UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _______ to _________
Commission file number 333-05744-LA
-----------------------------------
ZAP POWER SYSTEMS
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
CALIFORNIA 94-3210624
- ------------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
117 Morris Street, Sebastopol, California 95472
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(707) 824-4150
- ---------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. 2,626,887 shares of common
stock as of July 22, 1998
Transitional Small Business Disclosure Format Yes [ ] No [x]
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
ZAP POWER SYSTEMS
CONDENSED BALANCE SHEET
June 30,
1998
- -------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash $ 273,000
Receivables 370,500
Inventories 393,700
Prepaid expenses and other assets 134,300
------------
Total current assets 1,171,500
------------
PROPERTY AND EQUIPMENT 217,100
------------
OTHER ASSETS
Intangibles, net of accumulated amortization of $4,900 36,800
Deposits 11,900
------------
Total other assets 48,700
------------
Total assets $ 1,437,300
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 394,800
Accrued liabilities and other expenses 26,000
Customer Deposits 12,600
Notes payable 33,600
Current maturities of long-term debt 2,500
Current maturities of obligations under capital leases 8,400
------------
Total current liabilities 477,900
------------
OTHER LIABILITIES
Obligations under capital leases, less current maturities 10,900
Long-Term Debt, less current maturities 16,200
Notes Payable, less current maturities 60,000
------------
Total other liabilities 87,100
------------
STOCKHOLDERS' EQUITY
Common stock, no par value; 10,000,000 shares
authorized, 2,619,617 shares issued and outstanding 3,648,700
Accumulated deficit (2,776,400)
------------
Total stockholders' equity 872,300
------------
Total liabilities and stockholders' equity $ 1,437,300
============
The accompanying notes are an integral part of these financial statements
2
<PAGE>
<TABLE>
ZAP POWER SYSTEMS
CONDENSED STATEMENTS OF OPERATIONS
<CAPTION>
Quarter ended June 30, Six Months ended June 30,
1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $ 863,700 $ 568,200 $ 1,324,900 $ 826,100
COST OF GOODS SOLD 636,800 484,800 906,400 706,600
------------ ------------ ------------ ------------
GROSS PROFIT 226,900 83,400 418,500 119,500
------------ ------------ ------------ ------------
OPERATING EXPENSES
Selling 250,700 172,600 409,700 265,400
General and administrative 219,900 188,000 382,400 364,200
Research and development 47,600 69,500 79,900 118,500
------------ ------------ ------------ ------------
518,200 430,100 872,000 748,100
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (291,300) (346,700) (453,500) (628,600)
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest expense (3,600) (7,000) (6,300) (15,900)
Other (4,100) 7,900 400 5,300
------------ ------------ ------------ ------------
(7,700) 900 (5,900) (10,600)
------------ ------------ ------------ ------------
NET LOSS $ (299,000) $ (345,800) $ (459,400) $ (639,200)
============ ============ ============ ============
NET LOSS PER COMMON SHARE,
BASIC AND DILUTED $ (0.12) $ (0.15) $ (0.18) $ (0.29)
============ ============ ============ ============
WEIGHTED AVERAGE OF COMMON
SHARES OUTSTANDING 2,592,100 2,254,900 2,571,800 2,190,400
============ ============ ============ ============
<FN>
The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>
3
<PAGE>
ZAP POWER SYSTEMS
CONDENSED STATEMENTS OF CASH FLOWS
Six months ended June 30,
1998 1997
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(459,400) $(639,200)
Adjustments to reconcile net loss to net cash
used by operating activities
Depreciation and amortization 44,600 27,000
Allowance for doubtful accounts 400
Issuance of common stock for services rendered 64,600 10,600
Changes in:
Receivables (248,800) (156,900)
Inventories (127,200) (32,400)
Prepaid expenses (68,700) 14,000
Deposits (92,300) 105,500
Accounts payable 231,800 69,400
Accrued liabilities and other expenses (52,300) (38,000)
--------- ---------
