ZAPWORLD.COM Reports First Quarter Fiscal 2001 Results
SEBASTOPOL, Calif.--May 11, 2001--ZAPWORLD.COM today reported its financial results for the first quarter ended March 31, 2001.Revenue for the quarter was $2.0 million, up 6.1% compared with $1.9 million in 2000. The Company incurred a net loss of $1.3 million or $0.22 per share after accounting for other income and the dividend on the Preferred Stock.
"Our first quarter numbers are lower than anticipated as we responded to pressures from lower-cost competitors by reducing our pricing, which temporarily hurt our margins. At the same time we are moving manufacturing for our more popular products to overseas contract manufacturers, which we expect will ultimately improve our manufacturing costs by 25-40%. Unfortunately, however, none of this happened as quickly as we would ideally have liked. Assessing economic conditions, we also carefully reviewed our internal operations and have cut our personnel by 30%, while we continue to explore all other opportunities to reduce expenses," said Gary Starr, CEO of ZAPWORLD.COM (ZAP).
In elaborating on ZAP's overall plans, Mr. Starr continued, "Midway into our second quarter, we are happy to say that our backlog of orders and purchase contracts remains at $5.9 million. This base gives us a foundation upon which we can build towards our goal of being the premier provider of Zero Air Pollution vehicles that are safe, inexpensive, economical and fun. Although we pioneered the ZAPPY electric scooter, we need to develop, acquire and market other modes of electric transportation as well. The current energy crisis coupled with record high gas prices represents an opportunity for electric transportation and ZAP is positioned to be a leader in this new marketplace. While large conventional manufacturers have only leased a few hundred electric vehicles, ZAP has delivered over 55,000 units to date. In the immediate future, we will issue a follow-up statement that will outline our plans for securing and elevating our position in the electric vehicle marketplace."
The Gross Profit decreased from $714,000 in 2000 to $471,000 in 2001, or 38% to 23% as a percentage of net sales, respectively. The gross profit was adversely affected by lower margins on the foreign sales contracts where sales were made to move product and gain inroads into new markets. ZAP anticipates further improvement in 2001 as we work-off the current inventory of parts and shift our production to contract manufacturing facilities overseas.
Operating expenses of $1.8 million in 2001 increased $600,000 over the $1.2 million in 2000 or 65% to 88% as a percentage of net sales. The increase in expenses was due to greater salaries and related payroll costs, higher legal and professional expenses due to the patent lawsuit and fund raising activities, and increased depreciation and amortization costs, which were associated with the acquisitions done in the latter half of fiscal year 2000.
ZAPWORLD.COM Highlights
Among the more recent events that have been announced or have occurred in the quarter include the following:
| -- | Introduced such new products as the ZAPPY-Turbo, a high performance ZAPPY with a new electric propulsion system that offers an improved acceleration and hill climbing, SWIMMY(TM) a kids version of our Sea Scooters that provides a swim-assist in open water or swimming pools, POWERBIKE(R) an electric bike with a low price geared to mass merchants, and POWERSKI(R) an electric tow device for skaters and skateboarders. |
| -- | Opened a ZAP EV store in Newport Beach, California in March 2001 as well as 'ZAPPYLAND' an indoor electric scooter track at a nearby amusement park. This project is a joint venture between Donner Corporation and ZAP. |
| -- | Signed a distribution agreement for exclusive distribution rights in Korea. The contract is estimated to be worth sales of at least $500,000 in 2001. It also includes a two-year extension option. |
| -- | Developed the ZAPADAPT(TM), an electric-assist device for manual wheelchairs. The motor attaches to manual wheelchairs, providing an affordable, convenient means of power-assist without buying a fully powered wheelchair. |
ZAP has set an annual meeting date for June 16, 2001 in Sebastopol, California. ZAP's Common shares are listed on the NASDAQ Small Cap Stock Exchange under the trading symbol "ZAPP." For more information on ZAP, its ZAPPYLAND(TM) outlet stores, or for ordering an EV, go to www.zapworld.com.
-Financial Statements to Follow-
ZAPWORLD.COM and Subsidiaries
Consolidated Statements of Operations
For the Quarter ended March 31, 2001 and 2000
(Amounts in $000's except per share)
Quarter Ended March 31,
2001 2000
--------------------
Net sales $ 2,013 $ 1,897
Cost of Goods Sold $ 1,542 $ 1,183
------- -------
Gross Profit $ 471 $ 714
Gross Profit as a %
of Net Sales 23% 38%
Operating Expenses $ 1,777 $ 1,226
Other Income $ 22 $ 29
Net loss $(1,284) $ (483)
Net loss per common share
after preferred
dividend, basic
and diluted $ (0.22) $ (0.09)
Weighted average
of common
shares outstanding 5,962 5,150