ZAPATA CORP - 10-K Annual Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

OR

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

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER: 1-4219
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ZAPATA CORPORATION
(Exact name of Registrant as specified in its charter)

NEVADA 74-1339132
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

100 MERIDIAN CENTRE, 14618
SUITE 350 (Zip Code)
ROCHESTER, NY
(Address of principal executive offices)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
(585) 242-2000

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE.

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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] or No [ ].

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate by "X" whether the registrant is an accelerated filer (as defined
in Exchange Act Rule 12b-2). Yes [ ] No [X]

The aggregate market value of the voting stock held by non-affiliates of
the registrant as of June 30, 2002 (the last business day of the registrant's
most recently completed second fiscal quarter) was approximately $36,797,000.
For the sole purpose of making this calculation, the term "non-affiliate" has
been interpreted to exclude directors, corporate officers and holders of 10% or
more of the Company's common stock. As of March 14, 2003, the Registrant had
outstanding 2,390,849 shares common stock, $0.01 par value.

Documents Incorporated By Reference: Portions of the Registrant's
definitive Proxy Statement for its 2003 Annual Meeting of Stockholders, which
the Company plans to file with the Securities and Exchange Commission pursuant
to regulations 14A, on or prior to April 30, 2003, are incorporated by reference
in Part III (Items 10, 11, 12, and 13) of this Form 10-K.
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TABLE OF CONTENTS

1

FORWARD-LOOKING STATEMENTS

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. This document contains certain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company
intends such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995, and includes this statement for purposes of such
safe harbor provisions. Forward-looking statements, which are based upon certain
assumptions and describe future plans, strategies and expectations of the
Company, are generally identifiable by use of the words "believes," "expects,",
"intends," "anticipates," "plans," "seeks," "estimates," "projects" or similar
expressions. The ability of the Company to predict results or the actual effect
of future plans, strategies or expectations is inherently uncertain. Important
factors which may cause actual results to differ materially from the
forward-looking statements contained herein or in other public statements by the
Company, Omega Protein Corporation ("Omega Protein" or "Omega") and Zap.Com
Corporation ("Zap.Com") are described under the caption "Part II -- Item
7 -- Management's Discussion and Analysis of Financial Condition and Results of
Operation- Significant Factors That Could Affect Future Performance and
Forward-Looking Statements" appearing in this Report and other risks identified
from time to time in the Company's filings with the Securities and Exchange
Commission ("SEC"), press releases and other communications. The Company assumes
no obligation to update forward-looking statements or to update the reasons
actual results could differ from those projected in the forward-looking
statements.

PART I

In January 2001, Zapata Corporation ("Zapata" or the "Company") completed a
one-for-ten reverse stock split. Accordingly, share and per share amounts have
been retroactively restated for the reverse split.

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

Zapata was incorporated in Delaware in 1954 and was reincorporated in
Nevada in April 1999. The Company's principal executive offices are at 100
Meridian Centre, Suite 350, Rochester, New York 14618. Zapata's common stock is
listed on the New York Stock Exchange ("NYSE") and trades under the symbol
"ZAP."

Zapata is a holding company which currently operates in the food segment
through its 60% owned subsidiary, Omega Protein Corporation ("Omega Protein" or
"Omega") (NYSE: "OME"), which is the nation's largest marine protein company. In
addition, Zapata holds 98% of the outstanding stock of Zap.Com Corporation
("Zap.Com") (OTCBB: "ZPCM"), which is currently a public shell corporation.
Omega Protein and Zap.Com are publicly traded companies which file registration
statements, reports and other items with the Securities and Exchange Commission
("SEC") that contain other information about these companies. In addition to the
information included in this filing, other information about Omega Protein and
Zap.Com can be obtained from, among other places, filings or press releases made
from time to time by Omega Protein and Zap.Com. This report should be read in
conjunction with these companies' most recently filed annual reports on Form
10-K.

As used throughout this report, "Zapata Corporate" is defined as Zapata
Corporation exclusive of its majority owned subsidiaries Omega Protein and
Zap.Com.

ZAPATA CORPORATE DEVELOPMENTS

On June 17, 2002, Zapata announced that the Board of Directors authorized
management to explore ways to enhance Zapata stockholder value through its
majority owned subsidiary Omega Protein. The Board asked Zapata management to
consider increasing Zapata's ownership position in Omega Protein or in the
alternative pursuing a possible sale, merger or another significant strategic
transaction involving Omega
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Protein. Since June 2002, Zapata management has had discussions with various
investment banks to determine whether to engage one of them to assist the
Company in exploring potential transactions involving Omega Protein. As of the
date of this report, no offers have been received and no agreements or
understandings have been entered into by the Company relative to Omega Protein.
There can be no assurance: that a satisfactory transaction involving Omega
Protein will emerge, the timing of any such transaction, if any; or whether the
transaction will ultimately enhance Zapata stockholder value or how that value
will be realized.

On November 13, 2002, the Board of Directors approved and authorized Zapata
to make a cash tender offer of $28 per share, for up to 500,000 shares of its
common stock, or approximately 20.9% of its outstanding common stock. In
connection with the approval of this tender offer, the Board of Directors
terminated the existing authorization for the repurchase of up to 500,000 shares
in open market or private transactions. At the time of such termination, no
shares had been repurchased under this program.

On December 6, 2002, the Board of Directors terminated the self-tender
offer in light of its rejection of an unsolicited proposal to acquire the
Company at a price of $35 per share and the fact that the Company's stock had
consistently traded above the tender offer price following the self-tender offer
announcement. Additionally on December 6, 2002, the Board of Directors further
authorized the Company to purchase up to 500,000 shares of its outstanding
common stock in the open market or privately negotiated transactions. The shares
may be purchased from time to time as determined by the Company. Any purchased
shares would be placed in treasury and may subsequently be reissued for general
corporate purposes. The repurchases will be made only at such times as are
permissible under the federal securities laws. No time limit has been placed on
the duration of the program and no minimum number or value of shares to be
repurchased has been fixed. Zapata reserves the right to discontinue the
repurchase program at any time and there can be no assurance that any
repurchases will be made. As of the date of this report, no shares have been
repurchased under this program.

During 2002, the Company received a federal tax refund of approximately
$17.3 million primarily related to losses realized on the sale in 2001 of
certain non-investment grade securities and the Company's shares in Viskase
Companies Inc. ("Viskase").

ZAPATA CORPORATE BUSINESS ACQUISITIONS

Zapata currently is engaged in the search for one or more operating
businesses to acquire. The Company continues to consider acquisitions, business
combinations, or start up proposals, which could be advantageous to
stockholders. The Company has not focused and does not intend to focus its
acquisition efforts solely on any particular industry or geographical market.
While the Company focuses its attention in the United States, the Company may
investigate acquisition opportunities outside of the United States when
management believes that such opportunities might be attractive. Similarly, the
Company does not yet know the structure of any acquisition. The Company may pay
consideration in the form of cash, securities of the Company or a combination of
both. The Company may utilize non-investment grade securities as a part of an
acquisition strategy. Such investments often involve a high degree of risk and
must be considered highly speculative.

If the Company issues equity securities in connection with an acquisition,
it could result in significant dilution to existing stockholders. Depending upon
the size and number of acquisitions, the Company may also borrow money to fund
its acquisitions. In that event, the Company's stockholders would be subject to
the risks normally associated with leveraged transactions, including the
inability to service the debt or the dedication of a significant amount of cash
flow to service the debt, limitations on the Company's ability to secure future
financing and the imposition of certain operating restrictions.

The Company faces intense competition in its search for one or more
operating businesses. In this regard, Zapata competes with strategic buyers,
financial buyers and others who are looking to acquire suitable operating
businesses, many of whom have greater financial resources than the Company or
have greater flexibility in structuring acquisition transactions or strategic
relationships.

As of the date of this report, Zapata is not a party to any agreement for
the acquisition of an operating business. There can be no assurance that the
Company will be able to locate and consummate a suitable acquisition or that any
acquisitions which are consummated will ultimately prove to be beneficial to the
Company and its stockholders.
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OMEGA PROTEIN

General. Omega Protein is the largest processor, marketer and distributor
of fish meal and fish oil products in the United States. Omega's marine
operations involve the production and sale of a variety of protein and oil
products derived from menhaden, a species of wild herring-like fish found along
the Gulf of Mexico and Atlantic coasts. The fish is not genetically modified or
genetically enhanced. Omega Protein processes several grades of fish meal
(regular or "FAQ" meal and specialty meals), as well as fish oil and fish
solubles. Omega's fish meal products are primarily used as a protein ingredient
in animal feed for swine, cattle, aquaculture and household pets. Fish oil is
utilized for animal and aquaculture feeds, industrial applications, and for
additives to human food products. Omega's fish solubles are sold primarily to
livestock feed manufacturers, aquaculture feed manufacturers and for use as an
organic fertilizer. All of Omega's products contain Omega-3 fatty acids. The
Omega-3 fatty acids are referred to as "essential fatty acids" because the human
body does not produce them. Instead, essential fatty acids must be obtained from
outside sources, such as food or special supplements. Omega-3s are also referred
to as a "good fat" for their health benefits, as opposed to the "bad fats" that
create or aggravate health conditions through long-term consumption.

Omega Protein operates through five material subsidiaries: Omega Protein,
Inc., Omega Shipyard, Inc., Protein Operating Company, Protein Securities
Company and Omega Protein Mexico, S. de R. L. de C. V. ("Omega Mexico"). Omega
Protein, Inc. is the Company's principal operating subsidiary for its menhaden
processing business and is the successor to a business conducted since 1913.
Omega Shipyard, Inc. owns a drydock facility in Moss Point, Mississippi, which
is used to provide shoreside maintenance for Omega's fishing fleet and, subject
to outside demand and excess capacity, third-party vessels. Revenues from
shipyard work for third-party vessels in 2002 were not material. Protein
Operating Company holds title to Omega Protein's property containing its
60,000-square foot meal storage warehouse in St. Louis, Missouri. Protein
Securities Company holds title to Omega's property containing its 10,000 metric
ton meal storage warehouse, oil storage tanks with a 4,000 metric ton capacity
and other property in Morgan City, Louisiana. Omega Mexico is a new subsidiary
formed in 2002 for Omega Protein's meal and oil purchases in Mexico and re-sales
in Mexico. Omega also has a number of other immaterial direct and indirect
subsidiaries.

Geographic Information. Omega Protein operates within one industry
segment, menhaden fishing, for the production and sale of fish meal, fish
solubles and fish oil. Export sales of fish oil and fish meal were approximately
$44.0 million, $35.7 million and $21.7 million in 2002, 2001 and 2000,
respectively. Such sales were made primarily to European and Asian markets. In
2002, 2001 and 2000, sales to one customer were approximately $10.5 million,
$7.9 million and $6.3 million, respectively. This customer differed from year to
year.

The following table shows the geographical distribution of Omega Protein's
revenues (in thousands) based on the location of Omega's customers. (For a
consolidated table of geographical distribution of revenues, see Note 22 to the
Company's Consolidated Financial Statements included in Item 8 of this report.)

Fishing. During 2002, Omega Protein owned a fleet of 66 fishing vessels
and 33 spotter aircraft for use in its fishing operations and also leased
additional aircraft where necessary to facilitate operations. During the

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2002 fishing season in the Gulf of Mexico, which runs from mid-April through
October, Omega operated 31 fishing vessels and 26 spotter aircraft. The fishing
area in the Gulf is generally located along the Gulf Coast, with a concentration
off the Louisiana and Mississippi coasts. The fishing season along the Atlantic
coast begins in early May and usually extends into December. Omega operated 10
fishing vessels and 7 spotter aircraft along the Mid-Atlantic coast,
concentrated primarily in and around Virginia and North Carolina. The remaining
fleet of fishing vessels and spotter aircraft are not routinely operated during
the fishing season and are back-up to the active fleet, used for other
transportation purposes or may be in the process of refurbishment in Omega's
shipyard. Subsequent to the 1999 fishing season, Omega Protein embarked on a
program of cost-cutting measures which included, among other items, utilization
of carry vessels and a reduction in the number of fishing vessels and spotter
planes deployed. Since 1999, the deployment of fishing vessels and spotter
planes has been reduced by 12 vessels and 8 planes. Additionally, since 1999,
Omega has been able to increase its fish catch per fishing vessel employed by
11% as a result of such efforts.

Menhaden usually school in large, tight clusters and are commonly found in
warm, shallow waters. Spotter aircraft locate the schools and direct the fishing
vessels to them. The principal fishing vessels transport two 40-foot purse
boats, each carrying several fishermen and one end of a 1,500-foot net. The
purse boats encircle the school and capture the fish in the net. The fish are
then pumped from the net into refrigerated holds of the fishing vessel or onto a
carry vessel, and then are unloaded at Omega's processing plants.

Processing. During 2002, Omega operated four processing plants, two in
Louisiana, one in Mississippi and one in Virginia, where the menhaden are
processed into three general product types: fish meal, fish oil and fish
solubles. The fish are unloaded from the fishing vessels into storage boxes and
then conveyed into steam cookers. The fish are then passed through presses to
remove most of the oil and water. The solid portions of the fish are dried and
ground into fish meal. The liquid that is produced in the cooking and pressing
operations contains oil, water, dissolved protein and some fish solids. This
liquid is decanted to remove the solids and is put through a centrifugal oil and
water separation process. The separated fish oil is a finished product. The
separated water and protein mixture is further processed through evaporators to
recover the soluble protein, which can be sold as a finished product or added to
the solid portions of the fish for processing into fish meal.

Products. Omega Protein sells three general types of products: fish meal,
fish oil and fish solubles.

Fish Meal. Fish meal, the principal product made from menhaden, is sold
primarily as a high-protein feed ingredient. It is used as a protein supplement
in feed formulated for pigs, and other livestock, aquaculture and household
pets. Each use requires certain standards to be met regarding quality and
protein content, which are determined by the freshness of the fish and by
processing conditions such as speed and temperatures. Omega produces fish meal
of several different types:

Special Select(TM). Special Select(TM) is a premium grade low
temperature processed fish meal. The quality control guidelines are very
stringent, producing a higher protein level and higher digestibility and a
lower total volatile nitrogen (TVN) and histamine count. These guidelines
require that only the freshest fish and the most gentle drying process be
used. Special Select(TM) is targeted for monogastrics, including baby pigs,
turkey poults, mink, shrimp and trout.

Sea-Lac(TM). Sea-Lac(TM) is similar to Special Select(TM) in its
freshness (low TVN) and gentle drying (high digestibility). During the
processing however, Omega Protein removes most of the soluble protein. This
step allows the amount of rumen undegradable protein to be maximized while
still maintaining excellent digestibility. This product is made
specifically for dairy and beef cattle, sheep, goats and other ruminants
requiring bypass protein.

FAQ Meal(TM). FAQ (Fair Average Quality) Meal(TM), Omega's commodity
grade fish meal, guarantees a protein content of at least 60%. This product
typically is used in protein blends for poultry, catfish, pets and other
animals.

Fish Oil. Omega Protein produces two basic types of fish oil: crude
unrefined fish oil and refined fish oil.

Unrefined Fish Oil. Unrefined fish oil (also referred to as crude
fish oil) is Omega's basic fish oil product. This grade of fish oil has not
undergone any portion of the refining process. Omega Protein's

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markets for crude fish oil have changed over the past decade. In the early
1990's, Omega's main crude fish oil market, which accounted for greater
than 90% of Omega's production, was utilized by manufacturers of
hydrogenated oils for human consumption such as margarine and shortening.
In 2002, Omega estimates that approximately 60% of its crude fish oil was
sold as a feed ingredient to the aquaculture industry. The growth of the
worldwide aquaculture industry has resulted in increasing demand for fish
oils in order to improve feed efficiency, survivability and health of
farm-raised fish species.

Refined Fish Oil. Omega Protein's refined fish oils come in three
basic grades:

Feed Grade Oils. Feed grade menhaden oil is processed and refined to
offer a high Omega-3 oil for use in premium pet, aquaculture and livestock
feeds, as well as agricultural and attractant applications. The processing
reduces oxidation while enhancing stable Omega-3 fatty acids for
incorporation in the final feed to enhance skin and coat conditioning,
reproductive performance, and increasing immunity. Both kosher and organic
products are available.

Food Grade Oils. Food grade menhaden oil has been fully refined to
remove flavor, odor, and pro-oxidants and offer a naturally high long-chain
Omega-3 content. Omega-3 fatty acids come in two types: long-chain and
short-chain. Short-chain Omega-3's are generally found in canola oil, soy
beans, and flaxseed, and generally require five to ten times as much
concentration to approach the same benefit levels as long-chain Omega-3's.

Scientific studies have linked consumption of Omega-3 rich oil to a
number of nutritional and health benefits, such as heart health, treatment
of arthritis and other inflammatory diseases, improving brain and eye
function and treatment of depression. Omega's main product in this grade is
OmegaPure(TM). Applications for OmegaPure(TM) are designed to deliver a
stable, odorless, flavorless source of Omega-3 fatty acids to enhance human
nutrition. These applications include mainstream consumer foods, medical
care foods, and dietary supplements. OmegaPureTM also is kosher-certified
and organic.

OmegaPure(TM) currently is the only marine source of long-chain
Omega-3's directly affirmed by the U.S. Food and Drug Administration
("FDA") as a Generally Recognized As Safe (or "GRAS") food ingredient for
direct human consumption. The FDA has approved OmegaPure(TM) use in
margarine, salad dressings, condiments, yogurt, ice cream, cheese, prepared
meats, sauces, soups, crackers, cookies, cereals, bakery products and other
categories. In February 2002, the FDA posted for final comment a proposed
regulation that would add 23 additional food categories to the list of food
categories already approved for the inclusion of Omega-3 rich menhaden oil.
In addition, the National Academies of Sciences published a report in
September, 2002 on 11 macronutrients, including Omega-3's, which states
that human diets can include 110-160 milligrams of long-chain Omega-3's per
day for a healthy diet. Omega believes these developments could benefit its
OmegaPureTM sales efforts.

Industrial Grade Oils. Industrial grade menhaden oil is refined and
processed to enhance the unique fatty acid range making it desirable for a
number of drying and lubricating applications including lubrication,
coolant transfer, chemical raw material, drying and rustproofing paints,
and drilling fluids and leather treatment chemicals.

Fish Solubles. Fish solubles are a liquid protein product used as an
additive in fish meal and are also marketed as an independent product to animal
feed formulators and the fertilizer industry. Omega Protein's soluble-based
products are:

Neptune(TM) Fish Concentrate. This aqua grade liquid protein is
composed of low molecular weight, water-soluble compounds such as free
amino acids, peptides and nucleotides that are attractants for a variety of
aquaculture feeds. The product is utilized in both shrimp and finfish diets
to improve attractability and thus consumption and conversion. Neptune(TM)
Fish Concentrate also can be added directly to grow-out ponds as a
fertilizer to help feed plankton and other natural food sources.

OmegaGrow(TM). OmegaGrow(TM) is a liquid soil or foliar-applied
fertilizer for plant nutrition. OmegaGrow(TM) is approved for organic uses
by the Organic Materials Review Institute ("OMRI").

6

OmegaGrow(TM) is a free-flowing product that has been filtered through an
80-mesh screen and can be applied by sprayers or through irrigation
systems.

OmegaGrow Plus(TM). OmegaGrow Plus(TM) is a liquid foliar-applied
fertilizer for plant nutrition that also helps to control insect and fungus
problems. This product has additional oil or fat content of 25 to 30% which
is greater than the 7% to 10% oil or fat content typically found in Omega
Grow(TM). These higher levels are detrimental to soft-bodied insects, as
well as fungal diseases in citrus and vegetable crops. OmegaGrow Plus(TM)
can be used as a replacement for petroleum-based oil sprays.

Distribution System. Omega Protein's distribution system of warehouses,
tank storage facilities, vessel loading facilities, trucks, barges and railcars
allows Omega to service customers throughout the United States and also foreign
locations. Omega Protein owns and leases warehouses and tank storage space for
storage of its products, generally at terminals along the Mississippi River and
Tennessee River. Omega generally contracts with third-party trucking, vessel,
barge and railcar companies to transport its products to and from warehouses and
tank storage facilities and directly to its customers.

