SANTA ROSA -- Electric vehicle maker Zap Jonway (OTCBB:ZAAP) today reported a first-quarter net loss of $9.90 million on $11.7 million in sales, up from a $2.86 million net loss and sales of $848,000 a year before.
Zap said much of the loss came from consolidated net loss in the first quarter, ended March 31, resulted from the acquisition of 51 percent of China-based Zhejiang Jonway Automobile Co. Ltd. in January.
About $6 million of the quarterly loss was noncash and mostly related to the acquisition. Of the remainder of the loss, $3.3 million came from a one-time charge of various acquisition price adjustments.
Zap intends to narrow its electric vehicle line in the U.S. to a small number of "strategic" automobiles and streamline its corporate resources to accelerate production in China to address the electric-vehicle market there, according to the company. Zap Jonway also intends to pursue subsidies from the central and local governments in China, including from 60,000 to 100,000 RMB ($9,000--$15,000) in manufacturer rebates for each fully electric vehicle sold in China.
Zap Jonway plans to deliver early preproduction models of the A380EV to the Shanghai Yangpu government for its Green City Project during this quarter. The full production is expected in the latter part of the fourth quarter. The Alias model is expected to be released in early 2012.
Of the non-cash losses from Zap, approximately $1.5 million were expenses related to stock-based compensation, amortization of distribution rights and acquisition-related management fees, and a non-cash charge of $1.8 million for interest expenses related to the discounted price of the $19 million convertible note issued by Zap in connection with funding used to complete the Jonway acquisition.
Nonrecurring expenses for the quarter included a one-time cash payment of $650,000 in legal and audit fees in connection with the acquisition.
The company plans to pursue more credit opportunities from Chinese banks to expand manufacturing.
At the close of the trading session Tuesday, the company stock price was 58 cents a share, a decrease of 2 cents or 3.33 percent from Monday.