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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                          -----------------------------

                                   Form 10-KSB

                     ANNUAL REPORT UNDER SECTION 13 OR 15(d)

                     OF THE SECURITIES EXCHANGE ACT OF 1934

                          -----------------------------

                   For the fiscal year ended December 31, 1999

                                  ZAPWORLD.COM
                 (Name of small business issuer in its charter)

             CALIFORNIA                                94-3210624
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
    incorporation or organization)

                                117 Morris Street
                              Sebastopol, CA 95472
                                 (707) 824-4150

  (Address, including zip code, and telephone number, including area code, of
                   Registrant's principal executive offices)

         Securities registered under section 12(b) of the Exchange Act:
                                      None

         Securities registered under section 12(g) of the Exchange Act:
                                      None

Indicate by check mark  whether the issuer (1) filed all reports  required to be
filed by Section 13 or 15(d) of the  Securities  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. YesX No

Indicate  by check  mark if there  is no  disclosure  of  delinquent  filers  in
response to Item 405 of  Regulation  S-B is not  contained in this form,  and no
disclosure  will  be  contained,  to the  best  of  registrant's  knowledge,  in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-KSB or any amendment to this Form 10-KSB. Yes XNo

State issuer's revenues for its most recent fiscal year:    $6,437,200

The  aggregate  market  value  of the  Company's  voting  common  stock  held by
non-affiliates  as of March 27, 2000,  based on the average Bid and Ask price on
that date was $49,126,100.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

5,204,034 shares of common stock as of March 27, 2000.

--------------------------------------------------------------------------------
<PAGE>

                                TABLE OF CONTENTS

                                     Part I

     Item 1. Description of Business

     Item 2. Description of Property

     Item 3. Legal Proceedings

     Item 4. Submission of Matters to a Vote of Security Holders


                                     Part II

     Item 5. Market for Common Equity and Related Stockholder Matters

     Item 6.  Management's  Discussion  and Analysis of Financial  Condition and
              Results of Operations


     Item 7. Consolidated Financial Statements and Supplementary Data

     Item 8. Changes in and  Disagreements  with  Accountants  on Accounting and
             Financial Disclosure

                                    Part III

     Item 9.  Directors,  Executive  Officers,  Promoters  and Control  Persons;
              Compliance with Section 16(a) of the Exchange Act

     Item 10. Executive Compensation

     Item 11. Security Ownership and Certain Beneficial Owners and Management


     Item 12. Certain Relationships and Related Transactions

     Item 13. Exhibits and Reports on Form 8-K


     Item 14. Additional Exhibits

     Item 15. Signatures

                                        2
<PAGE>

                                     Part I


Item 1.           Description of Business

The  information  on Form 10-KSB  contain  forward-looking  statements  based on
current  expectations,  estimates and projections about the Company's  industry,
management's   beliefs  and  certain   assumptions   made  by  management.   See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations-Forward Looking Statements."

A.       Business Development

ZAPWORLD.COM  (the  "Company" or "ZAP") was  incorporated  under the laws of the
State of California,  on September 23, 1994, under its original name, "ZAP Power
Systems".  The name of the  Company  was  changed on May 16, 1999 to reflect the
company's  growth and entry into  larger  markets.  The Company has grown from a
single  product  line  to a full  line  of  electric  vehicle  products.  At its
Sebastopol  facilities,  the  Company  designs,   assembles,   manufactures  and
distributes  electric  bicycle  power kits,  electric  bicycles  and  tricycles,
electric   scooters,   electric   motorcycles   and  other   personal   electric
transportation vehicles.

The Company was  established  to develop low cost  electric  vehicles to provide
alternative  modes of  transportation  as a means of  providing  relief from the
emissions  associated  with gas powered  vehicles  and to become a leader in the
emerging light electric vehicle industry. The Company's objective is to leverage
its  proprietary  technology  and name  recognition  to  serve a number  of high
potential  markets in the electric bicycle,  electric  scooter,  and other light
electric  vehicle  transportation  industries.  Since the  Company's  management
believed  that the primary  barrier to widespread  use of electric  vehicles was
their high cost, the Company's  activity and revenue was initially  derived from
development  contracts from domestic  government  agencies and a foreign private
entity.  These  contracts were set up to develop low cost Zero Air Pollution (or
ZAP) type electric vehicles. The Company continues to focus its research efforts
on making electric  vehicles cost effective,  while  developing an international
distribution network for personal vehicle products.

The Company is developing  proprietary  technologies that are important elements
of the ZAP brand of personal electric vehicles. Each of these components will be
marketed under the ZAP brand name. In addition to new electric vehicles,  ZAP is
currently focusing its development efforts on a new generation of microprocessor
drive controllers.

B.       Business of Issuer

The Company's  business strategy has been to develop,  acquire and commercialize
electric  vehicles  and electric  vehicle  power  systems that have  fundamental
practical and environmental  advantages over available internal combustion modes
of  transportation  that  can  be  produced   commercially  on  an  economically
competitive  basis.  In 1999,  the Company  continued to enhance and broaden its
electric vehicle product line.


                                       3
<PAGE>


The Company  manufactures  an electric  motor system that is sold as a kit to be
installed  by the  customer  on their own  bicycle.  The system was  designed to
assist the rider  during  more  difficult  riding  situations,  rather than as a
replacement  for  pedaling.  The  Company  also  installs  the  motor  system on
specially  designed  bicycles that the Company has manufactured  under contract.
The completed bicycles, with motor, are then sold to the customer. Additionally,
the Company  produces the electric  scooter,  known as the  ZAPPY(TM),  which is
manufactured by the Company, using parts manufactured by various subcontractors.
The Company is the U.S.  distributor  of the  Electricycle(TM)  scooter  that is
imported from Taiwan. Additionally,  the Company is a distributor of an electric
motorcycle known as the Lectra(TM) and an electric neighborhood  vehicle,  known
as the GEM(TM).

The Company manufactures several electric motor vehicle kits. The electric motor
kit  manufacturing and installation of the motor systems to the bicycles is 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 primarily  using one company for its motors,  Revco  Molded  Plastics
Company,  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  industry  for  power  interrupt  systems.  The
electronic system uses standard electronic components. The Company has developed
long-term  purchase  arrangements  with  its  key  vendors.  The  Company  has a
contractual  relationship  with Smith & Wesson who provides the Company with law
enforcement bicycles. The Company has agreed to purchase at least 200 bikes from
Smith & Wesson in  exchange  for  specific  exclusive  distribution  and pricing
rights.  Smith & Wesson has agreed to  purchase at least 100 power kits from the
Company in exchange for specific exclusive distribution and pricing rights.

The Company has been  granted  exclusive  market  rights in  selective  electric
vehicle  markets  from  Evercel  Corporation  in  exchange  for  specifying  the
Evercel(TM)  battery in a specific  electric  vehicle made by the  Company.  The
Company has no other contractual agreements with any of its other vendors.

Environmental Initiatives and Legislation

Federal legislation was enacted to promote the use of alternative fuel vehicles,
including electric vehicles.  Several states have also adopted  legislation that
sets mandates for the  introduction of electric  vehicles.  In 2003 the State of
California  will  require  that 4% of the cars  offered  for sale are  electric.
However,  there is strong  political  opposition to this mandate.  Other states,
such as the State of Arizona, currently offer tax credits for electric vehicles.
Foreign countries have also initiated either mandates or incentives for electric
vehicles or are planning such programs in the future. As ZAP  commercializes new
transportation technology, it has been required to expend Company's resources in
educating  legislators of the benefits of these vehicles.  On January 1, 2000, a
new law that was sponsored by ZAP and creates  guidelines  for the legalized use
of light  electric  scooters such as the ZAPPY(TM) went into effect in the State
of  California.  Although many  government  agencies are concerned  about rising
global air  pollution,  it is expected that the Company will need to continue to
expend  considerable  resources in the future in the governmental  process,  and
there cannot be assurance that the current  favorable  governmental  climate for
these zero emission vehicles will remain in the future.

Research and Product Development

The nature of the  Company's  business has required and will continue to require
expenditures  for  research  and  product   development.   The  development  and
introduction  of new products  are  essential to  establishing  and  maintaining
competitive   advantage.   The  Company  is  developing  a  new   generation  of
micro-processor drive controllers.

Company funded research and development  expense charged to operations in fiscal
years 1999 and 1998 was $364,600 and $202,600 respectively.


                                       4
<PAGE>


Sources and Availability of Raw Materials

Materials,  parts,  supplies and  services  used in the  Company's  business are
generally  available  from a  variety  of  sources.  However,  interruptions  in
production  or  delivery  of these  goods  could have an  adverse  impact on the
Company's manufacturing operations.

Licenses, Patents and Trademarks

The  Company  has a number of  patents  and  trademarks  covering  its  electric
vehicles.  The Company was issued its first United States Patent on February 13,
1996 on its electric  motor power system for bicycles,  tricycles,  and scooters
(Patent  #5,491,390).  On September  30,1997,  the Company was issued its second
United  States  Patent on its electric  motor  system  (Patent  #5,671,821).  On
December 15, 1998,  the Company was issued a third United  States Patent for its
ZAPPY  scooter  (Patent  #5,848,660).  ZAP also holds  several  trademarks:  the
trademark  ZAP(R) was  assigned  to the Company on  September  23,  1994,  under
registration no. 1,794,866;  the ELECTRICRUIZER(R)  mark was registered on April
2, 1999  under  registration  no.  2,248,753;  and,  the  POWERBIKE(R)  mark was
registered on June 1, 1999 under  registration no.  2,248,753.  The Company also
acquired  various pending patent  applications and trademark rights from emPower
when they acquired this company on December 30, 1999.  The company  acquired all
of  the  assets  of  EVSI,  including  the  trademark   PowerSki(R),   trademark
registration no. 2,224,640 and two U.S. Patents, (Patent #5,735,361) and (Patent
#5,913,373).  This  transaction  was  finalized on February 29, 2000.  Marketing
strategies for PowerSki will begin in the year 2000. The trademark  ZAPPY(R) was
registered on March 21, 2000, and the trademark ZAP Elecrtric  Vehicle Outlet(R)
was registered on March 28, 2000. Other patents and trademarks are pending.