Net cash used by operating activities (707,700) (639,600)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of equipment (96,300) (56,700)
Investment in subsidiaries (13,900)
Patent Defense (17,900)
--------- ---------
Net cash used by investing activities (114,200) (70,600)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 30,000
Increase in loans payable 18,700
Decrease in restricted cash 10,000
Sale of common stock, net of stock offering costs 411,300 838,700
Principal repayments on long-term debt (4,700) (6,200)
Payments on obligations under capital leases (7,700) (6,000)
Principal repayments on note payable (13,200) (122,000)
--------- ---------
Net cash provided by financing activities 404,400 744,500
--------- ---------
NET INCREASE/(DECREASE) IN CASH (417,500) 34,300
CASH, beginning of period 690,500 161,600
--------- ---------
CASH, end of period $ 273,000 $ 195,900
========= =========
The accompanying notes are an integral part of these financial statements
4
<PAGE>
ZAP POWER SYSTEMS
NOTES TO THE INTERIM UNAUDITED CONDENSED FINANCIAL STATEMENTS
(1) Basis of Presentation
The financial statements included in this Form 10-QSB have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, pursuant to such rules and
regulations, although management believes the disclosures are adequate to make
the information presented not misleading. The results of operations for any
interim period are not necessarily indicative of results for a full year. These
statements should be read in conjunction with the financial statements and
related notes included in the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1997.
The financial statements presented herein as of June 30, 1998, and for the three
months and six months ended June 30, 1998 and June 30, 1997 reflect, in the
opinion of management, all material adjustments consisting only of normal
recurring adjustments necessary for a fair presentation of the financial
position, results of operations and cash flow for the interim periods.
The net loss per common share is based on the weighted average number of common
shares outstanding in each period. Common stock equivalents associated with
stock options have been excluded from the weighted average shares outstanding
since the effect of these securities would be anti-dilutive.
(2) - RECEIVABLES
June 30, 1998
-------------
Trade accounts receivable $ 375,500
Less allowance for doubtful accounts (5,000)
---------
$ 370,500
=========
(3) - INVENTORIES
June 30, 1998
-------------
Raw materials $ 261,500
Work-in-process 77,900
Finished goods 54,300
---------
$ 393,700
=========
(4) - PROPERTY AND EQUIPMENT
June 30, 1998
-------------
Demonstration items $ 109,700
Machinery and equipment 72,900
Equipment under capital leases 45,900
Office furniture and fixtures 38,900
Computers 34,900
Leasehold improvements 23,600
Vehicle 56,200
---------
382,100
Less accumulated depreciation and amortization (165,000)
---------
$ 217,100
=========
5
<PAGE>
(5) - NOTES PAYABLE
June 30, 1998
-------------
Notes to stockholders, with interest at 10%; interest and
principal due when the notes mature in December 1999.
The note holders have been issued warrants to purchase,
in the aggregate, 21,800 shares of common stock at $5.25
per share through October, 1999. $ 93,600
===========
(6) - COMMON STOCK
In November of 1996 the Company commenced a direct public offering of its Common
Stock, offering for sale 500,000 shares at $5.25. During 1996, the Company sold
3,800 shares and received $19,900 in proceeds. In 1997, the Company sold an
additional 415,100 shares in connection with the direct public offering and
realized net proceeds of $1,990,900, net of offering related expenses of
$188,400. In total, the Company sold 84% of the shares offered for sale and
realized net proceeds of $2,010,600. The offering was completed in November
1997.
The Company has in process a second direct public offering of its Common stock
for sale 500,000 shares at $6.00 per share. The Company commenced this offering
in January 1998 and as of July 22, 1998 has sold 72,759 shares and realized
gross proceeds of $436,554. On February 27, 1998, the Company's Common stock
commenced trading on the OTC Bulletin Board under the stock symbol "ZAPP".
