<PAGE>



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

ANNUAL  REPORT  UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2000

                         Commission File Number 33-19584

                              POWERCOLD CORPORATION
                              ---------------------
                 (Name of small business issuer in its charter)

          Nevada                                           23-2582701
-------------------------                      ---------------------------------
(State  of  Incorporation)                    (IRS Employer Identification No.)

     103  Guadalupe  Drive  Cibolo,  Texas                              78108
---------------------------------------------                        ----------
(Address  of  principal  executive  offices)                         (Zip Code)

Issuer's  telephone  number:     210  659-8450

      Securities registered under Section 12(b) of the Exchange Act:  None

      Securities registered under Section 12(g) of the Exchange Act:  None

     Common Stock,  $0.001 Par Value          OTC Electronic Bulletin Board

Check  whether  the issuer (1) filed all reports required to be filed by Section
13  or  15(d) of the Exchange Act during the past 12 months (or for such shorter
period  that the registrant was required to file such reports), and (2) has been
subject  to  such  filing  requirements  for  the past 90 days.  [X] Yes  [ ] No

Check  if  disclosure of delinquent filers in response to Item 405 of Regulation
S-B  is  not contained in this form, and no disclosure will 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-KSB or any amendment to
this  Form  10-KSB.  [X]

The  issuer's  revenues  for  its  most  recent  fiscal  year:   $395,040.00

The  aggregate  market  value  of  voting  stock  held  by non-affiliates of the
Registrant  was approximately $4,463,803, which is based on the closing price of
$0.6406  on  December  31,
2000.  The number of shares of Common Stock outstanding on December 31, 2000 was
12,669,383.  The number of shares of Preferred Stock outstanding on December 31,
2000  was  0.

Documents  Incorporated  By  Reference:     None

Transitional  Small  Business  Disclosure  Format:     Yes  [  ]  No  [X]




<PAGE> 1

                                      INDEX


PART  I                                                                   PAGE

ITEM  1.     DESCRIPTION  OF  BUSINESS                                       3
ITEM  2.     DESCRIPTION  OF  PROPERTY                                       9
ITEM  3.     LEGAL  PROCEEDINGS                                              9
ITEM  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS     9

     PART  II

ITEM  5.     MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
             STOCKHOLDER MATTERS                                            10
ITEM  6.     SELECTED  FINANCIAL  DATA                                      10
ITEM  7.     MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
             AND  RESULTS  OF  OPERATION                                    11
ITEM  8.     FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA                16
ITEM  9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
             AND  FINANCIAL  DISCLOSURE                                     17

     PART  III

ITEM  10.     DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT      17
ITEM  11.     EXECUTIVE  COMPENSATION                                       18
ITEM  12.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS
             AND MANAGEMENT                                                 18
ITEM  13.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     PART  IV

ITEM  14.     EXHIBITS,  FINANCIAL  STATEMENT SCHEDULES, AND REPORTS
              ON FORM 8-K                                                   20

SIGNATURES


























<PAGE> 2

PART  I

ITEM  1.     DESCRIPTION  OF  BUSINESS

GENERAL

PowerCold  is  a  solution  provider  of  energy  efficient   products  for  the
refrigeration,  air  condition and power industries. The Company operates across
many  market  sectors  from large industrial food processors to small commercial
air  conditioning  systems.  The  firm's focus is to give customers products and
systems that allow them to benefit from current changes occurring in the natural
gas  and  electrical  utility  marketplace.  Refrigeration  is  the  most energy
intensive  operation most business operators face. PowerCold has the opportunity
to  provide  products  and  systems,  that customers require taking advantage of
these changes, to improve profitability by reducing their operating costs.

Deregulation  of  the  gas  and  electric  utilities  will   provide  continuing
opportunities,  creating  new  markets for more efficient refrigeration systems.
PowerCold  has  the  products, experience and creative ability to package unique
refrigeration  systems  for  the  multi-billion  dollar refrigeration market. To
enhance  this  market  the  Company  is  pursuing  synergistic  businesses,  and
marketing   alliances  are  being  formed  with  major   utility  companies  and
established  refrigeration  companies  for  these  products  and  services.

The  Company's mission is to be a solution provider of energy efficient products
for  the  multi-billion  dollar refrigeration, air condition and power industry.
The  Company's  goal  is  to  achieve profitable growth and increase shareholder
value  by forming business alliances and providing superior technology, products
and  services.

COMPANY  HISTORY

International Cryogenics Systems Corporation (ICSC) was established as a private
company  in  1988 to fabricate and market freezer systems. The Company developed
and  patented  the most advanced, cost-effective and environmentally safe "quick
freeze"  systems in the industry. In January l993 ICSC's assets were merged into
a  public  entity.  The name was changed to PowerCold Corporation (PowerCold) in
April 1997, currently trading on the OTC Bulletin Board - symbol (PWCL). In 1995
the  Company  acquired  four companies - currently three operate as wholly owned
subsidiaries  of  PowerCold;  RealCold Products, Inc., Technicold Services, Inc.
and  Nauticon, Inc. RealCold Products designs and manufactures air condition and
refrigeration  systems,  Technicold  Services  provide  consulting  services for
commercial  refrigeration  and  freezing systems for use worldwide, and Nauticon
owns a unique product line of patented evaporative condensers and  heat exchange
systems  for  the  HVAC  and  refrigeration  industry.

At  the Annual Meeting of Shareholders on July 30, 1992, the shareholders of the
Company  approved the recapitalization of the Company Common Stock consisting of
a  100  to  1  reverse  split.

ASSET  ACQUISITION - On December 28, 1992, the Board of Directors of the Company
agreed  to  issue  2,414,083  shares  of common stock to six individuals for the
exclusive  rights to U. S. Patent No. 4,928,492 (May 29, 1990); which provided a
method  and apparatus for production treatment of a product through the usage of
a  cryogenic  liquid  and  in  a  manner such that minimum loss of the cryogenic
liquid  is  encountered.  The  products  that  was  be  processed by this method
includes,  but  not  limited  to,  food  products,  computer  chips,  tires  for
recycling,  blood  and plasma products, and medical utensils that require a high
degree  of  sterilization.


<PAGE> 3

The  total value of the transaction was $724,224.90. Two of the six individuals,
(Terrence  J. Dunne and Francis L. Simola) received stock in this transaction as
Directors  of  the  Company.  Terrence  J. Dunne received 850,000 and Francis L.
Simola  received 340,041 shares of stock respectively. This represented 49.3% of
all  the  common  stock  issued  for  the transaction.  Mr. Dunne is no longer a
director  of  the  Company.

