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Zap directors battle for control
Jeff Quackenbush, Business Journal Staff Reporter
Wednesday, January 2, 2013, 6:06 pm
Categories: Green, Industry News, North Bay News, Sonoma Report, Technology, Top News Stories, Transportation | No Comments
SANTA ROSA — Directors of Zap Jonway (OTC: ZAAP) have been accusing each other of trying to take control of the 19-year-old Santa Rosa-based electric-vehicle company, according to competing filings with federal securities regulators this week.
According to a Securities & Exchange Commission filing Monday, board of directors actions that day removed Priscilla Lu as chairwoman and director Goman Chong from committee roles, and fired were co-Chief Executive Officer and Chief Operating Officer Charles Schillings and Controller Michael Ringstad. Other reported board actions were appointing existing director Mark Abdou, 39, as chairman and secretary; naming to the board Jonway Auto Vice President Luo Hua Liang, 33, and Juan Gao, a 32-year-old business representative for ZAP USA to China; making “Alex” Wang as full CEO, a role he shared since 2010; and appointing Jeff Schneider, an investment banker and the 48-year-old brother of director and former co-CEO Steve Schneider, as president.
In a filing this morning, Ms. Lu claimed three of the seven board directors — Mr. Wang, Mr. Abdou and Steve Schneider — “took improper board actions” at the Monday meeting by removing Mr. Chong and her from board roles and making appointments without proper quorum.
“The majority of directors of the board … are investigating this matter and will follow up with necessary legal actions to revoke the improper appointment,” she wrote. Among that majority, she claimed, were Co Nguyen, chief financial officer of Cathaya Capital, and Jonway executive Aileen Kao. They weren’t mentioned as currently being on the board as of the Monday filing.
This afternoon, Mr. Wang filed an amendment to Ms. Lu’s report, claiming it was “unauthorized and inaccurate” by Ms. Lu and Mr. Ringstad “in retaliation against the board.” Mr. Wang claimed that the board meeting was “properly noticed and convened” per company bylaws, a quorum was present and “at least a majority of directors” approved the actions.
“ZAP intends to take immediate action to ensure Ms. Lu and Mr. Ringstad take no further action to misled ZAP’s shareholders and the public,” Mr. Wang wrote. Mr. Ringstad was escorted from Zap’s offices on Monday, according to the filing.
The board battle comes as Zap Jonway has suffered a couple of setbacks in the current year. The company relocated its Santa Rosa distribution and assembly facility to Sebastopol this summer amid a legal dispute with Railroad Square landlord over rent, and a settlement agreement was reached in recent weeks for $150,000 in cash and stock.
On Nov. 26, the company reported it received an order from the National Highway Traffic Safety Administration to buy back from owners and dealers nearly 700 of its three-wheeled sedans and trucks under a 2009 recall for problem brakes, saying the administration wasn’t satisfied with its remedy and notification program.
The company said it shipped 627 of 691 model year 2008 Xebra vehicles, which the government said have an average market value now of $3,100 each, or nearly $2 million in potential payouts. The company said it planned to appeal the order.
Meanwhile, the Zap Jonway reported in its third-quarter financial results on Nov. 14 that the company was aiming for certification of Jonway manufacturing facilities in China as eligible for the equivalent of nearly $9,700 in Chinese government incentives for electric vehicles.
The company reported a $13.5 million net loss for the first nine months of the year on net sales of $35.4 million, compared with losses of $27 million on sales of $42 million for the same pace in 2011.
Link to article: http://www.northbaybusinessjournal.com/66989/zap-directors-battle-for-control/
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