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


                                   Form 10-QSB


(Mark One)


[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
         EXCHANGE ACT OF 1934

         For the quarterly period ended  March 31, 1997
                                         --------------

[ ]      TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES 
         EXCHANGE ACT OF 1934

           For the transition period from ____________ to ____________

                       Commission file number 333-05744-LA
                                              ------------


                                ZAP POWER SYSTEMS
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)


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


                 117 Morris Street, Sebastopol, California 95472
--------------------------------------------------------------------------------
                    (Address of principal executive offices)


     (707) 824-4150
---------------------------
(Issuer's telephone number)

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
                                                                      ---
                     (APPLICABLE ONLY TO CORPORATE ISSUERS)

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
             2,200,196 shares of common stock as of March 31, 1997
             -----------------------------------------------------

          Transitional Small Business Disclosure Format Yes [ ] No [x]
<PAGE>

Part I.  FINANCIAL INFORMATION

Item 1.  Financial Statements
<TABLE>

ZAP POWER SYSTEMS
CONDENSED BALANCE SHEETS
      (Unaudited)
<CAPTION>
                                                                           March 31,
                                                                     1997             1996
---------------------------------------------------------------------------------------------
                                    ASSETS
<S>                                                                <C>            <C>        
CURRENT ASSETS
     Cash                                                          $   169,300    $    72,300
     Receivables                                                       112,900         38,500
     Inventories                                                       253,100         76,800
     Prepaid expenses and other assets                                 114,300
                                                                   -----------    -----------
         Total current assets                                          649,600        187,600
                                                                   -----------    -----------

PROPERTY AND EQUIPMENT                                                 114,400         71,600
                                                                   -----------    -----------

OTHER ASSETS
     Investment in joint venture                                        57,500
     Cash restricted to payment of long-term debt                       50,000
     Intangibles, net of accumulated amortization
          of $1,860 and $967, respectively                               7,000          8,000
     Deposits                                                           22,700          6,000
                                                                   -----------    -----------
                                                                       137,200         14,000
                                                                   -----------    -----------
         Total assets                                              $   901,200    $   273,200
                                                                   ===========    ===========

                   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                                              $   275,000    $   108,300
     Accrued liabilities and other expenses                             17,400          7,800
     Notes payable                                                     179,363         55,400
     Current maturities of long-term debt                               14,337
     Current maturities of obligations under capital leases              9,600
                                                                   -----------    -----------
         Total current liabilities                                     495,700        171,500
                                                                   -----------    -----------
OTHER LIABILITIES
     Obligations under capital leases, less current maturities          23,700
                                                                   -----------    -----------
STOCKHOLDERS' EQUITY
     Common stock, no par value; 10,000,000 and 3,000,000 shares
     authorized, 2,200,196 and 1,644,384 shares issued and
     outstanding, respectively                                       1,582,000        250,200
     Accumulated deficit                                            (1,200,200)      (148,500)
                                                                   -----------    -----------
                                                                       381,800        101,700
                                                                   -----------    -----------
        Total liabilities and stockholders' equity                 $   901,200    $   273,200
                                                                   ===========    ===========

<FN>
The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>
                                       2
<PAGE>

ZAP POWER SYSTEMS
CONDENSED STATEMENTS OF OPERATIONS
           (Unaudited)
                                                  Three months ended March 31,
                                                    1997                1996
--------------------------------------------------------------------------------

NET SALES                                         $   257,900       $   203,800

COST OF GOODS SOLD                                    221,800           112,800
                                                  -----------       -----------

GROSS PROFIT                                           36,100            91,000
                                                  -----------       -----------

OPERATING EXPENSES
     Selling                                           92,800            86,700
     General and administrative                       176,200            90,400
     Research and development                          49,000            12,400
                                                  -----------       -----------
                                                      318,000           189,500
                                                  -----------       -----------

LOSS FROM OPERATIONS                                 (281,900)          (98,500)
                                                  -----------       -----------

OTHER INCOME (EXPENSE)
     Interest expense                                  (8,900)
     Other                                             (2,600)            2,900
                                                  -----------       -----------
                                                      (11,500)            2,900
                                                  -----------       -----------

LOSS BEFORE INCOME TAXES                             (293,400)          (95,600)

PROVISION FOR INCOME TAXES                               --                --
                                                  -----------       -----------

NET LOSS                                          $  (293,400)      $   (95,600)

NET LOSS PER COMMON SHARE                         $     (0.14)      $     (0.06)
                                                  ===========       ===========

WEIGHTED AVERAGE OF COMMON SHARES
     OUTSTANDING                                    2,146,500         1,600,000
                                                  ===========       ===========

The accompanying notes are an integral part of these financial statements

                                       3
<PAGE>
<TABLE>

ZAP POWER SYSTEMS
CONDENSED STATEMENTS OF CASH FLOWS
           (Unaudited)
<CAPTION>
                                                           Three months ended March 31,
                                                                1997          1996
---------------------------------------------------------------------------------------

<S>                                                           <C>          <C>       
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                                 $(293,400)   $ (95,600)
     Adjustments to reconcile net loss to net cash
          used by operating activities
         Depreciation and amortization                           12,700        7,400
         Allowance for doubtful accounts                          5,300        1,300
         Issuance of common stock for services rendered          15,700       25,000
     Changes in:
         Receivables                                            (57,300)      (9,100)
         Inventories                                             (2,800)     (18,400)
         Prepaid expenses                                         1,200
         Deposits                                                (7,600)
         Accounts payable                                       (32,600)      14,100
         Accrued liabilities and other expenses                 (42,200)      (4,800)
                                                              ---------    ---------
                  Net cash used by operating activities        (401,000)     (80,100)
                                                              ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES
     Purchases of equipment                                     (30,400)      (4,800)
     Investment in subsidiaries                                  (5,000)
                                                              ---------    ---------
                  Net cash used by investing activities         (35,400)      (4,800)
                                                              ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from notes payable                                 30,000       58,400
     Increase in restricted cash                                (40,000)
     Sale of common stock, net of stock offering costs          547,100       51,900
     Principal repayments on long-term debt                      (3,000)
     Payments on obligations under capital leases                (3,000)
     Principal repayments on note payable                       (87,000)      25,000
                                                              ---------    ---------
                  Net cash provided by financing activities     444,100      135,300
                                                              ---------    ---------

NET INCREASE IN CASH                                              7,700       50,500

CASH, beginning of period                                       161,600       21,800
                                                              ---------    ---------

CASH, end of period                                           $ 169,300    $  72,300
                                                              =========    =========
<FN>

The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>
                                       4
<PAGE>

ZAP POWER SYSTEMS
NOTES TO THE INTERIM UNAUDITED CONDENSED FINANCIAL STATEMENTS

(1)   Basis of Presentation

The financial  statements included in this Form 10-QSB have been prepared by the
Company,  without audit, pursuant to the rules and regulations of the Securities
and Exchange  Commission.  Certain information and footnote disclosures normally
included in financial  statements prepared in accordance with generally accepted
accounting  principles have been condensed,  or omitted,  pursuant to such rules
and regulations,  although  management  believes the disclosures are adequate to
make the information presented not misleading. The results of operations for any
interim period are not necessarily  indicative of results for a full year. These
statements  should be read in  conjunction  with the  financial  statements  and
related  notes  included in the  Company's  Annual Report on Form 10-KSB for the
year ended December 31, 1996.

The financial statements presented herein as of March 31, 1997 and for the three
months ended March 31, 1997 and 1996 reflect, in the opinion of management,  all
material adjustments  consisting only of normal recurring  adjustments necessary
for a fair  presentation  of the financial  position,  results of operations and
cash flow for the interim periods.

The net loss per common share is based on the weighted  average number of common
shares  outstanding in each period.  Common stock  equivalents  associated  with
stock options have been excluded from the weighted  average  shares  outstanding
since the effect of these potentially dilutive securities would be antidilutive.

(2) -  RECEIVABLES
                                                          March 31,
                                                      1997           1996
                                                      ----           ----
Trade accounts receivable                       $   134,200     $     47,500
Less allowance for doubtful accounts                (21,300)          (9,000)
                                                -------------   -------------

                                                $   112,900     $     38,500
                                                =============   ==============

(3) - INVENTORIES
                                                           March 31,
                                                       1997           1996
                                                       ----           ----
Raw materials                                   $   190,000      $    47,000
Work-in-process                                      41,900           11,500
Finished goods                                       21,200           18,300
                                                -------------    -------------

                                                $   253,100      $    76,800
                                                =============    ==============