SUBSIDIARIES

During  1995, PowerCold acquired four companies in the refrigeration business in
a  stock  exchange   transaction.  These  entities,  complimented   and  secured
PowerCold's  position  in  the  industry, operated as wholly owned subsidiaries.
RealCold  Systems,  Inc.,  prior  to  its  sale to Wittcold Systems, a Wittemann
Company,  offered  custom  industrial refrigeration packages and merchant carbon
dioxide  plants  in  a joint venture with The Wittemann Company.  Nauticon, Inc.
offers  a  product  line of evaporative condensers and heat exchange systems for
the HVAC and refrigeration industry. Technicold Services, Inc. offers consulting
engineering services, including process safety management compliance and ammonia
refrigeration  and  carbon  dioxide  system  design.  Technicold  also  provides
operation, maintenance and safety seminars for ammonia refrigeration technicians
and  supervisors. Jordan Vessel Corporation, which merged into RealCold Systems,
offered  industrial refrigeration system components such as liquid recirculating
packages  and  refrigeration  system  vessels of all types. RealCold Maintenance
Systems,  Inc.  (renamed  RealCold  Products,  Inc.) designs and produces unique
products  for  the  refrigeration  industry.

RealCold Systems Inc. signed a Joint Cooperative Agreement in July 1995 with The
Wittemann  Company, a wholly owned subsidiary of Dover Resources and Dover Corp.
(NYSE  -  DOV),  for  the  manufacture  and marketing of merchant carbon dioxide
plants  and  refrigeration  products.  The  cooperation  agreement  combined the
technical  expertise and experience of RealCold with the marketing experience of
Wittemann.  The  industry  combination  of  technology,  sales and manufacturing
experience  proved  to  be a successful venture. Subsequently, Wittcold Systems,
Inc.,  a  division of Wittemann Company, acquired RealCold Systems in July 1997.

In  August  1995,  PowerCold acquired Nauticon Inc., a company that manufactured
and  markets  a  product  line  of  innovative  evaporative  condensers and heat
exchange systems for the HVAC and refrigeration industry, representing over five
years  of development.  The assets include United States Patent 5,501,269 issued
on  March  26,  1996,  and  entitled  Condenser  Unit,  and United States Patent
5,787,722  issued  August  4,  1998,  and  entitled   Heat  Exchange  Unit.  The
new-patented  products  are  innovative  and  unique  in  design  and  simple to
manufacture. They use new material technology with high efficiency copper tubing
to  give  very high efficiency, low operating costs and minimal maintenance. The
evaporative  heat  exchangers  are   self-cleaning  in  most  applications  thus
eliminating  chemical cleaning. The outstanding Nauticon product features cannot
be  found  in  competitive  products.  Nauticon  evaporative condensers and heat
exchange  systems  serve  the  residential,  commercial   HVAC  sector  and  the
commercial  refrigeration  industry.  They  have many applications, varying from
traditional  commercial  refrigeration  to HVAC to industrial cooling. Customers
vary  from  supermarkets  to  ice  rinks  to  walk-in  coolers for refrigeration
systems.  HVAC applications are in smaller commercial buildings, for traditional
air  conditioning  systems  to highly efficient heat pumps. Industrial uses span
plastic  molding  and  extrusion  to  conventional  cooling  of process water to
cooling  of  cutting  oils. They are used for condensers, fluid coolers, booster
coolers, and cooling towers. The Company believes that the Nauticon products may
revolutionize the refrigeration industry; an industry that faces serious changes
for  the first time in years due to energy and environmental concerns worldwide.
In  September  2000,  the  Company


<PAGE> 4
The  three operating subsidiaries, Technicold Services, Inc., RealCold Products,
Inc.  and  Nauticon  Inc.,  supported  by  the  parent public entity, PowerCold,
supports  all  operating  activities for the freezing systems, the refrigeration
systems  and  the  evaporative  heat  exchange  systems respectively. Technicold
provides  consulting  services  to  the  refrigeration  industry,  and  RealCold
Products,  Inc.  supports  all  refrigeration and freezer systems operating from
their  corporate  facility  in Cibolo, Texas. Nauticon  supports all evaporative
heat  exchange  and  refrigeration  systems  and operations from their corporate
facility  in  Cibolo,  Texas.  The corporate manufacturing facility supports all
technical  and  service  product  operations  including; design and engineering;
assemble  and  fabrication;   administration;   marketing,  sales  support   and
consulting services. Sales and marketing activities are supported by represented
agents  and  distributors.

TRADEMARKS:  In  October  2000,  the  Company  filed  application  requests  for
registration  of  a  trademark/service  mark  for  the  following  products:

NAUTICON:  manufacturing and packaging of evaporative condensers, fluid coolers;
commercial  and industrial refrigeration system components, liquid recirculating
packages  and  custom  refrigeration products for commercial and industrial use.

In  October,  2000,  Nauticon,  Inc.,  granted  RealCold  Products,  Inc,  (both
companies are wholly subsidiaries of PowerCold) the exclusive right and license,
on  a worldwide basis, to manufacture, use, market, package, distribute and sell
condensing  units  and  heat exchange units possessing the inventions covered by
the  Nauticon  patents.

EV-CHILL:  water  chillers,  namely,  water  chilling  and refrigeration systems
utilizing  water  evaporative  condensers  for  commercial  and  industrial use.

EV-COOL:  air conditioning units utilizing evaporative condensers for commercial
and  industrial  use.

EV-DRY: dehumidification system utilizing evaporative fluid coolers to cool warm
dry  air  for  commercial  and  industrial  use.

EV-FRIG:  refrigeration  condensing  units  utilizing evaporative condensers for
commercial  and  industrial  use.

EPOWERRX.NET:  providing  consulting  and  engineering  services in the field of
distributed  power  generation, electrical load management, air conditioning and
refrigeration  systems, namely, promoting and providing information on and links
to  the  resources  of  others  pertaining  to   distributed  power  generation,
electrical  load  management  of  commercial  and  industrial refrigeration, air
conditioning  and  dehumidification systems for commercial and industrial use by
means  of  a  global  computer  network

Rotary  Power  Enterprise,  Inc.  was  formed  as  a new PowerCold entity, which
acquired  the  Natural  Gas  Business from Rotary Power International on July 2,
1998.  The  agreement  included:  the  business  assets  including  intellectual
property,  inventory  and manufacturing capability and Distributor Agreement for
the  580  series  engines  from  Rotary  Power  International,  Inc.

Deregulation  of  gas and electric utilities is creating major changes in energy
use  and costs. The natural gas engines enhance the customers' economic benefits
by  reducing  energy costs while supporting the environment with a clean burning
energy  source.   Packaged industrial refrigeration systems produced by RealCold
Products  will now use natural gas rotary engines instead of competitor engines.
A  packaged,  commercial  air  conditioning  system using the natural gas rotary
engine  and the Nauticon evaporative condenser provides major energy savings for
large  commercial  building  facilities.

