ZAP Jonway (OTC BB: ZAAP), a designer and manufacturer of gasoline and new energy electric vehicles (EVs), reported financial results for the three and nine months ended September 30, 2011. Dr. Priscilla Lu, Chairman of ZAP Jonway, stated: “As we began laying the foundation for growth, the past several months have been transformative for ZAP Jonway. ZAP’s acquisition of 51% of Jonway Auto in January of 2011 was the first step in our initiative to establish a combined company that features strong manufacturing capabilities, an established distribution platform and a 17-year history of EV innovation. More recently, we appointed Mr. Zhang Da Qi as General Manager at Jonway Auto who will provide key leadership in our sales expansion initiatives. Our new product roadmap reflects our adherence to market relevance by focusing on delivering a high-quality yet affordable new energy electric vehicle product line targeting the fleet market, applying the same principles that Jonway has with its gasoline vehicles.” “As we expand our product line in 2012 to launch our EV models, we plan to develop new channels that address sales opportunities with institutions, governments and corporations while utilizing the established network of nationwide dealerships we already have in place for selling direct to consumers. Mr. Zhang Da Qi, with his extensive experience in the Chinese auto industry, will offer new product packages that are attractive to large volume buyers,” concluded Dr. Lu. Recent Company Highlights
- Introduced first joint product roadmap for 2011/2012 featuring new traditional gasoline and new energy electric vehicle models.
- Extended warranty period demonstrates ZAP Jonway’s commitment to quality with its core engine technologies using the Mitsubishi gasoline drive train, thus leading the Chinese auto industry with an unprecedented five-year warranty for its automobiles manufactured in China.
- Expanded and relocated sales and customer support center to Hangzhou, a vibrant technology center in the Zhejiang Province of China, to be in close proximity to its new energy vehicle R&D center and to increase access to talent for expansion plans.
- Appointed Mr. Zhang Da Qi as General Manager of Jonway Auto to lead sales and operations initiatives, leveraging his 20 years of experience working with leading Chinese auto companies.
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.
- 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 $3.1 million contributed by Jonway
|ZAP AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited)|
|Cash and cash equivalents||$||1,451||$||1,503|
|Accounts receivable, net of allowance of $17 in 2011 and $27 in 2010||4,108||294|
|Due from related party-Jonway||3,247||—|
|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|
|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 $197 in 2010||17,449||97|
|Deposit on Zhejiang Jonway Auto||-||11,000|
|Deposits and other asset, net||77||62|
|8 % Senior Convertible debt, net of discount||$||12,523||$||—|
|Short term debt and notes||9,473||668|
|Advances from customers||1,233||---|
|Due to related party||2,138||---|
|Total current liabilities||50,789||3,193|
|Long term liabilities:|
|Total long term liabilities||279||5,539|
|Commitments and contingencies||—||—|
|ZAP shareholders’ equity :|
|Common stock, 800 million shares authorized; no par value; 223,972,210 and 207,254,789 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively||216,821||179,691|
|Accumulated other comprehensive income (loss)||1,742||(112)|
|Notes receivable - Shareholders||(331)||-|
|Total ZAP shareholders’ equity||33,992||24,780|
|Total liabilities and equity||$||112,875||$||33,512|
|ZAP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share data) (Unaudited)|
|Three MonthsendedSeptember 30,2011||Three MonthsendedSeptember 30,2010||Nine MonthsendedSeptember 30,2011||Nine Monthsended September 30,2010|
|COST OF GOODS SOLD||11,951||837||37,310||2,318|
|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 $1.5 million for the three and nine Months ended September 30, 2011 and 2010, respectively)||3,562||1,564||13,981||5,579|
|Research and development||1,009||130||2,944||834|
|LOSS FROM OPERATIONS||(5,136||)||(1,791||)||(20,206||)||(6,818||)|
|OTHER INCOME (EXPENSE)|
|Interest expense, net||(4,904||)||(1||)||(13,732||)||(1,046||)|
|Gain on extinguishment of debt||-||-||-||817|
|Loss from equity interest in Joint Venture||(64||)||(96||)||(225||)||(244||)|
|Gain (Loss) on financial instruments||-||(373||)||(349||)||(257||)|
|Other income (expense), net||221||-||1,001||(47||)|
|LOSS BEFORE INCOME TAXES||$||(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|
|— BASIC AND DILUTED||219,097||109,611||215,044||106,846|