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Special Note Regarding Forward-Looking Statements
Certain statements in this Form 10-QSB, including information set forth
under this Item 2. "Management's Discussion and Analysis of Financial Condition
and Results of Operations" constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "ACT"). ZAP
Power Systems (the "Company") desires to avail itself of certain "safe harbor"
provisions of the Act and is therefore including this special note to enable the
Company to do so. Forward-looking statements included in this Form 10-QSB or
hereafter included in other publicly available documents filed with the
Securities and Exchange Commission, reports to the Company's stockholders and
other publicly available statements issued or released by the Company involve
known and unknown risks, uncertainties, and other factors which could cause the
Company's actual results, performance (financial or operating) or achievements
to differ from the future results, performance (financial or operating) or
achievements expressed or implied by such forward looking statements. Such
future results are based upon management's best estimates based upon current
conditions and the most recent results of operations.
Overview
The Company designs, assembles, manufactures and distributes electric
bicycle power kits, electric bicycles and tricycles, and other low-power
electric transportation vehicles. Historically, unit sales have been
approximately 50% kits, 30% electric bicycles, and 20% electric scooters. Dollar
sales have been 30% kits, 35% electric bicycles, and 35% electric scooters.
The Company sells its electric bicycles, kits, and scooters to retail
customers, international distributors, law enforcement agencies, electric
utility companies, bicycle dealerships and mail order catalogs. Net revenue is
net of returns. The Company sells to the mail order catalogs and selected
customers on credit with net 30-day terms. Many of the bicycle dealerships are
sold cash on delivery. The retail sales are primarily paid for with a credit
card or personal check before shipment of the product.
The Company manufactures an electric motor system that is sold as a kit
to be installed by the customer on their own bicycle. The Company also installs
the motor system on bicycles that the Company buys. The Company
6
<PAGE>
then sells the complete electric bicycle to the customer. The Company purchases
complete bicycles from various bicycle manufacturers for use with the Company's
electric motor system from U.S. and Taiwan sources. The Company manufactures the
electric motor kit, which has approximately 62 unique parts. The manufacturing
of the electric motor kit and the installation of the motor systems to the
bicycles are done at its Sebastopol location. The electric motors are purchased
from an original equipment manufacturer (OEM) in the auto and air-conditioning
industry. The Company is using one vendor for its motors, although there are
other companies that could be used with slight modifications to the motor
support brackets. The batteries are standard batteries used in the computer and
security industries for power interrupt systems. The electronic system uses
standard electronic components. Additionally, the Company produces a scooter,
known as the ZAPPY(TM), which is manufactured by the Company, using parts
manufactured by various subcontractors. The Company is also a U.S. distributor
of the Electricycle(TM) scooter that is imported from China.
The electric motor kits, bicycles, and scooters sold by ZAP are shipped by
U.P.S. and Federal Express. Larger quantity orders to wholesale distributors are
shipped by common carrier. Overseas shipments are shipped by ocean carrier or
airfreight. The Company has developed long term purchase arrangements with its
key vendors.
The Company has no contractual relationships with any of its vendors.
The Company as of June 30, 1998 had a $524,537 sales backlog. The company
expects to fill these orders within the next 60 days. Additionally, the Company
received a contract to purchase one million dollars of ZAP products from Central
& Southwest Services, Inc. Of the total order, $150,000 has been fulfilled and
the remaining $850,000, which is not included in the backlog amount, is intended
to be fulfilled over the next year. The products to be shipped will vary based
upon the requests of the customer during each month.
The Company's growth strategy is to increase net sales by augmenting its
marketing and sales force, and by increasing distribution channels through
retail organizations and wholesale distributors both domestically and overseas.
The company is also working on setting up franchise stores to assist in the
retail sales arena. The Company will continue to increase its production
capability to meet the increasing demand for its product. The Company will
continue to develop the product so that it is the low cost leader in the
industry. Product improvements and new product introductions will continue to
enlarge ZAP's presence in the electric vehicle industry.