<PAGE> 5

Channel  Freeze  Technologies,  Inc.  was  formed  as a new PowerCold entity, to
support  the  proprietary patented and economical multi-purpose freezing system,
suitable  for  virtually  any  liquid or semi-liquid product, that is inherently
more  efficient  than  prior  technologies in a variety of industries including;
block  ice  -  for  ice  plants,  fish  and  produce  industries;  food and food
byproducts  -  for food suppliers and their leftover byproducts, fruit and juice
products. The most notable new application is for highly efficient management of
liquid  and  semi-liquid industrial waste products for municipal water, pulp and
paper  plants and utilities. The freeze-thaw process; waste is frozen, the water
in  the  frozen  sludge drains almost immediately during thaw, and the remaining
materials  are  than  disposed of at greatly reduced cost, recycled or sold off.
Very  swift, economical freezing of the products is much more cost effective, up
to  one-third  the  cost,  than  with  bulk,  blast  freezing  or drum freezing.

AFFILIATE  -  In  December 1996 the Company agreed in principal to merge/acquire
Rotary  Power  International,  Inc.  The Company initially acquired a 30% equity
interest  in  RPI  (2M shares of common stock for $1M), and proposed a merger of
the  companies  in  a  stock  for  stock transaction, whereby RPI would become a
wholly  owned  subsidiary  of  the  Company.  A Plan of Agreement and Merger was
signed  with  Rotary Power International, Inc. ("RPI") on March 21, 1997 subject
to RPI shareholder approval.  Each shareholder of RPI was to receive .363 shares
of  the  Company's  common  stock  (1.56M  shares)  upon  shareholder  approval.

On  July  21,  1997,  the Company and Rotary Power International, Inc. agreed to
amend  Section  1.2  -  The  Closing  by  extending  the Agreement an additional
forty-five  (45)  days. The First Amendment to the Plan and Agreement of Merger,
the extension on the Plan and Agreement of Merger between the Company and Rotary
Power  International,  Inc., expired on September 5, 1997, accordingly, the Plan
and  Agreement  of  Merger  is  no  longer  in effect. The Company wrote off the
original  investment  in  Rotary  Power,  and currently owns 1,940,000 shares of
Rotary  Power  International,  Inc.  (OTCC-RPIN)

STRATEGIC  ALLIANCE

Alturdyne - An innovative manufacturer of standby diesel generator sets, turbine
and  rotary  generator  sets,  pumps and natural gas engine-driven chillers. The
generator  set  market  is a major new and replacement market for rotary engines
where  Alturdyne  has  extensive  manufacturing experience. Alturdyne's strength
lies  in its power engineering personnel, who are knowledgeable in the generator
set  business,  telephone  company  applications,  small  turbines, rotaries and
chillers.  Their  capabilities  and  experience in developing low cost, customer
power  packages  that meet specific needs have established Alturdyne's excellent
reputation in the industry.  Alturdyne's added expertise is available to support
the  design  and  production  of  rotary  engines  and  gensets for the Company.

Intermagnetics  General  Corporation  (Amex:  IMG) - Purchased for $1,000,000 an
aggregate  of  1,250,000  shares  of the Company's Series A Preferred Stock, par
value $0.001 per share; and PowerCold granted Intermagnetics General Corporation
a  purchase  option  to  acquire  up  to  50% of the fully diluted equity of the
Company.  The  purchase  option,  which  expired, was exercisable at a per share
price  of the lesser of $3.00 or a market price calculation of the common stock,
for  an  option  term no later than March 31, 1999 On June 30, 2000, 100% of the
Company's  outstanding  Series  "A" Convertible Preferred Stock was converted to
the  Company's  common  stock.  The  conversion  resulted  in  the  issuance  of
1,354,785 shares of the Company's common stock at an approximate conversion rate
of  one  share  of  preferred  stock  for  1.08  shares  of  common  stock.





<PAGE> 6
MANAGEMENT

PowerCold's management philosophy and structure supports decentralized authority
and operations, profit and loss accountability, incentive driven performance and
compensation,  and  total  customer  satisfaction. Management has over 175 years
business  experience.  Their  extensive  experience and background is adequately
related  to  the  business.  CEO  -  over  35  years experience in marketing and
management;  COO  -  over  40 years experience in manufacturing and marketing in
the  refrigeration  and power industry; CTO - over 50 years technical experience
in  refrigeration  engineering and design; a well-known expert consultant in the
refrigeration  industry.  Related  management  has  over  60 years experience in
refrigeration  engineering  and  sales  and marketing.  The subsidiary companies
include  experienced  marketing  and technical management and support personnel.

The  Company's  management  objective  is  to  become  a  major force with niche
products in the multi-billion dollar refrigeration industry and energy business.
The  Company's  goal  is  to  achieve profitable growth and increase shareholder
value  by  increasing  its  line  of  superior  products  and  services, through
acquisitions  and  joint  ventures  of  related  products  and  companies.

The  Company  maintains  corporate  offices  in  Cibolo, Texas, and an executive
office  in   Philadelphia,   Pennsylvania.   Administrative,   engineering   and
manufacturing  facilities  are  located  in  Cibolo,  Texas.

PRODUCTS:

INDUSTRIAL  REFRIGERATION  PACKAGES  -  RealCold  Products,  Inc. a wholly owned
subsidiary  of  the  Company,  designs and packages commercial refrigeration and
freezer  systems.  RealCold  Products was reorganized with its new name in March
1997,  replacing  RealCold  Systems  Inc. and RealCold Maintenance Systems, Inc.
RealCold  Products  supports  all  engineering  and  manufacturing of commercial
refrigeration  packages and its freezer systems. Custom innovative refrigeration
products  include  the   following:  ammonia   recovery  and  recycling  system,
non-chemical   water  treating   system,  liquid   recirculating  packages,  and
refrigeration  system  vessels.

Complimenting  the  various  product  lines, the Company intends to market other
various related industry products including automated ice systems, which produce
low  cost  block  and  sized  ice.

COMPETITION  -  varies  from  small industrial refrigeration manufactures to the
very  large   companies  in   the  industry,  all  competing   for  this  multi-
billion-dollar  industry.  The  Company  envisions an enormous market demand for
refrigeration  systems in third world countries. America is well entrenched with
refrigeration  systems,  but  there  is  a  great niche market for the Company's
unique  and  innovative  refrigeration  and  freezer products. PowerCold and its
related entities have the refrigeration engineering expertise and new innovative
products  that  are  needed and in demand today for an industry that hasn't seen
many  changes  in  the  last  30  -  40  years.

EVAPORATIVE  HEAT EXCHANGE SYSTEMS - Nauticon Inc., a wholly owned subsidiary of
PowerCold  manufactures and markets a product line of evaporative condensers and
heat exchange systems for the HVAC and refrigeration industry.  The new patented
products  are  innovative and unique in design, use new material technology, are
simple  to  manufacture,  and  have  low  operating  costs.  They  are  used for
condensers,  fluid  coolers,  booster  coolers,  and  cooling  towers.

Condensers  for  both  Refrigeration  and HVAC - Capacities range from 60,000 to
525,000  BTU  for  refrigeration  condensing.  Refrigerants  may be at different
incoming  temperatures as would be normal for multi-circuit applications. Copper
coils  are  compatible  with  all  refrigerants  except  ammonia.

