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                               ZAPATA CORPORATION
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
sive income (expense). The adoption of SFAS 130 resulted in revised and
additional disclosures but had no effect on the financial position, results of
operations or liquidity of the Company.
 
  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%.
 
  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 U.S. Government Agency Securities with maturities
of less than one year, 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.
 
  RECLASSIFICATION
 
     During 2001, certain reclassifications of prior year information have been
made to conform to the current year presentation. These reclassifications had no
effect on net income.
 
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