Historically, approximately 35% to 40% of Omega's FAQ grade fish meal was
sold on a two-to-twelve-month forward contract basis. The balance of FAQ grade
fish meal and other products was substantially sold on a spot basis through
purchase orders. In 2002, Omega Protein began a similar forward sales program
for its specialty grade meals and crude fish oil due to increasing demand for
these products. Omega's annual revenues are highly dependent on both annual fish
catch and inventories and, in addition, inventory is generally carried over from
one year to the next year. Omega determines the level of inventory to be carried
over based on prevailing market prices of the products and sales volumes will
fluctuate from quarter to quarter and year to year. Omega's fish meal products
have a useable life of approximately one year from date of production; however,
Omega Protein typically attempts to empty its warehouses of the previous
season's meal products by the second or third month of the new fishing season.
Omega's crude fish oil products do not lose efficacy unless exposed to oxygen
and, therefore, their storage life typically is longer than that of fish meal.

Customers and Marketing. Most of Omega Protein's marine protein products
are sold directly to about 400 customers by Omega's marketing department, while
a smaller amount is sold through independent sales agents. Product inventory was
$32.0 million as of December 31, 2002 versus $29.1 million on December 31, 2001.

Omega's fish meal is sold primarily to domestic feed producers for
utilization as a high-protein ingredient for the swine, aquaculture, dairy and
pet food industries. Fish oil sales primarily involve export markets where the
fish oil is used for aquaculture feeds and is refined for use as an edible oil.

Omega Protein's products are sold both in the U.S. and internationally.
International sales consist mainly of fish oil sales to Canada, Japan, Chile,
Norway and the Netherlands. Omega's sales in these foreign markets are
denominated in U.S. dollars and not directly affected by currency fluctuations.
Such sales could be adversely affected by changes in demand resulting from
fluctuations in currency exchange rates.

A number of countries in which Omega currently sells products impose
various tariffs and duties, none of which have a significant impact on Omega's
foreign sales. Certain of these duties are being reduced annually for certain
countries under the North American Free Trade Agreement in the case of Mexico
and Canada and under the Uruguay Round Agreement of the General Agreement on
Tariffs and Trade in the cases of Japan and Chile. In all cases, Omega's
products are shipped to its customers either by F.O.B. shipping point or CIF
terms, and therefore, the customer is responsible for any tariffs, duties or
other levies imposed on Omega's products sold into these markets.

During the off season, Omega fills purchase orders from the inventory it
has accumulated during the fishing season. Prices for Omega Protein's products
tend to be lower during the fishing season when product is more abundant than in
the off season. Throughout the entire year, prices are often significantly
influenced by supply and demand in world markets for competing products,
primarily other global sources of fish meal and oil and also soybean meal for
its fish meal products and vegetable oils and fats for its fish oil products
when used as an alternative to vegetable oils and fats.

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Seasonal and Quarterly Results. Omega Protein's menhaden harvesting and
processing business is seasonal in nature. Omega generally has higher sales
during the menhaden harvesting season (which includes the second and third
quarter of each year) due to increased product availability, but prices during
the fishing season tend to be lower than during the off-season. As a result,
Omega's quarterly operating results have fluctuated in the past and may
fluctuate in the future. In addition, from time to time Omega defers sales of
inventory based on worldwide prices for competing products that affect prices
for its products which may affect comparable period comparisons. Quarterly
financial data contained in Note 23 to the Consolidated Financial Statements
included in Item 8 of this Report are incorporated herein by reference.

Quality Control. Omega Protein believes that maintaining high standards of
quality in all aspects of its manufacturing operations play an important part in
its ability to attract and retain customers and maintain its competitive
position. To that end, Omega has adopted strict quality control systems and
procedures designed to test the quality aspects of its products, such as protein
content and digestibility. Omega Protein regularly reviews, updates and modifies
these systems and procedures as appropriate.

Purchases and Sales of Third-Party Meal and Oils. Omega has from time to
time purchased fish meal and fish oil from other domestic and international
manufacturers. Omega has generally resold those products to international
customers. These purchase and resale transactions have been ancillary to Omega
Protein's base manufacturing and sales business and revenues resulting from
these activities have historically not been material.

During 2002, Omega developed a business plan to expand its purchase and
resale of other manufacturers' fish meal and fish oil products. In the third
quarter of 2002, Omega engaged a full-time consultant to implement Omega
Protein's business plan which will focus initially on the purchase and resale of
Mexican fish meal and fish oil. In 2002, revenues generated from these types of
transactions represented less than 1% of total Omega revenues. Omega expects
that, although operating margins from these activities will be less than the
margins generated from Omega's base domestic production, its Mexican operations
will provide it with a source of fish meal and oil to sell into other markets
where Omega has not historically had a presence. Omega Protein's goal is to
expand these purchases of other manufacturers' fish meal and fish oil to an
annual volume of 10,000 to 20,000 metric tons, although there is no assurance
that Omega will be able to do so.

Insurance. Omega Protein maintains insurance against physical loss and
damage to its assets, coverage against liabilities to third parties it may incur
in the course of its operations, as well as workers' compensation, United States
Longshoremen's and Harbor Workers' Compensation Act and Jones Act coverage.
Assets are insured at replacement cost, market value or assessed earning power.
Omega Protein's limits for liability coverage are statutory or $50 million. The
$50 million limit is comprised of several excess liability policies, which are
subject to deductibles, underlying limits and exclusions. Omega believes its
insurance coverage to be in such form, against such risks, for such amounts and
subject to such deductibles and self-retentions as are prudent and normal for
its operations. Omega does not carry insurance against terrorist attacks, or
against business interruption, in large part because of the high costs of such
insurance. A general hardening of the world insurance markets in recent years
has made Omega Protein's insurance more costly and is likely to continue to
increase Omega's cost of insurance. Depending on the magnitude of the increase
in insurance premiums, Omega may elect to increase its deductibles and
self-retentions in order to achieve lower insurance premium costs. These higher
deductibles and self-retentions will expose Omega Protein to greater risk of
loss if claims occur.

Competition. The marine protein and oil business is subject to significant
competition from producers of vegetable and other animal protein products and
oil products such as Archer-Daniels-Midland and Cargill. In addition, but to a
lesser extent, Omega Protein competes with smaller domestic privately-owned
menhaden fishing companies and international marine protein and oil producers,
including Scandinavian herring processors and South American anchovy and sardine
processors. Many of these competitors have greater financial resources and more
extensive operations than Omega.

Omega competes on price, quality and performance characteristics of its
products, such as protein level and amino acid profile in the case of fish meal.
The principal competition for Omega Protein's fish meal and fish solubles is
from other global production of marine proteins as well as other protein sources
such as
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soybean meal and other vegetable or animal protein products. Omega believes,
however, that these other non-marine sources are not complete substitutes
because fish meal offers nutritional values not contained in such other sources.
Other globally produced fish oils provide the primary market competition for
Omega Protein's fish oil, as well as soybean and palm oil, from time to time.

Fish meal prices have historically borne a relationship to prevailing
soybean meal prices, while prices for fish oil are generally influenced by
prices for vegetable fats and oils, such as soybean and palm oils. Thus, the
prices for Omega Protein's products are established by worldwide supply and
demand relationships over which Omega has no control and tend to fluctuate
significantly over the course of a year and from year to year.

Regulation. Omega Protein's operations are subject to federal, state and
local laws and regulations relating to the locations and periods in which
fishing may be conducted as well as environmental and safety matters. At the
state and local level, certain state and local government agencies have enacted
legislation and regulations to prohibit, restrict or regulate menhaden fishing
within their jurisdictional waters. In January 2002, the State of New Jersey
enacted legislation which extended an existing 1.2 mile no-fishing zone for
menhaden an additional 1.8 miles offshore. Omega historically has caught an
immaterial amount of its fish catch in the newly closed area and believes that
this restriction will have no material effect on Omega's operations or financial
results. Omega remains able to conduct its fishing operations off the New Jersey
coast outside this new three-mile limit.

In September 2002, two of the three coastal counties in Mississippi
submitted resolutions to the Mississippi Marine Resources Commission seeking to
extend the menhaden no-fishing zone from one mile to two miles from shore. In
September 2002, the Mississippi Marine Resources Commission voted to take no
action on the resolutions and remanded the resolutions back to the counties for
additional clarification. One of the counties subsequently rescinded its
resolution. Since that time, no action has been taken by the Commission and
Omega Protein believes that the matter has been resolved. If in the future, one
or more of these resolutions are adopted, it could have a material adverse
affect on Omega Protein's financial position, results from operations or cash
flows.

Omega Protein, through its operation of fishing vessels, is subject to the
jurisdiction of the U.S. Coast Guard, the National Transportation Safety Board
and the U.S. Customs Service. The U.S. Coast Guard and the National
Transportation Safety Board set safety standards and are authorized to
investigate vessel accidents and recommend improved safety standards. The U.S.
Customs Service is authorized to inspect vessels at will.

In January 2002, the United States Supreme Court ruled that, in addition to
the United States Coast Guard, the Occupational Safety and Health Administration
has the authority to regulate working conditions aboard certain types of vessels
which include the Company's fishing vessels. The eventual implementation of this
ruling (which is expected to occur over a period of years) is expected to result
in additional safety requirements and procedures for Omega's vessels. It is
possible that the costs of these requirements and procedures could be material.

Omega Protein's operations are subject to federal, state and local laws and
regulations relating to the protection of the environment, including the federal
Clean Water Act, which imposes strict controls against the discharge of
pollutants in reportable quantities, and along with the Oil Pollution Act,
imposes substantial liability for the costs of oil removal, remediation and
damages. Omega's operations also are subject to the federal Clean Air Act, as
amended; the federal Comprehensive Environmental Response, Compensation, and
Liability Act, which imposes liability, without regard to fault, on certain
classes of persons that contributed to the release of any "hazardous substances"
into the environment; and the federal Occupational Safety and Health Act
("OSHA"). The implementation of continuing safety and environmental regulations
from these authorities could result in additional requirements and procedures
for Omega and it is possible that the costs of these requirements and procedures
could be material.

The OSHA hazard communications standard, the Environmental Protection
Agency community right-to-know regulations under Title III of the federal
Superfund Amendment and Reauthorization Act and similar state statutes require
Omega Protein to organize information about hazardous materials used or

9

produced in its operations. Certain of this information must be provided to
employees, state and local governmental authorities and local citizens. Numerous
other environmental laws and regulations, along with similar state laws, also
apply to the operations of Omega, and all such laws and regulations are subject
to change.

Omega Protein has made, and anticipates that it will make in the future,
expenditures in the ordinary course of its business in connection with
environmental matters. Such expenditures have not been material in the past and
are not expected to be material in the future. However, there is no assurance
that environmental laws and regulations enacted in the future will not require
material expenditures or otherwise adversely affect Omega Protein's operations.

Omega Protein's harvesting operations are subject to the Shipping Act of
1916 and the regulations promulgated thereunder by the Department of
Transportation, Maritime Administration which require, among other things, that
Omega Protein be incorporated under the laws of the U.S. or a state, Omega's
chief executive officer be a U.S. citizen, no more of Omega's directors be
non-citizens than a minority of the number necessary to constitute a quorum and
at least 75% of Omega's outstanding capital stock (including a majority of Omega
Protein's voting capital stock) be owned by U.S. citizens. If Omega fails to
observe any of these requirements, it will not be eligible to conduct its
harvesting activities in U.S. jurisdictional waters. Such a loss of eligibility
would have a material adverse effect on Omega Protein's business, results of
operations and financial condition.

To protect against such loss of eligibility, Omega Protein's Articles of
Incorporation (i) contain provisions limiting the aggregate percentage ownership
by non-citizens of each class of Omega's capital stock to no more than 25% of
the outstanding shares of each such class (the "Permitted Percentage") so that
any purported transfer to non-citizens of shares in excess of the Permitted
Percentage will be ineffective as against Omega for all purposes (including for
purposes of voting, dividends and any other distribution, upon liquidation or
otherwise), (ii) provide for a dual stock certificate system to determine such
ownership pursuant to which certificates representing shares of Omega Protein
Common Stock bear legends that designate such certificates as either "citizen"
or "non-citizen" depending on the citizenship of the owner, and (iii) permit
Omega Protein's Board of Directors to make such determinations as may reasonably
be necessary to ascertain such ownership and implement restrictive limitations
on those shares that exceed the Permitted Percentage (the "Excess Shares"). For
example, Omega Protein's Board is authorized, among other things, to redeem for
cash (upon written notice) any Excess Shares in order to reduce the aggregate
ownership by non-citizens to the Permitted Percentage.

Omega Protein believes that during the past five years it has substantially
complied with all material statutes and regulations applicable to its
operations, the failure to comply with which would have had a material adverse
impact on its operations.

ZAP.COM

Zap.Com was in the Internet industry and its stock is traded on the
over-the-counter market on the NASD's OTC Electronic Bulletin Board under the
symbol "ZPCM." In December 2000, Zap.Com exited the Internet business and
terminated all salaried employees and third party contractual relationships.
Currently, Zap.Com does not have any existing business operations, other than
maintaining its status as a public entity. Zap.Com is likely to search for
assets or businesses that it can acquire so that it can become an operating
company. Zap.Com may also consider developing a new business suitable for its
situation.

EMPLOYEES

As of December 31, 2002, Zapata Corporate employed 7 employees who
performed management and administrative functions, including managing the assets
of the Company, evaluating potential acquisition candidates, fulfilling various
reporting requirements associated with being a publicly traded company and
various other accounting, tax and administrative matters.

10

As of December 31, 2002, during its off-season, Omega Protein employed
approximately 500 persons. As of August 31, 2002, during the peak of its 2002
fishing season, Omega employed approximately 976 persons. Approximately 130
employees at Omega's Virginia facility are represented by an affiliate of the
United Food and Commercial Workers Union. During the past five years Omega has
not experienced any strike or work stoppage which has had a material impact on
its operations. Omega considers its employee relations to be generally
satisfactory.

As of December 31, 2002, Zap.Com had two employees, Avram Glazer, President
and CEO, and Leonard DiSalvo, VP-Finance and Chief Financial Officer. Neither
Mr. Glazer nor Mr. DiSalvo receive a salary from Zap.Com and currently devote a
significant portion of their business time to Zapata, where they hold the same
offices. Both of these officers, however, devote such time to Zap.Com's affairs
as is required to perform their duties to Zap.Com.

FINANCIAL INFORMATION ABOUT SEGMENTS

Prior to the sale of the Company's investment in the common stock of
Viskase, the sale of Charged Productions, Inc. ("Charged Productions" or
"Charged") (a multi-media production company) and Zap.Com's discontinuance of
its Internet operations, Zapata primarily operated in two industry segments: the
Food segment, consisting of Omega Protein and Viskase and the Internet segment,
consisting of Charged and Zap.Com. Since the sale of Viskase in September 2001,
the food segment information has consisted exclusively of Omega Protein. Costs
incurred during 2000 and 2001 related to Zap.Com and Charged were primarily
associated with wind-down and reporting activities. Accordingly, these costs
were included within the Company's Internet segment for 2000 and 2001. As of
January 1, 2002, all activity related to Zap.Com is reported as a separate
segment.

Information concerning revenues, operating results (before net interest
expense, other income and income taxes), identifiable assets, depreciation and
amortization and capital expenditures for the Company's continuing operations,
for each segment is incorporated herein by reference to Note 22 to the Company's
Consolidated Financial Statements included in Item 8 of this Report.

ITEM 2. PROPERTIES

ZAPATA CORPORATE

Zapata leases approximately 3,000 square feet of office space in Rochester,
New York and 5,000 square feet of office space in New York City. Due to the
termination of all Internet operations, Zapata is in the process of finding a
third party to sublease the New York City office space, which was previously
used by Charged. Zapata also leases office space in Houston, Texas, which is
subleased to Omega Protein for use as executive offices. Zapata believes its
facilities are adequate and suitable for its current level of operations.

OMEGA PROTEIN

Omega Protein owns the Reedville, Virginia; Moss Point, Mississippi; and
Abbeville, Louisiana plants and the real estate on which they are located
(except for a small leased parcel comprising a portion of the Abbeville
facility). Omega leases from unaffiliated third parties the real estate on which
the Cameron, Louisiana plant is located. The Cameron plant lease provides for a
10 year term ending on June 30, 2012 (with one 10-year option) and annual rent
of $64,000. Omega exercised its purchase option on its formerly leased Morgan
City, Louisiana property for $656,000 in November 2002.

As of December 31, 2002, Omega Protein's four active processing plants had
an aggregate capacity to process approximately 950,000 tons of fish annually.
Omega's processing plants are located in coastal areas near Omega's fishing
fleet. Annual volume processed varies depending upon menhaden catch and demand.
Each plant maintains a dedicated dock to unload fish, fish processing equipment
and storage capacity. The Reedville, Virginia facility is also the site for
Omega's oil refining plant.

11

Omega also leases from unaffiliated third parties warehouses and tank space
for storage of its products, generally at terminals located along the
Mississippi River and Tennessee River. Omega's material storage facilities are
located at:

In February 2002, Omega purchased the above storage facility in St. Louis,
Missouri for approximately $600,000.

Omega owns two dry docks, each with a capacity of 1,300 tons, and a 49.4
acre shipyard facility in Moss Point, Mississippi, which is used for routine
maintenance and vessel refurbishment on its fishing vessels and for shoreside
maintenance services to third-party vessels if excess capacity exists.

Omega leases office space in Hammond, Louisiana for its administrative
offices, and also subleases office space in Houston, Texas for its executive
offices pursuant to a sublease with Zapata. Omega believes its facilities are
adequate and suitable for its current level of operations. Omega maintains
customary workers' compensation insurance, as well as liability, property and
marine insurance for all of its operations.

ZAP.COM

Zap.Com's headquarters are located in Rochester, New York, in space
subleased to it by Zapata on a month-to-month basis. Zapata has advised Zap.Com
that it will not charge rent or other fees for the use of this space for future
periods until further notice.

ITEM 3. LEGAL PROCEEDINGS

LITIGATION

A non-operating wholly-owned subsidiary of Zapata, Energy Industries, Inc.,
was named as a defendant in three cases commenced in 1996 and 1997 pending in
the 83rd Judicial District Court of Upton County, Texas involving the death of
one individual and personal injuries to two others. The cases resulted from an
explosion and fire at a gas processing plant in Upton County caused by the
alleged failure of a valve cover. Zapata was named as a defendant in one of the
cases. The owners of the plant have also filed a cross-claim against Energy
Industries for property damage and lost profits resulting from the explosion and
fire. Plaintiffs and the cross-plaintiff owners base their claim on a theory of
manufacturing or design defect of the valve cover. Plaintiffs seek compensatory
damages. Zapata and Energy Industries deny liability in each of the lawsuits,
and have vigorously contested these matters and intend to vigorously defend
against these actions. In January 2002, the primary insurance carrier for Zapata
and Energy Industries claimed for the first time that it did not believe that
Energy Industries had primary insurance coverage for the losses arising out of
these incidents. This is despite the fact that this primary insurance carrier
had been providing for the defense of these actions and had not reserved its
rights with respect to that defense. While the primary insurance carrier has not
yet discontinued providing for the defense of these actions, it has since
formally disclaimed and, in fact, has brought a declaratory judgment action
claiming it does not owe a duty of indemnification. Zapata, in turn, has both
disputed these assertions and brought its own declaratory judgment action in
which it asserts that the primary insurance carrier does owe a duty of
indemnification. A loss of primary insurance coverage should not jeopardize the
excess coverage that Zapata or Energy Industries has for these claims. These
cases involve plaintiffs with very serious injuries, including death. While the
results of any ultimate resolution of these lawsuits cannot be predicted, in the
opinion of the Company's management, based upon discussions with defense
counsel, it is unlikely that any losses resulting from these matters will have a
material adverse effect on Zapata's results of operations, cash flow or
financial position.