<PAGE> 7
Fluid  Coolers  - Water. oil, glycol - anything compatible with the copper coils
can  be cooled according to each thermal characteristics. The separate coils can
handle  different  liquids  at  the  same  time,  according  to  needs.

Booster  Coolers  -  Applies   to  new  or  existing  applications.   Especially
advantageous  in  systems  now  short  of capacity, as it can be inserted in the
existing  cooling loop to circumvent the need for an entirely new system.  Gives
low  cost  additional  cooling to refrigerants or liquids plus the multi-circuit
ability.

Cooler  Tower  - Several important differences set this cooling tower apart from
others. Hot water is dispersed through Nauticon's unique "cyclone" water heads -
there  are no sprinkler moving arms to break, stall or clog.  No bottom openings
to  attract  debris,  thus  polluting  the  system.

Unique  low  cost  manufacturing  procedures  are  essentially the same for each
product,  which  is offered in four varieties. This is attributed to communality
of  parts  and  manufacturing.  Manufacturing  processes and techniques are both
simple  and  well  worked  out  utilizing  low  cost  labor.

Its  primary advantage is energy savings, yielding extremely high EER ratings to
not  only  better,  but  to  offset  the  regulated  change  to  low  efficiency
refrigerants.  To  be  sold  as a replacement or new applications and to also be
offered  packaged  with  compressors.

COMPETITION -  Nauticon products could revolutionize the refrigeration industry;
an industry that faces serious changes for the first time in years due to energy
and  environmental  concerns  worldwide.  The Nauticon application should reduce
these  traditional  concerns  and  enhance  the  industry's  growth. The Company
believes  that  it  has  a  truly unique product concept that serves a very wide
arena  of  commercial  applications  for  the  national  market  as  well as the
international  market.  Initial  marketing  of  the  Nauticon  systems  will  be
primarily  the mid-range systems because there is much less competition, a great
advantage  to  Nauticon  and  its  unique patented product.   Direct competitive
systems  are  marketed  by  some of the major competitors in the industry; large
systems by Evapco and BAC, smaller systems by Recold. These competitors are well
established  and  have  substantially greater financial and other resources than
Nauticon.

CHANNEL  FREEZE - patented Automated Bulk Freezing System has many applications.
Automated  block ice production. Automated freezing of food and food by-products
in  bulk, i.e., orange juice, offal, etc. Freeze/thaw (BiofreezeTM) applications
that  reduces  the  cost  to  process  residual sludge by up to 50%. This system
minimizes  landfill  costs  and water treatment costs. This application is being
researched  at  this  time. The technology has been proven many times usually in
areas  where  nature  supplies the freezing during winter and thawing in summer.
Biofreeze  automates  this  process.  There are literally thousands of potential
users  of this product. The automated ice block system replaces the now obsolete
can-ice  plants, many of which are over 50 years old. There are some 500 can-ice
plants  still  operating  in the US. However the major market for Channel Ice is
export.  Block  ice  is  still  in  demand  outside  the  US.











<PAGE> 8
The  Channel  Freeze bulk freezing system, which has been tested freezing single
strength  orange  juice,  can also be employed to freeze other food and non-food
products,  such  as red meat, gravies, seafood, fruit, eggs, etc. Channel Freeze
is  working  with  a  large  chicken producer to replace their existing Vertical
Plate  Freezers,  which freeze chicken byproducts. Freezing time tests are being
performed now.  This is a market that has considerable potential, as the Channel
Freeze  unit provides the following features compared to Can Ice, Vertical Plate
and  Blast  Freezing:  Uses  10%  - 15% less energy cost and one tenth the labor
cost; automated palletizing on muti-storage pallets; 10% - 50% less installation
and maintenance costs; automated clean in place and minimal product handling; no
building  required  and  uses  a  smaller  foot  print.

COMPETITION  -  Block  Ice - Small packaged manual block ice plants manufactured
by  various people in the U.S.  Up to five or ten tons of ice per day.  A manual
block  ice plant manufactured in Mexico with sizes up to 100 ton per day or ice.
Bulk  Freezing  -  Vertical  plate freezer manufacturers: York Food Systems  -US
(manual),  Gram - Denmark (manual), Technal - France (semi-automatic), APV-Baker
Ltd  -  Jackstone,  England  (manual), Dole - U.S. (manual), Blast Freezers - US
(manual).

ROTARY  POWER  NATURAL  GAS  ENGINES:

Natural  Gas  Rotary  Engine  (NGRE)  driven  rotating equipment and systems are
applicable  to  a  wide  variety  of  industrial uses, and offer customers large
savings  in  electrical  costs  from  both  energy  and  demand savings. A NGRE,
providing  on-site  utilities,  burns  the  minimum annual gas flows required to
allow sites to buy "transport" natural gas rather than more expensive commercial
gas. The combination of natural gas and electrical energy allows the customer to
balance its utility consumption on a daily, weekly, monthly or annual basis. The
Company  feels  that  the  unique characteristics of natural gas powered engines
allows  them to successfully compete in market sectors where low maintenance and
high  speed  rotating  equipment  is  predominant  or is rapidly taking over the
market  from  older  reciprocating  equipment.

Air  conditioning  -  screw  compressors
Refrigeration  -  screw  compressors
Plant  air  compression  systems  -  screw  compressors
Natural  Gas  compression  systems  -  screw  compressors
Mobile  power  units  -  Permanent  Magnet  Generators
Stationary  peaking  power  supplies  -  generators

65  SERIES  NATURAL  GAS  ENGINE

The  65  Series  twin  rotor  Natural  Gas Rotary Engine is a natural gas engine
derived  from  Mazda Motor Corporations RX-7 automotive rotary engine. The basic
block  incorporates  unique  internal  parts and features for meeting the 20,000
hour  life  demanded  by  the  industrial  market;  i.e.,  ceramic  apex  seals,
strengthened  stationary  gears.  More  durable  water  pump  and   longer  life
elastomers.  The  engine  is  rated  at  8OHP  on  natural  gas  at  4200RPM. It
incorporates  an  IMPCO  natural  gas  carburetor  and  specially  tuned  intake
manifold.











<PAGE> 9
580  SERIES  NATURAL  GAS  ENGINE

The  580  Series  family  of  twin  rotor  Natural  Gas Rotary Engine, which are
produced  by  Rotary  Power  International  Inc.,  is derived from the extensive
military development of the 580 Series diesel/multi-fuel engines since 1977. The
initial  580  Series  Natural  Gas Rotary Engine development has been for a twin
rotor  engine  rated  at  500HP  at  36OORPM.  This  will  provide  the power to
generators  for  peak  power  shaving.  The  four  rotor  (composed of two 5OOHP
modules) rated at 1000HP and the six rotor (three 5OOHP two rotor modules) rated
at  1 5OOHP complete the family. The 580 natural gas engine runs on low pressure
natural  gas  and  does not use expensive high pressure fuel injection equipment
and  costly  turbochargers  found  on  diesel  engines,  thus  offering  a  very
competitive  natural  gas  power  plant  for  industrial  applications.