The Company has an  exclusive  licensing  agreement  with Lucas Films  Licensing
Division  for  the  use  of  the  trade  name   STARWARSTM  and  STAPTM  in  the
classification of electric scooters.

Backlog

The Company has a $787,700  backlog of orders for electric  vehicles as of March
27, 2000.  The Company  expects to fill its entire  current  backlog  within the
current fiscal year.

Competitive Conditions

The competition to develop and market electric vehicles has increased during the
last year and is expected to continue to increase. The electric bicycle industry
has four (4) major manufacturers and a large group of small  manufacturers.  The
major  manufacturers  are Honda,  Suzuki,  Sanyo and  Yamaha.  They  mainly sell
products to Japan and Europe.  The other group of  manufacturers is much smaller
in size and sales volume.  These  manufacturers have products that sell into the
U.S., European,  and Asian markets. There are also other manufactures both large
and small,  of other  personal  electric  vehicles.  The  principal  competitive
advantages  of the Company are its  ownership  of  fundamental  technology,  its
ability  to  be a low  cost  manufacturer  through  domestic  and  international
connections,  and its distribution  network. The Company also currently benefits
from its high name  recognition in the electric  vehicle industry coupled with a
rapidly developing  business on its Internet website  ZAPWORLD.COM.  The Company
offers  one of the  broadest  lines  of  personal  electric  vehicles  currently
available.  According to published  reports,  the Company  believes it currently
holds the leading  electric  bicycle and scooter  market  position in the United
States.

Employees

As of March 27, 2000,  the Company had a total of 78 employees  (14 are ZAPWORLD
Stores,  Inc.  employees).  This is an increase of 33 employees  from 1998.  The
Company considers its relationship with its employees to be excellent.


                                       5
<PAGE>


Item 2.  Description of Property.  A summary of the principal  facilities of the
Company follows:

Location                Use                                Number of Square Feet
--------                ---                                ---------------------
117 Morris Street       Office and Motor Assembly                6,500
111 Morris Street       Machine Shop                             3,000
7190 Keating            Production                              10,000
6780 Depot              Office, Production, and R & D            5,000
6784 Depot              Engineering                              4,200
2715 Hyde Street        Retail/Rental Store                      8,000

All of the above buildings,  except Hyde Street in San Francisco, are located in
Sebastopol, California. The Company leases all of its manufacturing research and
office  facilities.  All of the leases are term leases,  none include options to
purchase.  The Company's property consists primarily of manufacturing  equipment
and office  computer  systems.  It is  management's  opinion that the  Company's
insurance  policies  cover all  insurance  requirements  of the  landlords.  The
Company owns the basic tools,  machinery and equipment necessary for the conduct
of its production, research and development, and vehicle prototyping activities.
Management believes that the above facilities are generally adequate for present
operations.

Item 3.  Legal Proceedings

There are no legal  proceedings to which the Company is a party which management
believes to be material.


Item 4.  Submission of Matters to a Vote of Security Holders

No matters were pending a vote by the security holders at 1999 year-end.


                                     Part II


Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

The  Company  was one of the early  pioneers  of  direct  public  offerings,  by
offering  stock  directly  to  the  public  in  1996,  and  1998.  The  National
Association of Security  Dealers (NASD) cleared ZAP's common stock for quotation
on the OTC  Bulletin  Board on  February  10,  1998 and on March 11,  1998,  the
Company's  Common Stock  commenced  trading on the OTC Bulletin  Board under the
stock symbol "ZAPP". During 1998, the Company sold 78,247 shares directly to the
public and received  $472,482 in proceeds.  The second public stock offering was
closed in January,  1999.  Additionally in 1998, the Company 1) realized $15,000
in proceeds  from the exercise of stock  options and issued  15,000  shares,  2)
converted $14,317 in notes payable and accrued interest into 2,727 shares ($5.25
per share)  and,  3) issued  25,136  shares in payment  for  current  and future
services at an average price per share of $5.98.

In 1999 the Company sold 29,833 shares and realized  gross proceeds of $177,900.
The Company also achieved private placements of 746,119 shares with net proceeds
of $1,720,600 in 1999 (on which expenses of $613,500 were incurred). The company
issued 279,600  shares at a value of $2,264,100 on new and pending  acquisitions
of companies and  technologies.  The Company  exchanged  27,479 shares valued at
$140,900  in  payment  of current  and  future  services.  A total of $5,600 was
realized on the sale of stock to employees  through a stock  purchase  plan. The
exercise of 559,086  employee stock options raised $423,400 in capital.  A total
of 165,111 shares were issued to convert  $664,700 of debt to equity. A total of
1,785  shares  were  repurchased  at  a  value  of  $10,700.  In  settlement  of
litigation, 8,666 shares were issued with a value of $50,000.  Additionally, the
fair value of  $136,700,  associated  with the  issuance  of stock  options  and
warrants, was added to stockholders' equity.


                                       6
<PAGE>


The Board of Directors  created the 1999  employee  stock option pool of 500,000
shares and expanded it to 1,500,000  shares at year-end.  Additionally the board
authorized the issuance of 10,000,000  shares of Common Stock (making a total of
20,000,000 shares) and authorized 10,000,000 shares of "indeterminate" Preferred
Stock.

The Company's  Common Stock is presently traded in the  over-the-counter  market
and quoted on the National  Association of Securities  Dealers (NASD)  "Bulletin
Board" under the symbol "ZAPP." As of March 27, 2000,  there were  approximately
1,898 holders of record of Common Stock.
<TABLE>
The  following  table sets forth the high and low prices of the Common  Stock as
reported on the NASD Bulletin  Board by the National Quote Bureau for the fiscal
quarters  indicated.  The following  over-the-counter  market quotations reflect
inter-dealer prices, without retail mark-up,  markdowns, or commission,  and may
not necessarily represent actual transactions:


<CAPTION>
                                    2000                      1999                   1998
                                High     Low            High         Low         High      Low
                                ----     ---            ----         ---         ----      ---
                             (through
                            3/27/2000)
                                 $          $             $            $          $           $
<S>                             <C>       <C>           <C>          <C>         <C>        <C>
First Quarter ...........         13.75      7.50        4.375       3.0625      6.00       4.50
Second Quarter ..........       --        --             8.75        4.25        6.50       4.50
Third Quarter ...........       --        --             6.875       5.00        5.0625     2.00
Fourth Quarter ..........       --        --            18.25        5.00        4.3125     2.875
</TABLE>

Dividend Policy

The Company has paid no cash  dividends  in the past and no cash  dividends  are
anticipated in the foreseeable future.

Related Parties

William  Evers is a member of the  Board of ZAP.  His firm  Evers &  Hendrickson
provided legal services for the Company during 1999, which received  $299,000 in
compensation  for these  services.  Additionally,  Mr.  Evers was granted  stock
options to acquire 75,000 shares ranging in price from $3.02 to $6.50 per share.


                                       7
<PAGE>


Item 6. Management's  Discussion and Analysis of Plan of Financial Condition and
Results of Operations.

Overview

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  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.

The Company designs,  assembles,  manufactures and distributes  electric bicycle
power  kits,  electric  bicycles  and  tricycles,  electric  scooters,  electric
motorcycles, and other electric transportation vehicles.

The Company sells its electric  vehicles through the Internet.  The Company also
sells its electric vehicles to retail customers, international distributors, law
enforcement   agencies,   electric  utility  companies,   bicycle   dealerships,
motorsport dealers,  its franchisees and mail order catalogs.  The Company sells
to  mail  order  catalogs  and  selected  customers  on  various  credit  terms.
Occasionally  accounts  are  factored  with a local  bank.  Many of the  smaller
dealerships are sold on a cash on delivery basis.  The Internet and retail sales
are primarily paid for with a credit card or personal  check before  shipment of
the product.

On July 19, 1999, the Company created two  subsidiaries,  ZAPWORLD Stores,  Inc.
and ZAPWORLD Outlets,  Inc. ZAPWORLD Stores,  Inc. was established to record the
activity for acquired stores and ZAPWORLD  Outlets was established to record the
activity for future  franchise  stores.  Both  subsidiaries  are wholly owned by
ZAPWORLD.COM.

The  Company's   growth   strategy  is  to  increase  net  sales  by  increasing
distribution channels through its website at ZAPWORLD.COM,  retail organizations
and wholesale  distributors,  both domestically and overseas, as well as setting
up Company outlet and 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
products  so  that  it  is  the  low  cost  leader  in  the  industry.   Product
improvements,  new product introductions,  and the expansion of the ZAP electric
outlet franchise network will continue to enlarge ZAP's presence in the electric
vehicle industry.

In order to access new  markets in 1999,  ZAPWORLD  Stores,  Inc.  acquired  the
following rental/retail operations:

     1.  Big Boy Bikes, a bicycle rental business in Key West, Florida.
     2.  American   Scooter  and  Rental,  a  bicycle  rental  business  in  San
         Francisco, California.