12

Zapata and Omega Protein were named as defendants in a lawsuit instituted
on March 10, 2003 in the District Court of Clark County, Nevada by Omega Protein
shareholder Robert Strougo. Plaintiff brought the action individually and as a
putative class action on behalf of all Omega Protein stockholders. No class
period has been identified. Also named as defendants in the lawsuit are Avram A.
Glazer, Chairman, President and CEO of Zapata and Darcie Glazer, a director of
Zapata, both of whom are also directors of Omega Protein, and all other Omega
Protein directors. Plaintiff claims that the individual defendants and Zapata
breached their fiduciary duties to Omega Protein's stockholders by not properly
considering a so-called offer sent via e-mail to Zapata by Hollingsworth,
Rothwell & Roxford, a Florida partnership. News reports have identified a
Hollingsworth, Rothwell & Roxford partner, Theodore Roxford, as the former
Lawerence Niren. Mr. Roxford is the subject of a March 18, 2003 New York Times
article entitled "A Financial Big Shot With an Unusual Past" and a June 19, 1995
Forbes article entitled "Stop Me Before I Steal Again". The complaint alleges
that the "offer" was to acquire all of Zapata's shares for $45.00 per share. It
also alleges that the offer was to acquire all of Omega's shares for $45.00 per
share. Plaintiff claims that Zapata and the individual defendants breached their
duties to Omega's stockholders by rejecting the purported offer and that Omega
Protein's stockholders have been damaged by being prevented from receiving a
fair price for their stock. Plaintiff seeks an order directing the defendants to
carry out their fiduciary duties to Omega Protein's stockholders, to refrain
from breaching them, and awarding plaintiff unspecified compensatory damages and
his costs and expenses incurred in the action. The Company is not aware of any
e-mail sent by Hollingsworth, Rothwell & Roxford to Omega Protein or any offer
for the purchase of Omega Protein shares. The Company believes that the claims
are without merit and intends to vigorously oppose the lawsuit.

Zapata is involved in litigation relating to claims arising out of its past
and current operations in the normal course of business. Zapata maintains
insurance coverage against such potential ordinary course claims in an amount in
which it believes to be adequate. While the results of any ultimate resolution
cannot be predicted, in the opinion of Zapata's management, based upon
discussions with counsel, any losses resulting from these matters will not have
a material adverse effect on Zapata's results of operations, cash flow or
financial position.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of Zapata's stockholders during the
fourth quarter of 2002.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

Zapata's common stock is listed on the New York Stock Exchange ("NYSE") and
trades under the symbol "ZAP." The high and low sales prices for the common
stock, as reported in the consolidated transactions reporting system, for each
quarterly period for the last two fiscal years, are shown in the following
table. The following stock prices reflect the one-for-ten reverse stock split
effective January 30, 2001.

Zapata has not declared any dividends in the last two years. The Company
may use all or a significant portion of its cash assets in the acquisition of
new operating businesses or for the repurchase of stock as discussed below. See
"Item 1 -- Description of Business -- Zapata Corporate Business Acquisitions."
In deciding whether to declare dividends, the Company's Board of Directors will
consider the Company's operating results, cash flow, financial condition,
capital requirements, general business condition of its future operating
businesses and such other factors, as the Board deems relevant. The rights of
the holders of common stock to receive dividends or other payments with respect
thereto in the future will be subject to the prior and superior rights of
holders of Zapata's Preferred Stock and Preference Stock then outstanding.

13

In January 2001, Zapata's Board of Directors approved a one-for-ten reverse
stock split. Accordingly, share and per share amounts have been retroactively
restated for the reverse split. The reverse stock split was effective as of
January 30, 2001 and as of that date, the Company's authorized capital stock was
reduced to 16.5 million shares of common stock, par value $0.01 per share,
200,000 shares of preferred stock and 1.8 million shares of preference stock.
The preferred and preference shares are undesignated "blank check shares." As a
result of the reverse stock split, the Company's outstanding common stock was
reduced to 2,390,849 shares on that date.

On November 13, 2002, the Board of Directors approved and authorized Zapata
to make a cash tender offer of $28 per share, for up to 500,000 shares of its
common stock, or approximately 20.9% of its outstanding common stock. In
connection with the approval of this tender offer, the Board of Directors
terminated the existing authorization for the repurchase of up to 500,000 shares
in open market or private transactions. At the time of such termination, no
shares had been repurchased under this program.

On December 6, 2002, the Board of Directors terminated the self-tender
offer in light of its rejection of an unsolicited proposal to acquire the
Company at a price of $35 per share and the fact that the Company's stock had
consistently traded above the tender offer price following the self-tender offer
announcement. Additionally on December 6, 2002, the Board of Directors further
authorized the Company to purchase up to 500,000 shares of its outstanding
common stock in the open market or privately negotiated transactions. The shares
may be purchased from time to time as determined by the Company. Any purchased
shares would be placed in treasury and may subsequently be reissued for general
corporate purposes. The repurchases will be made only at such times as are
permissible under the federal securities laws. No time limit has been placed on
the duration of the program and no minimum number or value of shares to be
repurchased has been fixed. Zapata reserves the right to discontinue the
repurchase program at any time and there can be no assurance that any
repurchases will be made. As of the date of this report, no shares have been
repurchased under this program.

As of March 14, 2003, there were approximately 2,150 holders of record of
common stock. This number does not include the stockholders for whom shares are
held in a "nominee" or "street" name.

14

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth certain selected historic consolidated
financial information of the Company for the periods and as of the dates
presented and should be read in conjunction with the Company's Consolidated
Financial Statements and the related notes thereto included in Item 8 of this
Report and with "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included in Item 7 of this Report. All amounts are in
thousands, except for per share income (loss) from operations and cash dividends
paid.

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

(1) During 2002, the Company received a federal tax refund of approximately
$17.3 million primarily related to losses realized on the sale in 2001 of
certain non-investment grade securities and the Company's Viskase shares.

(2) Based on adverse market conditions and the sale of non-investment grade
securities during 2001, the Company recognized impairment charges of
approximately $11.8 million.

(3) The Company sold its Viskase shares September 2001. See note 1 above.

(4) In connection with the termination of its Internet businesses in December
2000, Zap.Com recorded the necessary charges to write down applicable
investments in long-lived assets (which consisted mainly of its capitalized
software costs) to fair value, and to record estimated liabilities,
including costs associated with the termination of various contracts. These
charges totaled $1.5 million. In addition, Charged incurred a one-time
charge of approximately $434,000 related to asset write-downs and
approximately $182,000 related to contract termination expenses.

15

(5) Based on adverse market conditions, the Company recorded impairment losses
of $13.2 million during 2000 related to its non-investment grade holdings.

(6) During 2000, Omega Protein recorded inventory write-downs of $18.1 million
for market declines in the inventory values of Omega Protein's fish meal and
fish oil.

(7) During 1999, Omega Protein recorded inventory write-downs of $18.2 million
for market declines in the inventory values of Omega Protein's fish meal and
fish oil. Omega also recorded a pre-tax charge of $2.3 million during 1999
for the write-down of certain impaired in-line processing assets at its
Morgan City, Louisiana plant.

(8) On December 21, 1998, Zapata's Board of Directors approved a change in the
Company's fiscal year end from September 30 to December 31, which became
effective January 1, 1999.

(9) Zapata's former wholly-owned subsidiary, Omega Protein, completed its
initial public offering on April 8, 1998 and listed its stock on the NYSE.
Income from continuing operations includes $86.7 million of pre-tax gain on
Zapata's sale of Omega Protein stock in the offering and a charge of
approximately $5.0 million representing the minority interest in Omega
Protein's net income subsequent to the offering.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following is a discussion of the Company's financial condition and
results of operations. This discussion should be read in conjunction with the
Company's Consolidated Financial Statements included in Item 8 of this Report.
This discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed below in "Significant Factors
That Could Affect Future Performance and Forward-Looking Statements," as well as
those discussed in this section and elsewhere in this report.

GENERAL

Zapata is a holding company which currently operates in the food segment
through its 60% owned subsidiary, Omega Protein, and historically through
Viskase until the Company sold its Viskase stock in September 2001. In addition,
Zapata holds 98% of Zap.Com Corporation, which is currently a public shell
corporation. Before the Company exited the Internet business in December 2000,
Zap.Com and Zapata's wholly owned subsidiary Charged Productions constituted the
Company's Internet segment. Zapata's consolidated financial statements include
Zapata Corporation and its wholly and majority-owned domestic and foreign
subsidiaries.

ZAPATA CORPORATE

On November 13, 2002, the Board of Directors approved and authorized Zapata
to make a cash tender offer of $28 per share, for up to 500,000 shares of its
common stock, or approximately 20.9% of its outstanding common stock. In
connection with the approval of this tender offer, the Board of Directors
terminated the existing authorization for the repurchase of up to 500,000 shares
in open market or private transactions. At the time of such termination, no
shares had been repurchased under this program.

On December 6, 2002, the Board of Directors terminated the self-tender
offer in light of its rejection of an unsolicited proposal to acquire the
Company and the fact that the Company's stock had consistently traded above the
tender offer price following the self-tender offer announcement. Additionally on
December 6, 2002, the Board of Directors further authorized the Company to
purchase up to 500,000 shares of its outstanding common stock in the open market
or privately negotiated transactions. The shares may be purchased from time to
time as determined by the Company. Any purchased shares would be placed in
treasury and may subsequently be reissued for general corporate purposes. The
repurchases will be made only at such times as are permissible under the federal
securities laws. No time limit has been placed on the duration of the program
and no minimum number or value of shares to be repurchased has been fixed.
Zapata reserves the right to discontinue the repurchase program at any time and
there can be no assurance that any repurchases will be made. As of the date of
this report, no shares have been repurchased under this program.

16

On June 17, 2002, Zapata announced that the Board of Directors authorized
management to explore ways to enhance Zapata stockholder value through its
majority owned subsidiary Omega Protein. The Board asked Zapata management to
consider increasing Zapata's ownership position in Omega Protein or in the
alternative pursuing a possible sale, merger or another significant strategic
transaction involving Omega Protein. Since June 2002, Zapata management has had
discussions with various investment banks to determine whether to engage one of
them to assist the Company in exploring potential transactions involving Omega
Protein. As of the date of this report, no offers have been received and no
agreements or understandings have been entered into by the Company relative to
Omega Protein. There can be no assurance, that a satisfactory transaction
involving Omega Protein will emerge, the timing of any such transaction, if any;
or whether the transaction will ultimately enhance Zapata stockholder value or
how that value will be realized.

During 2002, the Company received a federal tax refund of approximately
$17.3 million primarily related to losses realized on the sale in 2001 of
certain non-investment grade securities and the Company's Viskase shares.

During April 2001, the Company completed its sale of the assets and
operations of Charged Productions (a multi-media production company and a 100%
owned subsidiary of Zapata) to Charged LLC (a limited liability corporation
comprised of former Charged employees) whereby Charged received 20% of the
outstanding equity of the LLC in exchange for certain remaining assets of the
original company. This investment was written down to zero during 2001. (See
Item 1 -- Business Description -- Unconsolidated Affiliates.)

Through June 2000, Zapata had invested its excess cash reserves in U.S.
Government agency securities and cash equivalents. In June 2000, Zapata
management believed that the non-investment grade debt market provided an
opportunity for the Company to meet the funding requirements of its Internet
business and corporate overhead activities while leveraging its available funds
for future acquisitions. Specifically, Zapata management believed that this debt
would yield sufficient income to support its direct operations and free-up
capital otherwise committed for this purpose for deployment in future
acquisitions. Based on adverse market conditions and the sale of the Company's
non-investment grade securities during the second and third quarters of 2001,
the Company recognized a realized loss of approximately $11.8 million during
2001.

During 1995 and 1996, Zapata acquired Viskase Companies, Inc. ("Viskase")
common stock, resulting in an ownership of approximately 38% of then outstanding
shares. The Company reported its Viskase interests in the food segment. During
1998, Zapata reduced its net investment in Viskase to zero as a result of net
losses. During September 2001, Zapata sold its 5,877,304 shares of Viskase stock
for an aggregate price of approximately $59,000 in a private transaction through
a broker.

Omega Protein

Omega is the largest U.S. producer of protein-rich meal and oil derived
from marine sources. Omega's products are produced from menhaden (a herring-like
fish found in commercial quantities), and include FAQ grade and value-added
specialty fish meals, crude and refined fish oils and fish solubles. Omega's
fish meal products are used as nutritional feed additives by animal feed
manufacturers and by commercial livestock producers. Omega's crude fish oil is
sold to food producers and aquaculture feed manufacturers in Europe and Asia and
its refined fish oil products are used in food production and certain industrial
applications. Fish solubles are sold as protein additives for animal feed and as
fertilizers.

Omega's fish catch is processed into FAQ grade fish meal, specialty fish
meals, fish oils and fish solubles at its four operating plants located in
Virginia, Mississippi and Louisiana. Omega utilized 41 fishing vessels and 33
spotter craft in the harvesting operations during 2002. Menhaden are harvested
offshore the U.S. mid-Atlantic and Gulf of Mexico coasts. In 2000, Omega
converted several of its fishing vessels to "carry vessels" which do not engage
in active fishing but instead carry fish from Omega's offshore fishing vessels
to its plants. Utilization of carry vessels increases the amount of time that
certain of Omega's fishing vessels remain offshore fishing productive waters and
therefore increases Omega's fish catch per vessel employed. Since 1999, Omega's
fish catch per vessel has increased 11%. The carry vessels have reduced crews
and crew expenses and incur less maintenance cost than the actual fishing
vessels.
17

The following table summarizes Omega's harvesting and production for the
indicated periods:

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

(1) Fish catch has been converted to tons using the National Marine Fisheries
Service ("NMFS") fish catch conversion ratio of 670 pounds per 1,000 fish.

Omega's harvesting season generally extends from May through December on
the mid-Atlantic coast and from April through October on the Gulf coast. During
the off season and the first few months of each fishing season, Omega fills
purchase orders from the inventory it has accumulated during the previous
fishing season. Prices for Omega's products tend to be lower during the fishing
season when product is more abundant than in the off season. Throughout the
entire year, prices are significantly influenced by supply and demand in world
markets for competing products, particularly other globally produced fish meal
as well as soybean meal for its fish meal products and vegetable fats and oils
for its fish oil products when used as an alternative to vegetable fats and
oils.

During 1999 and continuing through 2000, world grain and oilseed markets
were burdened by excess supplies relative to demand which, in turn, resulted in
prices for most major commodities being sharply lower than in previous years.
Correspondingly, Omega's product prices were adversely impacted during these
periods, resulting in decreased gross margins. During 1999 and again during
2000, Omega determined that the costs of its fish meal and fish oil product
inventories were in excess of those products' realization value by approximately
$18.2 million and $18.1 million, respectively. This realization was due mainly
to the continuing depressed market values of world protein markets and
particularly, animal and oilseed oil markets. The average prices received for
Omega's fish meal and fish oil products were approximately 28.1% and 48.2%
lower, respectively, during 1999 as compared to 1998. Price decreases continued
during 2000 and fish meal and fish oil prices were approximately 7.3% and 20%,
respectively, lower than 1999 average prices. Also impacting 2000 and
contributing to the write-down of inventories was the reduced crude fish oil
production yields (approximately 38% lower yields compared to 1999) experienced
during the majority of the 2000 fishing season in the Gulf of Mexico. These
reduced yields were primarily a result of the reduced fat content in the fish,
which was a result of poor nutritional conditions caused by the extreme drought
conditions suffered by the Gulf of Mexico region during late 1999 and early
2000.

The depressed pricing conditions of years 1999 and 2000 continued into the
early months of 2001 before making significant improvements late in 2001 and
continuing throughout 2002. These price increases were the result of diminished
global fish meal and fish oil inventories as opposed to a weaker world demand
for other competing products. Management believes that it is possible that these
price increases have reached a plateau and stabilized at this time. Future
product price volatility will depend upon the perceived international
availability of fish meal and fish oil inventories. Accordingly, gross profit
margins may vary in the future.

18

In an effort to reduce price volatility and to generate higher, more
consistent profit margins, Omega is continuing its efforts towards the
production and marketing of specialty meal products, which generally have higher
margins than Omega's FAQ meal product. Since 2000, Omega's sales volumes of
specialty meal products has increased approximately 26%. Additionally, Omega is
attempting to introduce its refined fish oil into the food market. Omega has had
some success selling its refined fish oil, trademarked OmegaPure(TM), to food
manufacturers in the United States and Canada at prices that provide
substantially improved margins over the margins that can be obtained from
selling non-refined crude fish oil. Omega cannot estimate, however, the size of
the actual domestic market for OmegaPure(TM) or how long it may take to develop
this market.

Historically, approximately 35% to 40% of Omega's FAQ fish meal was sold on
a two-to-twelve-month forward contract basis. The balance of regular grade and
other products was substantially sold on a spot basis through purchase orders.
Omega began a similar forward sales program for its specialty grade meals and
crude fish oil for 2002 and will continue this program for 2003. Omega's annual
revenues are highly dependent on both annual fish catch and inventories and, in
addition, inventory is generally carried over from one year to another year.
Omega determines the level of inventory to be carried over based on prevailing
market prices of the products and anticipated customer usage and demand during
the off season. Thus, production volume does not necessarily correlate with
sales volume in the same year and sales volumes will fluctuate from quarter to
quarter. Omega's fish meal products have a useable life of approximately one
year from date of production. Practically, however, Omega typically attempts to
empty its warehouses of the previous season's products by the second or third
month of the new fishing season. Omega's crude fish oil products do not lose
efficacy unless exposed to oxygen and therefore, their storage life typically is
longer than that of fish meal.

The following table sets forth Omega's revenues by product (in millions)
and the approximate percentage of total revenues represented thereby, for the
indicated periods:

ZAP.COM

On December 15, 2000, Zap.Com's Board of Directors concluded that Zap.Com's
operations were not likely to become profitable in the foreseeable future and,
therefore, it was in the best interest of Zap.Com and its stockholders to cease
all Internet operations. Since that date, Zap.Com has terminated all salaried
employees and all third party contractual relationships entered into in
connection with its Internet business.

CONSOLIDATED RESULTS OF OPERATIONS

Zapata reported consolidated net income of $6.5 million or $2.71 per share
on revenues of $117.0 million for the year ended December 31, 2002 compared to
consolidated net income of $4.4 million or $1.85 per share on revenues of $98.8
million in 2001. Increased consolidated revenues and consolidated income
resulted primarily from the improved performance of Omega Protein. Omega's net
income for the year ended December 31, 2002 was $12.2 million as compared to
$3.9 million in the prior year. On a consolidated basis,

19

Omega Protein's improved operating performance was offset by a reduction in
interest income recognized by Zapata Corporate.

The following presents a more detailed discussion of the consolidated
operating results:

Revenues. Consolidated revenues increased $18.2 million from $98.8 million
in 2001 to $117.0 million in 2002. This increase was primarily attributable to
higher selling prices of 15% and 41% of Omega Protein's fish meal and fish oil,
respectively. Omega attributes the higher fish meal and oil prices to strong
worldwide demand for fish meal and competing fish oil markets rebounding from
historic low levels.

Cost of revenues. Zapata's consolidated cost of revenues for the year
ended December 31, 2002 was $89.3 million, a $4.6 million increase, or 5% from
$84.7 million in 2001. Cost of sales as a percentage of revenues was 76% for
2002 as compared to 86% in 2001. The 10% decrease in cost of revenues as a
percentage of revenue was due primarily to an increase in the selling price of
Omega's fish meal and fish oil products, respectively.

Selling, general and administrative. Consolidated selling, general, and
administrative expenses decreased $727,000 or 6%, from $12.6 million in 2001 to
$11.9 million in 2002. This decrease was primarily due to a reduction in
expenses recognized for Directors and Officers Liability Insurance at Zap.Com of
$447,000, a reduction in reserves for legal settlements and workers compensation
claims at Zapata Corporate totaling $1.2 million, and reduced insurance
receivables write-offs at Omega. These decreases were partially offset by an
increase in legal and professional fees at Zapata Corporate totaling $483,000,
approximately $184,000 expenses related to the terminated self-tender offer at
Zapata Corporate and Omega's increased employee related costs attributable to
health care and retirement programs.

Impairment of long-lived assets. The Company recorded no impairment
charges on long-lived assets for the year ended December 31, 2002, as compared
to $232,000 in the prior year consisting primarily of the write-down to zero of
Charged's investment in the LLC.

Contract termination (settlement) expense. The Company recorded no
contract termination (settlement) expense for the year ended December 31, 2002.
For the year ended December 31, 2001, Zap.Com favorably settled its disputes
over two of its contracts and reversed previous accruals into income of $403,000
resulting from the settlement amounts being less than the associated accrued
liabilities recognized in 2000. These contracts had no future value to Zap.Com
after they ceased Internet operations.

