Form 10KSB for ZAP
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31-Mar-2006
Annual Report
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with, and are qualified by reference to, our Financial Statements and related notes thereto in Item 7 of this report. Certain statements set forth below under this caption constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform of 1995. Refer to Item 1 of this report. Also, for a discussion of certain risk factors applicable to our business and operations see "Risk Factors" in Item 1 of this report.
SUMMARY OF KEY ACCOMPLISHMENTS DURING 2005
The Company delivered the first U. S. Compliant Smart Cars Americanized by ZAP to qualified dealers in seven states. The future delivery schedule has not yet been determined. ZAP will need the support of a major manufacturer and additional governmental approvals to be able to deliver existing customer orders for Smart Cars.
ZAP entered into an agreement in September 2005, for a $425 million revolving financing facility with Surge Capital II, LLC. This new facility gives ZAP the ability to start fulfilling purchase orders it has already received for SMART cars that will be modified to meet United States environmental and safety standards. The facility may also be used for importation of other brands of fuel-efficient vehicles from global manufacturers that would be distributed through ZAP's dealer network. The financing facility has a term of one year, but may be extended upon agreement by both parties. The financing is based on orders ZAP receives from dealers who must be approved in advance by Surge Capital and is secured by a first lien on substantially all of ZAP's assets.
ZAP signed an exclusive North American distribution agreement with a Brazilian auto manufacturer OBVIO ! Automotoveiculos S.P.E. Ltda., of Rio de Janeiro. ZAP and OBVIO ! have agreed to collaborate in the design and manufacture of high efficiency, high performance urban cars. Prototypes of both models were introduced in late 2005 at the San Francisco Auto Show. Under the terms of the agreement, ZAP is ordering 50,000 vehicles from OBVIO ! during the three year period following initial delivery.
On October 28, 2005, the Company announced that it will be proceeding with legal action against Daimler Chrysler and others serving a complaint that seeks in excess of $500 million in redress for more than a year-long campaign of misconduct against ZAP by Daimler and Ulrich Walker, the then -CEO of its subsidiary Smart gmbh. The complaint filed in Los Angeles Superior Court, details a series of anti-competitive tactics, aimed at defaming ZAP and disrupting its third-party business relationships. ZAP anticipates proceeding to trial in this matter before the close of the year 2006.
ZAP established a primary listing in 2005 on the Archipelago Exchange ("ArcaEx"), a facility of the Pacific Exchange. The ticker symbol changed from ZAPZ to ZP. Subsequently, ArcaEx completed a merger with the New York Stock Exchange to form the New York Stock Exchange Group on March 7, 2006. The all-electronic stock exchange Archipelago is now a wholly owned subsidiary of the NYSE Group, Inc. The company's listing is now on NYSE Arca, and continues to trade under the ticker symbol ZP. |