Operating under the name ZAPWORLD  Stores,  Inc.,  this wholly owned  subsidiary
accounted  for  $316,000  (5%) of total sales.  The gross profit  margin for the
stores was 34%. The San Francisco store was purchased in July 1999. The Key West
location  was  purchased  in  November  1999.  The lease for the Key West  store
expired in February 2000, and at that time, all the assets were sold.

The Company acquired  emPower,  Inc., a designer and  manufacturing  business of
proprietary  electric  scooters to provide new  technologies and broaden product
lines.

The Company also signed agreements to acquire:

     1.  ZAP of Santa Cruz, a bicycle rental business in Santa Cruz, California.
     2.  Electric  Vehicle  Systems,   Inc.,  an  electric  vehicle  development
         business.


                                       8
<PAGE>


The  acquisition of Electric  Vehicles  Systems,  Inc. was completed in February
2000. The acquisition of ZAP of Santa Cruz was completed in March 2000.


In December 1999, the Company signed a term sheet agreement to merge with Global
Electric MotorCars, LLC (GEM), the largest manufacturer of neighborhood electric
vehicles,  and EV Rentals,  LLC. A revised  non-binding term sheet was signed in
January 2000. As of March 27, 2000 there is not an approved  final  contract for
either the GEM or EV Rentals mergers.  The common shareholders have not approved
the transaction.

Results of Operations

Year Ended December 31, 1999 Compared to Year Ended December 31, 1998


Net sales for the year ended  December  31,  1999 were  $6,437,200  compared  to
$3,518,600  in the prior year, an increase of $2,918,600 or 83%. The increase in
sales was due to greater acceptance of ZAP products in the marketplace. Internet
sales were $259,100 and $57,100 in 1999 and 1998 respectively.  This represented
a 354%  increase  for 1999.  A total of  $680,100  in  products  was sold to one
customer during the year ended December 31, 1999,  representing 11% of sales. In
the year ended December 31, 1998, $617,000, or 18% of net sales, was sold to one
customer.

Gross  profit.  Gross profit  decreased as a percentage of net sales to 31% from
32%.  The gross  profit  percentage  decrease of 1% is largely due to a one-time
sale to a large  distributor  at a significant  discount in the third quarter of
1999.  Direct  materials  were 58% of net sales for the year ended  December 31,
1998, as compared to 59% of net sales for the year ended December 31, 1999.

Selling.  Selling  expenses  in 1999 were  $1,186,700.  This was an  increase of
$219,000,  or 22% from 1998 to 1999.  Due to greater market  acceptance  through
Zap's  distribution  channels,  selling  expenses  as  a  percentage  of  sales,
decreased  from 28% of sales to 18% of  sales.  Costs  increased  as a result of
additional personnel being added to the sales force.

General  and  administrative  expenses  for  1999  were  $1,945,000.  This is an
increase of $965,800 or 100% over 1998.  As a percentage  of sales,  general and
administrative expense increased from 28% to 30% of net sales. Expense increases
during  1999  as  compared  to  1998  occurred  due to  added  personnel  in the
administrative  and accounting areas.  Additionally,  legal expenses of $300,000
were incurred in 1999 relating to acquisition activities and patent issues.

Research and  development  was $364,600 in 1999 as compared to $202,600 in 1998,
an 80% increase. As a percentage of net sales, Research and Development remained
6% in 1998 and 1999.  The Company  invested in developing  new electric  vehicle
products and tooling that is expected to lower  manufacturing  costs and broaden
the ZAP product line in 2000.

Other  income  increased  $81,000 in 1999 over 1998.  This 100%  increase can be
attributed to interest  earned on a commercial  paper money market fund from the
proceeds of private placement investments.

Interest Expense  increased  $167,000,  166% in 1999 over 1998. This increase is
due primarily higher outstanding debt in 1999.


                                       9
<PAGE>


Year Ended December 31, 1998 Compared to Year Ended December 31, 1997


Net sales for the year ended  December  31,  1998 were  $3,518,600  compared  to
$1,640,200 in the prior year, an increase of $1,878,400 or 115%. The increase in
sales was primarily due to the Company's  introduction of the ZAPPY(TM)  scooter
that accounted for $1,381,500 or 39% of total sales. Additionally, international
sales of  bicycles  and kits,  including  the new  single  speed low cost  motor
system,  for 1998  increased  $520,500 over 1997 levels as new dealers  acquired
interest in selling ZAP products  overseas.  During the year ended  December 31,
1998,  $617,000 in sales  representing 18% of total sales was with one customer.
In 1997, a different  single  customer  accounted  for 26% of the  Company's net
sales.

Gross profit. Gross profit increased as a percentage of net sales in 1998 to 32%
from 22%. The total gross  profit  increased  $761,800 or 208%.  The increase in
gross profit dollars can principally be attributed to the gross margins realized
on the sales of the new ZAPPY(TM)  scooter and other  products.  The increase in
gross margin  percentage  was the result of greater  cost  controls and improved
efficiencies  in the  manufacturing  process of all  products for the year ended
December  31, 1998 as  compared  to the year ended  December  31,  1997.  Direct
materials  were 58% of net  sales  for the year  ended  December  31,  1998,  as
compared to 70% of net sales for the year ended December 31, 1997.

Selling.  Selling  expenses  in 1998  were  $967,700.  This was an  increase  of
$334,700 or 53% from 1997 to 1998.  As a percentage of sales,  selling  expenses
decreased from 39% of sales to 28% of sales. Costs have increased as a result of
additional personnel being added to the sales force, increased promotion through
the Internet, a print media campaign, and added marketing efforts overseas.

General and administrative  expenses for 1998 were $979,200. This is an increase
of  $158,800  or  19%  over  1997.  As  a  percentage  of  sales,   general  and
administrative expense decreased from 50% to 28% of net sales. Expense increases
during  1998  as  compared  to  1997  occurred  due to  added  personnel  in the
administrative and accounting areas. Additionally,  a consultant was enlisted to
assist with obtaining additional equity funding.

Research  and  development  decreased  $43,500  or 18% from  1997 to 1998.  As a
percentage of net sales,  it decreased  from 15% to 6%  respectively.  Extensive
efforts in developing  the  ZAPPY(TM)  scooter and single speed  low-cost  motor
system resulted in higher costs in 1997 that were not duplicated in 1998.

Other income  (expense).  Interest  expense  increased  to $100,300 in 1998,  an
increase of $12,700 over 1997.  This increase can primarily be attributed to the
warrant  costs  associated  with  warrants  given to an  investment  banker  for
securing equity financing for the company.

Liquidity and Capital Resources

The Company used cash from  operations of $1,461,400 and  $1,307,400  during the
years ended December 31, 1999 and 1998 respectively.  Cash used in operations in
1999 was the result of the net loss incurred for the year of $1,692,600,  offset
by net non-cash expenses of $636,700, and the net change in operating assets and
liabilities  resulting  in a  further  use of cash  of  $405,500.  Cash  used in
operations  in 1998  was the  result  of the net loss  incurred  for the year of
$1,109,400,  offset by  non-cash  expenses  of  $255,300,  and the net change in
operating assets and liabilities resulting in a further use of cash of $453,300.

Investing  activities  provided cash of $601,000  during the year ended December
31, 1999. Proceeds from the emPower acquisition provided cash in 1999. Investing
activities  used cash for the purchase of fixed assets,  additional  capitalized
patent costs, intangibles, and purchases of the San Francisco and Key West Store
locations.  Investing  activities  used cash of  $161,900  during the year ended
December 31, 1998 for the purchase of fixed assets and intangibles.


                                       10
<PAGE>


Financing activities provided cash of $3,569,000 and $1,254,100 during the years
ended December 31, 1999 and 1998 respectively. In 1999, cash was provided by the
sale of common stock in the amount of  $1,818,100.  Cash provided by the sale of
stock in 1999 was partially  used to extinguish  notes payable to individuals of
$361,900.  In 1998,  cash was  provided  by the  issuance  of notes  payable  of
$1,280,800.   Cash  provided  in  1998  was  offset  by  principal  payments  on
outstanding debt.

At December 31, 1999, the Company had cash of $3,183,900 as compared to $475,300
at December 31, 1998. At December 31, 1999,  the Company had working  capital of
$4,450,300 as compared to working  capital of $128,600 at December 31, 1998. The
increase in cash and is primarily due to financing provided by private placement
investments.  The increase in working  capital is also explained by funding from
private placement investments.

The Company  believes that the cash and cash equivalents on hand at December 31,
1999 will be sufficient  to allow the Company to continue its expected  level of
operations for at least 12 months.  There is also an Agreement in Principle with
a private investment source for up to $7.5 million in equity capital.

The  Company's  primary  capital  needs are to fund its growth  strategy,  which
includes increasing its Internet shopping mall presence, increasing distribution
channels,  establishing company owned and franchised ZAP stores, introducing new
products, improving existing product lines and development of a strong corporate
infrastructure.

Seasonality and Quarterly Results

The Company's  business is subject to  seasonality  influences.  Sales volume in
this industry  typically slows down during the winter months,  November to March
in the U.S. The Company is marketing  worldwide and is not impacted 100% by U.S.
seasonality.

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.  However, with the low unemployment rate currently seen in
Sonoma County, the Company expects that current wage rates will be driven up due
to competitive pressures put on by other local manufacturing companies.