ITEM  2.     DESCRIPTION  OF  PROPERTY

The  Company  maintains  its corporate office in Cibolo, Texas, and an executive
office  in Philadelphia, Pennsylvania. The Cibolo facility is 32,000 sq. ft. and
houses  administrative,  engineering  and  manufacturing  operations.

The  Company  owns  and  maintains  no  properties.  Properties  are leased on a
short-term basis. Management believes that the Company's facilities are adequate
for its operations and are maintained in good condition. The Company is aware of
the  growth  potential  of  its  operating facilities and is currently reviewing
other  plant  facilities  near  respective  locations.

ITEM  3.     LEGAL  PROCEEDINGS

On  August  31,  2000,  The Company, Nauticon, Inc. and Robert E. Jenkins agreed
upon  a  full and final settlement of the lawsuit titled Nauticon, Inc. et al Vs
Robert  E.  Jenkins  Cause  No.  97-13035,  in the 53rd District court of Travis
County,  Texas.

The  Company  is in negotiations with Sir Worldwide, LLC, the previous owners of
the  Channel  Freeze  technology,  to  proceed  with mediation and settlement of
changes  to  the original Agreement.  Since the acquisition, September 1998, the
Company  had  to  overcome changes in product design and engineering and product
credibility  in  the  marketplace.

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

The  Annual  Meeting  of  Shareholders  was  held  on  November  10, 2000 at the
Company's  facility  in  Cibolo,  Texas.  Proposal No. 1 was for the election of
Directors and Proposal No. 2 was for a vote on such matters as may properly come
before  the  meeting.  Total voted shares represented by proxy was 7,622,619 and
the percentage of votable shares was 64.98%.  The outstanding votable shares was
11,730,383.  Election  results  where certified by the Company's  stock transfer
agent,  Computershare  Investor  Services.

Proposal  No.  1:
     Directors                    For                    Withhold
     ------------------           ------------           --------
     Frank  L.  Simola              7,617,619              5,000
     George  C.  Briley             7,617,619              5,000
     H.  Jack  Kazmar               7,617,619              5,000

Proposal  No.  2:   Other  matters  before  the  meeting.
     For:      7,603,180
     Against:     3,389
     Abstain:   16,050


<PAGE> 10

PART  II

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

(a)  Market  Information:

The  Registrant's  Common  Stock,  trading  symbol  PWCL,  is  traded on the OTC
Electronic  Bulletin  Board.

The  following  table  sets  forth the high and low sale prices of the Company's
Common  Stock as reported by one of the market makers for the periods indicated.

                                1999  BID            1999  ASK
                             HIGH       LOW         HIGH      LOW
                           --------  --------     --------  --------
     First  Quarter         1  1/4     1/4          1  1/2      5/8
     Second  Quarter        1  5/8     1/2          2         1
     Third  Quarter         1  7/8     1/2          2         1
     Fourth  Quarter        1  1/4     1/2          1  3/4    1

                                2000  BID             2000  ASK
                             HIGH       LOW         HIGH      LOW
                           --------  --------     --------  --------
     First  Quarter         2.2812       .5000      2.4062       .5600
     Second  Quarter        2.1875       .7500      2.3125       .8750
     Third  Quarter         2.4375      1.125       2.5000      1.3125
     Fourth  Quarter        1.4375       .5625      1.5625       .6875

(b)  Holders:  As  of  December  31,  2000,  there were approximately 658 record
holders  of  the  Company's  Common  Stock.

(c)  The  Company  has paid no cash dividends to date, and it does not intend to
pay  any  cash  dividends  in  the foreseeable future. The present policy of the
Board  of  Directors  is  to  retain  any  future  earnings  and provide for the
Company's  growth.

The  Company  issued  an  aggregate  of 3,437,957 unregistered shares during the
fiscal  year 2000. The Company issued 1,208,355 shares for recorded expenses and
consulting  services  at  an average share price of $0.50 per share. The Company
issued  1,329,602  shares  to investors for private placements for $1,158,000 in
equity  capital  at  an average share price of $0.871 per share.  100,000 shares
were  issued for a technology license valued at $50,000, and 800,000 shares were
issued for debt valued at 400,000. In addition, 1,354,785 shares were issued for
the  conversion of 100% of the Company's Series "A" Convertible Preferred Stock.
Historically  the  Company issues restricted common shares for private placement
funding  on  a  negotiated  basis  up  to minimum of a 50% discount off the then
current  share  price,  and the Company also issues restricted common shares for
expenses  and  service  rendered  based  on a discount up to a 50% off the share
price  within  the  quarter  issued  according  to  the  value  of  the service.

ITEM  6.     SELECTED  FINANCIAL  DATA

The  following  table presents selected financial data for PowerCold Corporation
and  its  subsidiaries.  The financial data for fiscal years ending December 31,
1996  through  December  31,  2000  have been derived from the Company's audited
Consolidated  Financial Statements included elsewhere in this Report, and should
be  read in conjunction with those Consolidated Financial Statements and related
notes.


<PAGE> 11

SUMMARY  STATEMENT  OF  OPERATIONS   (In  thousands,  except  per  share  data)

YEAR ENDED DECEMBER 31,         2000      1999      1998      1997      1996
-----------------------       --------  --------  --------  --------  --------
Revenues                      $   395   $   562   $   442   $   393   $ 1,452
Operating  (loss)             $(1,412)  $(1,199)  $(1,203)  $(1,713)  $  (573)
Net  Income  (loss)           $(1,319)  $(1,253)  $(1,690)  $(2,720)  $ 2,209
Net Income (loss) per share   $ (0.13)  $ (0.18)  $ (0.27)  $ (0.46)  $  0.39
Weighted average number
  of  shares                   10,157     7,107     6,377     5,893     5,662

SUMMARY  BALANCE  SHEET   (In  thousands,  except  per  share  data)

YEAR ENDED DECEMBER 31,         2000      1999      1998      1997      1996
-----------------------       --------  --------  --------  --------  --------
Total  assets                 $ 1,999   $ 1,634   $ 2,322   $ 2,229   $ 5,146
Total  liabilities            $   569   $ 1,220   $ 1,164   $   817   $ 1,076
Long  term  debt              $     6   $     0   $     0   $     0   $     0
Shareholders'  equity         $ 1,255   $   414   $ 1,158   $ 1,412   $ 4,070

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

Forward  looking statements made herein are based on current expectations of the
Company  that  involves  a  number  of risks and uncertainties and should not be
considered  as guarantees of future performance. These statements are made under
the  Safe  Harbor  Provisions of the Private Securities Litigation Reform Act of
1995.  The factors that could cause actual results to differ materially include;
interruptions  or  cancellation  of  existing  contracts,  impact of competitive
products  and  pricing, product demand and market acceptance risks, the presence
of  competitors  with  greater  financial  resources  than  the Company, product
development  and  commercialization risks and an inability to arrange additional
debt  or  equity  financing.