Interest income, net. Net interest income decreased $2.7 million from net
interest income of $3.5 million in 2001 to $822,000 in 2002. This decrease was a
result of decreased interest income at Zapata Corporate and Omega Protein
resulting from significantly lower interest rates on short-term U.S. Government
Agency securities as compared to rates in 2001. Omega incurred interest expense,
net of $595,000 in 2002 as compared to $485,000 in the prior year.

Realized loss on non-investment grade securities. The Company held no
investment grade securities during 2002. Realized loss on non-investment grade
securities for the year ended December 31, 2001 was $11.8 million, resulting
from the sale of non-investment grade securities.

Income taxes. The Company recorded a consolidated provision for income
taxes of $5.1 million in 2002 as compared to a consolidated benefit of $12.8
million in 2001. The consolidated provision was comprised primarily of Omega's
provision of $5.7 million resulting from increased taxable income, partially
offset by a $557,000 benefit at Zapata Corporate. The consolidated benefit in
2001 resulted from the sale of the Company's non-investment grade securities and
its Viskase shares, partially offset by Omega's tax provision. Depending on a
number of factors, the Company may incur a personal holding company tax in the
future. See Part II -- Item 7 "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Significant Factors That Could Affect
Future Performance and Forward-Looking Statements."

Minority interest. Minority interest from the consolidated statements of
operations represents the minority stockholders' interest in the net income of
the Company's subsidiaries (approximately 40% in Omega Protein and approximately
2% in Zap.Com). In 2002, minority interest was a $4.9 million reduction of
Zapata's share in the net income of Omega Protein, offset by a reduction in
Zapata's share in the net loss of
20

Zap.Com. In 2001, minority interest was a $1.5 million reduction of Zapata's
share in the net income of Omega Protein, offset by a reduction in Zapata's
share in the net loss of Zap.Com.

2001-2000

Zapata reported consolidated net income of $4.4 million on $98.8 million in
consolidated revenues in 2001 as compared to a consolidated net loss of $26.0
million on $84.1 million in consolidated revenues in 2000. Increased
consolidated revenues and consolidated income resulted primarily from the
improved performance of Omega Protein, the termination of the Company's Internet
operations in 2000, and the recognition of a benefit from income taxes at Zapata
Corporate, all of which was partially offset by realized losses on investments
and a reduction in interest income at Zapata Corporate.

The following presents a more detailed discussion of the consolidated
operating results:

Revenues. Consolidated revenues increased from $84.1 million in 2000 to
$98.8 million in 2001. This increase was primarily attributable to higher
selling prices of Omega Protein's fish meal and fish oil, combined with a 43.8%
increase in sales volumes of fish oil as compared to 2000. Selling prices for
fish meal and fish oil products increased by 17.5% and 37.7% in 2001 and 2000,
respectively. The higher sales volumes of Omega's fish oil products were due
primarily to a 48.5% increase in oil yields from the 2001 fishing effort as
compared to the previous year. Omega attributes the higher fish meal and fish
oil selling prices to diminished global fish meal and fish oil inventories.

Cost of revenues. Zapata's consolidated cost of revenues for the year
ended December 31, 2001 was $84.7 million, a $362,000 decrease, or 0.4%, from
$85.0 million (excluding the $18.1 million inventory write-down) in 2000. Cost
of sales as a percentage of revenues was 85.7% for 2001 as compared to 101.1% in
2000 (excluding the inventory write-down). The 15.4% decrease in cost of sales
as a percentage of revenues was due primarily to a 17.5% and 37.7% increase in
the selling price of Omega's fish meal and fish oil products, respectively,
along with a 43.8% increase in sales volume of Omega's fish oil.

Product development. There were no product development costs for the year
ended December 31, 2001, as compared to $1.5 million of such costs in the prior
year. This decrease is due to the termination of the Company's Internet
operations in December 2000.

Selling, general and administrative. Selling, general, and administrative
expenses decreased $3.2 million or 20.0%, from $15.8 million in 2000 to $12.6
million in 2001. This decrease was primarily due to termination of the Company's
Internet operations in December of 2000 and a reduction in staffing and related
employee costs at Omega, partially offset by Omega's recognition of $1.4 million
in receivables due from an insurance company as uncollectible due to the
insurance company's bankruptcy filing.

Impairment of long-lived assets. For the year ended December 31, 2001, the
Company recorded $232,000 in impairment of long-lived assets, consisting
primarily of the write-down of Charged's investment in Charged Productions LLC
to zero. As a result of the termination of the Company's Internet operations in
2000, $1.3 million of assets were deemed to be impaired as of December 31, 2000.

Contract termination (settlement) expense. Based on the decision to
terminate Internet operations in December of 2000, Charged Productions and
Zap.Com recorded expenses and associated accrued liabilities for cost associated
with exiting the business totaling $779,000. These expenses related primarily to
Zap.Com's costs associated with certain contracts entered into by Zap.Com during
its development stage that were deemed to have no future value. During 2001,
Zap.Com favorably settled its disputes over two of its contracts. Accordingly,
Zap.Com reversed previous accruals of $403,000 into income resulting from the
settlement amounts being less than the associated accrued liabilities.

Interest income, net. Net interest income decreased $3.9 million or 52.5%
from net interest income of $7.4 million in 2000 to $3.5 million in 2001. This
decrease was a result of significantly lower interest rates on short-term U.S.
Government Agency securities as compared to rates in 2000, as well as Omega
Protein incurring more interest expense during the current year. Omega incurred
net interest expense of $485,000 in 2001 as compared to $293,000 in the prior
year. The increase in net interest expense at Omega was primarily

21

due to a reduction of interest income as a result of lower returns on
investments. Also, in 2001, Zapata Corporate received approximately $1.1 million
of interest income earned on the Company's non-investment grade securities as
opposed to approximately $2.4 million 2000.

Realized loss on non-investment grade securities. Realized loss on
non-investment grade securities for the year ended December 31, 2001 was $11.8
million as compared to $13.2 million for the previous year. Management decided
to sell its non-investment grade securities during the second and third quarters
of 2001, resulting in a realized loss of $11.8 million in 2001. For 2000, the
$13.2 million in realized losses relates primarily to "other than temporary"
write-downs of the non-investment grade debt held in the Company's available for
sale portfolio.

Income taxes. The Company recorded benefit for income taxes of $12.8
million in 2001 as compared to $12.5 million in 2000. The benefit of $12.8
million in 2001 resulted from management's decision sell the Company's
non-investment grade securities and its Viskase shares stock during 2001,
partially offset by Omega's tax provision. The benefit of $12.5 million in 2000
was primarily the result of net operating losses incurred by Omega Protein and
Zapata.

Minority interest. Minority interest from the consolidated statements of
operations represents the minority stockholders' interest in the net income of
the Company's subsidiaries (approximately 40% in Omega Protein and approximately
2% in Zap.Com). In 2001, minority interest was a $1.5 million reduction of
Zapata's share in the net income of Omega Protein, offset by a reduction in
Zapata's share in the net loss of Zap.Com. In 2000, minority interest was a $6.6
million reduction of Zapata's share of the net losses incurred by Omega Protein
and Zap.Com.

LIQUIDITY AND CAPITAL RESOURCES

GENERAL

Zapata, Omega Protein and Zap.Com are separate public companies.
Accordingly, the capital resources and liquidity of Omega Protein and Zap.Com
are legally independent of Zapata. The working capital and other assets of Omega
Protein and Zap.Com are dedicated to their respective operations and are not
expected to be readily available for the general corporate purposes of Zapata,
except for any dividends that may be declared and paid to their respective
stockholders. Omega Protein's credit facility prohibits any dividends from being
declared or paid with respect to its outstanding capital stock, including the
shares held by Zapata. For the foreseeable future, Zapata does not expect to
receive cash dividends on its Omega Protein or Zap.Com shares.

The following tables summarizes information about Zapata's consolidated
contractual cash obligations and other commercial commitments (in thousands) as
of December 31, 2002 and the effect such obligations are expected to have on its
consolidated liquidity and cash flow in future periods:

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

(1) As of December 31, 2002, Zapata had $15.5 million in consolidated
indebtedness, all of which was Omega Protein's. Zapata has neither
guaranteed nor otherwise agreed to be liable for the repayment of this debt.
For more information concerning debt, see Note 11 to the Company's
Consolidated Financial Statements included in Item 8 of this Report.

(2) For more information concerning operating leases, see Note 16 to the
Company's Consolidated Financial Statements included in Item 8 of this
Report.

(3) For more information concerning the consulting agreement with Malcolm
Glazer, see Note 20 to the Company's Consolidated Financial Statements
included in Item 8 of this Report. Other amounts in this category are
related to a consultancy and retirement agreement entered into in 1981 with
a former executive officer of the Company.

(4) For more information concerning minimum pension liabilities, see Note 12 to
the Company's Consolidated Financial Statements included in Item 8 of this
Report.

(5) As of December 31, 2002, Omega had no cash borrowings outstanding under its
$20.0 million credit facility. This credit facility is reduced by
outstanding standby letters of credit totaling approximately $2.1 million.
For more information concerning Omega's credit facility and standby letters
of Credit, see Note 11 to the Company's Consolidated Financial Statements
included in Item 8 of this Report.

ZAPATA CORPORATE

Because Zapata does not guarantee or otherwise assume any liability for
Omega Protein or Zap.Com or have any investment commitments to either Omega
Protein or Zap.Com, it is useful to separately review the cash obligations of
Zapata exclusive of Omega and Zap.Com ("Zapata Corporate").

Zapata Corporate's current source of liquidity is its cash, cash
equivalents and short- and long-term investments and the interest income it
earns on these funds. Zapata expects these assets to continue to be a source of
liquidity except to the extent that it may be used to fund any acquisitions or
to purchase Zapata or Omega common stock. Zapata Corporate's investments consist
of U.S. Government agency securities and cash equivalents. At December 31, 2002,
Corporate's cash, cash equivalents and short- and long-term investments were
$85.0 million as compared to $72.4 million as of December 31, 2001. The increase
was attributable to Zapata's receipt during 2002 of a federal tax refund of
approximately $17.3 million primarily related to losses realized in 2001 of
certain non-investment grade securities and the Company's Viskase shares.

In addition to its cash, cash equivalents, short- and long-term investments
and interest income, Zapata Corporate has a potential secondary source of
liquidity in its publicly traded securities of Omega Protein and Zap.Com.
Zapata's holdings of Omega Protein and Zap.Com stock constitute "restricted
stock" under SEC Rule 144 and may only be sold in the public market pursuant to
an effective registration statement under the Securities Act of 1933 and under
any required state securities laws or pursuant to an available exemption. These
and other securities law restrictions could prevent or delay any sale by Zapata
of these securities or reduce the amount of proceeds that might otherwise be
realized therefrom. Currently, all of Zapata's equity securities holdings are
eligible for sale under Rule 144. Zapata also has demand and piggyback
registration rights for its Omega Protein and Zap.Com shares. The low volume of
trading in Omega's shares and the thin market in Zap.Com's shares will make it
difficult for Zapata to sell any significant number of shares in the public
market.

Zapata Corporate's liquidity needs are primarily for operating expenses,
litigation insurance costs, possible stock repurchases and acquisitions (See
Item 1 -- Zapata Corporate Business Acquisitions).

23

Corporate may also invest a significant portion of its cash assets in one or
more operating businesses. Although the Company believes it will have sufficient
funds for future acquisitions, depending on the size of future acquisitions, it
may need to raise additional capital through the issuance of equity or debt.
There is no assurance, however, that such capital will be available at the time,
in the amounts necessary or with terms satisfactory to Zapata.

The following table summarizes information about Zapata Corporate's
contractual cash obligations (in thousands) as of December 31, 2002, and the
effects such obligations are expected to have on Zapata Corporate's liquidity
and cash flow in future periods:

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

(1) For more information concerning operating leases, see Note 16 to the
Company's Consolidated Financial Statements included in Item 8 of this
Report.

(2) For more information concerning the consulting agreement with Malcolm
Glazer, see Note 20 to the Company's Consolidated Financial Statements
included in Item 8 of this Report. Other amounts in this category are
related to a consultancy and retirement agreement entered into in 1981 with
a former executive officer of the Company.

(3) For more information concerning minimum pension liabilities, see Note 12 to
the Company's Consolidated Financial Statements included in Item 8 of this
Report.

In the absence of unforeseen developments, Zapata believes that it has
sufficient liquidity to fund Zapata Corporate's operating expenses and other
operational requirements at least for the 12 months following the date of this
report.

SUMMARY OF CASH FLOWS

The following table summarizes Zapata's consolidating cash flow information
(in thousands):

Net cash provided by (used in) operating activities. Consolidated cash
provided by operating activities was $33.1 million for the year ended December
31, 2002 as compared to $16.6 million for the prior year. The increase was
primarily due to Zapata's receipt of a significant federal income tax refund
during 2002 and Omega Protein's increase in net income during the current year
as compared to the prior year.

Consolidated cash provided by operating activities was $16.6 million for
the year ended December 31, 2002 as compared to consolidated cash used in
operating activities of $4.7 million for the year ended December 31, 2000. The
increase in cash provided by operating activities for 2001 was primarily due to
Omega Protein's generation of net income during the year as opposed to a
significant loss recognized in the prior year. In addition, during December
2000, Zapata ceased the operations of Charged, Zap.Com and all other Internet
operations. These decisions provided an increase to cash flows provided by
operating activities during 2001 as opposed to 2000 by eliminating the expenses
associated with these operations.

Net cash (used in) provided by investing activities. On a consolidated
basis, Zapata had net cash used in investing activities of $13.6 million for the
year ended December 31, 2002 as compared to net cash provided by investing
activities of $25.9 million for the prior year. Variations in the Company's
consolidated net cash (used in) provided by investing activities are typically
the result of the change in the mix of cash and cash equivalents and short and
long-term investments during the period. All highly liquid investments with
original maturities of three months or less are considered to be cash
equivalents and all investments with original maturities of greater than three
months are classified as either short or long-term investments. Accordingly, the
net cash usage was primarily due to the increase in purchases of short-term
investments during the period as compared to the prior year, the purchase of
long-term investments during the current period, and Omega's increased capital
expenditures during the current year. Omega Protein anticipates making
approximately $8.0 million of capital expenditures in 2003, a significant
portion of which will be used to refurbish vessels and plant assets and to
repair certain equipment.

Consolidated cash provided by investing activities was $25.9 million for
the year ended December 31, 2001 as compared to consolidated cash used in
investing activities of $47.6 million. The increase in consolidated cash
provided by investing activities was primarily due to Zapata's reduction in
purchases of short-term investments, Zapata's lack of purchases of
non-investment grade securities during 2001 as compared to 2000 and Omega
Protein's reduction in capital expenditures during the current year.

Net cash (used in) provided by financing activities. On a consolidated
basis, Zapata had net cash used in financing activities of $1.3 million for the
year ended December 31, 2002 as compared to net cash provided by financing
activities of $752,000 for the prior year. The change from net cash provided by
operating activities to net cash used in financing activities was due to Omega's
debt repayments during the current year and the lack of Omega Protein borrowings
during 2002 as compared to 2001.

Consolidated cash provided by financing activities was $752,000 for the
year ended December 31, 2001 as compared to consolidated net cash used in
financing activities of $1.2 million for the year ended December 31, 2000. The
increase is due to Omega Protein's borrowings during 2001 as compared to no
borrowings during 2000, partially offset by Omega's principal payments on
borrowings.

RECENT ACCOUNTING PRONOUNCEMENTS

On January 17, 2003, the Financial Accounting Standards Board ("FASB")
issued Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest
Entities." FIN 46 clarifies the application of Accounting

25

Research Bulletin No. 51, "Consolidated Financial Statements," to certain
entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 applies immediately to variable interest
entities created after January 31, 2003, and to variable interest entities in
which an enterprise obtains an interest after that date. It applies in the first
fiscal year or interim period beginning after June 15, 2003, to variable
interest entities in which an enterprise holds a variable interest that it
acquired before February 1, 2003. FIN 46 applies to public enterprises as of the
beginning of the applicable interim or annual period. FIN 46 also sets forth
certain disclosures regarding interests in variable interest entities that are
determined significant, even if consolidation is not required. The disclosure
requirements of this interpretation are effective for all financial statements
issued after January 31, 2003. The Company does not expect the adoption of FIN
46 to have a material impact on the Company's financial position, results of
operations or cash flows.

On November 25, 2002, the FASB issued Interpretation No. 45 ("FIN 45"),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, an interpretation of FASB
Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34." FIN
45 clarifies the requirements of FASB Statement No. 5, "Accounting for
Contingencies" ("SFAS 5"), relating to a guarantor's accounting for, and
disclosure of, the issuance of certain types of guarantees. The disclosure
provisions of FIN 45 are effective for financial statements of interim or annual
periods that end after December 15, 2002. However, the provisions for initial
recognition and measurement are effective on a prospective basis for guarantees
that are issued or modified after December 31, 2002, irrespective of a
guarantor's year-end. The Company does not expect the adoption of FIN 45
provisions for initial recognition and measurement to have a material impact on
the Company's financial position, results of operations or cash flows.

In December 2002, FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure, an amendment of FASB Statement No.
123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based
Compensation" to provide alternative methods of transition for a voluntary
change to the fair value-based method of accounting for stock-based employee
compensation. It also amends the disclosure provisions of that Statement to
require prominent disclosure about the effects on reported net income of an
entity's accounting policy decisions with respect to stock-based employee
compensation. Finally, this Statement amends APB Opinion No. 28, "Interim
Financial Reporting", to require disclosure about those effects in interim
financial information. Although the Company continues to account for stock-based
compensation according to APB 25 and the related interpretations under FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation," the Company has adopted the required disclosure provisions under
SFAS No. 148 at December 31, 2002. As a result of the Company's continued use of
the intrinsic value method of accounting for stock-based compensation, the
transition provisions will not have an effect of the Company's financial
position, results of operations or cash flows.

In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions -- An Amendment of FASB Statements No. 72 and 144 and
FASB Interpretation No. 9." The provision of this statement related to the
application of the purchase method of accounting is effective for acquisitions
for which the date of acquisition is on or after October 1, 2002. The provisions
related to accounting for the impairment or disposal of certain long-term
customer-relationship intangible assets are effective on October 1, 2002.
Transition provisions for previously recognized unidentifiable intangible assets
are effective on October 1, 2002, with earlier application permitted. The
adoption of SFAS No. 147 did not have any impact on the Company's financial
position, results of operations or cash flows.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Exit or
Disposal Activities." SFAS No. 146 addresses significant issues regarding the
recognition, measurement, and reporting of costs that are associated with exit
and disposal activities, including restructuring activities that are currently
accounted for pursuant to the guidance that the Emerging Issues Task Force
("EITF") has set forth in EITF Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." The scope of SFAS No.
146 also includes
26

(1) costs related to terminating a contract that is not a capital lease and (2)
termination benefits that employees who are involuntarily terminated receive
under the terms of a one-time benefit arrangement that is not an ongoing benefit
arrangement or an individual deferred-compensation contract. SFAS No. 146 will
be effective for exit or disposal activities that are initiated after December
31, 2002. The Company does not expect the adoption of SFAS No. 146 to have a
material impact on the Company's financial position, results of operations or
cash flows.

In April 2002, the FASB issued SFAS No. 145, which rescinds SFAS No. 4,
"Reporting Gains and Losses from Extinguishment of Debt," SFAS No. 44,
"Accounting for Intangible Assets of Motor Carriers" and SFAS No. 64,
"Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements and amends
SFAS No. 13, "Accounting for Leases." This statement updates, clarifies and
simplifies existing accounting pronouncements. As a result of rescinding SFAS
No. 4 and SFAS No. 64, the criteria in Accounting Principles Bulletin No. 30
will be used to classify gains and losses from extinguishment of debt. This
statement is effective for financial statements issued for fiscal years
beginning after May 15, 2002. The Company does not expect the adoption of SFAS
No. 145 to have a material impact on the Company's financial position, results
of operations or cash flows.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 requires that obligations associated with
the retirement of a tangible long-lived asset to be recorded as a liability when
those obligations are incurred, with the amount of the liability initially
measured at fair value. Upon initially recognizing a liability for an asset
retirement obligation, an entity must capitalize the cost by recognizing an
increase in the carrying amount of the related long-lived asset. Over time, the
liability is accreted to its present value each period, and the capitalized cost
is depreciated over the useful life of the related asset. Upon settlement of the
liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement. The provisions of SFAS No. 143 will be
required to be adopted by the Company in Fiscal 2003. The Company does not
believe the adoption of this statement will have a material impact on the
Company's financial position, results of operations or cash flows.