                                       11
<PAGE>


Item 7. Consolidated Financial Statements and Supplementary Data

                                Table of Contents

                                                                            Page

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.............................2

CONSOLIDATED FINANCIAL STATEMENTS

     Consolidated Balance Sheet................................................3

     Consolidated Statements of Operations.....................................4

     Consolidated Statement of Stockholders' Equity............................5

     Consolidated Statements of Cash Flows.....................................7

     Notes to Consolidated Financial Statements................................9


<PAGE>


                Report of Independent Certified Public Accountant

To the Board of Directors and Stockholders
ZAPWORLD.COM

We have audited the accompanying consolidated balance sheet for ZAPWORLD.COM and
subsidiaries as of December 31, 1999, and the related consolidated statements of
operations,  stockholders'  equity  and cash  flows for each of the years in the
two-year  period ended  December 31, 1999.  These  financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United  States.  Those  standards  require  that we plan and  perform the
audit  to obtain reasonable assurance about whether the financial statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe our audits provided a reasonable  basis for
our opinion.

In our opinion,  the financial statements referred to above represent fairly, in
all material respects,  the consolidated  financial position of ZAPWORLD.COM and
subsidiaries  as of December 31,  1999,  and the  consolidated  results of their
operations  and their  cash  flows for each of the years in the two year  period
ended  December 31, 1999, in conformity  with  accounting  principles  generally
accepted in the United States.

GRANT THORNTON, LLP



San Francisco, California
March 1, 2000


<PAGE>
<TABLE>
                          ZAPWORLD.COM and Subsidiaries
                           Consolidated Balance Sheet
                                December 31, 1999
                                   (Hundreds)
                                    ASSETS
<CAPTION>
<S>                                                                          <C>
CURRENT ASSETS
   Cash                                                                      $  3,183,900
   Accounts receivable, less allowance for doubtful accounts of $35,000           352,700
   Inventories                                                                  1,725,100
   Note receivable                                                                 20,000
   Prepaid expenses and other assets                                              303,000
                                                                             ------------
     Total current assets                                                       5,584,700

PROPERTY AND EQUIPMENT - less accumulated depreciation                            350,300
                                                                             ------------

OTHER ASSETS
   Patents & Trademarks, less accumulated amortization                          1,176,100
   Goodwill                                                                       112,200
   Advance to retail stores and technology companies                              478,800
   Deposits                                                                        24,500
                                                                             ------------
         Total other assets                                                     1,791,600
                                                                             ------------

         Total assets                                                        $  7,726,600
                                                                             ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable                                                          $    742,200
   Accrued liabilities                                                            367,900
   Current maturities of long-term debt                                            15,300
   Current maturities of obligations under capital leases                           9,000
                                                                             ------------
         Total current liabilities                                              1,134,400
                                                                             ------------

OTHER LIABILITIES
   Long-term debt, less current maturities                                         24,200
   Obligations under capital leases, less current maturities                       13,500
                                                                             ------------

         Total other liabilities                                                   37,700
                                                                             ------------

STOCKHOLDERS' EQUITY
   Preferred stock, authorized 10,000,000 shares; no shares issued or
   outstanding Common stock, authorized 20,000,000 shares of no par value;
   issued
   and outstanding 5,109,180                                                   12,053,200
   Accumulated deficit                                                         (5,118,100)
   Unearned compensation                                                          (95,800)
                                                                             ------------
                                                                                6,839,300
   Less: notes receivable from shareholders                                      (284,800)
                                                                             ------------
         Total stockholders' equity                                             6,554,500
                                                                             ------------
Total liabilities and stockholders' equity                                   $  7,726,600
                                                                             ============
<FN>
The  accompanying  notes  are an  integral  part of the  consolidated  financial statements.
</FN>
</TABLE>

                                        3


<PAGE>
<TABLE>

                          ZAPWORLD.COM and Subsidiaries
                      Consolidated Statements of Operations
                      Year ended December 31, 1998 and 1999
                 (Hundreds, except shares and per share amounts)
<CAPTION>
                                                       1999           1998
                                                   -----------    -----------
<S>                                                <C>            <C>
NET  SALES                                         $ 6,437,200    $ 3,518,600
COST OF GOODS SOLD                                   4,446,400      2,391,300
                                                   -----------    -----------
              GROSS PROFIT                           1,990,800      1,127,300
OPERATING EXPENSES
    Selling                                          1,186,700        967,700
    General and administrative                       1,945,000        979,200
    Research and development                           364,600        202,600
                                                   -----------    -----------
                                                     3,496,300      2,149,500
                                                   -----------    -----------
LOSS FROM OPERATIONS                                (1,505,500)    (1,022,200)
                                                   -----------    -----------

OTHER INCOME (EXPENSE)

    Interest expense                                  (267,300)      (100,300)
    Other income                                        81,000           --
    Miscellaneous                                         --           13,900
                                                   -----------    -----------
                                                      (186,300)       (86,400)
                                                   -----------    -----------
              LOSS BEFORE INCOME TAXES              (1,691,800)    (1,108,600)
                                                   -----------    -----------

PROVISION FOR INCOME TAXES                                 800            800
                                                   -----------    -----------
              NET LOSS                             $(1,692,600)   $(1,109,400)
                                                   ===========    ===========
NET LOSS PER COMMON SHARE
    Basic and diluted                              $     (0.43)   $     (0.42)
                                                   -----------    -----------
SHARES USED IN CALCULATION OF NET LOSS PER SHARE     3,927,633      2,614,563
                                                   ===========    ===========
<FN>
The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.
</FN>
</TABLE>

                                        4

<PAGE>


<TABLE>
                                                    ZAPWORLD.COM and Subsidiaries
                                           Consolidated  Statement of Stockholders' Equity
                                                Years Ended December 31, 1998 and 1999
<CAPTION>

                                                                                               Unearned       Note
                                                                                              Compensation  Receivable
                                                          Common Stock        Accumulated         and          From
                                                       Shares       Amount       Deficit        services    Shareholder      Total
                                                      ---------   -----------   -----------    ---------    ----------       -----
<S>              <C>                                  <C>         <C>           <C>            <C>          <C>         <C>
Balance, January 1, 1998                              2,542,700   $ 3,168,900   $(2,316,100)   $   --       $   --      $   852,800


 Issuance of common stock in connection with
 direct public offering at $6 per share, net
 expenses of $91,000                                     78,800       383,300          --          --           --          383,300


 Fair value of stock options granted to
 non-employees                                              --         17,600         --           --           --            17,600


 Exercise of stock options                               15,000        15,000          --          --           --           15,000


 Conversion of notes payable and accrued interest
       into common stock at $5.25                         2,700        14,300          --          --           --           14,300


 Issuance of warrants in connection with debt              --          61,800          --           --          --           61,800


 Stock issued for current and future services            25,500       150,300          --          --           --          150,300


 Net loss                                                  --            --      (1,109,400)       --           --       (1,109,400)
                                                      ------------------------------------------------------------------------------
  Balance, December 31, 1998                           2,664,700    3,811,200    (3,425,500)       --           --          385,700

  Issuance of common stock:
         Cash                                             29,833      177,900                                               177,900
         Private placement, net of expenses of           746,119    1,720,600                                             1,720,600
         $613,500
         Acquisitions                                    279,600    2,264,100                                             2,264,100
         Advance to retail stores & technology co.'s      57,803      406,300                                               406,300
         Employee stock purchase plan                      1,139        5,600                                                 5,600
         Repurchase of shares                            (1,785)     (10,700)                                              (10,700)
         Services                                         27,479      140,900                                               140,900
         Litigation settlement                             8,666       50,000                                                50,000
         Conversion of debt                              165,111      664,700                                               664,700

  Exercise of employee stock options                     559,086      423,400                                               423,400
  Exercise of non-employee stock options                 571,429    2,000,000                                             2,000,000

</TABLE>


                                                                 5
<PAGE>


<TABLE>
                                                   ZAPW ORLD.COM and Subsidiaries
                                          Consolidated Statement of Stockholders' Equity (cont.)
                                                 Years Ended December 31, 1998 and 1999
<CAPTION>

                                                                                                               Note
                                                                                              Unearned      Receivable
                                                           Common Stock        Accumulated   Compensation      From
                                                     Shares          Amount     Deficit      and services   Shareholder    Total
                                                     ------          ------     -------      ------------   -----------    -----
<S>                                                    <C>           <C>       <C>            <C>                     <C>
         (Hundreds, except shares)

   Fair value of stock options issued to employees     --              1,700         --            --           --         1,700

   Fair value of stock options and warrants issued     --            135,000         --            --           --       135,000
   to non-employees

   Stock options and warrants issued for future        --            262,500         --         (95,800)        --       166,700
   compensation and services

   Note receivable from shareholders                   --                --          --            --       (284,800)   (284,800)

   Net loss                                            --                --     (1,692,600)        --           --    (1,692,600)
                                                   -----------------------------------------------------------------------------

  Balance, December 31, 1999                       5,109,180     $12,0533,200  $(5,128,100)   $ (95,800)   $(284,800) $6,554,500
                                                   =============================================================================

<FN>
The accompanying notes are an integral part of the consolidated financial statements.
</FN>
</TABLE>
                                        6


