Zap History
Source: Zap WorldZAP stands for Zero Air Pollution®. With its new product offerings, the Company is positioned to become a leading brand and distribution portal of advanced technology vehicles. ZAP is committed to running its business based on a strong philosophical foundation that supports the environment, social responsibility and profitability.ZAP's strategy is to serve the growing and underrepresented consumer that seeks fuel efficient vehicles. With the recent increases in the cost of oil and increasing concern about the environment and the effects of global warming, we believe there is a large and untapped demand in the areas of transportation and consumer products. During the energy crisis of the 1970s, Japanese automobile manufacturers penetrated the United States market when domestic automobile manufacturers failed to anticipate changes. ZAP believes a similar opportunity is present today, enhanced by heightened environmental awareness, climate changes and economic pressures. ZAP has assembled a complete line of products to meet the growing demands of the environmentally conscious consumer focused on two primary businesses: ZAP Automotive and ZAP Power Systems.
ZAP was incorporated as 'ZAP Power Systems' under the laws of the State of California on September 23, 1994, and we changed our name to ZAP on June 18, 2001. On March 1, 2002, the Company filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the Northern District of California, Santa Rosa Division. The plan of reorganization was confirmed on June 20, 2002 and the Bankruptcy Court closed the bankruptcy case on June 14, 2004. Our principal executive offices are located at 501 Fourth Street, Santa Rosa, California, 95401 and our telephone number is (707) 525-8658. We also conduct certain portions of our business through the following wholly-owned subsidiaries: Voltage Vehicles, R.A.P. Group, Inc., ZAPWorld Stores, Inc., ZAP Manufacturing, Inc. and ZAP Rental Outlet. Our Internet address is located at www.zapworld.com. Information contained on our website or that is accessible through our website should not be considered to be part of this Memorandum.
ZAP is positioned to become a leading distributor of fuel efficient alternative energy vehicles in the United States. ZAP has already established more than 20 licensed automotive dealers as customers and intends to grow its distribution base significantly over the next several years. Simultaneously, ZAP intends to secure distribution agreements with two to four other vehicle manufacturers whose products fit ZAP's mission, and distribute those vehicles through its dealer network.
ZAP entered the automotive business in 2006 by selling a modified version of the European micro-car, the 'Smart Car,' in the United States and has sold over 300 through the first nine months of 2006. ZAP Automotive is currently launching the XEBRATM, what we believe is the first 100% production electric vehicle ('EV') not designated as a 'low speed vehicle' ('LSV'). In fact, we believe the XEBRA is the only production EV available in the United States with a top speed of up to 40 mph.
ZAP has recently begun its first marketing campaign for the XEBRA vehicles. The XEBRA comes in a four-passenger sedan version and a two-passenger utility pickup version. According to the Electric Auto Association, there are over 56,000 EVs on the road today. It is estimated that almost all EVs sold to date are LSVs. The Company believes the EV market niche will continue to grow rapidly, especially with the introduction of affordable vehicles such as the XEBRA that will retail for less than $10,000 and deliver features, such as speeds in excess of 40 mph, not currently available among existing EVs. ZAP's Chinese manufacturing partner currently has the manufacturing capacity to produce approximately 1,000 vehicles per month and is working with ZAP to obtain the required federal and state regulatory approvals in the United States.
In line with ZAP's goal of growing its automotive offerings, in 2008 ZAP intends to launch an advanced alternative energy vehicle called the OBVIO!. ZAP entered into a license and distribution agreement with Brazilian manufacturer OBVIO! in September of 2005 that granted us the exclusive North American distribution rights for the line of OBVIO! micro-cars. These cars will be designed to run on ethanol, gasoline, or any combination of the two energy sources and will come in two models, an economy 828 model and a high performance 012 model. OBVIO! anticipates deliveries to ZAP to begin in 2008. According to an article published by the Washington Post, there are approximately five million flex-fuel vehicles currently on the road in the U.S., with sales expected to increase substantially over the next few years. ZAP believes it will capture market share by offering a vehicle that is stylish, sporty and fun, yet more fuel-efficient and able to run on 100% ethanol.
In the personal transportation market, the ZAP brand is well-known given the over 90,000 ZAP vehicles sold since the Company's founding in 1994. With a recently renewed focus on leveraging this brand identity, the Company has been upgrading its range of vehicles and products that produce zero air pollution and inject new energy and style into transportation, recreation and industrial applications. ZAP's new vehicle lineup features high quality 100% electric scooters, off-road dirt bikes and all terrain vehicles. The ZAPPY® 3, a three-wheel personal transporter, competes in the light electric vehicles segment, a category that includes light scooters, bicycles, motor scooters, and motorcycles. Data provided by Cycle Electric, an international consulting group, estimates that over 13 million light electric vehicles were sold in 2005.
However, the ZAPPY 3 is one of the only products in this segment which spans recreation, commercial and industrial applications. Its main competitor, the Segway, does not, in the Company's opinion, have the functionality of the ZAPPY 3, yet retails for approximately eight times the price. In the off-road segment, the Auto Channel estimates that there were over 800,000 all-terrain vehicles sold globally in 2005, none of which are electric. ZAP intends to capture a portion of the off-road market share by addressing the unmet demand for quiet, zero emission electric vehicles among consumers who previously could only purchase gasoline-powered versions of such vehicles.
ZAP also offers a new line of portable energy devices which feature advanced lithium-based battery and charge control devices that can power a wide range of mobile electronics such as cell phones, digital cameras, laptops and iPods. Rechargeable battery sources using lithium-ion and lithium polymer technology provide significantly more charge time than other currently available technologies. With its portable energy devices, ZAP is targeting a market which it estimates to include over two billion users of mobile electronic devices by the year 2007.
ZAP's recent efforts in pursuing its business plan are promising. The level of interest in dealer development and fleet sale inquiries for the XEBRA exceed the Company's initial expectations.
Total ZAP sales for 2006 are up significantly from comparable periods in 2005. For the first nine months of 2006 unaudited sales were $10.0 million, up 247% from the $2.9 million reported for the first nine months of 2005.
