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                                  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, 1999

                                ZAP POWER SYSTEMS
                 (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

         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.

             3,679,547 shares of common stock as of April 30, 1999.

           Transitional Small Business Disclosure Format Yes[ ] No[x]

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<PAGE>

Part I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

ZAP POWER SYSTEMS
CONDENSED BALANCE SHEET

                                                                      March 31,
                                                                        1999
--------------------------------------------------------------------------------
                         ASSETS
CURRENT ASSETS
     Cash                                                           $ 1,963,900
     Receivables                                                        367,600
     Inventories                                                        654,400
     Prepaid expenses and other assets                                  213,400
                                                                    -----------
         Total current assets                                         3,199,300

PROPERTY AND EQUIPMENT                                                  197,500
                                                                    -----------

OTHER ASSETS
      Intangibles, net of accumulated amortization
          of $10,100                                                     92,900
     Deposits                                                            11,900
                                                                    -----------
               Total other assets                                       104,800
                                                                    -----------

          Total assets                                              $ 3,501,600
                                                                    ===========

          LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                                               $   402,100
     Accrued liabilities and other expenses                             131,100
     Customer deposits                                                   36,900
     Notes payable                                                      361,900
     Current maturities of long-term debt                                 8,700
     Current maturities of obligations under capital leases               5,800
                                                                    -----------
          Total current liabilities                                     946,500
                                                                    -----------

OTHER LIABILITIES
     Obligations under capital leases, less current maturities              600
     Long-Term Debt, less current maturities                             24,800
                                                                    -----------
                 Total other liabilities                                 25,400
                                                                    -----------

STOCKHOLDERS' EQUITY
     Common stock, no par value; 10,000,000 shares
             authorized, 3,493,138 shares issued and
             outstanding                                              6,008,100
     Accumulated deficit                                             (3,478,400)
                                                                    -----------
                Total stockholders' equity                            2,529,700
                                                                    ===========

Total liabilities and stockholders' equity                          $ 3,501,600
                                                                    ===========


The accompanying notes are an integral part of these financial statements



                                       2
<PAGE>


ZAP POWER SYSTEMS
CONDENSED STATEMENTS OF OPERATIONS


                                                    Three months ended March 31,
                                                        1999            1998
--------------------------------------------------------------------------------
NET SALES                                           $ 1,164,100     $   461,200

COST OF GOODS SOLD                                      756,100         269,600
                                                    -----------     -----------

GROSS PROFIT                                            408,000         191,600
                                                    -----------     -----------

OPERATING EXPENSES
     Selling                                            200,100         159,000
     General and administrative                         218,200         162,500
     Research and development                            47,600          32,300
                                                    -----------     -----------
                                                        465,900         353,800
                                                    -----------     -----------

LOSS FROM OPERATIONS                                    (57,900)       (162,200)
                                                    -----------     -----------

OTHER INCOME (EXPENSE)
     Interest expense                                   (74,700)         (2,700)

     Other                                                1,000           4,500
                                                    -----------     -----------
                                                        (73,700)          1,800
                                                    -----------     -----------

NET LOSS                                            $  (131,600)    $  (160,400)
                                                    ===========     ===========

NET LOSS PER COMMON SHARE, BASIC AND DILUTED        $     (0.05)    $     (0.06)
                                                    ===========     ===========

WEIGHTED AVERAGE OF COMMON
      SHARES OUTSTANDING                              2,833,180       2,558,000
                                                    ===========     ===========



The accompanying notes are an integral part of these financial statements

                                       3
<PAGE>


<TABLE>
ZAP POWER SYSTEMS
CONDENSED STATEMENTS OF CASH FLOWS
<CAPTION>

                                                                                                   Three months ended March 31,
                                                                                                     1999                   1998
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                             <C>                     <C>         
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                                                                   $  (131,600)            $  (160,400)
     Adjustments to reconcile net loss to net cash
          used by operating activities
         Depreciation and amortization                                                               24,100                  20,600
         Allowance for doubtful accounts
         Issuance of common stock for services rendered                                             108,400                  74,100
                   Changes in:
         Receivables                                                                                (83,800)                (37,400)
         Inventories                                                                                (20,600)                (46,200)
         Prepaid expenses                                                                          (115,600)                (36,300)
         Deposits                                                                                                           (74,100)
         Accounts payable                                                                           112,600                 (84,200)
         Accrued liabilities and customer deposits                                                  (27,500)                (54,500)
                                                                                                -----------             -----------
                  Net cash used by operating activities                                            (134,000)               (398,400)
                                                                                                -----------             -----------