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141 Business
Combinations" and No. 142 "Goodwill and Other Intangible Assets." SFAS No. 141
requires that all business combinations be accounted for under the purchase
method only and that certain acquired intangible assets in a business
combination be recognized as assets apart from goodwill. SFAS No. 142 requires
that ratable amortization of goodwill be replaced with periodic tests of the
goodwill's impairment and that intangible assets other than goodwill be
amortized over their useful lives. SFAS No. 141 is effective for all business
combinations initiated after June 30, 2001, and the provisions of SFAS No. 142
are effective for all years beginning after December 15, 2001. The adoption of
SFAS No. 141 and SFAS No. 142 did not have a material impact on the Company's
financial position, results of operations or cash flows.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of Zapata's financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
management to make estimates and assumptions that affect amounts reported
therein. The following lists our current accounting policies involving
significant management judgment and provides a brief description of these
policies:

Litigation reserves. The establishment of litigation reserves requires
judgments concerning the ultimate outcome of pending litigation against the
Company and its subsidiaries. In applying judgment, management utilizes opinions
and estimates obtained from outside legal counsel to apply the standards of SFAS
No. 5 "Accounting for Contingencies." Accordingly, estimated amounts relating to
certain litigation have met the criteria for the recognition of a liability
under SFAS No. 5. Other litigation for which a liability has not been recognized
is reviewed on an ongoing basis in conjunction with the standards of SFAS No. 5.
A liability is recognized for all associated legal costs as incurred.
Liabilities for litigation settlements, legal fees and changes

27

in these estimated amounts may have a material impact on the Company's financial
position, results of operations or cash flows.

Valuation allowances for deferred income taxes. The Company reduces its
deferred tax assets to an amount that it believes is more likely than not to be
realized. In so doing, the Company estimates future taxable income in
determining if any valuation allowance is necessary. While the Company believes
it is more likely than not that it will be able to realize this amount of
estimated net deferred income tax benefits, it is possible that the facts and
circumstances on which the Company's estimates and judgments are based could
change, which could result in additional income tax expense in the future to
recognize or increase the associated valuation allowances. For additional
information regarding income taxes and valuation allowances, see Note 15 to the
Consolidated Financial Statements included in Item 8 of this report.

Benefit plan assumptions. On a consolidated basis, the Company has three
defined benefit plans, under which participants earn a retirement benefit based
upon a formula set forth in each plan. The Company records income or expense
related to these plans using actuarially determined amounts that are calculated
under the provisions of SFAS No. 87, "Employers' Accounting for Pensions." Key
assumptions used in the actuarial valuations include the discount rate and the
anticipated rate of return on plan assets. These rates are based on market
interest rates, and therefore fluctuations in market interest rates could impact
the amount of pension income or expense recorded for these plans.

Despite the Company's belief that its estimates are reasonable for these
key actuarial assumptions, future actual results will likely differ from the
Company's estimates, and these differences could materially affect the Company's
future financial statements either unfavorably or favorably. Additionally, it is
possible that assets of these plans could decline as a result of negative
investment returns, which combined with increasing amounts of accumulated
benefit obligations, could result in the Company with respect to its plans and
Omega Protein with respect to its plan being required to make significant cash
contributions to its plans in future periods.

For additional information regarding pension plan assets, benefit
obligations and accounting assumptions, see Notes 12 and 17 of the Notes to
Consolidated Financial Statements included in Item 8.

Omega's lower-of-cost-or-market inventory analysis. Inventory is stated at
the lower of cost or market. Omega Protein's fishing season runs from mid-April
to the first of November in the Gulf of Mexico and from the beginning of May
into December in the Atlantic. Government regulations generally preclude Omega
Protein from fishing during the off-seasons.

Omega Protein's inventory cost system considers all costs associated with
an annual fish catch and its processing, both variable and fixed and including
both costs incurred during the off-season and during the fishing season. Omega
Protein's costing system allocates cost to inventory quantities on a per unit
basis as calculated by a formula that considers total estimated inventoriable
costs for a fishing season (including off-season costs) to total estimated fish
catch and the relative fair market value of the individual products produced.
Omega Protein adjusts the cost of sales, off-season costs and inventory balances
at the end of each quarter based on revised estimates of total inventoriable
costs and fish catch. Omega Protein's lower-of-cost-or-market-value analyses at
year-end and at interim periods compare the total estimated per unit production
cost of Omega's expected production to the projected per unit market prices of
the products. The impairment analyses involve estimates of, among other things,
future fish catches and related costs, and expected commodity prices for the
fish products. These estimates, which management believes are reasonable and
supportable, involve estimates of future activities and events which are
inherently imprecise and for which actual results may differ materially.
Revisions in such estimates or actual results could materially impact Omega
Protein's results of operation and financial position.

Omega's deferral of off-season costs. During the off-seasons, in
connection with the upcoming fishing seasons, Omega Protein incurs costs (i.e.,
plant and vessel related labor, utilities, rent and depreciation) that are
directly related to Omega's infrastructure. These costs accumulate in inventory
and are applied as elements of the cost of production of Omega Protein's
products throughout the fishing season ratably based on Omega's monthly fish
catch and the expected total fish catch for the season.

28

Omega's accounting for self-insurance retentions. As mentioned previously,
Omega Protein carries insurance for certain losses relating to its vessels and
Jones Act liabilities for employees aboard its vessels (collectively, "Vessel
Claims Insurance"). The typical Vessel Claims Insurance policy contains an
annual aggregate deductible ("AAD") for which Omega remains responsible, while
the insurance carrier is responsible for all applicable amounts which exceed the
AAD. It is the Company's policy to accrue current amounts due and record amounts
paid out on each claim. Once payments exceed the AAD, the Company records an
insurance receivable for a given policy year. Omega Protein provides reserves
for those portions of the AAD for which Omega remains responsible by using an
estimation process that considers Omega Protein, Inc. specific and industry data
as well as Omega Protein management's experience assumptions and consultation
with outside counsel. Omega Protein management's current estimated range of
liabilities related to such cases is based on claims for which Omega's
management can estimate the amount and range of loss. Omega Protein has recorded
the minimum estimated liability related to those claims, where there is a range
of loss. As additional information becomes available, Omega will assess the
potential liability related to its pending litigation and revise its estimates.
Such revisions in estimates of the potential liability could materially impact
Omega Protein's results of operation and financial position.

The Company continually updates and assesses the facts and circumstances
regarding these critical accounting matters and other significant accounting
matters affecting estimates in its financial statements. In addition to these
accounting matters, other factors may affect the Company's results, as described
below.

SIGNIFICANT FACTORS THAT COULD AFFECT FUTURE PERFORMANCE AND FORWARD-LOOKING
STATEMENTS

Zapata believes that its results of operations, cash flows and financial
condition could be negatively impacted by certain risks and uncertainties,
including, without limitation, the risks and uncertainties identified in
Zapata's other public reports and filings made with the SEC, press releases and
public statements made by authorized officers of Zapata from time to time and
those risks and uncertainties set forth below.

- Risks associated with the fact that a significant portion of Zapata's
assets have consisted of securities, including equity and other interests
in its operating companies. This could subject Zapata to the registration
requirements of the Investment Company Act of 1940 (the "Investment
Company Act"). The Investment Company Act requires registration of, and
imposes substantial restrictions on, certain companies that engage, or
propose to engage, primarily in the business of investing, reinvesting,
owning, holding or trading in securities, or that fail certain
statistical tests concerning a company's asset composition and sources of
income. Zapata intends to actively participate in the management of its
operating companies, consistent with applicable laws, contractual
arrangements and other requirements. Accordingly, Zapata believes that it
is primarily engaged in a business other than investing, reinvesting,
owning, holding or trading in securities. Further, Zapata endeavors to
ensure that its holdings of investment securities constitute less than
40% of its total assets (excluding Government securities and cash) on an
unconsolidated basis. Zapata intends to monitor and attempt to adjust the
nature of its interests in and involvement with operating companies in
order to avoid subjecting Zapata to the registration requirements of the
Investment Company Act. There can be no assurance, however, that Zapata's
business activities will not ultimately subject Zapata to the Investment
Company Act. If Zapata were required to register as an investment company
under the Investment Company Act, it would become subject to regulations
that would have a material adverse impact on its financial position,
results of operations and cash flows.

- Risks associated with the personal holding company penalty tax. Section
541 of the Internal Revenue Code of 1986, as amended (the "IRC"),
subjects a corporation, which is a "personal holding company" as defined
in the IRC, to a 39.6% penalty tax on "undistributed personal holding
company income" in addition to the corporation's normal income tax.
Generally, undistributed personal holding company income is based on
taxable income, subject to certain adjustments, most notably a reduction
for Federal incomes taxes. Personal holding company income is comprised
primarily of passive investment income plus, under certain circumstances,
personal service income. Zapata and its domestic subsidiaries (other than
Omega) could become subject to the penalty tax if (i) 60% or more of its
adjusted ordinary gross income is personal holding company income and
(ii) 50% or more of its
29

outstanding common stock is owned, directly or indirectly, by five or
fewer individuals at any time during the last half of the taxable year.
The Company believes that five or fewer of Zapata's stockholders hold 50%
or more of its outstanding common stock for purposes of IRC Section 541.
However, as of December 31, 2002, Zapata and its domestic subsidiaries
(other than Omega) had no undistributed personal holding company income
and therefore has not recorded a personal holding company tax liability.
There can be no assurance that Zapata will not be subject to this tax in
the future, that in turn may materially and adversely impact the
Company's financial position, results of operations and cash flows.

- Risk associated with the uncertainty of the results of an ongoing
Internal Revenue Service audit of the tax fiscal years ended September
30, 1997-2001. Although the Company does not expect that the results of
this audit will have a material impact its financial position, results of
operations and cash flows, there can be no assurance that such results
will not be material.

- Risks associated with a change of ownership pursuant to Section 382 of
the Internal Revenue Code. Such risks could significantly or possibly
eliminate Zapata's utilization of its net operating losses and/or
alternative minimum tax credits. An ownership change for this purpose is
generally a change in the majority ownership of a company over a three
year period.

- Risk that our officers, directors and majority stockholder exert
substantial influence over Zapata. Members of our Board of Directors, our
executive officers together with members of their families and entities
that may be deemed affiliates of or related to such persons or entities,
and our majority stockholder beneficially own approximately 47% of our
outstanding common shares. Accordingly, these stockholders may be able to
elect all members of our Board of Directors and determine the outcome of
certain corporate actions requiring stockholder approval, such as any
future issuances of common stock or other securities, merger and
acquisition decisions, declaration of dividends, and the election of
directors. This level of ownership may have a significant effect in
delaying, deferring, or preventing a change in control of Zapata and may
adversely affect the voting and other rights of other holders of our
common shares.

- Risks related to the costs of defending litigation and the risk of
unanticipated material adverse outcomes in such litigation or any other
unfavorable outcomes or settlements. There can be no assurance that
Zapata will prevail in any pending litigation and to the extent that the
Company sustains losses growing out of any pending litigation which are
not presently reserved or otherwise provided for or insured against, its
business, results of operation and/or financial condition could be
adversely affected.

- Risks related to future changes in accounting and reporting practices of
Zapata and any equity investments which it may make could materially and
adversely affect Zapata's results of operations, cash flows and/or
financial condition.

- Risks associated with pursuing potential acquisitions. These acquisitions
could be material in size and scope, and since the Company has not yet
identified any assets, property or business that it may acquire or
develop, potential investors in the Company will have virtually no
substantive information about any such new business upon which to base a
decision whether to invest in the Company. In any event depending upon
the size and structure of the acquisitions, stockholders may not have the
opportunity to vote on the transaction, or access to any information
about any new business until such time as a transaction is completed and
the Company files a report with the SEC disclosing the nature of such
transaction and/or business. There is no assurance that the Company will
be successful in identifying suitable acquisition opportunities. If the
Company does identify any potential acquisition opportunity, there is no
assurance that the acquisition will be consummated, and if the
acquisition does occur, there is no assurance that it will be successful
in enhancing the Company's business or will increase the Company's
earnings or not materially adversely affect the Company's financial
condition. The Company faces significant competition for acquisition
opportunities, which may inhibit its ability to complete suitable
transactions or increase the cost that must be paid. Future acquisitions
could also divert substantial management time, result in short term
reductions in earnings or special transactions
30

or other charges and may be difficult to integrate with existing
operations or assets. We may, in the future, issue additional shares of
common stock or other securities in connection with one or more
acquisitions, which may dilute our stockholders. Depending upon the size
and number of acquisitions, the Company may also borrow money to fund its
acquisitions. In that event, the Company's stockholders would be subject
to the risks normally associated with leveraged transactions, including
the inability to service the debt or the dedication of a significant
amount of cash flow to service the debt, limitations on the Company's
ability to secure future financing and the imposition of certain
operating restrictions.

Risks associated with Omega Protein include the following, any of which
could have a material adverse impact on Omega's (and hence Zapata's) financial
position, results of operations and cash flows:

- Omega's ability to meet its raw material requirements through its annual
menhaden harvest, which is subject to fluctuation due to natural
conditions over which Omega has no control, such as varying fish
population, adverse weather conditions and disease.

- The impact on Omega if its spotter aircraft are prohibited or restricted
from operating in their normal manner during Omega's fishing season. For
example, as a direct result of the September 11, 2001 terrorist attacks,
the Secretary of Transportation issued a federal ground stop order that
grounded certain aircraft (including Omega's fish-spotting aircraft) for
approximately nine days. This loss of spotter aircraft coverage severely
hampered Omega's ability to locate menhaden fish during this nine-day
period and thereby reduced its amount of saleable product.

- The impact on the prices for Omega's products of worldwide supply and
demand relationships over which Omega has no control and which tend to
fluctuate to a significant extent over the course of a year and from year
to year. The products that influence the supply and demand relationship
are world supplies of fish meal made from other fish species, palm oil,
soy meal and oil, and other edible oils.

- The impact of a violation by Omega of federal, state and local laws and
regulations relating to menhaden fishing and the protection of the
environment and the health and safety of its employees or of the adoption
of new laws and regulations at federal, state or local levels that
restrict or prohibit menhaden or purse-seine fishing, or stricter
interpretations of existing laws or regulations that materially adversely
affect Omega's business.

- The impact on Omega if it cannot harvest menhaden in U.S. jurisdictional
waters if Omega fails to comply with U.S. citizenship ownership
requirements.

- Risks inherent in Omega's attempt to expand into sales of refined, food
grade fish oils for consumption in the U.S., including the unproven
market for this product.

- Fluctuations in Omega's quarterly operating results due to the
seasonality of Omega's business and Omega's deferral of sales of
inventory based on worldwide prices for competing products.

- The ability of Omega to retain and recruit key officers and qualified
personnel, vessel captains and crewmembers.

- Risks associated with the strength of local currencies of the countries
in which its products are sold, changes in social, political and economic
conditions inherent in foreign operations and international trade,
including changes in the law and policies that govern foreign investment
and international trade in such countries, changes in U.S. laws and
regulations relating to foreign investment and trade, changes in tax or
other laws, partial or total expatriation, currency exchange rate
fluctuations and restrictions on currency repatriation, the disruption of
labor, political disturbances, insurrection or war and the effect of
requirements of partial local ownership of operations in certain
countries.

- Risks related to unanticipated material adverse outcomes in any pending
litigation or any other unfavorable outcomes or settlements. There can be
no assurance that Omega will prevail in any pending litigation and to the
extent that Omega sustains losses growing out of any pending litigation

31

which are not presently reserved or otherwise provided for or insured
against, its business, results of operation and financial condition could
be adversely affected.

- In the future Omega may undertake acquisitions, although there is no
assurance this will occur. Further, there can be no assurance that Omega
will be able to profitably manage future businesses it may acquire or
successfully integrate future businesses it may acquire into Omega
without substantial costs, delays or other problems which could have a
material adverse effect on Omega's business, results of operations and
financial condition.

- A general hardening of the world insurance markets in recent years has
made Omega Protein's insurance more costly and is likely to continue to
increase Omega's cost of insurance. Depending on the magnitude of the
increase in insurance premiums, Omega may elect to increase its
deductibles and self-retentions in order to achieve lower insurance
premium costs. These higher deductibles and self-retentions will expose
Omega to greater risk of loss if claims occur.

Risks associated with Zap.Com, including:

- Risks associated with the future results of Zap.Com, including its lack
of a source of revenue, its failure to identify a particular industry in
which to concentrate its acquisition efforts, the risks associated with
any new business which is ultimately acquired, the absence of substantive
disclosure relating to prospective new businesses, the limited amount of
time which Zap.Com's management plans to devote to its business,
potential conflicts of interest between Zapata and Zap.Com's officers and
directors, lack of assurance of a continued public trading market, the
risks associated with being a low priced security, potential liabilities
as a member of Zapata's consolidated tax group, because Zap.Com does not
intend to pay any cash dividends on its common stock, holders of Zap.Com
common stock will not be able to receive a return on their shares unless
they sell their shares, anti-takeover provisions in its corporate
documents may have an adverse effect on the market price of its common
stock, a substantial amount of its common stock is eligible for sale into
the market and this could depress its stock price, the competition that
Zap.Com faces in pursuing a new acquisition which may inhibit its ability
to complete suitable transactions or increase the cost that must be paid
and the limited resources that Zap.Com has to devote to an acquisition.

ITEM 7.A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Zapata, Omega Protein and and Zap.Com are separate public companies.
Accordingly, the market risks of Omega Protein and Zap.Com are legally
independent of Zapata. The following information relates to the market risks of
Zapata Corporate.

INTEREST RATE RISK

Zapata's investment grade securities include obligations of the U.S.
Government or agencies thereof, certificates of deposit and money market
deposits. In addition, Zapata holds a minimal amount of commercial paper with a
rating of A-1 or P-1. As the majority of the Company's investment grade
securities constitute short-term U.S. Government agency securities, the Company
does not believe that the value of these instruments have a material exposure to
interest rate risk. However, changes in interest rates do affect the investment
income the Company earns on its cash equivalents and marketable securities and,
therefore, impacts its cash flows and results of operations. Accordingly, there
is inherent roll-over risk for the Company's investment grade securities as they
mature and are renewed at current market rates. Using Zapata Corporate's
investment grade security balance of $85.0 million at December 31, 2002 as a
hypothetical constant cash balance, an adverse change of 1% in interest rates
would decrease interest income by approximately $850,000 during a twelve-month
period.

32

EQUITY PRICE RISK

As the Company considers its holdings of Omega Protein and Zap.Com to be a
potential source of secondary liquidity, the Company is subject to equity price
risk to the extent of fluctuations in the market prices and trading volumes of
these securities. Fluctuation in the market price of a security may result from
perceived changes in the underlying economic characteristics of the investee,
the relative price of alternative investments and general market conditions.
Furthermore, amounts realized in the sale of a particular security may be
affected by the relative quantity of the security being sold.

33

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of Zapata Corporation

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, stockholders' equity and cash
flows present fairly, in all material respects, the financial position of Zapata
Corporation and its subsidiaries at December 31, 2002 and 2001, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

PRICEWATERHOUSECOOPERS LLP

Rochester, New York
March 14, 2003

34

ZAPATA CORPORATION

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

The accompanying notes are an integral part of the consolidated financial
statements.
35

ZAPATA CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

The accompanying notes are an integral part of the consolidated financial
statements
36

ZAPATA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

The accompanying notes are an integral part of the consolidated financial
statements.
37

ZAPATA CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

The accompanying notes are an integral part of the consolidated financial
statements
38

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. BUSINESS AND ORGANIZATION

Zapata Corporation is a holding company which currently operates in the
food segment through its 60% owned subsidiary, Omega Protein Corporation ("Omega
Protein" or "Omega"), which is the nation's largest marine protein company. In
addition, Zapata holds 98% of the outstanding stock of Zap.Com Corporation
("Zap.Com"), which is currently a public shell corporation. As a holding
company, Zapata continues to explore ways to enhance stockholder value,
including a possible strategic transaction involving Omega or one or more
acquisitions of new businesses.

