ZAP Reports Second Quarter Results

SEBASTOPOL, Calif., Aug. 15 - Advanced transportation developer ZAP today reported its financial results for the second quarter ended June 30 of fiscal year 2002. ADVERTISEMENT

On June 20, 2002, the Company's Plan of Reorganization ("the Plan") was approved by the federal court in Santa Rosa, California allowing ZAP to emerge immediately from bankruptcy. Under the terms of the Plan, the company was able to convert outstanding debt into common stock, which resulted in the recording of an extraordinary gain of approximately $4 million for the second quarter.

According to ZAP: "Part of the gain was due to the conversion of approximately $3 million in debt to equity by the largest creditor which indicates a vote of confidence for the future prospects of ZAP."

Including the conversion as well as other provisions of the Plan, the operations for the quarter resulted in Net Income after the extraordinary gain of $3.4 million or $2.82 earnings per share versus a net loss of $(2) million or $(1.88) loss per share at June 30, 2001. Net Income after the extraordinary gain for the six months ended June 30, 2002 was $2.8 million or $2.90 earnings per share as compared to a loss of $(3.3) million or $(3.25) loss per share. The per share amounts were restated to reflect a reverse stock split which was effected on July 1, 2002.

Net sales for the quarter ended June 30, 2002, were $360,000 compared to $940,000 in the prior year. Sales were less due to the overall poor worldwide economy and the adverse affect of the Company's filing for Reorganization under Chapter 11 Bankruptcy Proceedings. Operating expenses were reduced 57% or $872,000 from second quarter last year or from $1.5 million to $653,000 due to cost cutting measures. The Company reported a net loss before reorganization items and the extraordinary gain of $(501,000) versus a loss of $(1.9) million for the second quarter ended June 30, 2001.

The year-to date net sales through June 30, 2002 were $780,000 versus $2.9 million for the period ended June 30, 2001. The decrease in sales was due to the reasons noted above. Operating expenses decreased 61% or $2 million from the six months ended June 30, 2001 due to the reorganization and reduction of expenses in all areas. The Company reported a net loss before reorganization items and the extraordinary gain of $1 million versus a loss of $3.2 million for the six months ended June 30, 2001.

ZAP's Plan of Reorganization includes mergers with Voltage Vehicles and RAP Group, which were completed on July 1. ZAP is anticipating that the net sales for the third quarter ended September 30, 2002 will be significantly higher due to the combined results of the acquired companies. Voltage Vehicles is a Sonoma County-based Nevada Corporation with the exclusive distribution contracts for advanced transportation in the independent auto dealer network, including rights to one of the only full-performance electric cars certified under federal safety standards. The RAP Group owns an auto dealership focused on the independent automotive and advanced technology vehicle markets. A Voltage Vehicle authorized dealer, RAP showcases an array of advanced transportation at its dealership in Fulton, California. The Rap Group began business in 1996 and has been a profitable entity for the past few years with annual sales in excess of $6 million. Voltage Vehicles, which began business in February 2001, is a relatively new enterprise.

As noted in the ZAP's approved Plan of Reorganization, the mergers are expected to enhance ZAP's financial base by providing access to the two companies' services and relationships. The move is expected to advance ZAP's goal of becoming a leading full-service brand in the electric and alternate fuel transportation industry. Following the mergers, the Company plans to step-up its role in building a national distribution network to support contract manufacturing for its growing line of products. The mergers also enable ZAP to immediately cut overhead and other costs, and increase revenues.

The following are highlights associated with ZAP's Reorganization and new business developments:

The Company completed mergers with Voltage Vehicles and RAP Group. The Company authorized a reverse split of common stock on July 1, 2002. The Company began trading on the Over-the-Counter (OTC) Bulletin Board under the stock symbol of ZAPZ.

The Company announced its new Electric Vehicle Rental Program with Global Electric Motorcars (GEM), LLC, a Daimler Chrysler Company, to establish rental locations throughout California for GEM's neighborhood electric cars. ZAP announced a distribution agreement with Daka Development Ltd, for the design, manufacturing and marketing of a full line of advanced transportation and alternative energy products. The Plan of Reorganization also approved the execution of a $500,000 Secured Convertible Promissory Note to Daka for financing of the inventory purchases. ZAP markets many forms of advanced transportation, including electric automobiles, motorcycles, bicycles, scooters, personal watercraft, hovercraft, neighborhood electric vehicles, commercial vehicles and more. For further information, visit http://www.zapworld.com or call 1-800-251-4555.