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchases of equipment                                                                         (42,200)                (47,400)
     Patent Costs Capitalized                                                                       (15,200)                      0
                                                                                                -----------             -----------
         Net cash used by investing activities                                                      (57,400)                (47,400)
                                                                                                -----------             -----------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from loans payable                                                                     19,500                  20,000
     Sale of common stock, net of stock offering costs                                            1,955,300                 126,400
     Principal repayments on long-term debt                                                          (2,300)                 (4,700)
     Payments on obligations under capital leases                                                    (4,500)                 (3,800)
     Principal repayments on note payable                                                          (288,000)                (12,500)
                                                                                                -----------             -----------
                  Net cash provided by financing activities                                       1,680,000                 125,400
                                                                                                -----------             -----------

NET INCREASE/(DECREASE) IN CASH                                                                   1,488,600                (320,400)

CASH, beginning of period                                                                           475,300                 690,400
                                                                                                -----------             -----------

CASH, end of period                                                                             $ 1,963,900             $   370,000
                                                                                                ===========             ===========

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

                                                            4
<PAGE>

<TABLE>
<CAPTION>
                                                                                                     1999                   1998
------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                             <C>                          <C>
Supplemental cash flow information:

Non-cash investing and financing activities:
     Conversion of notes payable and accrued interest into common stock                         $     212,000                     0
     Stock issued for current and future services                                                     108,400                74,100


</TABLE>

                                       5
<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, 1998.

The financial statements presented herein as of March 31, 1999 and for the three
months ended March 31, 1999 and 1998 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 securities would be anti-dilutive.

(2) -  RECEIVABLES

                                                                  March 31, 1999
                                                                  --------------
Trade accounts receivable                                          $    402,600
Less allowance for doubtful accounts                                    (35,000)
                                                                   ------------
                                                                   $    367,600
                                                                   ============

(3) - INVENTORIES

                                                                  March 31, 1999
                                                                  --------------
Raw materials                                                      $   419,600
Work-in-process                                                        136,000
Finished goods                                                          98,800
                                                                   -----------
                                                                   $   654,400
                                                                   ===========

(4) - PROPERTY AND EQUIPMENT

                                                                  March 31, 1999
                                                                  --------------
Demonstration items                                                 $    89,600
Machinery and equipment                                                  85,400
Equipment under capital leases                                           45,900
Office furniture and fixtures                                            39,600
Computers                                                                46,000
Leasehold improvements                                                   32,700
Vehicles                                                                 77,800
                                                                    -----------
                                                                        417,000
Less accumulated depreciation and amortization                         (219,500)
                                                                    -----------
                                                                    $   197,500
                                                                    ===========


                                        6
<PAGE>


(5) - NOTES PAYABLE

                                                                  March 31, 1999
                                                                  --------------
Notes to stockholders, with interest at 10%; interest and
     principal due when the notes mature in December 1999.
     The note holders have been issued warrants to purchase,
     in the aggregate, 21,800 shares of common stock at
     $5.25 per share through October 1999.                             $ 92,800


Convertible secured promissory notes, with interest at 12%,
     principal and interest is due when the notes mature in
     March 1999.                                                        300,000

     Less fair value of unamortized cost of warrants issued
     in connection with the debt.                                       (30,900)
                                                                     ----------

                                                                     $  361,900
                                                                     ==========

The above  convertible  notes due in March 1999, were paid or converted to stock
subsequent to March 31, 1999.

(6) - COMMON STOCK

The Company's  Common Stock is traded on the OTC Bulletin  Board under the stock
symbol  "ZAPP".  In January  1999,  the Company  closed its second direct public
offering.  Prior to the  completion,  the company  sold 400 shares and  realized
gross proceeds of $2,400. Additionally in 1999, the company 1) issued 268 shares
in payment  for current  and future  services at a price of $6.00 per share,  2)
rescinded 1,785 shares at a price of $6.00 per share, and 3) realized $18,000 in
proceeds from the exercise of stock options and issued 45,000 shares.