GENERAL  FINANCIAL  ACTIVITY

REALCOLD  PRODUCTS,  INC.  -  designs  and  manufactures unique energy efficient
packaged  products  for  the  refrigeration industry. RealCold Products supports
Nauticon  and  Rotary  Power  Enterprise  by  engineering  and  packaging  their
products.  RealCold  Products  also  supports  Channel  Freeze  Technologies  by
designing  and  packaging  their  accompanying  refrigeration  systems. RealCold
Products has the engineering and manufacturing  expertise to produce and package
custom   manufacturing  systems.   There  are  proposed   alliances  with  other
refrigeration  companies,   whereas  RealCold  Products  will   package  various
components  adding  value  for  a total turnkey refrigeration system. Because of
insufficient  working  capital  for  raw materials and labor directly needed for
RealCold  custom designed products, and the long sales cycle attributed to these
custom  products,  sales and revenue was greatly impaired during 2000.  RealCold
Products  has  some  $12M of proposed customer quotations out at year for custom
refrigeration  packages,  primarily  for  turbine  inlet  cooling  applications.

NAUTICON  INC.  -  Through RealCold Products, manufactures and markets a product
line  of patented evaporative condensers and  heat exchange systems for the HVAC
and refrigeration industry.  The new patented products are innovative and unique
in design, use new material technology, is simple to manufacture, and have a low
operating  cost.  They  are used for condensers, fluid coolers, sub-coolers, and
cooling  towers.  Nauticon  products can produce power cost in the refrigeration
industry  by 40% making these units contribute to the utilities' needs to reduce
power  demand.


<PAGE> 12
PowerCold  has  funded  Nauticon over $1M in operating capital over the last few
years,  but  the  Company  was continually hindered by major operating and legal
expenses  due  to  previous  inept  Nauticon  management.  Because  of the major
operating  losses  incurred  by  previous  management, Nauticon did not have the
sufficient  resources  to  continue  operations  and  did not meet its sales and
revenue  projections. Subsequently the legal matter with the previous management
was  settled  (Reference  Item  No.  3).  The  Nauticon  product  technology was
licensed  to  RealCold  Products, a PowerCold Company, in October 2000 for a two
and  one  half  per cent royalty fee on product sales.  Management believes that
Nauticon  will  now  meet  its  sales objectives in 2001. There is over $900K of
proposed customer quotations out at year end for Nauticon units.  There are over
150  units  installed  in  various  commercial  buildings.

ROTARY  POWER  ENTERPRISE, INC. - was formed (September 1998) as a new PowerCold
entity to acquire the Natural Gas Business from Rotary Power International, Inc.
PowerCold  is  also  a  major  shareholder  of  Rotary Power International, Inc.
(OTCC:RPIN).  The agreement included: the business assets including intellectual
property, inventory and packaging capability; North American rights to the small
65  series Mazda natural gas engine block, subject to a new Mazda Agreement; and
a  Distributor  Agreement  for  the  Rotary Power 580 series engines form Rotary
Power  International,  Inc.  In  August  2000  Rotary  Power Enterprise signed a
non-exclusive  manufacturing  license  agreement  for the 580 series engine with
Rotary  Power  International.  The  Company has delivered fourteen 65 HP engines
and  one  500  HP  engine  on its sales agreement with Kem Equipment Company, an
engine  packager  for  OEM  applications for the oil and gas industry in Western
Canada.   The  major  application  is  for  oil  and  gas  field  systems.

CHANNEL  FREEZE  TECHNOLOGIES, INC. - was formed (September 1998) as a PowerCold
subsidiary  to  acquire  80% of the assets of Channel Ice Technologies.  Channel
Ice  produces  a  proprietary  patented  and  economical  multi-purpose freezing
system,  suitable  for  virtually  any  liquid  or  semi-liquid product, that is
inherently  more  efficient  than  prior technologies in a variety of industries
including;  block  ice  -  for ice plants, fish and produce industries; food and
food  byproducts  -  for food suppliers and their leftover byproducts, fruit and
juice  products.  The  most  notable  new  application  is  for highly efficient
management  of  liquid  and  semi-liquid industrial waste products for municipal
water,  pulp  and  paper plants and utilities. The freeze-thaw process; waste is
frozen,  the  water  in the frozen sludge drains almost immediately during thaw,
and  the  remaining  materials  are  than  disposed  of at greatly reduced cost,
recycled  or  sold.

Since  the acquisition, Channel Freeze had to overcome changes in product design
and  engineering and limited marketing experience and product credibility in the
marketplace,  therefore  has  not  meet  its  sales and revenue projections. The
company  has invested over $1M in Channel Freeze. The Company is in negotiations
with  the  previous  owners  of the technology to change the original agreement.
Management  believes  that  the  product  is now ready for customer delivery and
acceptance.  There  is  over  $6M  of  proposed  quotations  out  to prospective
customers  for  the  Channel  Freeze  system.

ALTURDYNE  ENERGY  SYSTEMS  -  The Company formed Alturdyne Energy Systems, Inc.
(AES)in  September  1999  to support the natural gas engine driven water chiller
business.  Subsequently  the entity has not been in operation because of lack of
operating  capital.  Subject  to  further interest and negotiations, the Company
plans  to  acquire  the  chiller  business  from Alturdyne, which has over (140)
customer  chillers  systems  installed.






<PAGE> 13
The  Company  has  a  Strategic  Alliance  with  Alturdyne for manufacturing and
marketing of their respective products.  Alturdyne is an innovative manufacturer
of  standby  diesel generator sets, turbine and rotary generator sets, pumps and
natural  gas  engine-driven  chillers.  Alturdyne's  strength  lies in its power
engineering  personnel,  who  are  knowledgeable  in the generator set business,
telephone  company  applications,  small  turbines, rotaries and chillers. Their
capabilities and experience in developing low cost, customer power packages that
meet  specific  needs  have  established Alturdyne's excellent reputation in the
industry.  Alturdyne's added expertise is in the design and production of rotary
engines.


