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Zap Jonway posts $9.9 million loss

Electric vehicle manufacturer Zap Jonway reported a $9.9 million loss for the first three months of 2011, up from a $2.8 million loss a year ago.

The increase largely stems from its January acquisition of Zhejiang Jonway Automobile Co., according to Zap. It acquired the Chinese company for $29 million and 8 million shares of Zap stock, which gave Santa Rosa-based Zap a 51 percent share of Jonway.

Zap Jonway had net sales of $11.7 million during the first quarter, compared to Zap's net sales of $848,000 during the same period last year, according to a report filed last week with U.S. securities regulators.

Part of Zap Jonway's quarterly loss came from a one-time charge of $3.3 million for various acquisition price adjustments, the company said in a statement.

Zap has made a partial payment to Jonway using $19 million in convertible debt, which Zap expects will be converted into shares of its stock by 2012. The company also received a $7 million loan from a relative of the Wangs, the Chinese family who owned Jonway.

Alex Wang is now co-chief executive of Zap, splitting duties with longtime CEO Steven Schneider. The company's chairwoman is Priscilla Lu, whose company Cathaya Capital and its affiliates have in recent years provided Zap with massive funding and now own about 57 percent of its outstanding shares of common stock.

As a result, Cathaya "will be able to exercise a significant level of control over all matters" including amending Zap's articles of incorporation, hiring and firing top management and approving major transactions, the company said in a filing with the U.S. Securities and Exchange Commission.

Zap also announced it made its final settlement payment on March 31 to the Al Yousuf Group, a former investor that sued Zap in 2009 for failing to repay a $5.6 million loan. As part of the settlement, Zap agreed last year to make regular payments for a total of $1.8 million and transfer ownership of its downtown building at 501 Fourth St. to the Al Yousuf Group. As a result, Zap closed its downtown showroom last month.

The Dubai-based company was a major shareholder of Zap, and its president, Eqbal Al Yousuf, was chairman of Zap at the time of the loan.

Zap stock closed at 55 cents a share on Wednesday, down 3 cents in over-the-counter trading. The company's stock has lost two-thirds of its value since January, when Zap shares hit a four-year high of $1.86.


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