On March 30, 1999,  ZAP completed a private  placement of 678,808  shares of its
Common  Stock at a price  of $3.02  per  share  and  realized  net  proceeds  of
$1,785,000 which includes additional  underwriting fees and expenses of $157,500
paid in the second  quarter of 1999. The Company issued 35,596 shares in partial
payment for the services  associated with acquiring the noted equity  financing.
In addition,  the Company  converted  $212,000 of its remaining debt into equity
and issued 70,199 common shares.

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 45% kits, 20% electric bicycles, and 35% electric scooters. Dollar
sales have been 35% kits, 30% electric bicycles, and 35% electric scooters.


                                        7
<PAGE>

         The Company manufactures several electric motor kits that have up to 62
unique parts. 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 using one  company  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 Company has a contractual relationship with
Smith & Wesson who  provides  the Company  with Law  Enforcement  Bicycles.  The
Company  has  agreed  to  purchase  at least 250  bikes  from  Smith & Wesson in
exchange for specific exclusive distribution and pricing rights. The Company has
no other contractual agreements with any of its other vendors.

     The Company as of March 31, 1999 had a $544,800 sales backlog. The company
expects to fill these orders within the next 45 days.

     The Company's  growth  strategy is to increase net sales by augmenting  its
marketing  and sales force,  increasing  distribution  channels  through  retail
organizations and wholesale distributors both domestically and overseas, as well
as setting up company 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 products
so that it is the low cost leader in the  industry.  Product  improvements  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,
                                                      1999             1998
                                                   ----------    -------------

     Statements of Income Data:
         Net sales.............................      100.0%          100.0%
         Cost of sales.........................       65.0            58.5
         Gross profit (Loss)...................       35.0            41.5
         Operating  expenses...................       40.0            76.7
         Loss from operations..................       (5.0)          (35.2)
         Other  income (expense)...............       (6.3)            0.4
         Loss before income taxes..............      (11.3)          (34.8)
         Provision for income taxes............        0.0             0.0
         Net loss..............................      (11.3)          (34.8)

Quarter Ended March 31, 1999 Compared to Quarter Ended March 31, 1998

     Net sales for the quarter ended March 31, 1999, were $1,164,100 compared to
$461,200 in the prior year,  an  increase of $702,900 or 152%.  The  increase in
sales in 1999 over the same period in 1998 was primarily due to the sales of the
ZAPPY(TM) scooter that accounted for $780,000 or 67% of total sales. The product
was introduced to the market at the end of the first quarter of 1998 and totaled
$9,600 in sales for that period.

     Gross  profit.  Gross profit  decreased as a percentage of net sales to 35%
from 42%. The total gross  profit  increased  $216,400 or 113%.  The increase in
gross profit dollars can be attributed to gross profits generated from the sales
of the  ZAPPY(TM)  scooter.  The  decrease  in gross  margin  percentage  can be
attributed to volume  discounts given to large retailers in the first quarter of
1999 that were not as prevalent in the first quarter of 1998.

     Selling  expenses  in the quarter  ended  March 31,  1999 were  $200,100 as
compared to $159,000 for the quarter ended March 31, 1998.  This was an increase
of $41,100 or 26% from 1998 to 1999. As a percentage of sales,  selling expenses
decreased  from 34% of sales to 17% of sales.  The increase in selling  expenses
can primarily be attributed  to  commissions  paid for services tied directly to
the sales of product to a large dealer.



                                       8
<PAGE>

     General and  administrative  expenses for the quarter  ended March 31, 1999
were $218,200.  This is an increase of $55,700 or 34% from 1998. As a percentage
of sales,  general and  administrative  expense decreased to 19% from 35% of net
sales.  Expense  increases during the 1st quarter of 1999 as compared to the 1st
quarter of 1998  resulted  from  increased  personnel  needs,  updated  computer
resources, and $30,000 in legal costs relating to franchising  opportunities and
equity financing.

     Research and development  increased  $15,300 or 47% from the 1st quarter of
1998 as  compared to the 1st quarter of 1999.  As a  percentage  of net sales it
decreased  to 4% of sales in the 1st  quarter of 1999 as compared to 7% of sales
in the 1st quarter of 1998.  Expense  increases in the first  quarter of 1999 as
compared  to the first  quarter of 1998 were the result of  increased  personnel
needs to assist in the development of new products.

     Other income  (expense).  Interest expense  increased to $74,700 in the 1st
quarter of 1999,  an  increase  of $72,000  over the 1st  quarter of 1998.  This
increase can be  attributed  to the  amortization  of the fair value of warrants
issued to an investment banker for securing equity financing for the company and
interest on the notes payable.


Liquidity and Capital Resources

     In the first quarter of 1999, net cash provided to the Company by operating
activities was $78,000. In the first quarter of 1998, the Company used cash from
operations of $398,400. Cash provided in the first quarter of 1999 was comprised
of the net loss  incurred  for the quarter of  $131,600,  offset by net non-cash
expenses  of $344,500  and the net change in  operating  assets and  liabilities
resulting in a use of cash of  $134,900.  Cash used in  operations  in the first
quarter  of 1998 was  comprised  of the net loss  incurred  for the  quarter  of
$160,400,  offset by net  non-cash  expenses of  $94,700,  and the net change in
operating assets and liabilities resulting in a further use of cash of $332,700.

     Investing  activities  used cash of $57,400  and  $47,400  during the first
quarters ended March 31, 1999 and 1998  respectively.  The uses of cash were for
the purchase of fixed assets and additional capitalized patent costs.

     Financing  activities  provided cash of $1,468,000 and $125,400  during the
first quarters ended March 31, 1999 and 1998  respectively.  In both years,  the
cash provided by financing  activities  resulted from the sales of common stock,
$1,955,300  and  $126,400 for the first  quarters  ended March 31, 1999 and 1998
respectively, offset by principal payments on outstanding debt. In addition, the
company  purchased a new cargo van  through a loan in the first  quarter of 1999
that increased financing activities.

     At March 31, 1999 the Company had cash and cash  equivalents  of $1,963,900
as compared to $370,000 at March 31, 1998.  At March 31,  1999,  the Company had
working  capital of  $2,252,800,  as compared to working  capital of $759,700 at
March 31,  1998.  The  increases in both cash and cash  equivalents  and working
capital  in the  first  quarter  of 1999  over  the  first  quarter  of 1998 are
primarily  due to the proceeds  received from the  Company's  private  placement
offering which more than offset the Company's net losses during the same period.
The Company, at present, does not have a credit facility in place with a bank or
other financial institution.  The Company has established an accounts receivable
facility that is guaranteed by the U.S. EximBank.  The Company believes that the
cash and cash  equivalents on hand at March 31, 1999 will be sufficient to allow
the Company to continue its expected  level of  operations  for the remainder of
the year.

     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.


                                       9
<PAGE>

Dates following December 31, 1999 and beyond (the "Year 2000 Problem")

     Many existing  computer systems and  applications,  and other devices,  use
only two digits to identify a year in the date field,  without  considering  the
impact of the  upcoming  change in the century.  Such  systems and  applications
could fail or create erroneous results unless  corrected.  The Company relies on
its internal financial systems and external systems of business enterprises such
as  customers,   suppliers,   creditors,   and  financial   organizations   both
domestically  and globally,  directly and  indirectly  for accurate  exchange of
data. The Company has evaluated such systems and has taken the appropriate steps
that it believes  address the concerns of the Year 2000 problem.  However,  even
though the internal  systems of the Company are not  materially  affected by the
Year  2000  issue  the  Company  could be  affected  through  disruption  in the
operation of the enterprises with which the Company interacts.

Seasonality and Quarterly Results

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

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.

                                       10
<PAGE>

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

      The  company  has  become  aware  that a  company  named  Omni  under  the
leadership of an individual  named Joseph  Stevenson  has been  advertising  and
selling an  electric  system for  bicycles  called EROS  (electric  regenerative
operating  system).  The  Company's  management,  in  consultation  with  patent
counsel,  has  determined  after  analysis  that the EROS system  infringes  the
Company's patents and has filed suit against EROS. Although the Company believes
its claims are  meritorious  and the patents for the ZAP system are valid, it is
possible,  as in any suit, that the Company may be unable to prove  infringement
or that Mr. Stevenson may establish, either in litigation or in a re-examination
proceeding before the Patent Office that the Company's patents are not valid. If
the Company's  patents are held to be invalid,  the Company's ability to prevent
competitors from manufacturing or selling bicycles with the patented system will
be significantly  reduced. The loss of the patents or a significant damage award
against the Company could have a material  adverse  effect upon the business and
financial condition and prospects of the Company.


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.

                                       11
<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
         ------------------        ---------------------------------------------
                                      James McGreen - President and Director


Date
         ------------------        ---------------------------------------------
                                           Gary Starr - Managing Director

                                       12