ULTIMATE  COMFORT  SYSTEMS, INC. - On December 1, 2000, the Company acquired the
technology  rights,  patent  rights, and license agreement for integrated piping
technology  for  a heating and air conditioning system. This technology was then
placed  into  a  newly  formed, wholly-owned subsidiary of the Company, Ultimate
Comfort   Systems,  Inc.   This   acquisition   gave  the   Company   exclusive,
non-transferable United States transfer rights to the technology and all related
assets.  In  exchange,  the  Company  paid  $65,000  cash,  assumed two lines of
credit,  issued  100,000  shares  of  its common stock, granted 150,000 of stock
options  at  $1.00  per share, and agreed to the payment of royalties at no more
than  $3,000  per month for one year.  In addition, the Company hired the seller
of  the  technology for an annual salary of $70,000, with annual renewals, based
upon  performance  as  defined  within  the  purchase  agreement.  There  are 14
installations  in  hotel/motels  and  extended  care  facilities.  Some  of  the
installations  are saving over 40% energy costs.  Subsequently through the first
quarter  2001  there  is  over  $700K  of proposed quotations out to prospective
hotel/motel  chains.  The company anticipates continued growth is sales for this
unique  proprietary  application

RESULTS  OF  OPERATIONS       2000

The  following  table's  sets  forth  the  company's  results  of operation as a
percentage  of  net  sales  for  the  periods  indicated  below:

                                         Year  Ended  December  31,
                                        ----------------------------
                                          2000      1999      1998
                                        --------  --------  --------
Revenue                                   100.0%   100.0%    100.0%
Cost  of  revenue                          71.7     (0.07)     89.7
Gross  margin                              28.3     (0.07)     10.3
Operating  expenses                      (385.6)   (213.4)   (282.5)
Operating  income  (loss)                (357.3)   (222.9)   (272.1)
Net  income  (loss)                      (357.3)   (222.9)   (382.2)

COMPARABLE  FISCAL  2000,  1999  AND  1998  RESULTS:

The  Company's  Consolidated  Statements of Operations for the fiscal year ended
December  31,  2000 compared to fiscal year ended December 31, 1999 and December
31,  1998:

Total  revenue  for  2000  decreased 29.8% to $395,040 compared to $ 562,403 for
1999  and  $442,172  for  1998;  operating  losses  for  2000 increased 17.6% to
($1,411,654)  compared  to  ($1,199,942) for 1999 and ($1,796,291) for 1998; and
the  net  loss  for  2000  increased  5%  to ($1,319,195) or ($0.13) compared to
($1,253,395) or ($0.18) per share for 1999 and ($1,690,187) or ($0.27) per share
for  1998.  Net  income (loss) per share was based on weighted average number of
shares  of  10,156,76 for 2000 compared to 7,106,638 for 1999 and  6,376,647 for
1998.


<PAGE> 14
The  company's  revenue  decreased  29.8%  in 2000; operating expenses increased
28.4%.  The  company's revenues and expenses resulted in an increase of 17.6% in
operating  loss for 2000. The Company's net loss increased 5% for 2000.  Revenue
decrease  was  due  to  reorganization  of  the  Cibolo facility and the lack of
working  capital  for  manufacturing  and marketing operations.  The increase in
operating  losses was primarily due to restructuring sales and marketing and new
administration  operations  at  the  Cibolo  facility and for financial services
(fees)  rendered  the  Company  during  2000.

The  Company's  Consolidated Balance Sheet as of December 31, 2000, December 31,
1999  and  December 31, 1998 respectively: Total current assets increased 39% to
$694,301  for  2000  compared  to $270,958 for 1999 and 1998 current assets were
$834,274;  Total  assets  increased  20.8%  to $1,998,595 for 2000 compared to $
1,582,139  for 1999 and 1998 assets were $2,269,748: total liabilities decreased
49%,  for  2000  compared to  $1,210,694 for 1999 and $1,164,377 for 1998; total
stockholders'  equity  increased  20.3%  to  $1,254,819  for  2000  compared  to
$361,836  for  1999  and  $1,105,371  for  1998.

The  primary  increase in current assets was due to increases in cash, inventory
and  prepaid  expenses, which also related to the increase in total assets.  The
decrease  in  liabilities  was  due  primarily to the  write-off of some account
payables  and  the  pay-off  in  accounts  payable for a total reduction of some
$392,998,  and  the reduction of some $291,618, which was converted to shares in
the  Company,  due  an  affiliate  and  major  shareholder  of  the  Company.

The  Company  issued  an  aggregate  of 3,437,957 unregistered shares during the
fiscal  year 2000. The Company issued 1,208,355 shares for recorded expenses and
consulting  services  at  an average share price of $0.50 per share. The Company
issued  1,329,602  shares  to investors for private placements for $1,158,000 in
equity  capital  at  an average share price of $0.871 per share.  100,000 shares
were  issued for a technology license valued at $50,000, and 800,000 shares were
issued for debt valued at 400,000. In addition, 1,354,785 shares were issued for
the  conversion of 100% of the Company's Series "A" Convertible Preferred Stock.
Historically  the  Company issues restricted common shares for private placement
funding  on  a  negotiated  basis  up  to minimum of a 50% discount off the then
current  share  price,  and the Company also issues restricted common shares for
expenses  and  service  rendered  based  on a discount up to a 50% off the share
price  within  the  quarter  issued  according  to  the  value  of  the service.

Liquidity  and  Capital Resources:  At December 31, 2000, the Company's  working
capital  increased to $125,651 compared to ($939,736) at December 31, 1999.  The
increase  in cash was primarily attributable to equity capital from the sale the
Company's stock. The company's cash resources at December 31, 2000 were $106,864
reflecting  an  increase  in  cash  resources from $14,464 at December 31, 1999.

Status of Operations:  Management intends to continue to utilize and develop the
intangible  assets of the Company. It is Management's opinion that the Company's
cash  flow  generated  from  current intangible assets is not impaired, and that
recovery  of  its  intangible  assets,  upon which profitable operations will be
based,  will  occur.

Management  believes  that  its working capital may not be totally sufficient to
support both its current operations and growth plans for additional acquisitions
and joint ventures for the near future.  Management  implemented a new operating
plan in 2000 and is carrying forward the same plan of operation into 2001, which
provides  guidance  for  cash management and revenue growth. The Company is also
currently  seeking  investor  proposals  to obtain additional major financing to
support  its future growth plans and acquisitions.  The current status of future
acquisitions is dependent on  continued interest between the parties, successful
due  diligence  and  investor  funding.


<PAGE> 15
Company operating revenues and profit should increase in 2001 because of the new
reorganization  and  enhancement  of the Nauticon line of products (now 20 - 375
ton  condensing  units)  and  from  the  recent   exclusive  license/acquisition
technology  for  Ultimate Comfort Systems.  Management believes that its working
capital  is  not  sufficient to support its current operations and growth plans,
therefore  to  support  the  Company's  immediate  growth  plans,  management is
seeking  additional  funding  specifically  for  this  purpose.

PREVIOUS  FINANCIAL  ACTIVITY  -  1999

The  following  table's  sets  forth  the  company's  results  of operation as a
percentage  of  net  sales  for  the  periods  indicated  below:

                                         Year  Ended  December  31,
                                        ----------------------------
                                          2000      1999      1998
                                        --------  --------  --------
Revenue                                  100.0%     100.0%    100.0%
Cost  of  revenue                         (0.07)     89.7      83.3
Gross  margin                             (0.07)     10.3      16.7
Operating  expenses                     (213.4)    (282.5)   (453.9)
Operating  income  (loss)               (222.9)    (272.1)   (437.2)
Net  income  (loss)                     (222.9)    (382.2)   (694.1)

COMPARABLE  FISCAL  1999,  1998  AND  1997  RESULTS:

The  Company's  Consolidated  Statements of Operations for the fiscal year ended
December 31, 1999 compared to fiscal year ended December 31, 1998: Total revenue
for  1999  was  $  562,403  compared to $442,172 for 1998 and $391,819 for 1997;
operating  losses of ($1,199,942) for 1999 compared to ($1,796,291) for 1998 and
($2,929,971)  for  1997;  and  net loss of ($1,253,395) or ($0.18) per share for
1999  compared to a net loss of ($1,690,187) or ($0.27) per share for 1998 and a
net  loss  of ($2,843,789) or ($0.46) per share for 1997.  Net income (loss) per
share  was  based  on  weighted  average  number  of shares of 7,106,638for 1999
compared  to  6,376,647  for  1998  and  5,893,000  for  1997.