Omega Protein produces and markets a variety of products produced from
menhaden (a herring-like species of fish found in commercial quantities in the
U.S. coastal waters of the Atlantic Ocean and Gulf of Mexico), including regular
grade and value-added specialty fish meals, crude and refined fish oils and fish
solubles. Omega processes several grades of fish meal (regular or "FAQ" meal and
specialty meals), as well as fish oil and fish solubles. Omega's fish meal
products are primarily used as a protein ingredient in animal feed for swine,
cattle, aquaculture and household pets. Fish oil is utilized for animal and
aquaculture feeds, industrial applications, as well as for additives to human
food products. Omega's fish solubles are sold primarily to livestock feed
manufacturers, aquaculture feed manufacturers and for use as an organic
fertilizer. Omega's stock is traded on the New York Stock Exchange ("NYSE")
under the symbol "OME."

Zap.Com was in the Internet industry and its stock is traded on the
over-the-counter market on the NASD's OTC Electronic Bulletin Board under the
symbol "ZPCM." In December 2000, Zap.Com exited the Internet business and
terminated all salaried employees and third party contractual relationships.
Currently, Zap.Com does not have any existing business operations, other than
maintaining its status as a public entity. Zap.Com is likely to search for
assets or businesses that it can acquire so that it can become an operating
company. Zap.Com may also consider developing a new business suitable for its
situation.

As used throughout this report, "Zapata Corporate" is defined as Zapata
Corporation exclusive of its majority owned subsidiaries Omega Protein and
Zap.Com.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

CONSOLIDATION

The consolidated financial statements include Zapata and its wholly and
majority-owned domestic and foreign subsidiaries (collectively, "Zapata" or the
"Company"). Consolidated financial statements are financial statements of a
parent company and its subsidiaries presented as if the entities were a single
economic unit. Although the assets, liabilities, revenues, and expenses of all
entities are combined to provide a single set of financial statements, certain
eliminations and adjustments are made. These eliminations are necessary to
ensure that only arm's-length transactions between independent parties are
reflected in the consolidated statements; transactions between related parties
are eliminated. In addition, when the parent company consolidates non-wholly
owned subsidiaries, minority interest on the consolidated balance sheets and
statements of operations represents the minority stockholders' (those other than
the parent company) interest in the net assets and net income (loss) of such
subsidiaries.

Entities where Zapata can exercise significant influence, but not control,
are accounted for under the equity method of accounting. Whether or not Zapata
exercises significant influence with respect to a company depends on an
evaluation of several factors including, among others, representation on the
company's board of directors and ownership level, generally 20%-50% interest in
the voting securities of the company including voting rights associated with the
Company's holdings in common, preferred and other convertible instruments in the
company.

39

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CASH AND CASH EQUIVALENTS

The Company invests certain of its excess cash in government and corporate
debt instruments. All highly liquid investments with original maturities of
three months or less are considered to be cash equivalents. The recorded amounts
for cash equivalents approximate fair market value due to the short-term nature
of these financial instruments.

SHORT-TERM INVESTMENTS

The Company invests certain of its excess cash in government debt
instruments. All highly liquid investments with original maturities of greater
than three months but not longer than one year are considered short-term
investments, available for sale. Accrued interest receivable is recorded on
short-term investments so that the original cost plus accrued interest
approximates fair market value due to the short-term nature of these
investments. As such, no unrealized holding gains or losses are recorded as a
separate component of other comprehensive (loss) income.

INVENTORIES

Inventory is stated at the lower of cost or market. Omega Protein's fishing
season runs from mid-April to the first of November in the Gulf of Mexico and
from the beginning of May into December in the Atlantic. Government regulations
preclude Omega Protein from fishing during the off-seasons.

Omega Protein's inventory cost system considers all costs associated with
an annual fish catch and its processing, both variable and fixed, and including
both costs incurred during the off-season and during the fishing season. Omega
Protein's costing system allocates cost to inventory quantities on a per unit
basis as calculated by a formula that considers total estimated inventoriable
costs for a fishing season (including off-season costs) to total estimated fish
catch and the relative fair market value of the individual products produced.
Omega Protein adjusts the cost of sales, off-season costs and inventory balances
at the end of each quarter based on revised estimates of total inventoriable
costs and fish catch. Omega Protein's lower-of-cost-or-market-value analyses at
year-end and at interim periods compares the total estimated per unit production
cost of expected production to the projected per unit market prices of the
products. The impairment analyses involve estimates of, among other things,
future fish catches and related costs, and expected commodity prices for the
fish products. These estimates, which management believes are reasonable and
supportable, involve estimates of future activities and events which are
inherently imprecise and from which actual results may differ materially.

During the off-seasons, in connection with the upcoming fishing seasons,
Omega Protein incurs costs (i.e., plant and vessel related labor, utilities,
rent, repairs, and depreciation) that are directly related to Omega's
infrastructure. These costs accumulate in inventory and are applied as elements
of the cost of production of Omega Protein's products throughout the fishing
season ratably based on Omega's monthly fish catch and the expected total fish
catch for the season.

INSURANCE

Omega Protein carries insurance for certain losses relating to its vessels
and Jones Act liabilities for employees aboard its vessel. Omega provides
reserves for those portions of the annual aggregate deductible for which Omega
remains responsible by using an estimation process that considers Omega
Protein-specific and industry data as well as management's experience,
assumptions and consultation with outside counsel. Omega Protein management's
current estimated range of liabilities related to such cases is based on claims
for which management can estimate the amount and range of loss. Omega has
recorded the minimum estimated liability related to those claims, where there is
a range of loss. As additional information becomes available, Omega Protein will
assess the potential liability related to its pending litigation and revise its
estimates. Such revisions

40

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

in estimates of the potential liability could materially impact Omega Protein's
results of operation and financial position.

LONG-TERM INVESTMENTS

The Company accounts for its long-term investments in marketable securities
in accordance with Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115").
SFAS 115 establishes the accounting and reporting requirements for all debt
securities and for investments in equity securities that have readily
determinable fair values. All marketable securities must be classified as one of
the following: held-to-maturity, available-for-sale or trading. The Company
classifies its marketable securities as available-for-sale and, as such, carries
the investments at fair value, with unrealized holding gains and losses reported
in stockholders' equity as a separate component of accumulated other
comprehensive (loss) income. The cost of securities sold is based on the
specific identification method. Realized gains and losses, and declines in value
judged to be other than temporary, are included in investment income (loss).

ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS

The Company accounts for impairments and disposals of long-lived assets in
accordance with Statement of Financial Accounting Standards No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144). SFAS No
144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of," but retains the fundamental
provisions of Statement 121 for (a) recognition and measurement of the
impairment of long-lived assets to be held and used and (b) measurement of
long-lived assets to be disposed of by sale. Pursuant to the provisions of SFAS
144, the Company reviews the recoverability of its long-lived assets when events
or changes in circumstances occur that indicate that the carrying value of the
asset may not be recoverable. The assessment of possible impairment is based on
the Company's ability to recover the carrying value of the asset from the
expected future cash flows. If these cash flows are less than the carry amount
of the asset, an impairment loss is recognized for the difference between
estimated fair value and carrying value. The measurement requires management to
estimate future cash flows and the fair value of long-lived assets.

PENSION PLANS

Annual costs of pension plans are determined actuarially based on SFAS No.
87, "Employers' Accounting for Pensions." The Company applies SFAS No. 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits"
disclosure requirements for its pensions and other postretirement benefit plans.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are recorded at cost and depreciated over the
estimated useful lives of the assets using the straight-line method. Estimated
useful lives of assets acquired, determined as of the date of acquisition, are
as follows:

Replacements and major improvements are capitalized; maintenance and
repairs are charged to expense as incurred. Upon sale or retirement, the costs
and related accumulated depreciation are eliminated from the accounts. Any
resulting gains or losses are included in the statement of operations.

41

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

COMPREHENSIVE INCOME

SFAS No. 130, "Reporting Comprehensive Income," establishes standards for
the reporting and display of comprehensive income and its components within the
financial statements. Other comprehensive income is comprised of charges to
stockholders' equity, other than contributions from or distributions to
stockholders, excluded from the determination of net income. The Company's other
comprehensive (loss) income is comprised of unrealized holding gains and losses
on the Company's long-term investments and additional minimum pension liability
adjustment. Comprehensive (loss) income is presented in the Company's Statement
of Stockholders' Equity.

REVENUE RECOGNITION

Omega Protein recognizes revenue for the sale of its products when title
and rewards of ownership to its products are transferred to the customer, which
occurs upon shipment.

ADVERTISING COSTS

The costs of advertising are expensed as incurred in accordance with
Statement of Position 93-7 "Reporting on Advertising Costs."

INCOME TAXES

The Company utilizes the liability method to account for income taxes. This
method requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of existing temporary differences between the
financial reporting and tax reporting basis of assets and liabilities, and
operating loss and tax credit carry-forwards for tax purposes. Prior to the
completion of the Omega Protein initial public offering in April 1998, Omega
Protein was included in Zapata's consolidated U.S. federal income tax return and
its income tax effects were reflected on a separate return basis for financial
reporting basis. Since this offering, Omega Protein has filed a separate income
tax return for itself and its subsidiaries. Zap.Com will continue to be included
in Zapata's consolidated U.S. federal income tax return for as long as Zapata's
ownership interest is above 80%. Valuation allowances are recognized to reduce
deferred tax assets to an amount that is more likely than not to be realized.

STOCK-BASED COMPENSATION

In December 2002, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 148, "Accounting for Stock-Based Compensation -- Transition and
Disclosure, an amendment of FASB Statement No. 123." SFAS No. 148 amends SFAS
No. 123, "Accounting for Stock-Based Compensation" to provide alternative
methods of transition for a voluntary change to the fair value-based method of
accounting for stock-based employee compensation. It also amends the disclosure
provisions of that Statement to require prominent disclosure about the effects
on reported net income of an entity's accounting policy decisions with respect
to stock-based employee compensation. Finally, this Statement amends APB Opinion
No. 28, "Interim Financial Reporting", to require disclosure about those effects
in interim financial information. Although the Company continues to account for
stock- based compensation according to APB 25 and the related interpretations
under FASB Interpretation No. 44, "Accounting for Certain Transactions Involving
Stock Compensation," the Company has adopted the required disclosure provisions
under SFAS No. 148 at December 31, 2002. As a result of the Company's continued
use of the intrinsic value method of accounting for stock-based compensation,
the transition provisions will not have an effect of the Company's financial
position or results of operations.

42

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Had compensation expense for the Company's stock option grants been
determined based on fair value at the grant date using the Black-Scholes
option-pricing model, the Company's net income (loss) and net income (loss) per
share (basic and diluted) would have been as follows:

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting
principals generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of invested excess cash and
Omega Protein's trade accounts receivable. Currently, the Company invests the
majority of its excess cash in short-term U.S. Government Agency Securities and
therefore has significantly reduced its future exposure to market risk.

In addition, Omega Protein has cash deposits concentrated primarily in one
major bank. Also, Omega had Certificates of Deposit and commercial quality grade
investments rated A-2 P-2 or better with companies and financial institutions.
As a result of the forgoing, Omega believes that credit risk in such investments
is minimal.

Omega's customer base generally remains consistent from year to year. Omega
performs ongoing credit evaluations of its customers and generally does not
require material collateral. Omega maintains reserves for potential credit
losses and such losses have historically been within management's expectations.

43

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

RECLASSIFICATION

During 2002, certain reclassifications of prior year information have been
made to conform to the current year presentation. These reclassifications had no
effect on net income.

NOTE 3. UNCONSOLIDATED AFFILIATES

During April 2001, the Company completed its sale of the assets and
operations of Charged Productions, Inc. ("Charged Productions" or "Charged") (a
multi-media production company and a 100% owned subsidiary of Zapata) to Charged
LLC ("the LLC") (a limited liability corporation comprised of former Charged
employees) whereby Charged received 20% of the outstanding equity of the LLC in
exchange for certain remaining assets of the original company. Charged accounts
for its investment in the LLC under the cost method as it does not exercise
significant influence over the operations of the LLC. Further, as Charged is
unsure of the LLC's ability to generate positive cash flows from its operations,
the investment was written down to zero during 2001. Charged and Zapata are
legally independent of the LLC, are not actively involved in the operations of
the LLC, and have no current or future obligation to support the operations of
the LLC.

During 1995 and 1996, Zapata acquired Viskase Companies, Inc. ("Viskase")
common stock, resulting in an ownership of approximately 38% of Viskase's then
outstanding shares. During 1998, Zapata reduced its net investment in Viskase to
zero as a result of net losses. During September 2001, Zapata sold its 5,877,304
shares of common stock for an aggregate price of approximately $59,000 in a
private transaction through a broker.

NOTE 4. SHORT-TERM INVESTMENTS

Short-term investments as of December 31, 2002 and 2001 are summarized as
follows:

Interest rates on these investments ranged from 1.26% -- 1.88% and
1.83% -- 2.37% at December 31, 2002 and 2001, respectively.

44

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5. ACCOUNTS RECEIVABLE

Accounts receivable as of December 31, 2002 and 2001 are summarized as
follows:

At December 31, 2002 and 2001, trade, insurance and employee receivables
consisted exclusively of Omega Protein.

NOTE 6. INVENTORIES

Inventories as of December 31, 2002 and 2001 are summarized as follows:

At December 31, 2002 and December 31, 2001, consolidated inventory
consisted exclusively of the inventory of Omega Protein. During 2000, Omega
Protein provided $18.1 million in write-downs of the value of its fish meal and
fish oil product inventories produced during the 2000 fishing season. The
inventory write-downs were made necessary due to market prices Omega either had
received or expected to receive for its products which had declined to a level
below Omega Protein's cost basis in those products.

NOTE 7. LONG-TERM INVESTMENTS

As of December 31, 2002, Zapata Corporate held available for sale
securities with a total cost of approximately $4.0 million, market value of
approximately $4.0 million and an unrealized gain of $22,000, which is reflected
as a component of other comprehensive (loss) income, net of tax. These
investment grade securities are obligations of the Federal Home Loan Bank, an
agency of the U.S. Government and mature in 2003. The Company held no long-term
investments as of December 31, 2001.

45

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 8. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net as of December 31, 2002 and 2001 are
summarized as follows:

Depreciation expense for 2002, 2001 and 2000 was $9.2 million, $8.6 million
and $8.5 million, respectively. At December 31, 2002 and 2001, land, plant
assets and fishing vessels are exclusively Omega Protein's.

NOTE 9. OTHER ASSETS

Other assets as of December 31, 2002 and December 31, 2001 are summarized
as follows:

Omega Protein's amortization expense for fishing nets amounted to $688,000,
$732,000 and $720,000 for the years ended December 31, 2002, 2001, and 2000
respectively.

Omega carries insurance for certain losses relating to its vessels and
Jones Act liability for employees aboard its vessels (collectively, "Vessel
Claims Insurance"). The typical Vessel Claims Insurance policy contains an
annual aggregate deductible ("AAD") for which Omega remains responsible, while
the insurance carrier is responsible for all applicable amounts which exceed the
AAD. It is Omega's policy to accrue current amounts due and record amounts paid
out on each claim. Once payments exceed the AAD, Omega records an insurance
receivable for a given policy year.

46

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

For the period from October 1, 1998 to March 31, 2000, Omega placed its
Vessel Claims Insurance coverage with HIH Casualty and General Insurance, Ltd.,
an insurance company that is part of HIH Insurance Limited, the second largest
insurance company in Australia ("HIH"). In April 2001, HIH petitioned a court in
Australia to place it in provisional liquidation. Omega estimates, based on
previous payments made by Omega and its existing reserves for open claims for
the period covered by HIH, that HIH owes approximately $1.8 million either to
Omega or on its behalf. This amount could be adjusted upward or downward as
additional claims and their corresponding reserves become finalized.

Omega has put the trustees in the Australian liquidation proceedings on
notice of its claims under its insurance policy. However, based on the early
nature of the proceedings, Omega believes that the ultimate outcome of the
recovery against HIH cannot be assured at this time and that it is probable that
a portion of these receivables will not be collectible. Accordingly, at December
31, 2002, the allowance for doubtful accounts applicable to the HIH receivable
was $1.8 million.

On December 27, 2001, Omega entered into a purchase agreement to purchase a
60,000 square foot material storage facility in St. Louis, Missouri, which it
had previously leased. As part of the agreement, Omega placed $600,000 as
deposit pending the executed Deed of Trust. The Deed of Trust was executed and
delivered in February 2002.

NOTE 10. ACCRUED LIABILITIES

Accrued liabilities as of December 31, 2002 and 2001 are summarized as
follows:

47

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 11. DEBT

At December 31, 2002 and 2001, the Company's long-term debt consisted of
the following:

At December 31, 2002 and 2001, the estimated fair value of debt obligations
approximated book value.

On December 22, 1999, Omega Protein closed on its 1999 Title XI application
and received $5.6 million of Title XI borrowings for qualified projects.
Originally, Omega was authorized to receive up to $20.6 million in loans under
the Title XI program and has used the entire amount authorized under such
program. The Title XI loans are secured by liens on certain of Omega's fishing
vessels and mortgages on the Reedville, Virginia and Abbeville, Louisiana
plants. Loans are now available under similar terms pursuant to the Title XI
program without intervening lenders. On November 6, 2001, Omega closed on its
application for an additional loan of $1.9 million under the new program for
qualified projects.

On December 20, 2000, Omega entered into a three-year $20.0 million
revolving credit agreement with Bank of America, N.A. (the "Credit Facility").
Borrowings under this facility may be used for working capital and capital
expenditures. The Credit Facility shall bear interest at a rate equal to (i)
LIBOR plus 250 basis points or (ii) at the Borrower's option, the Bank's prime
rate. The Credit Facility requires a per annum commitment fee of one-half of one
percent (0.5%) on the daily average unused portion of the commitment of the
Lender. The Credit Facility is collateralized by all of Omega's trade
receivables, inventory and equipment. Omega and its subsidiaries are required to
comply with certain financial covenants, including maintenance of a minimum
tangible net worth and minimum EBITDA. In addition, the Credit Facility does not
allow for the payment for cash dividends or stock repurchases and also limits
capital expenditures and investments. Omega was in compliance with the Credit
Facility covenants at December 31, 2002. As of December 31, 2002, Omega had no
borrowings outstanding under the Credit Facility. The current Credit Facility
expires on December 20, 2003.

As of December 31, 2002 and 2001, Omega had outstanding letters of credit
totaling approximately $2.1 million and $1.9 million, respectively, issued
primarily in support of workers' compensation insurance programs.

48

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The annual maturities of long-term debt for the five years ending December
31, 2007 are as follows (in thousands):

2003........................................................ 1,270
2004........................................................ 1,354
2005........................................................ 1,436
2006........................................................ 1,526
2007........................................................ 1,631
Thereafter.................................................. 8,292
-------
$15,509
=======

All debt consists of the obligations of Omega Protein. Zapata Corporate has
neither guaranteed nor otherwise agreed to be liable for the repayment of this
debt.

NOTE 12. PENSION LIABILITIES

Pension liabilities as of December 31, 2002 and 2001 are summarized as
follows:

Pension liabilities are primarily derived from the additional minimum
liability requirements of SFAS No. 87 which requires the recognition of an
additional pension liability in the amount of the unfunded accumulated benefit
obligation in excess of accrued pension cost with an equal amount to be
recognized net of the associated tax benefits in accumulated other comprehensive
(loss) income. Increases in the additional minimum liability do not impact
earnings or cash flow, and could reverse in future periods should either
interest rates increase or market performance and plan returns improve.

As it is Omega Protein's policy to fund U.S. pension plans at amounts not
less than the minimum requirements of the Employee Retirement Income Security
Act of 1974, Omega may be required to make contributions to its pension plan to
meet the minimum funding requirements as required by law. In the event that such
contributions are required, Zapata is not responsible for any funding of Omega's
plan.

