ZAP Posts Continuing Record Sales And Gross Profit Margin
4 August 1998
ZAP Posts Continuing Record Sales And Gross Profit Margin in Second Quarter Fiscal 1998
SEBASTOPOL, Calif.--Aug. 4, 1998--ZAP Power Systems (OTC BB:ZAPP) today reported its unaudited financial results for the three months ended June 30, 1998.Net sales for the second quarter fiscal 1998 were up 52% and gross profit margins rose 11 percentage points over 1997.
Net sales for the six months ended June 30, 1998 are $1,324,900 compared with $826,100 in the six months ended June 30, 1997, an increase of $498,800 or 60%. The increase is attributed to sales of the new ZAPPY(TM) scooter, that was introduced into the marketplace at the beginning of 1998, as well as a greater acceptance of ZAP's other products in the marketplace. Foreign sales jumped from 15% to 20% of overall sales.
Net loss for the six months ended June 30, 1998 are $459,400 or $0.18 per share, compared with $639,200 or $0.29 per share for the same period in 1997.
Net sales for the quarter ended June 30, 1998, were $863,700 compared to $568,200 in the prior year. Gross profit increased as a percentage of net sales to 26% from 15%. The total gross profit increased $143,500 or 172%. This increase in gross margin is attributed to margins generated from sales of the ZAPPY(TM) and efficiency increases in manufacturing and part sourcing of other products in the current quarter as compared to the quarter ended June 30, 1997.
Net loss dropped $46,800 to a loss of $299,000 or $0.12 per share for the three months ended June 30, 1998 from a loss of $345,800 or $0.15 per share for the same quarter last year. The net loss improvement was primarily attributed to the Company's marketing campaign, which generated greater sales and supported higher prices for specialty products, as well as its cost cutting initiatives, which ensured manufacturing and personnel efficiencies to increase gross profit margins.
At June 30, 1998, the Company had total assets of $1,437,316, cash and receivables of $643,472, and working capital of $693,648. Increases in both cash and receivables and working capital over the same period in 1997 were primarily due to proceeds received from the Company's direct public offering and increases in product shipments.
The Company's shipments for June 1998 were up 76 percent to $439,144 from $250,239 for the same period last year. The rise is attributed to increased demand for the Company's line of electric bicycles and bicycle motor kits as well as shipments of the ZAPPY. Sales for the month of June were also the best in company history at $439,144, up $170,170 or 63 percent over May's record-setting sales of $268,974.
During the current fiscal year, the Company has announced two individual purchase contracts totaling nearly all sales during the previous year. ZAP announced a purchase contract with Z-Mark of Taiwan earlier this month and, in April, reported a purchase contract with CSW Total EV, a subsidiary of Central & Southwest Corp. , a $5 billion Dallas-based public utility holding company.
"Fiscal 1997 investments in infrastructure and product development, which provided for increased sales and larger volume production in 1998, are paying off with sales and contracts in hand at the end of the second quarter '98 surpassing all of last year's sales," said ZAP President James McGreen. "Due to our growing sales volume and new manufacturing partnerships, we expect margins to rise in all product areas, and total revenues to reach new heights in 1998, setting the stage for an exciting 1999."
ZAP Power Systems develops, manufactures, markets and distributes a full line of competitively priced electric vehicles to over 45 countries worldwide through distributors, dealers, joint ventures, its Web Site http://www.zapbikes.com, and franchise stores. Founded in 1994, ZAP products include electric bicycles, tricycles, scooters and motorcycles.
- Financial Statements Follow -
ZAP POWER SYSTEMS
SELECTED CONDENSED BALANCE SHEET INFORMATION
JUNE 30, 1998
(Unaudited)
ASSETS June 30, 1998
Cash and receivables $ 643,472
Total current assets $1,171,490
Total assets $1,437,316
LIABILITIES AND STOCKHOLDERS EQUITY
Total current liabilities $ 477,841
Long-term debt, less current maturities $ 87,135
Total liabilities and stockholders equity $1,437,316
ZAP POWER SYSTEMS
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Quarter ended Six Months ended
June 30, June 30,
1998 1997 1998 1997
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
Forward-looking statements in this release are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties, including, without limitation, continued acceptance of the Company's products, increased levels of competition for the Company, new products and technological changes, the Company's dependence upon third-party suppliers, intellectual property rights, and other risks detailed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission.