================================================================================

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

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

                                   FORM 10-QSB

                  QUARTERLY REPORT PURSUANT SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                          -----------------------------
                  For the quarterly period ended March 31, 2002

                         Commission File Number 0-303000


                                       ZAP
                                       ---
                             (FORMERLY ZAPWORLD.COM)
                             (DEBTOR-IN-POSSESSION)
                 (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:
                                  Common Shares

            Check 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. Yes [X]  No [_]

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

             6,693,643 shares of common stock as of May 10, 2002.

            Transitional Small Business Disclosure Format       Yes[_]   No[X]
================================================================================
<PAGE>

Part I.  FINANCIAL INFORMATION
Item 1.  Financial Statements
         ZAP (FORMERELY ZAPWORLD.COM)
         (DEBTOR-IN-POSSESSION)
         CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
         (IN THOUSANDS)
<TABLE><CAPTION>
                                                                                 March 31,
                                                                                    2002
------------------------------------------------------------------------------------------
<S>                                                                               <C>
                                     ASSETS
CURRENT ASSETS

     Cash                                                                         $    499
     Accounts receivable, net of allowance for doubtful accounts of $723               382
     Inventories                                                                     1,254
     Prepaid expenses and other assets                                                 243
                                                                                  --------
                        Total current assets                                         2,378

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $706                        394

OTHER ASSETS
      Patents & Trademarks                                                             292
      Goodwill                                                                         100
      Deposits and other                                                               121
                                                                                  --------
               Total other assets                                                      513

                                                                                  --------
Total assets                                                                      $  3,285
                                                                                  ========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
     Accounts payable                                                             $     95
     Accrued liabilities and other expenses                                            171
     Current maturities of obligations under capital leases                             14
                                                                                  --------
               Total current liabilities                                               280

OTHER LIABILITIES
     Obligations under capital leases, less current maturities                          29
                                                                                  --------
               Total other liabilities                                                  29

LIABILITIES SUBJECT TO COMPROMISE
       Secured Debt                                                                    152
       Trade and miscellaneous claims                                                1,601
       Debt that may be converted to equity                                          3,060
                                                                                  --------
               Total liabilities subject to compromise                               4,813
                                                                                  --------

STOCKHOLDERS' DEFICIT
    Preferred stock, authorized 10,000 shares; 2  shares
    Issued and outstanding                                                           1,133
    Common stock, authorized 20,000 shares of
    no par value; issued and outstanding 6,068 shares                               16,616
    Accumulated deficit                                                            (19,586)
                                                                                  --------
               Total stockholders' deficit                                          (1,837)
                                                                                  --------
Total liabilities and stockholders' deficit                                       $  3,285
                                                                                  ========
</TABLE>
           See accompanying notes to consolidated financial statements

                                       2
<PAGE>


ZAP (FORMERLY ZAPWORLD.COM)
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE><CAPTION>
                                               THREE MONTHS ENDED MARCH 31,
                                                  2002              2001
                                                -------           -------
<S>                                             <C>               <C>
NET SALES                                       $   420           $ 2,013

COST OF GOODS SOLD                                  314             1,542
                                                -------           -------

GROSS PROFIT                                        106               471

OPERATING EXPENSES
     Selling                                         67               426
     General and administrative                     542             1,132
     Research and development                        17               219
                                                -------           -------
                                                    626             1,777
                                                -------           -------

LOSS FROM OPERATIONS BEFORE                        (520)           (1,306)
                                                -------           -------
REORGANIZATION ITEMS

OTHER INCOME (EXPENSE)
     Interest income (expense)                      (15)               22
     Other income                                    14                 0
                                                -------           -------
                                                     (1)               22
                                                -------           -------
NET LOSS BEFORE REORGANIZATION ITEMS               (521)           (1,284)

REORGANIZATION ITEMS:
     Professional fees                              (39)                0
                                                -------           -------
     NET LOSS                                      (560)           (1,284)
                                                =======           =======
Net loss attributable to common shares

      Net loss                                     (560)           (1,284)
      Preferred Dividend                            (24)              (57)
                                                -------           -------
                                                $  (584)          $(1,341)
                                                =======           =======
NET LOSS PER COMMON SHARE
BASIC AND DILUTED                               $ (0.09)          $ (0.22)
                                                =======           =======

WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES OUTSTANDING
   BASIC AND DILUTED                              6,429             5,962
                                                =======           =======
</TABLE>

See accompany notes to consolidated financial statements

                                       3
<PAGE>

ZAP(FORMERLY ZAPWORLD .COM)
(DEBTOR-IN-POSSESSION)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)

<TABLE><CAPTION>
                                                                        THREE MONTHS ENDED MARCH 31,
                                                                           2002              2001
                                                                         -------           -------
<S>                                                                      <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net loss before reorganization items                                 $  (521)          $(1,284)
    Adjustments to reconcile net loss to net cash used for
    operating activities:
      Depreciation and amortization                                           56               169
      Reorganization items, net                                              (39)             --
      Allowance for doubtful accounts                                        190
    Amortization of the fair market value of warrants                       --                  14
    Changes in:                                                             --
      Receivables                                                             14              (109)
      Inventories                                                            149              (704)
      Deposits                                                               (11)             --
      Prepaid expenses and other assets                                      (53)              317
      Accounts payable                                                        24               245
      Accrued liabilities and customer deposits                             (108)             (613)
                                                                         -------           -------
                      Net cash used in operating activities                 (299)           (1,965)
                                                                         -------           -------
CASH FLOWS FROM INVESTING ACTIVITES
    Purchase of equipment                                                     (5)              (46)
    Purchase of Patents and intangibles                                     --                 (19)
    Investment in joint venture                                              (50)             --
                                                                         -------           -------
                      Net cash used for investing activities                 (55)              (65)
                                                                         -------           -------
CASH FLOWS FROM FINANCING ACTIVITIES
    Sale of common stock, net of stock offering costs                         15              --
    Principal repayments on long-term debt                                  --                 (22)
    Payments on obligations under capital leases                              (4)               44
                                                                         -------           -------
                      Net cash provided by financing activities               11                22
                                                                         -------           -------

NET DECREASE IN CASH                                                        (343)           (2,008)

CASH, beginning of period                                                    842             3,543
                                                                         -------           -------

CASH, end of period                                                      $   499           $ 1,535
                                                                         =======           =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the quarter for interest                                $    15           $    15
  Non-cash  investing and financing activities
    Debt issued to repurchase common stock                               $ 1,500           $  --
</TABLE>

See accompanying notes to consolidated financial statements.

                                       4
<PAGE>

ZAP (FORMERLY ZAPWORLD.COM)
(DEBTOR-IN-POSSESSION)

NOTES TO THE INTERIM UNAUDITED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

The financial statements included in this Form 10-QSB have been prepared by us,
without audit. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted,
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, 2001.

The financial statements presented herein, for the three months ended March 31,
2002 and 2001 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.

CRITICAL ACCOUNTING POLICIES

The Company's most critical accounting policies mainly relate to the going
concern status assumed for the Company and the related use of estimates in the
valuation of certain assets and liabilities. In particular, at March 31, 2002
intangibles, inventories, receivables and other assets valuations are entirely
dependent on the Company continuing to operate as a going concern. The value of
these assets on a liquidation basis would likely be significantly less than
their currently recorded net book values.

CASH

As of March 31, 2002, $151,589 was held in a restrictive bank account and set
aside for letters of credit to purchase inventory.

BANKRUPCY FILING AND GOING CONCERN ASSUMPTION

On March 1, 2002 the Company filed a voluntary petition for reorganization under
Chapter 11 of the U. S. Bankruptcy Code with the U.S. Bankruptcy Court. The
Company experienced a dramatic reduction in sales volume and incurred a
significant net loss during the year ended December 31, 2001. The Company also
experienced a significant loss in 2000. These losses and other factors resulted
in most of the Company's available cash resources being used to support
operating activities. In addition, the Company has assumed significant
commitments and obligations as described in the financial statements. These
factors, among others, raise substantial doubt about the Company's ability to
continue as a going concern.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

On March 1, 2002 the Company filed a voluntary petition for reorganization under
Chapter 11 of the U. S. Bankruptcy Code with the U.S. Bankruptcy Court. The
first impact of the Chapter 11 filing was to stay certain legal proceedings that
had been instituted against the Company. Management also believes that the
Chapter 11 filing will allow the Company to reorganize and rethink its
direction, and to seek debtor-in-possession financing.

                                        5
<PAGE>

On March 15, 2002, we announced the signing of memorandums of understanding to
acquire three privately owned companies involved in alternate fueled vehicles,
automotive transfer and sales and distribution businesses. On March 28, 2002, we
announce that we have discontinued negotiations with Daybreak Auto and that we
signed Agreements to Merge with RAP and Voltage Vehicles. ZAP's management feels
that the remaining two planned mergers will enhance ZAP's financial base and
provide access to the two companies' services and relationships. Both merger
agreements with ZAP are contingent upon ZAP's Plan of Reorganization being
approved by its creditors and shareholders and confirmed by the U.S. Bankruptcy
Court. We are in the process of preparing ZAP's Plan of Reorganization and
Disclosure Statement that will be mailed to all stakeholders upon approval by
the Bankruptcy Court.

The Risks Related to Our Business

We have a history of losses, and we might not achieve or maintain profitability.
Our continuation as a going concern is directly dependent upon our ability to
increase sales and receive additional financing. We will require substantial
additional capital in the short term to remain a going concern. A substantial
portion of our growth in the past three years has come through acquisitions and
we may not be able to identify, complete and integrate future acquisitions,
including those with RAP and Voltage Vehicles which could adversely affect our
future growth and ability to receive approval of our Plan of Reorganization.

Currently, holders of our Series A-1 and Series A-2 Convertible Preferred Stock
have liquidation rights that are senior to the liquidation rights of our common
stockholders. Common stockholders will likely experience substantial dilution
when the holders of the Series A-1 and Series A-2 Convertible Preferred Stock
convert their shares into Common Stock. There is no minimum conversion price at
which the Series A-1 and Series A-2 Preferred Shareholders may convert. Upon
advise of counsel, ZAP has not honored any recent conversion requests since we
believe that these contracts are executory contracts and will be rejected in the
plan of reorganization. The Company also believes that the preferred stock and
any dividends, or fees or penalties allowed will be part of the consideration of
the reorganization plan.

Our stock has been delisted by the NASDAQ SmallCap Market. The result of
delisting from the Nasdaq National Market could be a reduction in the liquidity
of any investment in our common stock and an adverse effect on the trading price
of our common stock. Delisting could also reduce the ability of holders of our
common stock to purchase or sell shares as quickly and as inexpensively as they
have done historically. This lack of liquidity would make it more difficult for
the company to raise capital in the future.

Other risks include, but are not limited to, the following:

We face intense competition which could cause us to lose market share. Changes
in the market for electric vehicles could cause our products to become obsolete
or lose popularity. We cannot assure you that growth in the electric vehicle
industry will continue and our business may suffer if growth in the electric
vehicle industry ceases or if we are unable to maintain the pace of industry
demands. We may be unable to keep up with changes in electric vehicle technology
and, as a result, may suffer a decline in our competitive position. The failure
of certain key suppliers to provide us with components could have a severe and
negative impact upon our business. Product liability or other claims could have
a material adverse effect on our business. We may not be able to protect our
internet address. Our success is heavily dependent on protecting our
intellectual property rights

The net loss per common share is based on the weighted average number of common
shares outstanding in each period. Potential dilutive securities associated with
stock options, warrants and conversion of preferred stock have been excluded
from the weighted average shares outstanding since the effect of these
securities would be anti-dilutive.

                                        6
<PAGE>

(2) PRINCIPLES OF CONSOLIDATION-The accounts of the Company and its consolidated
subsidiaries are included in the consolidated financial statements after
elimination of significant inter-company accounts and transactions.

(3) COMMON STOCK
Our Common Stock has been listed on the NASDAQ SmallCap Market under the symbol
"ZAPP" since May 22, 2000. On February 14, 2002, the Company received a NASDAQ
staff determination notice indicating that the Company's common stock would be
subject to delisting from the NASDAQ National Market System for failure to
comply with certain Marketplace Rules. These rules require that the Company's
common stock maintain a minimum bid price of $1.00. Under this rule, the Company
has until August 13, 2002, to comply. If the Company meets certain listing
criteria it may be granted an additional 180 day grace period to demonstrate
compliance. On March 1, 2002, ZAP was suspended from trading on the NASDAQ
SmallCap Market due to our Chapter 11 Bankruptcy filing. On March 20, 2002, we
resumed trading under the symbol "ZAPPQ". On April 29, 2002, the NASDAQ Stock
Market notified ZAP that its shares of common stock would be delisted from the
NASDAQ Small Cap Market effective with the open of business on April 30, 2002.
As grounds for its decision was cited uncertainty over the Company's future in
light of its current chapter 11 proceedings. In particular, the panel noted that
the timing and the completion of the Company's plan are uncertain. Because ZAP
is currently subject to chapter 11proceedings, the company's shares are not
automatically eligible for quotation on the OTC Bulletin Board. The Company is
considering its alternatives, such as applying for approval for Bulletin Board
trading or quotation in the "pink sheets" to maintain a market for its common
stock.

On June 28, 2001, we entered into a settlement agreement to avoid threatened
litigation whereby we agreed to repurchase 50% of the 1,250,357shares of Common
Stock held by Ridgewood ZAP, LLC, (Ridgewood) one of several funds managed by
two former members of our board of directors. The terms of the agreement require
us to pay $1.5 million in the form of a 6% interest-bearing Promissory Note,
interest payable semi-annually with principal due in three installments, the
first of which is for $500,000 and is due on June 27, 2002, the second of
$500,000 is due six months later, and the third is due six months after the
second.

The remaining one-half of Ridgewood stock was to be purchased by certain holders
of our Series A-1 and Series A-2 Preferred Stock in $100,000 monthly
installments (subject to certain adjustments) starting February 1, 2002 with the
purchase price per share to be 91% of the lowest closing bid price for the prior
twenty-day trading period.

To the extent the amount paid by the Preferred Shareholders for the Ridgewood
stock is less than $1.5 million, the difference is to be added to the Promissory
Note and that amount is to be paid by the Company at the rate of $100,000 per
month. Thus, the Company is contingently liable for any short-fall in the
purchase price paid by the Preferred Shareholders. In the event of a default,
Ridgewood may convert the remaining balance of the Promissory Note into shares
of Common Stock at a price one-third of the then market price. Since no
purchases have been made by the preferred shareholders through March 31, 2002
nor are any anticipated to be made, the Company has recorded the additional $1.5
million as its obligation and is included in liabilities subject to compromise.
This transaction has been treated as a stock redemption by reducing common stock
$1.5 million and 626,317 shares.

In January, 2002 the Company sold 72,000 shares of common stock from which it
received net proceeds of $14,400.

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"). We desire to avail
ourselves of certain "safe harbor" provisions of the Act and are therefore
including this special note to enable us 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,

                                        7
<PAGE>

reports to our stockholders and other publicly available statements issued or
released by us involve known and unknown risks, uncertainties, and other factors
which could cause our 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 our best estimates based upon
current conditions and the most recent results of operations.

OVERVIEW

On March 1, 2002, the Company filed a voluntary petition for relief under
Chapter 11 (the "Chapter 11 Filing") of the United States Bankruptcy Code (the
"Code") in the United States Bankruptcy Court for the Northern District of
California (the "Bankruptcy Court"). The Company is operating as
debtor-in-possession under the Code, which protects it from its creditors
pending reorganization under the jurisdiction of the Bankruptcy Court. As
debtor-in-possession, the Company is authorized to operate its business but may
not engage in transactions outside the ordinary course of business without
approval of the Bankruptcy Court.

As part of the Chapter 11 reorganization process, the Company has attempted to
notify all known or potential creditors of the Chapter 11 Filing for the purpose
of identifying all pre-petition claims against the Company. Substantially all of
the Company's liabilities ("pre-petition liabilities") are subject to settlement
under a plan of reorganization. Generally, legal actions to enforce or otherwise
effect repayment of all pre-petition liabilities as well as all pending
litigation against the Company are stayed while the Company continues to operate
its business as debtor-in-possession. The Company can only pay pre-petition
obligations with the approval of the Bankruptcy Court. Schedules have been filed
by the Company with the Bankruptcy Court setting forth its assets and
liabilities as of the filing date as reflected in the Company's accounting
records. Differences between amounts reflected in such schedules and claims
filed by creditors will be investigated and either mutually resolved or
subsequently adjudicated before the Bankruptcy Court. The ultimate amount and
settlement terms for such liabilities are subject to a plan of reorganization.
There can be no assurance that any reorganization plan that is effected will be
successful. Under the Code, the Company may elect to assume or reject real
property leases, employment contracts, personal property leases, service
contracts and other executory pre-petition contracts, subject to the review of
the Bankruptcy Court. Parties affected by any such rejections may file
pre-petition claims with the Bankruptcy Court in accordance with bankruptcy
procedures. The Company cannot presently determine or reasonably estimate the
ultimate liability that may result from rejecting leases or from filing of
claims for any rejected contracts, and no provisions have been made for the
majority of these items.

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 2002, the Company continued to enhance and broaden its
electric vehicle product line.

The Company also manufactures several electric motor systems. One of these 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 a 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(R), which is
manufactured by the Company, using parts manufactured by various subcontractors.

The Company manufactures several electric motor vehicle kits. The batteries used
in these kits 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 $373,800 backlog of orders and purchase contracts in hand for
electric vehicles as of May 10, 2002. The Company expects to fill these orders
within the current fiscal year.

                                        8
<PAGE>

Some of the significant events for the Company that occurred during the first
quarter of 2002 were as follows

    (1)     ZAP signed a distribution agreement in January for the AirBoard(R)
            Personal Hovercraft. The agreement is with Australia's Arbortech
            Industries for the right to distribute its personal hovercraft
            technology in North America. Called AirBoard(R) it is similar to
            hovercraft technology seen in film and used by the military, but is
            designed for use by a single rider.
    (2)     On March 1, 2002, ZAP filed a voluntary petition for reorganization
            under Chapter 11 of the U.S. Bankruptcy Code.
    (3)     In March, ZAP announced the first shipments of a new electric
            scooter called the ZAPPY(R) Turbo. The new ZAPPY(R) Turbo includes
            several upgrades, including a "turbo" performance mode that powers
            it to speeds of up to 18 MPH. The new scooter is similar to the
            classic design but has incorporated innovative in power-control
            electronics to respond to the increasing demand for hi-performance,
            portable transportation.
    (4)     ZAP signed agreements to merge with two privately owned companies
            that are involved in alternate fuel vehicles, automotive sales and
            distribution. Both of the mergers with ZAP will be an integral part
            of, and contingent on, ZAP's Plan of Reorganization being approved
            by the U.S. Bankruptcy Court.
    (5)     ZAP has been granted a design patent for its new electric water
            scooter called SWIMMY(R). This electric submersible marine vehicle
            is designed as a toy for kids to help them swim through the water,
            providing a boost up to 2.5 MPH along the surface or underneath it.
    (6)     ZAP submitted a Disclosure Statement and Plan of Reorganization with
            the Santa Rosa division of the United States Bankruptcy Court,
            Northern District of California. The Disclosure Statement needs to
            be approved by the Court prior to the Plan's submission to the
            creditors and shareholders for vote.

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,
                                                          2002       2001
                                                          ----       ----

  STATEMENTS OF OPERATIONS DATA:
    Net sales..........................................  100.0%     100.0%
    Cost of sales......................................  (74.7)     (76.7)
    Gross profit.......................................   25.2       23.3
    Operating expenses.................................  149.0       88.3
    Loss from operations before reorganization items... (123.8)     (65.0)
    Other income ......................................      -        1.1
    Net loss before reorganization items............... (123.8)     (63.9)
    Reorganization items-Professional fees.............   (9.3)         -
    Net loss........................................... (133.1)     (63.9)

QUARTER ENDED MARCH 31, 2002 COMPARED TO QUARTER ENDED MARCH 31, 2001

NET SALES for the quarter ended March 31, 2002, were $420,000 compared to $2
million in the prior year. The major decrease was in foreign sales of
approximately $1.2 million which was primarily due to the default of one major
distributor on their sales contract in second quarter of 2001. The Company's
filing of Chapter 11 Bankruptcy also adversely affected our sales during the
current quarter.

GROSS PROFIT decreased from $471,000 in 2001 to $106,000 in 2002 due to the
lower sales volume. However, as a percentage of sales the gross profit actually
increased from 23% in 2001 to 25% in 2002. The increase was due to slightly
lower costs on the ZAPPY(R) now made in Taiwan and to product mix.

                                        9
<PAGE>

SELLING AND MARKETING expenses in the quarter ended March 31, 2002 were $67,000
as compared to $426,000 for the quarter ended March 31, 2001. As a percentage of
sales, selling and marketing expenses decreased from 21% to 16% of net sales.
The primary reason for the decrease was less spending in all areas of sales and
marketing together with significantly less personnel.

GENERAL AND ADMINISTRATIVE expenses for the quarter ended March 31, 2002 were
$542,000 as compared to $1.1 million for the quarter ended March 31, 2001. This
is a decrease of $590,000 or 52%. As a percentage of sales, general and
administrative expense increased from 56% to 129% of net sales in 2002. The
major factor in the increase as a percentage of sales was the recording of
additional bad debt expense for problem customers. The dollar decrease in amount
of expenses was due to less salaries and benefits, fewer professional fees, no
amortization of goodwill in accordance with new accounting guidelines, and
spending cut-backs.

RESEARCH AND DEVELOPMENT decreased $202,000 or 92% in the 1st quarter of 2002
as compared to the 1st quarter of 2001. As a percentage of net sales it
decreased to 4% of sales in the 1st quarter of 2002 as compared to 11% of sales
in the 1st quarter of 2001. Expense decreases in the first quarter of 2002 as
compared to the first quarter of 2001 were the result of less spending.

INTEREST INCOME (EXPENSE) decreased from income of $22,000 in 2001 to an expense
of $15,000 in 2002. The decrease was due to less interest income due to lower
cash investment balances.

OTHER INCOME (EXPENSE) increased to $14,000 as the result of reimbursement of
expenses from a government grant.

REORGANIZATION ITEMS- The increase in reorganization items was due to legal
expenses incurred for the reorganization.

LIQUIDITY AND CAPITAL RESOURCES
In the first quarter of 2002 net cash used by the Company for operating
activities was $ 299,000. In the first quarter of 2001, the Company used cash
for operations of $1.9 million. Cash used in the first quarter of 2002 was
comprised of the net loss before reorganization items incurred for the quarter
of $521,000 offset by net non-cash expenses of $207,000 and the net change in
operating assets and liabilities resulting in providing cash of $15,000. Cash
used in operations in the first quarter of 2001 was comprised of the net loss
incurred for the quarter of $1.3 million, offset by net non-cash expenses of
$183,000, and the net change in operating assets and liabilities resulting in a
further use of cash of $864,000.

Investing activities used cash of $55,000 in the first quarter of 2002 and used
$65,000 during the first quarter ended March 31, 2001. The uses of cash were for
the purchase of equipment and patents.

Financing activities provided cash of $11,000 and $22,000 during the first
quarters ended March 31, 2002 and 2001, respectively.

At March 31, 2002 the Company had cash of $499,000 compared to $1.5 million at
March 31, 2001. At March 31, 2002, the Company had working capital of $2
million, as compared to working capital of $5.8 million at March 31, 2001. The
Company, at present, does not have a credit facility in place with a bank or
other financial institution.

We may not be able to meet our future cash requirements for the rest of the
current fiscal year unless new financing is obtained. Toward this end, we have
held discussions with various parties, but no formal agreements have been
reached to date. Moreover, we will require substantial capital to execute our
Plan of Reorganization and the Plan of Reorganization must be approved in the
short term to remain a going concern. We will need short term outside
investments on a continuing basis to finance our current operations. Our
revenues for the foreseeable future may not be sufficient to attain
profitability. We expect to continue to experience losses for the near future.

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In order to finance our working capital requirements we are currently seeking
both debt and equity investments with several investors, but there can be no
assurances that we will obtain this capital or that it will be obtained on terms
favorable to us. If we do not obtain short term financing, or have our Plan of
Reorganization quickly approved, we may not be able to continue as a going
concern and the Company may have to convert to a Chapter 7 bankruptcy. We do not
have a bank line of credit and there can be no assurance that any required or
desired financing will be available through bank borrowings, debt, or equity
offerings, or otherwise, on acceptable terms. If future financing requirements
are satisfied through the issuance of equity securities, investors may
experience significant dilution in the net book value per share of common stock
and there is no guarantee that a market will exist for the sale of the Company's
shares.

