SANTA ROSA, Calif., April 16, 2012 (GLOBE NEWSWIRE) -- ZAP Jonway (OTCBB:ZAAP), a manufacturer of gasoline and new energy electric vehicles (EVs), reported financial results for the three and twelve months ended December 31, 2011.
Alex Wang, Co-CEO of ZAP Jonway and CEO of Jonway Automobile, stated: "Following our merger, 2011 was a transformational year for ZAP Jonway. We are encouraged by our progress positioning the company for growth. In particular, we enhanced our dealership consortium and sales team, including focusing on more profitable dealers, appointing our new VP of Sales, and strategically relocating our sales and customer service support centers to Hangzhou. In addition, we are driving our vehicle development initiatives."
In March, ZAP Jonway hosted a very successful annual dealership conference for over 450 attendees. During the event, the company launched the new 2012 JNZ A380 G-5 SUV with its fully re-styled interior and unveiled its concept vehicle planned for year-end 2013, designed by Maggiora, a renowned Italian auto designer well known for its exquisite stylish design of Italian sports cars.
"Looking ahead in 2012, our goal is to launch our EV A380 SUV in China mid-year followed by our EV van. To further our international presence, we are building sales channels and targeting type approval in key strategic countries," concluded Wang.
Financial Results
This is the first year of consolidated financials of ZAP and 51% of Jonway Automobile, the merger of which closed on January 22nd, 2011. Therefore, the year-over-year analysis below compares the consolidated financials of ZAP and Jonway Automobile in 2011 with ZAP standalone in 2010. Complete financial details for the three- and twelve-month periods ended December 31, 2011 can be found on the company's Form 10-K, which it filed today with the Securities and Exchange Commission.
Quarterly Review
- Consolidated net sales were $14.2 million for the three months ended December 31, 2011, including $13.9 million contributed by Jonway, compared to $1.1 million for ZAP on a standalone basis for the three months ended December 31, 2010.
- Consolidated gross profit for the fourth quarter in 2011 was down due to promotional incentives offered to dealers to clear inventory of the prior year model and additional incentives to motivate higher sales quota. The $687,000 in gross profit was contributed by Jonway, compared to gross profit of $64,000 for ZAP on a standalone basis in the fourth quarter of 2010.
- Consolidated operating expenses were $7.8 million in the fourth quarter of 2011, including both $5.4 million related to Jonway and non-cash charges of $1.6 million related to quarterly amortization of distribution rights, stock based compensation and others. This compares to operating expenses of $7.3 million for ZAP on a standalone basis for the fourth quarter of 2010.
- Net loss attributable to ZAP for the fourth quarter of 2011 was $11.4 million, or $0.05 per diluted share including total comprehensive loss of $2.1 million from Jonway, compared to net loss of $11.4 million, or $0.09 per diluted share in fourth quarter 2010 for ZAP on a standalone basis.
- At December 31, 2011, cash and cash equivalents was $5.9 million.
- In December 2011, the $19 million convertible note was extended to August 12, 2012. Subsequently this was further extended to August 12, 2013. There will be no interest accrual going forward after the end of the first term that ended February 12, 2012.
- At the end of December 2011, ZAP delivered 71 million shares to Jonway Group for work on the new Shuttle van, totaling over $18 million in design, exterior and interior molds, tooling and production equipment.
Annual Review
- Consolidated net sales in 2011 were $56.2 million including$54.3 million contributed by Jonway, compared to $3.8 million in 2010 from ZAP on a standalone basis.
- Consolidated gross profit in 2011 was $4.5 million including $5.0 million contributed by Jonway, or 7.9% of sales, compared to gross profit of $429,000 in 2010 from ZAP only. Gross profit for Jonway was down primarily due to promotional incentives to encourage volume sales and rebates to support rebranding under the Jonway brand from its previous name of "UFO".
- Consolidated operating expenses for 2011 were $32.7 million including $16.6 million related to Jonway and non-cash charges of $7.2 million related to amortization of distribution rights, stock based compensation and others. This compares to operating expenses of $14.5 million in 2010 for ZAP alone. The higher operating expenses from Jonway were due primarily to increases in sales and marketing in establishing its branding in 2011, general and administrative for relocation of the sales team to Hangzhou, and research and development related to the localization of the EV products, as well as the cost of tooling and equipment for production manufacturing of the EV product line.
- Consolidated net loss in 2011 was $45.4 million. Net loss attributable to ZAP was $40.8 million including total comprehensive loss of $8.1 million attributed to Jonway Auto, compared to net loss in 2010 of $19.0 million from ZAP on a standalone basis. More than $30 million of the consolidated net loss was non-cash, attributed to stock based compensation and amortization of distribution rights, interest payment and depreciation, and non-cash loss due to convertible note, conversion price compared to the over a dollar share price during January 2011 at the time the convertible note was issued. Of the remaining consolidated net loss, approximately $14 million was cash expenditure, of which more than $4 million was one-time expense associated with the legal and accounting costs from the acquisition, EV technology development for production manufacturing and payment for development of EV tooling and type approval expenses.
Webcast Information
ZAP Jonway's management team will host a webcast on Tuesday, April 17, 2012 at 4:30 p.m. ET to discuss its fourth quarter and year-end 2011 earnings results. Investors can access the webcast on the company's website at www.zapworld.com, or via the link below, for a period of one year. http://investor.shareholder.com/media/eventdetail.cfm?eventid=112244&CompanyID=AMDA-J22R5&e=1&mediaKey=9E9B9D24C62C9AE9EA53835CC5CEE4A3
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 on 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.
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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.