Results of Operations
The following table sets forth, as a percentage of net sales, certain
items included in the Company's Income Statements (see Financial Statements and
Notes) for the periods indicated:
Quarter ended June 30, Six months ended June 30,
1998 1997 1998 1997
------- ------ ------ ------
Statements of Income Data:
Net sales ................... 100.0% 100.0% 100.0% 100.0%
Cost of sales ............... 73.7 85.3 68.4 85.5
Gross profit (Loss) ......... 26.3 14.7 31.6 14.5
Operating expenses .......... 60.0 75.7 65.8 90.6
Loss from operations ........ (33.7) (61.0) (34.2) (76.1)
Other income (expense) ...... (0.9) 0.2 (0.4) (1.2)
Loss before income taxes .... (34.6) (60.8) (34.6) (77.3)
Provision for income taxes .. 0.0 0.0 0.0 0.0
Net loss .................... (34.6) (60.8) (34.6) (77.3)
Quarter Ended June 30, 1998 Compared to Quarter Ended June 30, 1997
Net sales for the quarter ended June 30, 1998, were $863,700 compared to
$568,200 in the prior year, an increase of $295,500 or 52%. The increase in
sales in 1998 over the same period in 1997 was largely due to the production and
demand of the new ZAPPY(TM) scooter. Sales of the ZAPPY(TM) scooter were
$302,700 or 35% of total sales for the quarter. This product was introduced into
the marketplace in the beginning of 1998.
7
<PAGE>
Gross profit increased as a percentage of net sales to 26% from 15%. The
total gross profit increased $143,500 or 172%. The increase in gross margin can
be attributed to 1) margins generated from the sales of the new ZAPPY(TM)
scooter and 2) efficiency increases in the manufacturing of other products in
the current quarter as compared to the quarter ended June 30, 1997. Direct
Materials were 68% of net sales in the 2nd quarter of 1998 as compared to 75% of
net sales in the 2nd quarter of 1997. This is mainly due to improved control of
material costs in 1998. Direct labor and overhead were 6% of net sales in the
2nd quarter of 1998 as compared to 10% in the 2nd quarter of 1997. This is
mainly due to increased efficiencies resulting from higher utilization of
production personnel and facilities in 1998 as compared to 1997.
Selling expenses in the quarter ended June 30, 1998 were $250,700 as
compared to $172,600 for the quarter ended June 30, 1997. This was an increase
of $78,100 or 45% from 1997 to 1998. As a percentage of sales, selling expenses
decreased from 30% of sales to 29% of sales. The increase in selling expenses
was a result of efforts to create ZAP franchise stores and increased promotional
activity to enhance customer demand. Additionally, new marketing materials were
developed and printed to further market the products.
General and administrative expenses for the quarter ended June 30, 1998
were $219,900. This was an increase of $31,900 or 17% from 1997. As a percentage
of sales, general and administrative expense decreased to 25% from 33% of net
sales. Expense increases during the 2nd quarter of 1998 as compared to the 2nd
quarter of 1997 resulted from increased personnel costs and the additional use
of outside consultants.
Research and development decreased $21,900 or 32% from the 2nd quarter of
1997 as compared to the 2nd quarter of 1998. As a percentage of net sales it
decreased to 6% of sales in the 2nd quarter of 1998 as compared to 12% of sales
in the 2nd quarter of 1997. Extensive efforts in developing the ZAPPY(TM)
scooter and single speed low-cost motor system resulted in higher costs in the
2nd quarter of 1997.
Six Months Ended June 30, 1998 Compared to Six Months Ending June 30, 1997
Net sales for the six months ended June 30, 1998 were $1,324,900 compared
with $826,100 in the six months ended June 30, 1997, an increase of $498,800 or
60%. The increase in sales is attributed to sales of the new ZAPPY(TM) scooter
and a greater acceptance of the Company's products in the marketplace. ZAPPY(TM)
scooters accounted for $307,100 of sales in the first six months of 1998.