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

SEASONALITY AND QUARTERLY RESULTS
The Company's business is subject to seasonal influences. Sales volumes in this
industry typically slow down during the winter months, November to March in the
U.S. The Company is marketing worldwide and is not impacted by U.S. seasonality.

INFLATION
Our raw materials are sourced from stable, cost-competitive industries. As such,
we do not foresee any material inflationary trends for our raw material sources.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings
From time to time, the Company is subject to legal proceedings and claims in the
ordinary course of business, including employment-related and trade related
claims.

On March 1, 2002, the Company filed a voluntary petition for reorganization
under Chapter 11 of the U. S. Bankruptcy Code with the U. S. Bankruptcy Court,
Northern District, in Santa Rosa, California. As a result of the filing of
voluntary petitions under Chapter 11 of the United States Bankruptcy Code, it is
anticipated that claims will be asserted in excess of those amounts set forth in
the Company's books and records, and that the Company will dispute and file
objections to certain of such claims. The Company's management cannot express
any opinion as to the likelihood of an outcome respecting any claims asserted or
to be asserted in the Chapter 11 cases, including claims resulting from the
assumption or rejection of leases and executory contracts and various other
claims.

Generally, legal actions to enforce or otherwise effect repayment of all
prepetition liabilities as well as all pending litigation against the Company
are stayed while the Company continues to operate its business as
debtor-in-possession.

In light of the Chapter 11 filing the following three lawsuits have been stayed:

On September 28, 2001, we were notified by the Lashman Family Partnership, which
holds a security interest on the intellectual property rights to ZAP products
selling under the name Sea Scooter, that we are in default on our Promissory
Note of $158,000 issued to them in connection with our acquisition of Aquatic
Propulsion Technologies, Inc. We were further notified that the Lashman Family
Partnership has foreclosed on the patents and, henceforth, we will be infringing
the patents should we continue to manufacture and market the Sea Scooter brand.
We dispute the accuracy of the default, and we are looking for a buyer of the
Promissory Note and the intellectual assets.

On September 6, 2001, we were served with a complaint from Hampel Technologies,
Inc. for a collection in the amount of $49,324.16. We filed a timely answer
denying the allegations set forth therein with the County of Sonoma Superior
Court. This action has been stayed as a result of the bankruptcy filing.

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On August 8, 2001, we were served with a complaint from Northern California
Collection Service Inc. for a collection in the amount of $63,000. We filed an
answer offering a general denial to each allegation on September 10, 2001 with
the County of Sacramento Superior Court. This action has been stayed as a result
of the bankruptcy filing.

The Company has filed a lawsuit on March 8, 2002 against International Service
Group in the Superior Court of the State of California County of San Mateo,
Northern Branch. The compliant is for breach of contract and negligence over the
theft of electric scooters transferred to their custody.

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

        On March 1, 2002, the Company issued a Form 8-K to report the filing of
        a voluntary petition for reorganization under Chapter 11 of the U.S.
        Bankruptcy Code with the U. S. Bankruptcy Court, Northern District, in
        Santa Rosa, California. After the Quarter ended March 31, 2002 the
        Company also issued the following two Form 8-K's: On April 15, 2002 the
        Company filed its Disclosure Statement and Proposed Plan of
        Reorganization which is subject to approval of the U.S. Bankruptcy court
        prior to submission to the creditors and shareholders for vote and on
        April 29, 2002 the company also filed a Form 8-K to report that it
        changed their independent auditors for the year ended December 31, 2002
        from Grant Thornton LLP to Odenberg, Ullakko, Muranishi & Co. LLP.

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                                   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
--------------------------
      (Registrant)


SIGNATURE                            TITLE                         DATE
---------                            -----                         ----


/s/ Gary Starr                       Director / CEO                May 10, 2002
--------------------------


/s/ William R. Hartman               CFO                           May 10, 2002
--------------------------











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