Zapata's supplemental retirement plan is an unfunded plan whereby plan
contributions are not required. Fixed plan benefits are paid on a monthly basis
to certain former senior executives of Zapata. The amounts of such payments
equal the difference between the amounts received under the applicable pension
plan and the amounts that would otherwise be received if pension plan payments
were not reduced as the result of the limitations upon compensation and benefits
imposed by federal law.

For more information on benefit plans, see Note 17. Qualified Defined
Benefit Plans.

NOTE 13. PREFERRED, PREFERENCE AND COMMON STOCK

PREFERRED STOCK

At December 31, 2002 and 2001, Zapata had authorized 200,000 shares of
preferred stock issuable in one or more series.

49

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PREFERENCE STOCK

At December 31, 2002 and 2001, Zapata had authorized 1,800,000 shares of
preference stock issuable in one or more series.

COMMON STOCK

At December 31, 2002 and 2001, Zapata had authorized 16,500,000 shares of
common stock, of which 3,069,859 shares were issued and 2,390,849 shares were
outstanding.

On November 13, 2002, the Board of Directors approved and authorized Zapata
to make a cash tender offer of $28 per share, for up to 500,000 shares of its
common stock, or approximately 20.9% of its outstanding common stock. In
connection with the approval of this tender offer, the Board of Directors
terminated the existing authorization for the repurchase of up to 500,000 shares
in open market or private transactions. At the time of such termination, no
shares had been repurchased under this program.

On December 6, 2002, the Board of Directors terminated the self-tender
offer in light of its rejection of an unsolicited proposal to acquire the
Company at a price of $35 per share and the fact that the Company's stock had
consistently traded above the tender offer price following the self-tender offer
announcement. Additionally on December 6, 2002, the Board of Directors further
authorized the Company to purchase up to 500,000 shares of its outstanding
common stock in the open market or privately negotiated transactions. The shares
may be purchased from time to time as determined by the Company. Any purchased
shares would be placed in treasury and may subsequently be reissued for general
corporate purposes. The repurchases will be made only at such times as are
permissible under the federal securities laws. No time limit has been placed on
the duration of the program and no minimum number or value of shares to be
repurchased has been fixed. Zapata reserves the right to discontinue the
repurchase program at any time and there can be no assurance that any
repurchases will be made. As of December 31, 2002, no shares had been
repurchased under this program.

On January 30, 2001, the Company effected a one-for-ten reverse split of
its outstanding shares of common stock resulting in there then being
approximately 2.4 million common shares outstanding. In addition, the Company's
authorized shares were reduced to approximately 16.5 million common shares,
200,000 preferred shares and 1.8 million preference shares. The preferred stock
and preference shares are undesignated "blank check" shares. All share and per
share amounts have been retroactively restated for the reverse split.

On April 13, 1999, the Company's stockholders approved the re-incorporation
of the Company as a Nevada corporation and a related Agreement and Plan of
Merger. On April 30, 1999, the Company effected the merger by merging into a
wholly-owned Nevada subsidiary. In connection with the re-incorporation, the par
value of the Company's common stock was changed from $.25 per share to $.01 per
share. The change in the par value was effectuated by a reclassification between
the common stock, at par value and capital in excess of par, respectively, on
the balance sheet.

On July 6, 1998, Zapata's Board of Directors approved a stock repurchase
program whereby Zapata could repurchase up to 500,000 additional shares of its
own outstanding common stock from time to time. The Company made no repurchases
under this program before the Board of Directors terminated the plan on November
13, 2002 in connection with the aforementioned self-tender offer.

50

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 14. EARNINGS PER SHARE INFORMATION

The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings (loss) per share computations:

Basic EPS was computed by dividing reported earnings (loss) available to
common stockholders by the weighted average common shares outstanding during the
year. Options to purchase 119,421 common shares at a weighted average price of
$46.84, and options to purchase 122,221 common shares at a weighted average
price of $46.97 per share were outstanding for the years ending December 31,
2002 and 2001, respectively, but were not included in the computation of diluted
EPS since the exercise price of the options was greater than the average market
price of the common shares for the period. Options to purchase 122,351 common
shares at a weighted average price of $46.72 were outstanding for the year ended
December 31, 2000 and were not included in the diluted EPS calculation as the
effect would be antidilutive due to the net loss.

NOTE 15. INCOME TAXES

The Company utilizes the liability method to account for income taxes. This
method requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of existing temporary

51

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

differences between the financial reporting and tax reporting base of assets and
liabilities, and operating loss and tax credit carry-forwards for tax purposes.

Zapata and Omega each file a separate consolidated U.S. federal income tax
return. The combined income tax (provision) benefit from continuing operations
consisted of the following:

The last remaining portion of investment tax credits, approximately
$851,000, expired on September 30, 2001. The Company has $12.4 million in net
operating loss carry-forwards for federal income tax purposes, of which $6.6
million is attributable to Omega and the remaining $5.8 is attributable to
Zapata. Since the two companies cannot currently file a consolidated federal
income tax return, the ability for each of these companies to utilize its own
net operating losses is dependent on the future taxable income that each company
separately generates. Net operating loss carry-forwards have a 20year
carry-forward period. For Zapata and Omega, the net operating losses will begin
to expire in 2020 and 2019, respectively. Additionally, Zapata has approximately
$6.6 million in federal alternative minimum tax credits, which can be used to
offset future federal tax liabilities. Alternative minimum tax credits do not
expire.

The following table reconciles the income tax provisions for all periods
computed using the U.S. statutory rate of 35% to the provisions from continuing
operations as reflected in the financial statements:

52

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Temporary differences and tax credit carryforwards that gave rise to
significant portions of deferred tax assets and liabilities are as follows:

The Company believes it is more likely than not that its net deferred tax
assets as of December 31, 2002 and 2001 will be realized. Accordingly, no
valuation allowances have been established to offset any deferred tax assets.
The ultimate realization of deferred tax assets could be negatively impacted by
market conditions and other variables not known or anticipated at this time.

If Zapata or Omega has a change of ownership pursuant to Section 382 of the
Internal Revenue Code, utilization of their respective net operating losses or
alternative minimum tax credits could be significantly limited or, in Zapata's
case, possibly eliminated. An ownership change for this purpose is generally a
change in the majority ownership of a company over a three year period. As a
result of a prior change of ownership, Zapata's use of approximately $6.3
million of its alternative minimum tax credits will be limited to a maximum of
up to approximately $1.5 million per year.

Section 541 of the Internal Revenue Code of 1986, as amended (the "IRC"),
subjects a corporation, which is a "personal holding company" as defined in the
IRC, to a 39.6% penalty tax on "undistributed personal holding company income"
in addition to the corporation's normal income tax. Generally, undistributed
personal holding company income is based on taxable income, subject to certain
adjustments, most notably a reduction for Federal incomes taxes. Personal
holding company income is comprised primarily of passive investment income plus,
under certain circumstances, personal service income. Zapata and its domestic
subsidiaries (other than Omega) could become subject to the penalty tax if (i)
60% or more of its adjusted ordinary gross income is personal holding company
income and (ii) 50% or more of its outstanding common stock is owned, directly
or indirectly, by five or fewer individuals at any time during the last half of
the taxable year. The Company believes that five or fewer of Zapata's
stockholders hold 50% or more of its outstanding common stock for purposes of
IRC Section 541. However, as of December 31, 2002, Zapata and its domestic
subsidiaries (other than Omega) had no undistributed personal holding company
income due to
53

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

losses generated by the consolidated tax filing group and therefore has not
recorded a personal holding company tax liability. There can be no assurance
that Zapata will not be subject to this tax in the future, that in turn may
materially and adversely impact the Company's financial position, results of
operations and cash flows.

Zapata is undergoing an Internal Revenue Service audit of the tax fiscal
years ended September 30, 1997-2001. Although Zapata does not expect that the
results of this audit will have a material impact its financial position,
results of operations and cash flows, there can be no assurance that such
results will not be material.

NOTE 16. COMMITMENTS AND CONTINGENCIES

OPERATING LEASES PAYABLE

Future minimum payments under non-cancelable operating lease obligations
aggregate $1.8 million, and for the five years ending December 31, 2007 are (in
thousands):

2003........................................................ $659
2004........................................................ 630
2005........................................................ 367
2006........................................................ 67
2007........................................................ 67

Rental expenses for operating leases were $868, $923, and $1,045 in 2002,
2001, and 2000, respectively.

LITIGATION

A non-operating wholly-owned subsidiary of Zapata, Energy Industries, Inc.,
was named as a defendant in three cases commenced in 1996 and 1997 pending in
the 83rd Judicial District Court of Upton County, Texas involving the death of
one individual and personal injuries to two others. The cases resulted from an
explosion and fire at a gas processing plant in Upton County caused by the
alleged failure of a valve cover. Zapata was named as a defendant in one of the
cases. The owners of the plant have also filed a cross-claim against Energy
Industries for property damage and lost profits resulting from the explosion and
fire. Plaintiffs and the cross-plaintiff owners base their claim on a theory of
manufacturing or design defect of the valve cover. Plaintiffs seek compensatory
damages. Zapata and Energy Industries deny liability in each of the lawsuits,
and have vigorously contested these matters and intend to vigorously defend
against these actions. In January 2002, the primary insurance carrier for Zapata
and Energy Industries claimed for the first time that it did not believe that
Energy Industries had primary insurance coverage for the losses arising out of
these incidents. This is despite the fact that this primary insurance carrier
had been providing for the defense of these actions and had not reserved its
rights with respect to that defense. While the primary insurance carrier has not
yet discontinued providing for the defense of these actions, it has since
formally disclaimed and, in fact, has brought a declaratory judgment action
claiming it does not owe a duty of indemnification. Zapata, in turn, has both
disputed these assertions and brought its own declaratory judgment action in
which it asserts that the primary insurance carrier does owe a duty of
indemnification. A loss of primary insurance coverage should not jeopardize the
excess coverage that Zapata or Energy Industries has for these claims. These
cases involve plaintiffs with very serious injuries, including death. While the
results of any ultimate resolution of these lawsuits cannot be predicted, in the
opinion of the Company's management, based upon discussions with defense
counsel, it is unlikely that any losses resulting from these matters will have a
material adverse effect on Zapata's results of operations, cash flow or
financial position.

Zapata and Omega Protein were named as defendants in a lawsuit instituted
on March 10, 2003 in the District Court of Clark County, Nevada by Omega Protein
shareholder Robert Strougo. Plaintiff brought the action individually and as a
putative class action on behalf of all Omega Protein stockholders. No class
period

54

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

has been identified. Also named as defendants in the lawsuit are Avram A.
Glazer, Chairman, President and CEO of Zapata and Darcie Glazer, a director of
Zapata, both of whom are also directors of Omega Protein, and all other Omega
Protein directors. Plaintiff claims that the individual defendants and Zapata
breached their fiduciary duties to Omega Protein's stockholders by not properly
considering a so-called offer sent via e-mail to Zapata by Hollingsworth,
Rothwell & Roxford, a Florida partnership. News reports have identified a
Hollingsworth, Rothwell & Roxford partner, Theodore Roxford, as the former
Lawerence Niren. Mr. Roxford is the subject of a March 18, 2003 New York Times
article entitled "A Financial Big Shot With an Unusual Past" and a June 19, 1995
Forbes article entitled "Stop Me Before I Steal Again". The complaint alleges
that the "offer" was to acquire all of Zapata's shares for $45.00 per share. It
also alleges that the offer was to acquire all of Omega's shares for $45.00 per
share. Plaintiff claims that Zapata and the individual defendants breached their
duties to Omega's stockholders by rejecting the purported offer and that Omega
Protein's stockholders have been damaged by being prevented from receiving a
fair price for their stock. Plaintiff seeks an order directing the defendants to
carry out their fiduciary duties to Omega Protein's stockholders, to refrain
from breaching them, and awarding plaintiff unspecified compensatory damages and
his costs and expenses incurred in the action. The Company is not aware of any
e-mail sent by Hollingsworth, Rothwell & Roxford to Omega Protein or any offer
for the purchase of Omega Protein shares. The Company believes that the claims
are without merit and intends to vigorously oppose the lawsuit.

Zapata is involved in litigation relating to claims arising out of its past
and current operations in the normal course of business. Zapata maintains
insurance coverage against such potential ordinary course claims in an amount in
which it believes to be adequate. While the results of any ultimate resolution
cannot be predicted, in the opinion of Zapata's management, based upon
discussions with counsel, any losses resulting from these matters will not have
a material adverse effect on Zapata's results of operations, cash flow or
financial position.

ENVIRONMENTAL MATTERS

The Company is subject to various possible claims and lawsuits regarding
environmental matters. Management believes that costs, if any, related to these
matters will not have a material adverse effect on the results of operations,
cash flows or financial position of the Company.

TAX ASSESSMENT

Omega Protein has informally been notified by representatives from the
Vermillion Parish and St. Mary Parish tax authorities of undefined deficiencies
in parish sales and use taxes for Omega's 1997 to 2000 tax years. As of October
30, 2002, the proposed adjustments to the parish sales and use tax returns for
the calendar years ending 1997 through 2000 have not yet been assessed. Omega
expects the proposed adjustments will claim additional tax, including penalties
and interest through December 31, 2002 and has recorded a provision adequate to
cover these adjustments. Omega Protein intends to contest the proposed
adjustments vigorously.

GUARANTEES

The Company has applied the disclosure provisions of FASB Interpretation
No. 45 (FIN 45), "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others," to its
agreements containing guarantee or indemnification clauses. These disclosure
provisions expand those required by SFAS No. 5, "Accounting for Contingencies,"
by requiring a guarantor to disclose certain types of guarantees, even if the
likelihood of requiring the guarantor's performance is remote. The following is
a description of arrangements in which the Company is the guarantor.

Zapata's articles of incorporation, bylaws and certain other agreements
contain indemnification clauses for its officers, directors and certain
consultants for losses incurred as a result of claims made against such
55

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

individuals arising out of, or because of their service to the Company. The
maximum potential amount of future payments the Company could be required to
make under these indemnification agreements is unlimited; however, Zapata
maintains Director and Officer Liability insurance that limits this exposure. As
a result of this insurance coverage, it is the opinion of Zapata's management
that the estimated fair value of any liabilities under these indemnification
agreements is minimal and should not materially impact the Company's financial
position, results of operations or cash flows. These indemnification obligations
were in effect prior to December 31, 2002 and are therefore grandfathered under
the provisions of FIN No. 45. Accordingly, no liabilities have been recorded for
the indemnification clauses in these agreements.

Throughout its history, the Company has entered into numerous transactions
relating to the sale, disposal or spin-off of past operations. Pursuant to
certain of these transactions, the Company may be obligated to indemnify other
parties to these agreements. These obligations include indemnifications for
losses incurred by such parties arising out of the operations of such businesses
prior to these transactions or the inaccuracy of representations of information
supplied by the Company in connection with such transactions. These
indemnification obligations were in effect prior to December 31, 2002 and are
therefore grandfathered under the provisions of FIN No. 45. Accordingly, no
liabilities have been recorded for the indemnification clauses in these
agreements.

Management continues to assess agreements for potential impacts under the
provisions of FIN No. 45. While it is not possible to predict the ultimate
outcome of this effort, management does not anticipate that any potential
findings will have a material impact on the Company's financial position,
statements of operations or cash flows.

NOTE 17. QUALIFIED DEFINED BENEFIT PLANS

Zapata and Omega Protein have separate and independent noncontributory
defined benefit pension plans covering certain U.S. employees. Benefits are
generally based on employees' years of service and compensation level. All of
the costs of these plans are borne by Zapata and Omega. Each plan has adopted an
excess benefit formula integrated with covered compensation. Both plan's
participants are 100% vested in the accrued benefit after five years of service.
The funding policy of each plan is to make contributions as required by
applicable regulations. Both plans' assets are invested in cash, common and
preferred stocks, short-term investments and insurance contracts.

In 2002, Omega Protein's Board of Directors authorized a plan to freeze the
Omega pension plan in accordance with ERISA rules and regulations so that new
employees, after July 31, 2002, will not be eligible to participate in the
pension plan and further benefits will no longer accrue for existing
participants. The freezing of the pension plan had the effect of vesting all
existing participants in their pension benefits in the plan.

Additionally, Effective April 1, 1992, Zapata adopted a supplemental
pension plan, which provides supplemental retirement payments to certain former
senior executives of Zapata. The amounts of such payments equal the difference
between the amounts received under the applicable pension plan and the amounts
that would otherwise be received if pension plan payments were not reduced as
the result of the limitations upon compensation and benefits imposed by federal
law. Effective December 1994, the supplemental pension plan was frozen.

56

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following represents a presentation of consolidated data for these
three plans:

The plans' funded status and amounts recognized in the Company's
Consolidated Balance Sheets at December 31, 2002 and 2001 are presented below:

57

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ZAPATA PLAN ASSUMPTIONS AND DISCLOSURES

Plan assets were in excess of the plan's accumulated benefit obligations as
of December 31, 2002 and December 31, 2001. Unrecognized transition assets of
$10.6 million at October 1, 1987 were amortized over 15 years.

OMEGA PROTEIN PLAN ASSUMPTIONS AND DISCLOSURES

Accumulated benefit obligations of $25.5 million were in excess of plan
assets of $14.5 million as of December 31, 2002. Accumulated benefit obligations
of $22.3 million were in excess of plan assets of $19.4 million as of December
31, 2001. Unrecognized transition assets of $10.6 million at October 1, 1987
were amortized over 15 years.

Omega Protein's plan is subject to the additional minimum liability
requirements of SFAS No. 87 which requires the recognition of an additional
pension liability in the amount of Omega's unfunded accumulated benefit
obligation in excess of accrued pension cost with an equal amount to be
recognized net of the associated tax benefits in accumulated other comprehensive
loss. Based upon plan actuarial and asset information, Omega recorded an
additional pension liability of $13.1 million and $6.1 million in 2002 and 2001
respectively. Amounts listed as minimum pension liability adjustments under the
caption "Comprehensive (Loss) Income" on the Consolidated Statements of
Stockholders' Equity represent the net change in the portion of the additional
pension liability recorded under "Accumulated other comprehensive loss" on the
Consolidated Balance Sheets.

Zapata is not responsible for any potential funding of Omega's pension
plan.

58

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SUPPLEMENTAL RETIREMENT PLAN ASSUMPTIONS AND DISCLOSURES

Accumulated benefit obligations of $852,000 were in excess of plan assets
of $0 as of December 31, 2002. Accumulated benefit obligations of $866,000 were
in excess of plan assets of $0 as of December 31, 2001.

The Company's supplemental plan is subject to the additional minimum
liability requirements of SFAS No. 87. Accordingly, based upon plan actuarial
and asset information, the Company recorded an additional pension liability of
$230,000 and $201,000, in 2002 and 2001 respectively. Amounts listed as minimum
pension liability adjustments under the caption "Comprehensive (Loss) Income" on
the Consolidated Statements of Stockholders' Equity represent the net change in
the portion of the additional pension liability recorded under accumulated other
comprehensive loss on the Consolidated Balance Sheets.

NOTE 18. QUALIFIED DEFINED CONTRIBUTION PLANS

Effective May 31, 2001, the Company established the Zapata 401(k) Plan (the
"Zapata Plan") and simultaneously revoked its participation in the Omega Protein
401(k) Retirement and Savings Plan, (the "Profit Sharing Plan"). All amounts
held by the Profit Sharing Plan on behalf of current and former employees of the
Company were transferred to the Zapata Plan. Participants may defer a fixed
amount or a percentage of their eligible compensation, subject to limitations of
the Zapata Plan. The Company makes a discretionary matching contribution of 100%
of the employee's contribution up to 3% of eligible compensation and 50% of the
employee's contribution between 3% and 5% of eligible compensation. Employer
contributions are discretionary. The Company's contribution to the Zapata Plan
totaled $17,847 and $18,054 in 2002 and 2001 respectively. The Company's
contribution to the Profit Sharing Plan totaled $13,736 in 2000. No
contributions were made in 2002 and 2001.

Prior to 2001, Omega contributed matching contributions to the Profit
Sharing Plan based on employee contributions and compensation. Contributions to
the Profit Sharing Plan totaled approximately $816,000 in 2000. Omega suspended
its matching contributions to the Profit Sharing Plan for 2001. In 2002, Omega
Protein's Board of Directors authorized the reinstatement of the company's
matching cash contribution to the Profit Sharing Plan, effective January 1,
2002, at levels previously in place prior to the suspension of the match in
2001. Omega's matching contributions to the Profit Sharing Plan during 2002 were
approximately $627,000. Zapata is not responsible for any potential funding of
the Omega 401(k) Retirement and Savings Plan.