<PAGE>

<TABLE>

                          ZAPWORLD.COM and Subsidiaries
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                          Years ended December 31, 1999
                                   (Hundreds)
<CAPTION>
                                                               1999           1998
                                                           -----------    -----------
<S>                                                        <C>            <C>
Cash flows from operating activities:
 Net loss                                                  $(1,692,600)   $(1,109,400)
 Adjustments to reconcile net loss to net cash used in
  operating activities:
   Depreciation and amortization                               124,000         86,500
   Allowance for doubtful accounts                                --          (30,000)
   Issuance of common stock for services rendered              140,900        150,300
   Issuance of common stock for litigation settlement           50,000           --
   Issuance of stock options for services rendered             136,700         17,600
   Noncash charges & settlement of debt                        154,200           --
   Amortization of fair value of warrants                       30,900         30,900
   Changes in:
       Accounts receivable                                     (68,900)      (192,100)
       Inventories                                            (877,700)      (366,600)
       Prepaid expenses and other assets                        24,100        (32,200)
       Deposits                                                (12,600)         1,600
       Accounts payable                                        312,400        172,600
       Accrued liabilities and customer deposits               217,200        (36,600)
                                                           -----------    -----------
                   Net cash used in operating activities    (1,461,400)    (1,307,400)
Cash flows from investing activities:
 Purchases of property and equipment                          (188,100)       (97,800)
 Purchase of American Scooter and Cycle Rental                 (70,000)          --
 Purchase of Big Boy Bicycles                                  (15,200)          --
 Proceeds from emPower acquisition                           1,033,000           --
 Payment advances for acquisitions                             (72,500)          --
 Issuance of note receivable                                   (20,000)          --
 Purchase of intangibles                                       (66,200)       (64,100)
                                                           -----------    -----------
       Net cash provided by (used in) investing                601,000       (161,900)
Cash flows from financing activities:
 Sale of common stock, net of stock offering costs           1,812,500           --
 Issuance of common stock under employee purchase plan           5,600           --
 Proceeds from issuance of long-term debt                     (361,900)     1,280,800
 Proceeds from exercise of stock options                     2,423,400        (10,700)
 Repurchase of common stock                                    (10,700)       (16,000)
 Advances on notes receivable to shareholders                 (284,800)          --
 Payments on obligations under capital leases                  (15,100)          --
                                                           -----------    -----------
       Net cash provided by financing activities             3,569,000      1,254,100
                                                           -----------    -----------
                   NET INCREASE/(DECREASE) IN CASH           2,708,600       (215,200)
Cash, beginning of year                                        475,300        690,500
                                                           -----------    -----------
Cash, end of year                                          $ 3,183,900    $   475,300
                                                           ===========    ===========
</TABLE>

                                        7


<PAGE>

<TABLE>
                                      ZAPWORLD.COM and Subsidiaries
                              CONSOLIDATED STATEMENTS OF CASH FLOWS (contd.)
                                      Years ended December 31, 1999
<CAPTION>
                                                                                  1999         1998
                                                                               ----------   ----------
<S>                                                                            <C>          <C>
Supplemental cash flow information: Cash paid during the year for:

  Interest                                                                     $  115,200   $   69,400
  Income taxes                                                                        800          800


 Non-cash investing and financing activities:

  Conversion of debt into common stock                                            475,400
  Conversion of accounts payable into common stock                                 35,100
  Equipment acquired through capital lease obligations                             26,700
  Notes payable used to exercise stock options                                     32,300

  Issuance of common stock upon acquisition of American Scooter
   and Cycle Rental, Big Boy Bicycles, and emPower Corporation                  2,311,700

  Assets and liabilities recognized upon acquisition of American Scooter and
   Cycle Rental, Big Boy Bicycles, and empower Corporation

       Cash                                                                     1,033,000
       Inventories                                                                213,500
       Prepaid expenses and other                                                  56,400
       Property and equipment                                                      70,000
       Patent                                                                   1,154,600
       Accounts payable                                                           130,600
<FN>
The  accompanying  notes  are an  integral  part of the  consolidated  financial statements.
</FN>
</TABLE>

                                        8


<PAGE>


                          ZAPWORLD.COM and Subsidiaries
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       o   Nature of Operations

       ZAPWORLD.COM  (the "Company" or "ZAP") was  incorporated in California in
       September, 1994 under its original name "Zap Power Systems". The name was
       changed on May 16,  1999.  ZAP  designs,  manufactures,  and  distributes
       electric bicycle power kits,  electric bicycles and tricycles,  and other
       personal  electric  transportation  vehicles.  Company  products are sold
       directly to end-users and to  distributors  throughout  the United States
       and the world.

       o   Principles of Consolidation

       The accompanying  consolidated  financial statements include the accounts
       of the Company, ZAPWORLD Stores, Inc., and emPower Corporation.  ZAPWORLD
       Stores, Inc. and emPower Corporation are 100% owned by ZAPWORLD.COM.  All
       significant inter-company transactions and balances have been eliminated.

       o   Revenue Recognition

        The Company recognizes income when products are shipped.

       o   Inventories

       Inventories  consist  primarily of raw  materials,  work-in-process,  and
       finished goods and are carried at the lower of cost (first-in,  first-out
       method) or market.

       o   Property and Equipment

       Property  and  equipment  are  stated  at  cost  and  depreciated   using
       straight-line  and accelerated  methods over the assets' estimated useful
       lives.  Costs of  maintenance  and  repairs  are  charged  to  expense as
       incurred. Significant renewals and betterments are capitalized. Estimated
       useful lives are as follows:

                Machinery and equipment               7 years
                Equipment under capital leases        5 years
                Demonstration bicycles                2 years
                Office furniture and equipment        7 years
                Vehicle                               5 years
                Leasehold improvements                15 years or life of lease,
                                                          whichever is shorter

       o   Patents & Trademarks

       Patents & Trademarks consist of costs expended to perfect certain patents
       and trademarks acquired in the emPower  acquisition.  These costs will be
       amortized over an estimated useful life of ten years.

       o   Goodwill

        Goodwill consists of the excess consideration paid over net assets. This
        asset will be amortized using the  straight-line  method over a ten-year
        period.

       o Income Taxes

       The Company uses an asset and liability approach to financial  accounting
       and  reporting  for  income  taxes.   Deferred   income  tax  assets  and
       liabilities are computed  annually for differences  between the financial
       statement  and tax bases of assets and  liabilities  that will  result in
       taxable or deductible amounts in the future bases on enacted tax laws and
       rates  applicable to the periods in which the differences are expected to
       affect  taxable  income.   Valuation   allowances  are  established  when
       necessary to reduce deferred tax assets to the amount


                                        9
<PAGE>

       expected  to be  realized.  Income  tax  expense  is the tax  payable  or
       refundable for the period plus or minus the change in deferred tax assets
       and liabilities during the period.

       o   Use of Estimates

       The  preparation  of financial  statements in conformity  with  generally
       accepted accounting principles requires Management of the Company to make
       estimates and  assumptions  affecting the reported  amounts of assets and
       liabilities  and disclosure of contingent  assets and  liabilities at the
       date of the financial statements, as well as revenues and expenses during
       the  reporting  period.  The amounts  estimated  could differ from actual
       results.

       o   Fair Value of Financial Instruments

       The Company  measures its financial  assets and liabilities in accordance
       with  generally  accepted  accounting  principles.  The  fair  value of a
       financial  instrument  is the  amount  at which the  instrument  could be
       exchanged in a current transaction  between willing parties.  For certain
       of  the  Company's  financial   instruments,   including  cash,  accounts
       receivable and accounts  payable,  the carrying amount  approximates fair
       value because of the short  maturities.  The carrying  amount of the bank
       note payable and current notes payable  approximate fair value as current
       interest   rates   available   to  the  Company  for  similar   debt  are
       approximately  the  same.  The  fair  value  of  related  party  debt  is
       impracticable to determine.

       o   Net Loss Per Common Share

       Net loss per common share,  basic and diluted,  has been  computed  using
       weighted  average  common shares  outstanding.  The effect of outstanding
       stock   options  and  warrants  has  been   excluded  from  the  dilutive
       computation, as their inclusion would be anti-dilutive (see note F).

       o   Segment Information

       In 1999, the company adopted SFAS No.131,  "Disclosures about Segments of
       an  Enterprise  and related  Information".  The  Company  operates in one
       reportable segment, the design, assembly, manufacture and distribution of
       electric bicycle power kits,  electric  bicycles and tricycles,  electric
       scooter,  electric motorcycles and other personal electric transportation
       vehicles.

       o   Reclassification

       Certain  reclassifications  have  been  made  to the  December  31,  1998
       information to conform to the December 1999 presentation.

NOTE B - INVENTORIES

         Inventories consisted of the following at December 31, 1999:

         Raw materials                                        $   661,700
         Work-in-process                                          349,200
         Finished goods                                           714,200
                                                              -----------

                                                              $ 1,725,100
                                                              ===========


                                       10
<PAGE>

NOTE C - PROPERTY AND EQUIPMENT

    Property and equipment consist of the following at December 31, 1999:

         Machinery and equipment                               $   187,000
         Computer Equipment                                        209,600
         Demonstration bicycles                                     89,600
         Office furniture and equipment                             52,000
         Leasehold improvements                                     78,400
         Vehicle                                                    97,600

                                                                   714,200

         Less accumulated depreciation and amortization            363,900
                                                               -----------

                                                               $   350,300

NOTE D - ADVANCE TO RETAIL STORES AND TECHNOLOGY COMPANIES

    During the year ended  December 31, 1999 the Company issued shares of common
    stock and paid cash as advances  toward the acquisition of retail stores and
    technology  companies.  The Company  issued 57,803 shares of common stock in
    the amount of $406,300 and paid cash in the amount of $72,500.

