---
Other payables 473 ---
Due to related party 2,138 ---
Taxes payable 927 ---
Total current liabilities 50,789 3,193
Long term liabilities:
Derivative liability - 5,539
Warranty Liability 279 ---
Total long term liabilities 279 5,539
Total liabilities 51,068 8,732
 
 
Commitments and contingencies
 
Equity:

 

 

ZAP shareholders’ equity :
Common stock, 800 million shares authorized; no par value ; 223,972,210 and 207,254,789 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively

216,821

179,691

Accumulated other comprehensive income (loss)

1,742

(112)

Notes receivable - Shareholders

(331)

-
Accumulated deficit

(184,240)

(154,799)

Total ZAP shareholders’ equity 33,992 24,780
Non-controlling interest 27,815 --
Total equity 61,807 24,780
 
Total liabilities and equity $ 112,875 $ 33,512
 
 

ZAP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

(Unaudited)

             

Three Months ended September 30, 2011

Three Months ended September 30, 2010

Nine Months ended September 30, 2011

Nine Months ended

September 30, 2010

  Restated   Restated
NET SALES $ 14,088 $ 985 $ 42,062 $ 2,682
COST OF GOODS SOLD   11,951     837     37,310     2,318  
GROSS PROFIT 2,137 148 4,752 364
OPERATING EXPENSES
Sales and marketing 2,702 245 8,033 769
 
General and administrative (non-cash stock-based compensation of $1 million and $1.45 million and $1 million and $1.5 million for the three and nine Months ended September 30, 2011 and 2010, respectively) 3,562 1,564 13,981 5,579
 
Research and development   1,009     130     2,944     834  
  7,273     1,939     24,958     7,182  
LOSS FROM OPERATIONS (5,136 ) (1,791 ) (20,206 ) (6,818 )
OTHER INCOME (EXPENSE)
Interest expense, net (4,904 ) (1 ) (13,732 ) (1,046 )
Gain on extinguishment of debt - - - 817
Loss from equity interest in Joint Venture (64 ) (96 ) (225 ) (244 )
Gain (Loss) on financial instruments - (373 ) (349 ) (257 )
Other income (expense), net   221     -     1,001     (47 )
  (4,747 )   (470 )   (13,305 )  

(777

)

LOSS BEFORE INCOME TAXES $ (9,883 ) $ (2,261 ) $ (33,511 ) $ (7,595 )
PROVISION (EXPENSE) BENEFIT FOR INCOME TAX   (5 )   -     10     (4 )
CONSOLIDATED NET LOSS $ (9,888 ) $ (2,261 ) $ (33,501 ) $ (7,599 )
Less: net loss attributable to non controlling interest   1,026     -     4,060     -  
Net loss attributable to ZAP $ (8,862 ) $ (2,261 ) $ (29,441 ) $ (7,599 )
 
NET LOSS PER COMMON SHARE
— BASIC AND DILUTED $ (0.04 ) $ (0.02 ) $ (0.14 ) $ (0.07 )
WEIGHTED AVERAGE OF COMMON
SHARES OUTSTANDING
— BASIC AND DILUTED   219,097     109,611     215,044     106,846  




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