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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking statements in this Form 10-Q, future filings by the Company with the Securities and Exchange Commission (“Commission”), the Company’s press releases and oral statements by authorized officers of the Company are intended to be subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainty, including without limitation those identified from time to time in press releases and other communications with stockholders by the Company and the filings made with the Commission by the Company, Omega Protein Corporation (“Omega Protein” or “Omega”) and Zap.Com Corporation (“Zap.Com”), such as those disclosed under the caption “Significant Factors That Could Affect Future Performance and Forward-Looking Statements” appearing in Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operation” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001 filed with the Commission or elsewhere in this report. The Company believes that forward-looking statements made by it are based on reasonable expectations. However, no assurances can be given that actual results will not differ materially from those contained in such forward-looking statements.

General

Zapata Corporation is a holding company which currently operates in the food segment through its 61% owned subsidiary, Omega Protein Corporation (“Omega Protein” or “Omega”), which is the nation’s largest marine protein company. In addition, Zapata holds approximately 98% of the outstanding stock of Zap.Com Corporation (“Zap.Com”), which is currently a public shell corporation.

Omega Protein produces and markets a variety of products produced from menhaden (herring-like 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’s fish meal products are used as nutritional feed additives by animal feed manufacturers and by commercial livestock producers. Omega operates its own fleet of fishing vessels as well as four processing plants. Omega’s crude fish oil is sold primarily to food producers in Europe, and its refined fish oil products, which are high in nutritionally desirable Omega-3 fatty acids, are used in a variety of foods for human consumption, as well as in aquaculture feeds and certain industrial applications. Fish solubles are sold as protein additives for animal feed and as organic fertilizers. Omega Protein is engaged in the marine protein business and its stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “OME.” On June 17, 2002, Zapata announced that the board of directors authorized management to explore ways to enhance Zapata stockholder value through its holdings in Omega Protein. As of that time, Zapata’s board believed that Omega Protein was undervalued and that Zapata stockholder value may be increased through an appropriate transaction or strategy. The board asked Zapata management to consider increasing Zapata’s ownership position in Omega Protein or in the alternative pursuing a possible sale or another significant strategic transaction involving that interest. Zapata’s cash resources will be decreased to the extent of any purchases and increased to the extent of any sale or similar transaction. There can be no assurance, however, that Zapata will be successful in completing any possible strategic alternatives currently being explored or that the alternative will enhance stockholder value.

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, the Zap.Com 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, all signed agreements with web site owners who joined the ZapNetwork, and all third party contractual relationships entered into in connection with its Internet business.

Results of Operations

Three Months Ended June 30, 2002 and 2001

Zapata had consolidated net income of approximately $1.2 million or $0.51 per share for the quarter ended June 30, 2002 compared to net loss of approximately $9.9 million or $4.16 per share for the quarter ended June 30, 2001. The net income for the second quarter was primarily due to a profitable quarter reported by Omega Protein. Omega reported net income of $2.9 million for the three months ended June 30, 2002 as compared to a net loss of $527,000 for the quarter ended June 30, 2001.

Revenues. For the three months ended June 30, 2002, Zapata’s consolidated revenues increased approximately 43% from the quarter ended June 30, 2001. The revenue increase was primarily due to higher sales prices of 36% and 57% for Omega Protein Corporation’s fish meal and fish oil, respectively, along with a 29% increase in fish oil

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