NOTE E - PROVISION FOR INCOME TAXES

                                                    1999             1998
                                                 -----------        -----------
Current tax expense

   Federal                                       $      --          $    --
   State                                                 800              800
                                                 -----------        -----------

                                                        $800             $800
                                                 ===========        ===========

       Significant  components  of the  Company's  net deferred tax assets as of
December 31, 1999 are as follows:

Tax loss carryforward                            $ 1,819,600        $ 1,263,700
Inventory capitalization                             (99,100)           (22,000)
Other                                                (70,800)           (27,400)
                                                 -----------        -----------
Total                                              1,649,700          1,214,300

Less valuation allowance                          (1,649,700)        (1,214,300)
                                                 -----------        -----------

          Net deferred tax asset                 $      --          $      --
                                                 ===========        ===========

    The Company has available  carry  forward of  approximately  $4,758,300  and
    $2,819,400 of federal and state net operating losses, respectively, expiring
    through 2019. The Tax Reform Act of 1986 and the  California  Conformity Act
    of 1987 impose  restrictions on the  utilization of net operating  losses in
    the event of an "ownership change" as defined by Section 382 of the Internal
    Revenue Code. There has been no determination  whether an ownership  change,
    as defined, has taken place. Therefore, the extent of any limitation has not
    been ascertained.

      A valuation  allowance is required for those  deferred tax assets that are
    not likely to be realized.  Realization  is dependent  upon future  earnings
    during the period that temporary differences and carry forwards are expected
    to  be  available.  Because  of  the  uncertain  nature  of  their  ultimate
    utilization,  a full valuation  allowance is recorded against these deferred
    tax assets. The valuation  allowance increased $435,400 in 1999 and $386,700
    in 1998.

    The difference  between the income tax expense at the federal statutory rate
    and the Company's effective tax rate is as follows:

                                              1999           1998
                                              ----           ----
  Statutory federal income tax rate            34%            34%
  State income tax rate                         6              6
  Valuation allowance                         (40)           (40)
                                              ----           ----
                                               --%            --%
                                              ====           ====

                                       11
<PAGE>


NOTE F - STOCK OPTIONS AND WARRANTS

    Options to purchase common stock are granted by the Board of Directors under
    three Stock  Option  Plans,  referred  to as the 1999,  1996 and 1995 plans.
    Options granted may be incentive stock options (as defined under Section 422
    of the Internal Revenue Code) or nonstatutory  stock options.  The number of
    shares  available  for  grant  under  the  1999,  1996  and 1995  Plans  are
    1,500,000, 600,000 and 750,000, respectively. Options are granted at no less
    than fair market value on the date of grant, become exercisable as they vest
    (over a 2 or 3 year period) and expire ten years after the date of grant.
<TABLE>
Option activity under the three plans is as follows:
<CAPTION>
                               1999 Plan                 1996 Plan                1995 Plan
                                          Wtd Avg                   Wtd Avg                  Wtd Avg
                               Number     Exercise       Number     Exercise      Number     Exercise
                               of Shares  Price          Of Shares  Price         of Shares  Price
                              ------------------------  -----------------------  -----------------------
<S>                           <C>         <C>            <C>        <C>          <C>         <C>
Outstanding at 12/31/97                                   383,500   $1.38         446,300    $0.56

Granted                                                    20,000   $4.31             --        --

Exercised                                                 (12,500)  $1.00             --        --

Canceled                                                  (26,500)  $1.48         (27,400)   $0.40

Outstanding at 12/31/98         --        $  --           364,500   $1.55         418,900    $0.56

Granted                       481,000     $6.33            35,000   $4.06             --        --
Exercised                        (586)    $5.00          (259,500)  $1.15        (299,000)   $0.40
Forfeited                      (1,000)    $5.00           (14,500)  $3.50         (49,900)   $1.00
                              -------                     -------                 -------
Outstanding at 12/31/99       479,414     $6.34           125,500   $2.85          70,000    $0.93
                              =======                     =======                 =======
</TABLE>

    The  weighted  average  fair value of all options  granted  during the years
    ending December 31, 1999 and 1998 was $4.33 and $3.66 respectively.
<TABLE>
       The following  information  applies to employee  incentive  stock options
outstanding at December 31, 1999:
<CAPTION>
            Plan:                                         1999                 1996                  1995
                                                          ----      --------------------------       ----
<S>                                                   <C>           <C>            <C>           <C>
            Range of exercise prices                  $5.00- $7.00  $1.00-$1.00    $3.68-$5.25   $1.00-$1.00
            Options outstanding                            479,414       47,500         78,000        70,000
            Weighted average exercise price           $       6.34  $      1.00    $      3.98   $      1.00
            Weighted average remaining life (years)           9.79         6.58           8.03          6.50
            Options exercisable                             46,833       47,500         62,806        70,000
            Weighted average exercise price           $       6.31  $      1.00    $      3.97   $      1.00
</TABLE>

    The company  granted stock options and warrants to purchase  common stock to
    non-employees of the company.  The options and warrants have exercise prices
    ranging from $3.02 - $6.36.

    The Company  granted  671,429 in options and warrants in connection with the
    private  placement,  200,000 in  connection  with the  emPower  acquisition,
    100,000  in  connection   with   placement   fees,   and  167,000  to  other
    non-employees.


                                       12
<PAGE>

    The Company  recorded the  non-statutory  options and warrants  based on the
    grant date for value in  accordance  with FAS 123. The grant date fair value
    of each stock option was estimated  using the  Black-Scholes  option-pricing
    model.  The company  recorded  expense in the amount of $135,000 and $48,500
    for the year ended December 31, 1999 and 1998, respectively.  As of December
    31, 1999 the Company has recorded  prepaid expense in the amount of $166,700
    for future services.

    Options and warrant activity for non-employees is as follows:

                                                              Weighted
                                                                 Avg.

Outstanding at 12-31-97                      46,000           $   4.33

Granted                                      82,800               4.86
Exercised                                    (2,500)              1.00
                                          ---------
Outstanding at 12-31-98                     126,300               4.74

Granted                                   1,138,429               4.58
Exercised                                  (571,429)              3.50
Forfeited                                   (64,300)              4.75
                                          ---------
Outstanding at 12-31-99                     629,000               5.51
                                          =========



    The Company accounted for stock options and warrants under the policy of APB
    25 "Accounting  for Stock Issued to Employees".  The Company has adopted the
    disclosure only provision of Statement of Financial Accounting Standards No.
    123, "Accounting for Stock-Based Compensation (SFAS 123)".  Accordingly,  no
    compensation  expense has been  recognized  for stock options  issued during
    1999 and 1998. Had compensation cost for the Company's options been based on
    the  fair  value  of the  awards  at the  grant  date  consistent  with  the
    provisions  of SFAS No. 123, the Company's net loss and loss per share would
    have approximated the following proforma amounts:

                                                  1999          1998
                                             -------------   ------------

          Net loss - as reported             $ (1,692,600)   $ (1,109,400)
          Net loss - pro forma                 (2,686,700)     (1,254,600)
          Loss per share - as reported               (.43)           (.42)
          Loss per share - pro forma                 (.68)           (.48)

    The fair value of each  option and  warrant  is  estimated  on date of grant
    using   the   Black-Scholes   option-pricing   model   with  the   following
    weighted-average assumptions:

                                            1999            1998
                                         ----------       ---------

          Dividends                            None            None
          Expected volatility                86.00%            100%
          Risk free interest rate             6.00%           6.00%
          Expected life                     5 years        10 years

    In connection  with the issuance of $800,000 of notes  payable in 1998,  the
    Company issued 20,000 warrants at $4.00 per share, to purchase the Company's
    common  stock,  to an entity  that  assisted  the Company in  arranging  the
    financing.  The warrants are immediately  exercisable and expire  September,
    2001.  The fair value of warrants at the time of issuance was $61,800 and is
    being  amortized as additional  interest  expense over the term of the debt.
    Amortization expense of $30,900 was recorded for both 1998 and 1999.

                                       13

<PAGE>

NOTE G - MAJOR CUSTOMERS and VENDORS

    During 1999,  one  customer  accounted  for $680,100 or 11% of the Company's
    net sales.  During 1998, one customer accounted for $617,000 or 17.5% of the
    Company's  net sales.  The Company  ceased  selling to this customer in late
    1998.

    During  1999,  one vendor  accounted  for  $798,600 or 12% of the  Company's
    supplies  and  materials.  For the year ended  December  31, 1998 one vendor
    accounted of $440,000 or 7%,of the Companies supplies and materials.

NOTE H - COMMITMENTS

    The Company  rents  warehouses  and office space under leases that expire in
    June 2001.  The monthly rent of $24,100 is adjusted  annually to reflect the
    average percentage increase in the Consumer Price Index. An option exists to
    extend the lease for an additional five-year period. Rent expense under this
    lease was $54,100 and $52,800 in 1998 and 1997, respectively.

         Future minimum lease payments on the leases are as follows:

       Year ending December 31,

                 2000                           $ 320,600
                 2001                             222,600
                 2002                             138,300
                 2003                             115,200
                 2004 and thereafter               54,300
                                               ------------
                     Total                      $ 851,000
                                               ============

NOTE I - PERFERRED STOCK

The  Board of  Directors  authorized  10,000,000  shares of  Preferred  Stock in
December 1999. No financial features (participation in dividends,  conversion to
warrants/common  stock  etc.)  have been  specified  for  these  "indeterminate"
preferred shares to date.

NOTE J - ACQUISITIONS

On December 30, 1999, the Company  purchased all of the common stock of emPower,
Inc., a designer and manufacturing  business of proprietary  electric  scooters,
for 265,676 shares of its common stock. The Company issued warrants to emPower's
shareholders to purchase an aggregate of 200,000 shares of the Company's  common
stock. The warrants expire three years after issuance.  The acquisition has been
accounted  for as a purchase at $5.75 per share.  The purchase was  allocated to
the assets acquired,  including patents,  and liabilities assumed based on their
estimated  fair values.  The  acquisition  resulted in no  goodwill.  Results of
operations  for emPower have been included with those of the company for periods
subsequent to the date of acquisition.

