Zap does sell some electrically powered vehicles built in China and classed as motorcycles by virtue of the missing fourth wheel thus exempting them from automotive safety regulations. They also re-sell repossessed cars, but the bulk of the transactions on Zap's balance sheet stem from activity in their stock.
Disclaimer: By no means am I an expert in finance as my abortive attempts at individual investing can attest to.
Continue reading about Zap after the jump.
[Source: Forbes, thanks to Darryl for the tip]
Having said that, a perusal of some of Zap's SECs filings and the way the company uses stock to pay employees and others seems to indicate that the issuing of press releases is a necessity to prop up their stock price long enough to pay some bills. Zap issues a lot of convertible debt that can be redeemed for shares if the stock price reaches a predetermined level. A steady stream of overwrought press releases often repeating the same information that came out a few weeks before on the off chance that someone missed it helps to drive the price up from it's roughly $1 a share price point long enough to convert some of that debt before the share price settles back down. Zap also utilizes the services of paid stock promoters to help boost their share price.
As I said I'm not a financial expert or a lawyer and to the best of my knowledge, they are doing nothing illegal. However, the string of abortive ventures over the last several years combined with these financial transactions does little to inspire any confidence that the Zap-X will ever be anything more than the EV equivalent of Duke Nukem Forever. Forbes Jonathan Fahey has some more details on the numbers behind Zap including their recent $79 million "order" for electric vehicles.