NOTE 19. STOCK OPTION PLANS

Zapata's Amended and Restated Special Incentive Plan (the "1987 Plan")
provides for the granting of stock options and the awarding of restricted stock.
Under the 1987 Plan, options may be granted at prices equivalent to the market
value of the common stock at the date of grant. Options become exercisable on
dates as determined by the Zapata Board of Director's Compensation Committee,
provided that the earliest such date cannot occur before six months after the
date of grant. Unexercised options will expire on varying dates, up to a maximum
of ten years from the date of grant. All options granted vest ratably over three
years beginning on the first anniversary of the date of grant and have an
exercise price equal to the fair market value

59

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of the stock at grant date. The awards of restricted stock have a restriction
period of not less than six months and not more than five years. The 1987 Plan
provided for the issuance of up to 60,000 shares of the common stock. During
1992, the stockholders approved an amendment to the 1987 Plan that provides for
the automatic grant of a nonqualified stock option to directors of Zapata who
are not employees of Zapata or any subsidiary of Zapata. At December 31, 2002,
stock options covering a total of 3,333 stock options had been exercised. No
shares of common stock are available for future stock options or other awards
under the Plan. As of December 31, 2002, there were options for the purchase of
up to 8,667 shares outstanding under the 1987 plan.

On December 5, 1996, the Company's stockholders approved a long-term
incentive plan (the "1996 Plan"). The 1996 Plan provides for the granting of
restricted stock, stock appreciation rights, stock options and other types of
awards to key employees of the Company. Under the 1996 Plan, options may be
granted by the Committee at prices equivalent to the market value of the common
stock on the date of grant. Options become exercisable in one or more
installments on such dates as the Committee may determine. Unexercised options
will expire on varying dates up to a maximum of ten years from the date of
grant. All options granted vest ratably over three years beginning on the first
anniversary of the date of grant and have an exercise price equal to the fair
market value of the stock at grant date. The 1996 Plan provides for the issuance
of options to purchase up to 500,000 shares of common stock. During 1999, the
stockholders approved an amendment to the 1996 Plan which increased the number
of shares available for options granted under the plan to 1,000,000 shares. At
December 31, 2002, stock options covering a total of 104,100 shares had been
exercised and a total of 764,666 shares of common stock are available for future
stock options or other awards under the Plan. As of December 31, 2002 there were
options for the purchase of up to 131,234 shares outstanding under the 1996
plan.

In May 2002, the Stockholders approved specific stock option grants of
1,000 options to each of the six non-employee directors of the Company. These
grants had been approved by the Board of Directors and awarded by the Company in
March of 2002. These grants are non-qualified options with a ten year life and
are exercisable in cumulative one-third installments vesting annually beginning
on the first anniversary of the date of grant.

A summary of the status of the Company's stock options is presented below:

60

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Options outstanding and exercisable as of December 31, 2002 are summarized
below:

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

NOTE 20. RELATED PARTY TRANSACTIONS

OMEGA PROTEIN CORPORATION

Upon completion of Omega's initial public offering in 1998, Omega and
Zapata entered into certain agreements including the Administrative Services
Agreement, which covers certain administrative services Omega provides to
Zapata. The Sublease Agreement provides for Omega to lease its principal
corporate offices in Houston, Texas from Zapata and provides Omega with the
ability to utilize telephone equipment worth approximately $21,000 for no
additional charge. The Administrative Services Agreement allows Omega to provide
certain administrative services to Zapata at Omega's estimated cost. For the
year ended

61

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

December 31, 2002, 2001 and 2000, Zapata reimbursed Omega $14,500, $16,000 and
$13,500, respectively, for services provided under the plan.

ZAP.COM CORPORATION

Since its inception, Zap.Com has utilized the services of the Zapata's
management and staff under a shared services agreement that allocated these
costs on a percentage of time basis. Zap. Com also subleases its office space in
Rochester, New York from Zapata. Under the sublease agreement, annual rental
payments are allocated on a cost basis. Zapata has waived its rights under the
shared services agreement to be reimbursed for these expenses since May 1, 2000.
For the year ended December 31, 2002, approximately $12,000 was recorded as
contributed capital for these services.

OTHER

During 2002, the Company finalized the terms of a consulting agreement with
its former Chairman of the Board of Directors, Malcolm Glazer. Subject to the
terms of the agreement, Malcolm Glazer shall be paid $122,500 per month
effective March 1, 2002 and payable until April 30, 2006. The agreement also
provides for health and other medical benefits for Mr. Glazer and his wife. This
agreement will terminate in the event of Mr. Glazer's death or permanent
disability.

During 2002, the Company modified the terms of certain outstanding stock
options held by Malcolm Glazer and Darcie Glazer. These modifications extended
the life of the options subsequent to their termination of employment with the
Company. Consistent with FASB Interpretation No. 44, "Accounting for Certain
Transactions involving Stock Compensation (an interpretation of APB Opinion No.
25)" the Company recorded a compensation charge of approximately $127,000 during
2002 to properly reflect the impact of these modifications.

On March 21, 2002, a stockholder of the company, on behalf of himself and
purportedly on behalf of a class of Zapata stockholders, filed suit against
Malcolm I. Glazer, the Malcolm I. Glazer Family Limited Partnership, and Malcolm
I. Glazer GP, Inc., claiming that the defendants purchased shares in the Company
using non-public information. Zapata is named as a nominal plaintiff. Pursuant
to an indemnification agreement, the Company is required to advance defense
costs, including attorney's fees and disbursements, to Malcolm Glazer in
connection with this type of litigation. In addition, the Company is obligated
to indemnify Mr. Glazer for any verdict or judgment returned against him under
such circumstances, given that he served as the Company's Chairman of the Board
at the time that the acts occurred; however, the Company maintains Directors and
Officers Liability insurance that limits this exposure. For the year ended
December 31, 2002, the Company incurred legal fees of approximately $40,000
related to this complaint.

NOTE 21. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

On January 17, 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 clarifies the application
of Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 applies immediately to variable interest
entities created after January 31, 2003, and to variable interest entities in
which an enterprise obtains an interest after that date. It applies in the first
fiscal year or interim period beginning after June 15, 2003, to variable
interest entities in which an enterprise holds a variable interest that it
acquired before February 1, 2003. FIN 46 applies to public enterprises as of the
beginning of the applicable interim or annual period. FIN 46 also sets forth
certain disclosures regarding interests in VIE that are determined significant,
even if consolidation is not required. The disclosure requirements of this
interpretation are effective for all financial

62

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

statements issued after January 31, 2003. The Company does not expect the
adoption of FIN 46 to have a material impact on the Company's financial
position, results of operations or cash flows.

On November 25, 2002, the FASB issued Interpretation No. 45 ("FIN 45"),
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, an interpretation of FASB
Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34." FIN
45 clarifies the requirements of FASB Statement No. 5, "Accounting for
Contingencies" ("SFAS 5"), relating to a guarantor's accounting for, and
disclosure of, the issuance of certain types of guarantees. The disclosure
provisions of FIN 45 are effective for financial statements of interim or annual
periods that end after December 15, 2002. However, the provisions for initial
recognition and measurement are effective on a prospective basis for guarantees
that are issued or modified after December 31, 2002, irrespective of a
guarantor's year-end. The Company does not expect the adoption of FIN 45
provisions for initial recognition and measurement to have a material impact on
the Company's financial position, results of operations or cash flows.

In December 2002, FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation -- Transition and Disclosure, an amendment of FASB Statement No.
123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based
Compensation" to provide alternative methods of transition for a voluntary
change to the fair value-based method of accounting for stock-based employee
compensation. It also amends the disclosure provisions of that Statement to
require prominent disclosure about the effects on reported net income of an
entity's accounting policy decisions with respect to stock-based employee
compensation. Finally, this Statement amends APB Opinion No. 28, "Interim
Financial Reporting", to require disclosure about those effects in interim
financial information. Although the Company continues to account for stock-based
compensation according to APB 25 and the related interpretations under FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation," the Company has adopted the required disclosure provisions under
SFAS No. 148 at December 31, 2002. As a result of the Company's continued use of
the intrinsic value method of accounting for stock-based compensation, the
transition provisions will not have an effect of the Company's financial
position, results of operations or cash flows.

In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions -- An Amendment of FASB Statements No. 72 and 144 and
FASB Interpretation No. 9." The provision of this statement related to the
application of the purchase method of accounting is effective for acquisitions
for which the date of acquisition is on or after October 1, 2002. The provisions
related to accounting for the impairment or disposal of certain long-term
customer-relationship intangible assets are effective on October 1, 2002.
Transition provisions for previously recognized unidentifiable intangible assets
are effective on October 1, 2002, with earlier application permitted. The
adoption of SFAS No. 147 did not have any impact on the Company's financial
position, results of operations or cash flows.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Exit or
Disposal Activities." SFAS No. 146 addresses significant issues regarding the
recognition, measurement, and reporting of costs that are associated with exit
and disposal activities, including restructuring activities that are currently
accounted for pursuant to the guidance that the Emerging Issues Task Force
("EITF") has set forth in EITF Issue No. 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." The scope of SFAS No.
146 also includes (1) costs related to terminating a contract that is not a
capital lease and (2) termination benefits that employees who are involuntarily
terminated receive under the terms of a one-time benefit arrangement that is not
an ongoing benefit arrangement or an individual deferred-compensation contract.
SFAS No. 146 will be effective for exit or disposal activities that are
initiated after December 31, 2002. The Company does not expect the adoption of
SFAS No. 146 to have a material impact on the Company's financial position,
results of operations or cash flows.

63

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In April 2002, the FASB issued SFAS No. 145, which rescinds SFAS No. 4,
"Reporting Gains and Losses from Extinguishment of Debt," SFAS No. 44,
"Accounting for Intangible Assets of Motor Carriers" and SFAS No. 64,
"Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements and amends
SFAS No. 13, "Accounting for Leases." This statement updates, clarifies and
simplifies existing accounting pronouncements. As a result of rescinding SFAS
No. 4 and SFAS No. 64, the criteria in Accounting Principles Bulletin No. 30
will be used to classify gains and losses from extinguishment of debt. This
statement is effective for financial statements issued for fiscal years
beginning after May 15, 2002. The Company does not expect the adoption of SFAS
No. 145 to have a material impact on the Company's financial position or its
results of operations.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." SFAS No. 143 requires that obligations associated with
the retirement of a tangible long-lived asset to be recorded as a liability when
those obligations are incurred, with the amount of the liability initially
measured at fair value. Upon initially recognizing a liability for an asset
retirement obligation, an entity must capitalize the cost by recognizing an
increase in the carrying amount of the related long-lived asset. Over time, the
liability is accreted to its present value each period, and the capitalized cost
is depreciated over the useful life of the related asset. Upon settlement of the
liability, an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement. The provisions of SFAS No. 143 will be
required to be adopted by the Company in Fiscal 2003. The Company has not
determined what impact, if any, this statement will have on its financial
position, results of operations or cash flows.

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141 Business
Combinations" and No. 142 "Goodwill and Other Intangible Assets." SFAS No. 141
requires that all business combinations be accounted for under the purchase
method only and that certain acquired intangible assets in a business
combination be recognized as assets apart from goodwill. SFAS No. 142 requires
that ratable amortization of goodwill be replaced with periodic tests of the
goodwill's impairment and that intangible assets other than goodwill be
amortized over their useful lives. SFAS No. 141 is effective for all business
combinations initiated after June 30, 2001, and the provisions of SFAS No. 142
are effective for all years beginning after December 15, 2001. The adoption of
SFAS No. 141 and SFAS No. 142 did not have a material impact on the Company's
financial position, results of operations or cash flows.

NOTE 22. INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION

Prior to the sale of the Company's investment in the common stock of
Viskase, the sale of Charged and Zap.Com's discontinuance of its Internet
operations, Zapata primarily operated in two industry segments: the Food
segment, consisting of Omega Protein and Viskase and the Internet segment,
consisting of Charged and Zap.Com. Since the sale of Viskase in September 2001,
the food segment information has consisted exclusively of Omega Protein. Costs
incurred during 2000 and 2001 related to Zap.Com and Charged were primarily
associated with wind-down and reporting activities. Accordingly, these costs
were included within the Company's Internet segment for 2000 and 2001. As of
January 1, 2002, all activity related to Zap.Com is reported as a separate
segment.

64

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Omega Protein is engaged in menhaden fishing for the production and sale of
fish meal and fish oil. Export sales of fish oil and fish meal were
approximately $44.0 million, $35.7 million, and $21.7 million in 2002, 2001, and
2000, respectively. Such sales were made primarily to European and Asian
markets. In 2002, 2001, and 2000, sales to one customer were approximately $10.5
million, $7.9 million, and $6.3 million, respectively. This customer differed
from year to year.

The following table shows the geographical distribution of consolidated
revenues (in thousands) based on location of customers:

NOTE 23. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following table presents certain unaudited consolidated operating
results for each of the Company's preceding eight quarters. The Company believes
that the following information includes all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation in accordance
with

65

ZAPATA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

accounting principles generally accepted in the United States of America. The
operating results for any interim period are not necessarily indicative of
results for any other period.

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

(1) The Company has restated its results for the quarters ended June 30, 2001
and September 30, 2001 to incorporate certain restatements made by Omega
Protein. Omega revised its results to give effect to the treatment of the
valuation allowance attributable to insurance receivables as a period
expense instead of an inventoriable cost. Additionally, Omega Protein had
previously expensed (in the quarter ended September 30, 2001) abnormal costs
associated with the FAA groundings of Omega's fleet of spotter aircraft as a
result of the September 11, 2001 terrorist attacks. It has subsequently been
determined that such costs should have been treated as inventoriable costs.

Omega Protein's menhaden harvesting and processing business is seasonal in
nature. Omega generally has higher sales during the menhaden harvesting season
(which includes the second and third quarter of each year) due to increased
product availability, but prices during the fishing season tend to be lower than
during the off-season. As a result, Omega's quarterly operating results have
fluctuated in the past and may fluctuate in the future. In addition, from time
to time Omega defers sales of inventory based on worldwide prices for competing
products that affect prices for Omega's products which may affect comparable
period comparisons.

66

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Pursuant to General Instruction G on Form 10-K, the information called for
by Item 10 of Part III of Form 10-K is incorporated by reference to the
information set forth in the Company's definitive proxy statement relating to
its 2003 Annual Meeting of Stockholders (the "2003 Proxy Statement") to be filed
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), in response to Items 401 and 405 of Regulation S-K under
the Securities Act of 1933, as amended, and the Exchange Act ("Regulation S-K").

ITEM 11. EXECUTIVE COMPENSATION.

Pursuant to General Instruction G of Form 10-K, the information called for
by Item 11 of Part III of Form 10-K is incorporated by reference to the
information set forth in the 2003 Proxy Statement in response to Item 402 of
Regulation S-K, excluding the material concerning the report on executive
compensation and the performance graph specified by paragraphs (k) and (l) of
such Item.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.

Pursuant to General Instruction G of Form 10-K, the information called for
by Item 12 of Part III of Form 10-K is incorporated by reference to the
information set forth in the 2003 Proxy Statement in response to Item 403 of
Regulation S-K.

The following table sets forth information as of December 31, 2002, with
respect to compensation plans under which equity securities of the Company are
authorized for issuance:

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to General Instruction G of Form 10-K, the information called for
by Item 13 of Part III of Form 10-K is incorporated by reference to the
information set forth in the 2003 Proxy Statement in response to Item 404 of
Regulation S-K.

67

PART IV

ITEM 14. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

An evaluation was performed under the supervision of the Company's
management, including its Chief Executive Officer (CEO) and Chief Financial
Officer (CFO), of the effectiveness of the design and operation of the Company's
disclosure controls and procedures (as defined in Securities Exchange Act of
1934 (the "Exchange Act") Rules 13a-14(c) and 15-d-14(c)) within 90 days before
the filing date of this annual report. Based on that evaluation, the Company's
management, including the CEO and CFO, concluded that the Company's disclosure
controls and procedures were effective to ensure that information, including
that of our consolidated subsidiaries, that we are required to disclose in
reports that we file or submit under the Exchange Act is recorded processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms.

CHANGES IN INTERNAL CONTROLS

Further, there have been no significant changes in the Company's internal
controls or in other factors that could significantly affect our disclosure
controls subsequent to our evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) List of Documents Filed.

Financial Statements, Zapata Corporation.

Report of Independent Accountants.

Consolidated Balance Sheets as of December 31, 2002 and 2001.

Consolidated Statements of Operations for the years ended December 31,
2002, 2001, and 2000.

Consolidated Statements of Cash Flows for the years ended December 31,
2002, 2001, and 2000.

Consolidated Statements of Stockholders' Equity for the years ended
December 31, 2002, 2001, and 2000.

Notes to Consolidated Financial Statements.

EXHIBITS

The exhibit list attached to this report is incorporated herein in its
entirety by reference as if fully set forth herein.

The exhibits indicated by an asterisk (*) are incorporated by reference.

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

+ Management contract or compensatory plan or arrangement required to be filed
as an exhibit pursuant to the requirements of Item 15(a)(3) of Form 10-K.

69

(b) Current Reports on Form 8-K.

None.

(c) Consolidated Financial Statement Schedule.

Filed herewith as a consolidated financial statement schedule is the
schedule supporting Zapata's consolidated financial statements listed under
paragraph (a) of this Item, and the Independent Accountant's Report with
respect thereto.

70

SIGNATURES

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

ZAPATA CORPORATION
(Registrant)

By: /s/ LEONARD DISALVO
------------------------------------
(Leonard DiSalvo Vice President)

March 25, 2003

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

71

CERTIFICATION UNDER SECTION 302(A) OF THE
SARBANES-OXLEY ACT OF 2002

I, Avram A. Glazer, certify that:

1. I have reviewed this annual report on Form 10-K of Zapata
Corporation;

2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this annual report;

3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
annual report;

4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent functions):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

Date: March 26, 2003
/s/ AVRAM A. GLAZER
--------------------------------------
Avram A. Glazer
President and CEO

72

CERTIFICATION UNDER SECTION 302(A) OF THE
SARBANES-OXLEY ACT OF 2002

I, Leonard DiSalvo, certify that:

1. I have reviewed this annual report on Form 10-K of Zapata
Corporation;

2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this annual report;

3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
annual report;

4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;

b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons performing
the equivalent functions):

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officers and I have indicated in
this annual report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.

Date: March 26, 2003
/s/ LEONARD DISALVO
--------------------------------------
Leonard DiSalvo
Vice President -- Finance and CFO

73

REPORT OF INDEPENDENT ACCOUNTANTS
ON CONSOLIDATED FINANCIAL STATEMENT SCHEDULE

To the Board of Directors of Zapata Corporation

Our audits of the consolidated financial statements referred to in our
report dated March 14, 2003 appearing in this Form 10-K, also included an audit
of the consolidated financial statement schedule listed in Item 15(c) of this
Form 10-K. In our opinion, this consolidated financial statement schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.

PRICEWATERHOUSECOOPERS LLP

Rochester, New York
March 14, 2003

74

SCHEDULE II

ZAPATA CORPORATION

VALUATION AND QUALIFYING ACCOUNTS

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

(A) Allowance for Doubtful Accounts -- uncollectible accounts written off

75

INDEX TO EXHIBITS

10(q)+ Form of February 28, 2003 Indemnification Agreement by and among Zapata
and the directors and officers of the Company.

10(r)+ Form of March 1, 2002 Director Stock Option Agreement by and among
Zapata and the non-employee directors of the Company.

21 Subsidiaries of the Registrant.

23 Consent of PricewaterhouseCoopers LLP.

24 Powers of attorney.

99.1 Certification of CEO Pursuant to 18 U.S.C Section 1350, as adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.2 Certification of CFO Pursuant to 18 U.S.C Section 1350, as adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
- ---------------

+ Management contract or compensatory plan or arrangement required to be filed
as an exhibit pursuant to the requirements of Item 15(a)(3) of Form 10-K.

76