(4) - PROPERTY AND EQUIPMENT
                                                           March 31,
                                                      1997          1996
                                                      ----          ----
Demonstration bicycles                          $   50,800        $ 17,700
Machinery and equipment                             44,800          33,300
Equipment under capital leases                      42,100            -
Office furniture and fixtures                       22,500          15,400
Computers                                           13,100          13,200
Leasehold improvements                               6,900           6,600
Vehicle                                              4,300            -
                                                -----------     ------------
                                                   184,500          86,200
Less accumulated depreciation and
 amortization                                      (70,100)        (14,600)
                                                -----------     ------------

                                                $  114,400       $  71,600
                                                ===========     ============

                                       5
<PAGE>

(5) - NOTES PAYABLE
                                                              March 31,
                                                           1997         1996
                                                       -----------  -----------

Notes to  stockholders,   with  interest  at  12%;
     interest  and  principal  due when the  notes
     mature in November and  December,  1997;  the
     Company  is  allocating  50% of the  proceeds
     received  from the  Company's  Direct  Public
     Offering towards repayment of the loans until
     fully  repaid;  the note  holders  have  been
     issued   warrants   to   purchase,   in   the
     aggregate,  28,800  shares of common stock at
     $5.25 per share through October, 1999.             $   144,000  $      -

Notes to a  stockholder,  with  interest  at  10%;
     principal  and interest is due when the notes
     mature in December, 1997; unsecured                    35,363       45,400

Notes,  with   interest  at  10%;   principal  and
     interest  is due when  the  notes  mature  in
     January and February, 1997; unsecured                                5,000

Note, with interest at 10%; the note was converted
     to 3,000 shares of common stock in 1996                              5,000
                                                        -----------  ----------
                                                        $  179,363   $   55,400
                                                        ===========  ===========

(6) - COMMON STOCK

In November 1996,  the Company began offering for sale,  directly to the public,
500,000  shares of common stock at $5.25 per share.  The net  proceeds  from the
sale are to be used to retire certain debt, increase manufacturing capacity, and
provide working capital for new product development and general purposes.

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS.

Special Note Regarding Forward-Looking Statements

         Certain statements in this Form 10-QSB, including information set forth
under this Item 2. "Management's  Discussion and Analysis of Financial Condition
and Results of Operations"  constitute  "forward-looking  statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "ACT"). ZAP
Power Systems (the  "Company")  desires to avail itself of certain "safe harbor"
provisions of the Act and is therefore including this special note to enable the
Company to do so.  Forward-looking  statements  included  in this Form 10-QSB or
hereafter  included  in  other  publicly  available  documents  filed  with  the
Securities and Exchange  Commission,  reports to the Company's  stockholders and
other publicly  available  statements  issued or released by the Company involve
known and unknown risks, uncertainties,  and other factors which could cause the
Company's actual results,  performance  (financial or operating) or achievements
to differ from the future  results,  performance  (financial  or  operating)  or
achievements  expressed  or implied by such  forward  looking  statements.  Such
future results are based upon  management's  best  estimates  based upon current
conditions and the most recent results of operations.

Overview

         The Company designs,  assembles,  manufactures and distributes electric
bicycle  power  kits,  electric  bicycles  and  tricycles,  and other  low-power
electric   transportation   vehicles.   Historically,   unit   sales  have  been
approximately  65% kits and 35%  electric  bicycles.  Dollar sales have been 50%
kits and 50% electric bicycles.

                                        6
<PAGE>

         The Company sells its electric  bicycles and kits to retail  customers,
police  departments,  electric utility companies,  bicycle  dealerships and mail
order  catalogs.  Net revenue is net of returns.  The Company  sells to the mail
order catalogs and selected  customers on credit with net 30 day terms.  Many of
the  bicycle  dealerships  are sold  cash on  delivery.  The  retail  sales  are
primarily paid for with a credit card or personal  check before  shipment of the
product.

         The Company manufactures an electric motor system that is sold as a kit
to be installed by the customer on their own bicycle.  The Company also installs
the motor system on bicycles  which the Company buys. The Company then sells the
complete  electric  bicycle to the  customer.  The  Company  purchases  complete
bicycles from various bicycle  manufacturers for use with the Company's electric
motor  system.  The  Company  manufactures  the  electric  motor kit,  which has
approximately 62 unique parts.  The  manufacturing of the electric motor kit and
the  installation of the motor systems to the bicycles 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
using one vendor for its motors,  although there are other  companies that could
be used with slight  modifications to the motor support brackets.  The batteries
are  standard  batteries  used in the  computer  industry  for  power  interrupt
systems. The electronic system uses standard electronic components.