Gross profit increased as a percentage of net sales, to 32% from 15%. The
total gross profit increased $299,000 or 250%. The increase in gross margin can
be attributed to 1) Gross margins realized on the sales of the new ZAPPY(TM)
scooters and, 2) greater cost controls on pre-existing products in the current
six months as compared to the six months ended June 30, 1997. Direct materials
were 61% of net sales in the first six months of 1998 as compared to 72% of net
sales in the first six months of 1997. This is mainly due to improved control of
material costs in 1998. Direct labor and overhead were 7% of net sales in the
first six months of 1998 as compared to 14% of net sales in the first six months
of 1997. This is mainly due to increased efficiencies resulting from higher
utilization of production personnel and facilities in 1998 as compared to 1997.
Selling expenses for the six months ended June 30, 1998 were $409,700 as
compared to $265,400 for the six months ended June 30, 1997. This was an
increase of $144,300 or 54% from 1997 to 1998. As a percentage of sales, selling
expenses decreased from 32% of sales to 31% of sales. The increase was a result
of heightened efforts to promote the concept of franchise stores throughout the
country and increased promotion activity including attendance in specific trade
show tied to new designated markets.
General and administrative expenses for the six months ended June 30, 1998
were $382,400. This is an increase of $18,200 or 5% from 1997. As a percentage
of sales, general and administrative expense decreased to 29% from 44% of net
sales. Expense increases during the first six months of 1998 as compared to the
first six months of 1997 occurred due to additional use of outside consultants
for business purposes.
8
<PAGE>
Research and development decreased $38,600 or 33% from the first six months
of 1997 as compared to the first six months of 1998. As a percentage of net
sales, research and development decreased to 6% of sales in the first six months
of 1998 as compared to 14% of sales in the first six months of 1997. Extensive
efforts in developing the ZAPPY(TM) scooter and single speed low-cost motor
system resulted in higher costs in the first six months of 1997.
Liquidity and Capital Resources
The Company used cash from operations of $707,700 and $639,600 during the
six months ended June 30, 1998 and 1997 respectively. Cash used in operations in
the first six months of 1998 was the result of the net loss incurred for the
period of $459,400, offset by net non cash expenses of $109,200, and the net
change in operating assets and liabilities resulting in a further use of cash of
$357,500. Cash used in operations for the first six months of 1997 was the
result of the net loss incurred for the first six months of $639,200, offset by
net non cash expenses of $38,000, and the net change in operating assets and
liabilities resulting in further use of cash of $38,400.
Investing activities used cash of $114,200 and $70,600 during the first six
months ended June 30, 1998 and 1997 respectively. The uses of cash were for the
purchase of fixed assets and defense of the company's patents.
Financing activities provided cash of $404,400 and $744,500 during the
first six months ended June 30, 1998 and 1997 respectively. In both years, the
cash provided by financing activities resulted from the sales of common stock,
$411,300 and $838,700 for the first six months ended June 30, 1998 and 1997
respectively, offset by principal payments on outstanding debt
At June 30, 1998, the Company had cash and cash equivalents of $273,000 as
compared to $196,000 at June 30, 1997. At June 30, 1998, the Company had working
capital of $693,600 as compared to working capital of $126,500 at June 30, 1997.
The increase in both cash and cash equivalents and working capital in the first
six months of 1998 over the first six months of 1997 are primarily due to the
proceeds received from the Company's direct public offering which more than
offset the Company's net losses during the same period. The Company, at present,
does not have a credit facility in place with a bank or other financial
institution. The Company does have in process a second direct public offering
for the six months ended June 30, 1998 of its common stock with maximum
potential gross proceeds of $3,000,000 before expenses. The Company believes
that the cash and cash equivalents on hand at June 30, 1998 along with the
expected proceeds from the Company's direct public offering, will be sufficient
to allow the Company to continue its expected level of operations for the
remainder of the year.