                The purchase price of emPower was allocated as follows

                Cash                     $ 1,033,000
                Inventories                   96,300
                Property and equipment        64,100
                Patents                    1,042,400
                Liabilities assumed          (54,200)
                                         -----------
                                         $ 2,181,600
                                         ===========
                Consideration paid:
                Common stock             $ 2,181,600
                                         ===========


                                       14
<PAGE>

In  September  1999,  the Company  purchased  all assets of Big Boy Bicycles and
assumed certain liabilities. The company issued 1,000 shares of common stock and
paid $15,165 in cash.  The purchase  price was allocated to assets  acquired and
liabilities  assumed based on their estimated fair value.  Results of operations
for Big Boy  Bicycles  have been  included  with  those of the  Company  for the
periods subsequent to the date of acquisition.

        The purchase price of Big Boy Bicycles was allocated as follows:

                       Inventories              $ 73,800
                       Property and equipment      4,400
                       Goodwill                    1,300
                       Expenses                    1,900
                       Liabilities assumed       (59,800)
                                                --------
                                                $ 21,600
                                                ========
                       Consideration paid:
                       Cash                     $ 15,200
                       Common stock                6,400
                                                --------
                                                $ 21,600
                                                ========

In  July  1999,  the  Company  purchased  certain  assets  and  assumed  certain
liabilities  of American  Scooter and Cycle  Rental.  The Company  issued 12,924
shares  of  common  stock  and paid  $70,000  in cash.  The  purchase  price was
allocated  to the  assets  acquired  and  liabilities  assumed  based  on  their
estimated  fair values.  Results of  operations  for American  Scooter and Cycle
Rental have been  included  with those of the company for periods  subsequent to
the date of acquisition.

         The  purchase  price of certain  assets  and  liabilities  of  American
Scooter and Cycle Rental were allocated as follows:

                     Inventories              $  43,300
                     Property and equipment       1,500
                     Goodwill                   113,300
                     Expenses                     4,600
                     Liabilities assumed        (16,600)
                                              ---------
                                              $ 146,100
                                              =========
                     Consideration paid:
                     Cash                     $  70,000
                     Common stock                76,100
                                              ---------
                                              $ 146,100
                                              =========

The above operations  represent 5% of total revenues for the year ended December
31, 1999.

NOTE K - SUBSEQUENT EVENTS

On January 20,  2000,  the Company  purchased  all of the common stock of Zap of
Santa Cruz, Inc. a California corporation,  for $25,000 in cash and 8,803 shares
of the  Company's  common  stock.  The  acquisition  will be accounted  for as a
purchase.  The purchase price is approximately $125,000 and will be allocated to
add the assets  acquired and  liabilities  assumed based on their estimated fair
values. The acquisition closed in the first quarter of calendar year 2000.

On February 29, 2000, the Company  purchased all of the common stock of Electric
Vehicle Systems, Inc., a California corporation,  for $20,000 in cash and 25,000
shares of the Company's common stock. The acquisition will be accounted for as a
purchase.  The purchase price is approximately $285,000 and will be allocated to
the net assets  acquired and  liabilities  assumed based on the  estimated  fair
value. The acquisition closed in the first quarter of calendar year 2000.

Item 8. - Changes  in and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure.

Not Applicable

                                       15
<PAGE>

Item 9. Directors and Executive Officers of the Registrant.


                               MANAGEMENT

    Name                    Age     Position
    ----                    ---     --------
    Gary Starr              44      Director, Chief Executive Officer, President

    Robert Swanson          51      Director, Chairman of the Board

    Doug Wilson             40      Director

    William Evers           72      Director

    Lee S. Sannella, M.D.   84      Director

    Andrew Hutchins         39      Vice President Operations

    Scott Cronk             35      Vice President Business Development

    Sanford Theodore        36      Controller

    Oonagh Duggan           28      Corporate Secretary


Gary Starr has been a Director and  executive  officer of the Company  since its
inception in 1994. He has been the Chief Executive  Officer and President of the
Company since  September  1999.  He has been  building,  designing,  and driving
electric cars for more than 25 years. In addition to overseeing the marketing of
more than 35,000 electric  bicycles and other electric  vehicles,  Mr. Starr has
invented  several solar electric  products and conservation  devices.  Mr. Starr
founded U.S.  Electricar's  electric  vehicle  operation  in 1983.  That Company
recently signed a licensing  agreement with Hyundai. In 1993, Mr. Starr earned a
Private Industry Council Recognition Award for creating job opportunities in the
EV  industry  and was  named as one of the ten  most  influential  electric  car
authorities by Automotive News. He has also received  recognition awards for his
contributions  toward  clean  air  from the  American  Lung  Association  of San
Francisco,  CALSTART  and U.S.  Senator  Barbara  Boxer.  Mr.  Starr has several
publications: Electric Cars: Your Guide to Clean Motoring, The Shocking Truth of
Electric  Cars,  and The True Cost of Oil. In addition,  he has appeared on more
than 300 radio and television  talk and news shows  (including  Larry King Live,
The Today Show, Inside Edition,  CNN Headline News, Prime Time Live, and the CBS
Evening News and the McNeil  Lehrer News Hour) as a recognized  authority in the
field of electric vehicles.  Mr. Starr has a Bachelor of Science Degree from the
University of California, Davis in Environmental Consulting and Advocacy.

Robert E. Swanson has been Chairman of the Board of ZAPWORLD.COM since 1999. Mr.
Swanson  is  Chairman  of the  Board,  sole  director  and sole  stockholder  of
Ridgewood Capital Corporation.  Mr. Swanson is also Chairman of the Board of the
Fund and  President,  registered  principal  and sole  stockholder  of Ridgewood
Securities  Corporation.   In  addition,  Mr.  Swanson  is  President  and  sole
shareholder of Ridgewood Energy,  Ridgewood Power and Ridgewood Power Management
Corporation.  Ridgewood  Power is a  managing  shareholder  of each of the prior
Programs and Mr. Swanson is the President of each prior Program. Since 1982, Mr.
Swanson,  through a number of entities,  has  sponsored  and been a principal of
more than 47 investment  programs  involved in gas exploration and  development,
which  programs  have  raised  approximately  $200  million  from  the  sale  of
investment  units. Mr. Swanson was also a tax partner at the former New York and
Los Angeles law firm of Fulop & Hardee and an officer in the Investment Division
of Morgan  Guaranty Trust  Company.  His specialty was in personal and financial
planning,  including income, estate and gift tax. Mr. Swanson is a member of the
New York State and Jersey bars. He is a graduate of Amherst  College and Fordham
University Law School. Mr. Swanson and his wife Barbara Mardinly Swanson are the
authors of "Tax Shelters,  A Guide for Investors and Their Advisors."  published
by Jones-Irwin in 1982 and published in revised editions in 1984 and 1985.


                                       16
<PAGE>

Doug Wilson has been a Director of  ZAPWOLD.COM  since 1999.  Mr.  Wilson is the
Vice  President of  Acquisitions  for of RCC and the  Ridgewood  Fund.  He was a
principal of Monhegan Partners,  Inc., which provided  acquisition and financial
advisory for  Ridgewood  Power and the Prior  Programs,  from October 1996 until
September   1998,   when  he  joined   Ridgewood  Power  as  Vice  President  of
Acquisitions.  He has over 14 years of  capital  markets  experience,  including
specialization  in  complex  lease  and  project  financings  in  energy-related
businesses.  He has a Bachelor of Business Administration from the University of
Texas and a Masters degree in Business Administration from the Wharton School of
the University of Pennsylvania.

William D. Evers has been a Director of  ZAPWORLD.COM  since 1999.  Mr. Evers is
one of the leading SEC  attorneys in  California  with  extensive  experience in
start-up and emerging  companies,  specializing for a number of years in private
placements,  Section 25102(n) offerings,  Small Corporate Offering Registration,
Re. A  Exemptions  and Small  Business  Registrations.  He has handled  numerous
mergers and  acquisitions.  Mr.  Evers is a name partner the law firm of EVERS &
Hendrickson  LLP. Mr. Evers heads the Evers and  Hendrickson  Internet Law Group
with its emphasis on Internet  relationships.  Mr. Evers has also had  extensive
experience in franchising and has been the CEO or President of various  business
ventures.  He  holds  a BA  from  Yale  University  and JD  from  University  of
California, Berkeley.


Lee Sannella,  M.D. has been a Director of  ZAPWORLD.COM  since its inception in
1994.  Dr.  Sannella has been an active  researcher in the fields of alternative
transportation,  energy and  medicine for more than 25 years.  Dr.  Sannella has
been a founding  shareholder  in many  start-up  high tech  companies.  He was a
Director of U.S. Electricar from 1983 to 1992. A graduate of Yale University, he
maintained  an active  medical  practice  for many  years in  ophthalmology  and
psychiatry.  He worked with the Sonoma  Medical  Society on improving  radiation
standards and is a best-selling  author. He has served on advisory boards of the
City of  Petaluma,  California,  on the Board of  Directors  of the San  Andreas
Health  Council of Palo Alto, the Veritas  Foundation of San Francisco,  and the
AESOP Institute.