         The electric  motor kits and electric  bicycles sold by ZAP are usually
shipped by U.P.S.  and Federal  Express.  Larger  quantity  orders to  wholesale
distributors  are shipped  common  carrier.  The Company has developed long term
purchase  arrangements  with its key  vendors.  The Company  has no  contractual
relationships with any of its vendors.

         The Company recently began selling an electric scooter  manufactured by
an Italian company through a joint marketing agreement where they have rights to
sell the Company's products in Italy and Austria,  and the Company has the right
to sell their  product in Northern  America.  Subsequent  to this  agreement the
company has sold approximately 40 units.

         The  Company as of March  31,1997  had a $322,000  sales  backlog.  The
company expects to fill these orders within the next 60 days.

         The  Company's  growth  strategy is to increase net sales by augmenting
its marketing and sales force, and by increasing  distribution  channels through
retail organizations and wholesale  distributors both domestically and overseas.
The Company will  continue to increase  its  production  capability  to meet the
increasing  demand for its  product.  The Company  will  continue to develop the
product so that it is the low cost leader in the industry.  Product improvements
and new product  introductions  will continue to enlarge  ZAP's  presence in the
electric vehicle industry.

Results of Operations

         The following table sets forth,  as a percentage of net sales,  certain
items included in the Company's Income Statements (see Financial  Statements and
Notes) for the periods indicated:

                                                 Three months ended March 31,
                                                      1997        1996
                                                      ----        ----
     Statements of Income Data:

         Net sales.............................      100.00%      100.00%
         Cost of sales.........................       86.00        55.35
         Gross profit (Loss)...................       14.00        44.65
         Operating  expenses...................      123.00        92.98
         Loss from operations..................     (109.00)      (48.33)
         Other  income (expense)...............       (4.50)        1.42
         Loss before income taxes..............     (113.50)      (46.91)
         Provision for income taxes............        0.00         0.00
         Net loss..............................     (113.50)      (46.91)

                                       7
<PAGE>


Quarter Ended March 31, 1996 Compared to Quarter Ended March 31, 1997

         Net sales for the quarter ended March 31, 1997, were $257,900  compared
to $203,800 in the prior year,  an increase of $54,100 or 27%.  The  increase in
sales is attributed to the Company's  development of  distributor  sales and the
increased retail sales from year end clearance  programs the company executed to
sell off the 1996 models in January 1997.

         Gross  profit  (loss).  Gross profit  decreased as a percentage  of net
sales,  from 45% to 14%.  The total gross profit  decreased  $54,900 or 60%. The
year end clearance in the 1st quarter 1997 and the subsequent price reduction of
the 1997 models is the primary  reason for the decrease.  The  transition to the
new 1997 model  resulted  in lower  production  volumes  and  associated  higher
initial production costs in the 1st quarter of 1997.

         Selling expenses in the quarter ended March 1997 were $92,800. This was
an increase of $6,100 or 7% from 1996 to 1997. As a percentage of sales, selling
expenses decreased from 43% of sales to 36% of sales. This was due to a decrease
in  marketing  to auto  dealerships  and an increase in direct  retail sales and
other dealer outlets as compared to the 1996 period.

         General and  administrative  expenses  for the quarter  ended March 31,
1997 were  $176,200.  This is an  increase  of $85,800  or 95% from  1996.  As a
percentage of sales,  general and  administrative  expense increased from 44% to
68% of net sales.  Expense  increases during the 1st quarter of 1997 as compared
to the 1st quarter of 1996 resulted from the expenses of the  implementation  of
computer systems, and increased accounting,  auditing and administration expense
to support the Company's public offering and the increase in sales activity.

         Research and development increased $36,600 or 295% from the 1st quarter
of 1996 as compared to the 1st quarter of 1997.  As a percentage of net sales it
increased  to 19% of sales in the 1st quarter of 1997 as compared to 6% of sales
in the 1st quarter of 1996. The expense  increase in the 1st quarter of 1997 was
related to the electric  scooter  products that will be introduced in the second
half of 1997.

         Other income (expense)  decreased  $14,400 or 497% from the 1st quarter
of 1996 to 1997. This decrease was due to interest expense  increasing $8,900 in
the first quarter of 1997 as compared to the first quarter of 1996.


Liquidity and Capital Resources

         In the first quarter of 1997 the Company had a cash deficit of $401,000
from operations as compared to a cash deficit of $80,000 in the first quarter of
1996.  In order to meet all of the  Company's  operating  expenses  the  Company
relied on the sales of common stock and issuing notes payable.