The Company's primary capital needs are to fund its growth strategy,
which includes increasing its net sales, increasing distribution channels,
improving existing product lines and development of strong corporate
infrastructure.
Dates following December 31, 1999 and beyond (the "Year 2000 Problem")
Many existing computer systems and applications, and other devices, use
only two digits to identify a year in the date field, without considering the
impact of the upcoming change in the century. Such systems and applications
could fail or create erroneous results unless corrected. The Company relies on
its internal financial systems and external systems of business enterprises such
as customers, suppliers, creditors, and financial organizations both
domestically and globally, directly and indirectly for accurate exchange of
data. The Company has evaluated such systems and believes the cost of addressing
the Year 2000 Problem will not have a material adverse affect on the result of
operations or financial position of the Company. However, even though the
internal systems of the Company are not materially affected by the Year 2000
issue the Company could be affected through disruption in the operation of the
enterprises with which the Company interacts.
Seasonality and Quarterly Results
The Company's business is subject to seasonal influences. Sales volumes in
the bicycle industry typically slow down during the winter months, November to
March, in the U.S. The Company is selling worldwide and is not impacted 100% by
the U.S. seasonality in the bicycle industry.
9
<PAGE>
Inflation
The Company's raw materials are sourced from stable cost competitive
industries. As such, the Company does not foresee any material inflationary
trends for its raw material sources.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The company has become aware that a company named Omni under the
leadership of an individual named Joseph Stevenson has been advertising and
selling an electric system for bicycles called EROS (electric regenerative
operating system). The Company's management, in consultation with patent
counsel, has determined after analysis that the EROS system infringes the
Company's patents and has filed suit against Omni for such infringement.
Although the Company believes its claims are meritorious and the patents for the
ZAP system are valid, it is possible, as in any suit, that the Company may be
unable to prove infringement or that Mr. Stevenson may establish, either in
litigation or in a re-examination proceeding before the Patent Office that the
Company's patents are not valid. If the Company's patents are held to be
invalid, the Company's ability to prevent competitors from manufacturing or
selling bicycles with the patented system will be significantly reduced. If the
Company does not prevail, it is also possible that ZAP could be held liable for
the alleged infringer's damages, including loss of profits and interference with
business relations. The loss of the patents or a significant damage award
against the Company could have a material adverse effect upon the business and
financial condition and prospects of the Company.
Item 2. Changes in Securities
There were no changes in rights of securities holders.
Item 3. Defaults Upon Senior Securities
There were no defaults upon senior securities.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to the vote of security holders.
Item 5. Other Information
There were no major contracts signed during the period.
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed during the quarter.
10
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ZAP POWER SYSTEMS
-----------------------------------------
(Registrant)
Date
--------------- --------------------------------------
James McGreen - President and Director
Date
--------------- --------------------------------------
Gary Starr - Managing Director
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ZAP POWER SYSTEMS FOR THE SIX MONTHS ENDED JUNE
30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 273,000
<SECURITIES> 0
<RECEIVABLES> 375,500
<ALLOWANCES> (5,000)
<INVENTORY> 393,700
<CURRENT-ASSETS> 1,171,500
<PP&E> 382,100
<DEPRECIATION> (165,000)
<TOTAL-ASSETS> 1,437,300
<CURRENT-LIABILITIES> 477,900
<BONDS> 2,500
0
0
<COMMON> 3,648,700
<OTHER-SE> (2,776,400)
<TOTAL-LIABILITY-AND-EQUITY> 1,437,300
<SALES> 1,324,900
<TOTAL-REVENUES> 1,325,300
<CGS> 906,400
<TOTAL-COSTS> 872,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (5,000)
<INTEREST-EXPENSE> 6,300
<INCOME-PRETAX> (459,400)
<INCOME-TAX> 0
<INCOME-CONTINUING> (459,400)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (459,400)
<EPS-PRIMARY> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