Andrew  Hutchins was appointed Vice  President,  Operations of  ZAPWORLD.COM  in
October  1999.  He joined the Company in  December  1996 and since June 1997 has
been the Company's General Manager. Successful as an entrepreneur,  Mr. Hutchins
started,  developed and managed a retail bicycle  business for 11 years prior to
selling it for several times his initial investment. He has been involved in the
bicycle  industry  since 1971 when he stared  working for his  family's  bicycle
business. Mr. Hutchins was a charter member of the Transportation Advisory Board
for the City of Rohnert  Park.  He also worked for three years in the  insurance
industry in management  positions  with  Banker's  Life and in Equity  Qualified
Sales for Equitable Life Assurance.  In 1982 Mr. Hutchins received a Bachelor of
Arts degree with a double major in Business Economics and Communication  Studies
from the University of California at Santa Barbara.

Scott Cronk was appointed Vice President of Business Development of ZAPWORLD.COM
in December  1999. He was the President and founder of Electric  MotorBike  from
1995 to 1999.  Previously,  as Director of Business  Development & International
Programs, Mr. Cronk led strategic venturing activities for U.S. Electricar, Inc.
Before  joining  U.S.  Electricar  in  1994,  Mr.  Cronk  managed  international
manufacturing planning activities (1991-1994) for Delco Electronics Corporation,
a division of General Motors Corporation.  He was responsible for a $350 million
automotive  electronics product line, with facilities in Liverpool,  England and
Singapore.  His book,  "Building  the  E-Motive  Industry",  is published by the
Society Of Automotive Engineers.  Mr. Cronk has a B.S. in Electrical Engineering
from GMI Engineering & Management Institute (now "Kettering  University") and an
M.B.A. from the City University of London, England.

Sanford  Theodore  has been the  Controller  of  ZAPWORLD.COM  since  1997.  Mr.
Theodore has been  involved in various  financial and  accounting  positions for
over 11 years. Well versed with computerized  accounting and auditing processes,
he has worked with Optical Coating Laboratory,  Western Dairy Products, and Blue
Cross. Mr. Theodore received a bachelor's degree in Business Administration from
San  Diego  State  University  in 1985  and a  certificate  for  Human  Resource
Management from Sonoma State University in 1996.

Oonagh  Duggan was appointed  Corporate  Secretary of  ZAPWORLD.COM  in November
1999.  Ms. Duggan also works in the  international  marketing  and  governmental
affairs  departments for ZAP.  Previously she worked in  communications at World
Stewardship  Institute.  She  holds a BA in  European  Studies  from  University
College,  Cork, Ireland, and an MA in International  Studies from the University
of Limerick, Ireland.


                                       17
<PAGE>

Compliance with Section 16(A) of the Securities Exchange Act of 1934.

Section  16(a) of the  Securities  Exchange Act of 1934  requires the  Company's
directors  and officers to file  reports of  ownership  and changes in ownership
with  respect to the  securities  of the  Company  and its  affiliates  with the
Securities and Exchange Commission and to furnish copies of these reports to the
Company. Based on a review of these reports and written representations from the
Company's directors and officers regarding the necessity of filing a report, the
Company believes that during fiscal 1999, all filing  requirements were met on a
timely basis.

Indemnification of Directors and Officers

The  Company's  Articles of  Incorporation  provide  that the  liability  of the
directors  for  monetary   damages  shall  be  limited  to  the  fullest  extent
permissible  under  California law. Insofar as  indemnification  for liabilities
arising  under  the  federal  securities  laws may be  permitted  to  directors,
officers and controlling  persons of the Company pursuant to that provision,  or
otherwise,  the Company has been advised  that in the opinion of the  Securities
and  Exchange  Commission  such  indemnification  is  against  public  policy as
expressed in those laws and is, therefore, unenforceable.

Director Term of Office and Compensation

All   directors'   terms  of  office  expire  at  the  next  annual  meeting  of
shareholders.  The Company's  directors do not receive any cash compensation for
their  service on the Board of Directors,  but  directors may be reimbursed  for
certain expenses in connection with their attendance at Board meetings.

The Company granted stock options to acquire 75,000 shares to two Directors. The
range in price of the options was from $3.25 to $6.25 per share.  The vesting of
these options range from immediately to three years.

Item 10.     Executive Compensation
<TABLE>
The following  tables set forth all  compensation  earned by the Company's Chief
Executive  Officer,  former  President,  and  the  Company's  four  most  highly
compensated  executive  officers serving as executive officers at the end of the
fiscal year. There are currently two executive officers.
<CAPTION>
                          Executive Compensation Table
                     (rounded to hundreds, except per share)
                                                                                        Long-Term Compensation
                                                                              -----------------------------------------
                                                                                   Awards                    Payouts
                                                                              -----------------------------------------
            ( a )                  ( b )      ( c )     ( d )        ( e )          ( f )         ( g )         ( h )
                                                                    Other        Restricted      Stock
                                                                    Annual         Stock       Underlying       LTIP
                                              Salary    Bonus     Compensation      Award      Options/SARs    Payouts
          Position                  Year      ( $ )     ( $ )        ( $ )          ( $ )         ( # )         ( $ )
-----------------------------------------------------------------------------------------------------------------------
<S>                                 <C>       <C>       <C>         <C>            <C>         <C>
James McGreen                       1997      38,000                               2,250
Former President                    1998      37,500
                                    1999      34,000     200                                     35,000

Gary Starr                          1997      35,000
Chief Executive Officer             1998      35,700
And President                       1999      39,500     200                                    135,000

Andrew Hutchins                     1999      39,400   1,200        9,800                        30,000
Vice President-Operations
</TABLE>

                                       18
<PAGE>
<TABLE>
<CAPTION>
                                                           Option/SAR Grant in Last Fiscal Year
                                                           Individual Grants
                                                           -----------------
                         Year Options     Number of               % of Total         Exercise or        Expiration
                            Granted      Securities         Optional/SARs Granted     Base Price           Date
                                         Underlying         to Employees in Fiscal        $
                                        Options/SARs                Year
Name                                      Granted
--------------------------------------------------------------------------------------------------------------------
<S>                          <C>              <C>                      <C>               <C>            <C>
James McGreen                1999              35,000                   5.1              7.00           07/19/02

Gary Starr                   1999              35,000                                    7.00           07/19/02
                             1999             100,000                                    6.25           12/20/02
                             ----             --------       --------------
                                              135,000                  19.8

Andrew Hutchins              1999              30,000                   4.4              6.36           07/19/02
</TABLE>


Item 11.  Security Ownership and Certain Beneficial Owners and Management

The  following  table  sets  forth  certain  information  known  to the  Company
regarding the beneficial ownership of the Company's Common Stock as of March 27,
2000 for each shareholder known by the Company to own beneficially 5% or more of
the  outstanding  shares of its Common  Stock.  The  Company  believes  that the
beneficial  owners  of the  Common  Stock  listed  below,  based on  information
furnished by them,  have sole  investment and voting power with respect to their
shares, subject to community property laws where applicable.


                                           Shares          Percentage of Common
                                         Beneficially       at March 27, 2000
                  5% Shareholders:         Owned            (5,204,034 shares)
         -----------------------------------------------------------------------

     Ridgewood ZAP, LLP                  1,250,237                 24%

     James McGreen                         537,600                 10%

     Gary Starr                            520,117                 10%

     All directors and executive         2,410,160                 47%
     officers as a group

Includes:  100,000 shares of Common Stock for Ridgewood ZAP, LLP, 100,000 shares
of Common  Stock for James  McGreen and 135,000  shares of Common Stock for Gary
Starr issuable upon exercise of currently exercisable incentive stock options.

Item 12.  Certain Relationships and Related Transactions


                                       19

                                       2
<PAGE>

Employee Stock Purchase Plan and Option/Warrant Plans description.

The Company has three (1995, 1996 and 1999 Plans) stock option/warrant pools for
the  benefit  of  employees  and in  the  case  of  the  1996  and  1999  Plans,
non-employee.  These plans have been established to reward meritous contribution
and create additional incentive to outstanding  employees in the Company.  These
awards vest at various times that are directed at the discretion of the Board of
Directors.  The  company  also  offers a 1999  Common  Stock  purchase  plan for
employees.  Participation  in the plan is  voluntary  for all  employees  of the
Company  that  have  completed  one or  more  years  of  continuous  employment.
Contributions are applied to the purchase of Common shares at 85% of fair market
value and issued quarterly to participants.

Item 13.  Exhibits and Reports on Form 8-K

On July 12, 1999, a Form 8-K was filed  amending the name of the  Corporation to
ZAPWORLD.COM from ZAP Power Systems.

         Exhibit 1.  Additional Information

         In April 2000 the Company  reached an  Agreement  in  Principle  with a
         private  investment  source for the Company to receive from that source
         up to $7.5 million in equity capital.


                                       20
<PAGE>

Item 15. Signatures

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
         Exchange  Act of 1934,  the  registrant  has caused  this  report to be
         signed on its behalf by the undersigned, thereunto duly authorized.

                              ZAPWORLD.COM

                        By:   __________________________________________________
                              Gary Starr - Chief Executive Officer and President

                        Date  __________________________________________________


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
         the following persons on behalf of the registrant and in the capacities
         and on the dates indicated have signed this report below:

                        By    __________________________________________________
                              Bob Swanson - Chairman and Director

                        Date  __________________________________________________

                        By    __________________________________________________
                              Doug Wilson - Director

                        Date  __________________________________________________

                        By    __________________________________________________
                              William D. Evers - Director

                        Date  __________________________________________________


                        By    __________________________________________________
                              Lee Sannella - Director

                        Date  __________________________________________________


                          By   _________________________________________________
                               Oonagh Duggan - Corporate Secretary

                          Date  ________________________________________________


                          By    ________________________________________________
                                Sanford Theodore - Principal Accounting
                                Officer and Controller

                          Date  ________________________________________________


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