         In the first  quarter of 1997 the  Company  raised a total of  $547,100
from common stock sales and $30,000 from the issuance of notes  payable.  In the
first  quarter of 1996 the Company  raised  $51,900 from stock sales and $83,400
from the issuance of notes  payable.  The Company was cleared by the SEC to sell
public shares on November 29, 1996.  The funds  received from this direct public
offering in the first quarter of 1997 were utilized to pay down accounts payable
and accrued expenses and to pay the Company's operating expenses.

         At March 31,  1996 and 1997,  the  Company  had a  working  capital  of
$16,100 and $158,600  respectively.  As of March 31, 1997, the Company had total
current assets of $649,600,  including cash of $169,300  unrestricted,  accounts
receivable  of  $112,900,  inventories  of  $253,100,  and  prepaid  expenses of
$114,300.  The Company's current  liabilities as of March 31,1997 were $491,000,
including  accounts payable and accrued  expenses of $292,400,  notes payable of
$179,363  and $19,237 of current  maturity  of  long-term  debt and leases.  The
balance of notes  payable  issued in November and December of 1996 in the amount
of $144,000  had  preferential  repayment  rights of the public  stock  offering
proceeds. The notes are due in November and December of 1997. These note holders
were also granted a total of 37,800  warrants.  The proceeds from this placement
went  to  fund  increased  inventory  levels,   accounts  receivables,   capital
expenditures  and the Company's public stock offering  expenses.  The balance of
notes payable  $35,363,  were unsecured notes with an interest rate of 10%. This
note is due in December of 1997.

                                       8
<PAGE>

         The Company had net cash  provided by financing  activities of $135,200
for the Quarter  ended March 31, 1996,  and $444,100 for the quarter ended March
31, 1997. Net cash provided by financing  activities for the quarter ended March
31, 1996 was from notes payable proceeds of $58,400, a bank loan of $25,000, and
sale of common stock of $51,900.  Net cash provided by financing  activities for
the quarter  ended March 31,1997 was $30,000 from notes  payable,  $547,100 from
the sale of common stock, less $93,000 of repayments of notes payable, bank debt
and lease obligations.

         The bank loan with  Wells  Fargo  Bank,  (March  1996),  had an initial
principal  balance of $25,000 amortized over 2 years at an interest rate of 15%.
The note, with a balance of $14,337 as of March 31, 1997, will be paid off March
of 1998. The equipment lease is with AT&T Credit  Corporation,  (July 1996), and
had an initial  balance of $43,076  with  monthly  payments  of $1,186 for three
years.

         The Company's  primary  capital needs are to fund its growth  strategy,
which  includes  increasing  its net sales,  increasing  distribution  channels,
introducing new products,  improving  existing  product lines and development of
strong corporate infrastructure.

Recent Accounting Pronouncements

         During October 1995, the Financial  Accounting  Standards  Board issued
Statement No. 123,  "Accounting for Stock-Based  Compensation" ("SFAS No. 123"),
which  established  a fair  value-based  method of  accounting  for  stock-based
compensation  plans.  The Company is currently  following  the  requirements  of
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees."

Seasonality and Quarterly Results

         The Company's business is subject to seasonal influences similar to the
bike industry.  Sales volumes in the bicycle industry typically slow down during
the winter months, November to March, in the U.S.

Inflation

         The Company's  raw  materials are sourced from stable cost  competitive
industries.  As such,  the Company  does not foresee any  material  inflationary
trends for its raw material sources.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

         There were no material  proceedings pending in which the Registrant was
named as a party.

Item 2.  Changes in Securities

         There were no changes in rights of securities holders.

Item 3.  Defaults Upon Senior Securities

         There were no defaults upon senior securities.

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

         There were no matters submitted to the vote of security holders.

Item 5.  Other Information

         There were no major contracts signed during the period.

Item 6.  Exhibits and Reports on Form 8-K

         No reports on Form 8-K were filed during the quarter.

                                        9
<PAGE>
  

                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


   ZAP POWER SYSTEMS
-------------------------------
      (Registrant)


Date ______________________      ______________________________________________
                                 Gary Starr - Managing Director

Date ______________________      ______________________________________________
                                 James McGreen - President and Director

Date ______________________      ______________________________________________
                                 David Workman - Vice President of Operations,
                                 Chief  Financial Officer, and 
                                 Principal Accounting Officer


                                       11