The  company's  revenue  increased  21.4%  in 1999; operating expenses decreased
37.0%.  The  company's  revenues and expenses resulted in a decrease of 25.8% in
operating  loss  for  1999 ($1,253,395) compared to ($1,690,187) as an operating
loss  of  for  1998.  The  Company's  net  loss  decreased  25.8%%  for  1999 to
($1,253,395)  from  ($1,690,187)  for  1998.  Revenue  increase  was  due to the
increasing  market acceptance of the Nauticon evaporative condenser systems. The
decrease in operating losses was primarily due to the elimination of $557,145 in
advances  to  an  affiliate  in 1998, and  to a reduction of $196,982 in general
operating  expenses due to new administration operating procedures at the Cibolo
facility.  The Company has decreased the direct selling program for the Nauticon
products  to  selling  through  distributors  and  agents.

The  Company's  Consolidated  Balance Sheet as of December 31, 1999 and December
31,  1998 respectively: Total current assets decreased 63.5%, $ 270,958 for 1999
from  $834,274  for  1998;  total assets decreased 29.6% to $1,998,595  for 1999
from  $2,269,748 for 1998; total liabilities increased 4.6%, $1,220,303 for 1999
from  $1,164,377 for 1998; total stockholders' equity was $361,836  for 1999 and
$1,105,371  for  1998,  a  64.2%  decrease.

The  primary  decrease in current assets was reduction of $400,000 in restricted
cash,  which was secured by a $400,000 certificate of deposit, and a decrease of
$121,706  in inventory.  The $124,293 decrease in total assets occurred from the
adjusted  accounting  transaction  of  the Channel Freeze transaction (Reference
Note  17  in  the  Consolidated  Financial  Statements).


<PAGE> 16
The increase in liabilities was due primarily to increase in accounts payable of
some  $80,324, and the Company was advanced $365,254 during 1999 by Simco Group,
Inc.,  an  affiliate  and  major  stockholder.  A  short  term  note payable was
eliminated  from  the  proceeds  by  the  stated  restricted  cash.

The  Company issued a total of 1,042,641  shares of new common restricted shares
in 1999. 483,641 shares were issued for satisfaction of recorded liabilities for
expenses  and  services   rendered.   559,000   shares  were  issued  for  cash.
Historically  the  Company issues restricted common shares for private placement
funding  on  a  negotiated  basis  up  to minimum of a 50% discount off the then
current  share  price,  and the Company also issues restricted common shares for
expenses  and  service  rendered  based  on a discount up to a 50% off the share
price  within  the  quarter issued according to the value of the service.  As of
December  31,  1999  there  was 7,876,641common shares outstanding and 1,250,000
preferred  shares  outstanding  to  one  shareholder.

Liquidity  and  Capital  Resources:  At December 31, 1999, the Company's working
capital  was  ($939,736)  compared  with  ($330,103)  at December 31, 1998.  The
decrease  in cash was primarily attributable to the Company's elimination of the
$400,000  certificate  of deposit and the advance from affiliate.  The company's
cash  resources at December 31, 1999 were $14,464 reflecting an decrease in cash
resources  from  $21,781  at  December  31,  1998.

Status of Operations:  Management intends to continue to utilize and develop the
intangible  assets of the Company. It is Management's opinion that the Company's
cash  flow  generated  from  current intangible assets is not impaired, and that
recovery  of  its  intangible  assets,  upon which profitable operations will be
based,  will  occur.

Management  believes  that  its working capital may not be totally sufficient to
support both its current operations and growth plans for additional acquisitions
and  joint  ventures  for  the  near  future.  Management  is implementing a new
operating  plan  for  2000  providing  guidance  for cash management and revenue
growth.  The  Company  is  also  currently  seeking investor proposals to obtain
additional  major financing to support its future growth plans and acquisitions.

The  current  status  of  Company  acquisitions  is  dependent on the success of
investor  funding.  PowerCold  signed  a Letter of Agreement (December 1998), to
acquire  a  division  of Alturdyne that produces natural gas engine driven water
chillers.  To  date the transaction has not been finalized pending funding.  The
two  companies operate as a joint alliance for the sales of engine and generator
products.

Company operating revenues and profit should increase in 2000 because of the new
products  from  acquisitions.  Management  believes that its working capital may
not  be  sufficient  to  support  its  operations and growth plans, therefore to
support the Company's growth and goals, management is seeking additional funding
for  this  purpose.

Simco  Group,  Inc.,  a  wholly  owned affiliate of Francis L Simola, CEO of the
Company  has  financed  the  Company  on  several  occasions since the Company's
inception.  Simco  Group has never received or requested payment of any interest
from  the  Company for providing said financing.  In 1999 the Board of Directors
elected  to give Simco group 8% interest on outstanding loans to the Company. As
of  December 31, 1999 there was an outstanding loan of $365,254 due Simco Group.
Management  believes  that  without  the  continuous  financial support of Simco
Group,  the  Company  would  never  have  remained  in  business.





<PAGE> 17
The  Board of Directors unanimously approved establishing Simco Group, Inc. with
fiduciary responsibility for the Company, effective December 27, 1994.  On April
15,  1996,  the  Board of Directors again voted unanimously to have Simco Group,
Inc. continue to support the financial needs of the Company and its subsidiaries
whenever  necessary; making loans and borrowing money for the Companies, selling
personal  stock  or  assets of Francis Simola to support the Company, or to make
loans  to  support  financial  transactions  of  the  Company.

Because  of  these financial transactions, Simco Group, Inc. knowingly knew that
it  may  be at financial risk, losing personal interest and principal money, and
incurring  losses  due  in  personal  stock  transactions.

ITEM  8.     FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA

Power  Cold  Corporation  and  subsidiaries  consolidated  financial  statements
incorporated  in  this  annual  report  Form  10K.

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

During  the registrant's fiscal year ending December 31, 2000 and the subsequent
period  up  to  the  date  of  the  former  accountants  release,  there were no
disagreements with the former accountant nor with the current accountant  on any
matter of accounting principles or practices, financial statement disclosures or
auditing  scope  of  procedure.

PART  III

ITEM  10.     DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  REGISTRANT

The  directors  and  executive  officers  of  the  Company  are  as  follows:

NAME                       AGE  POSITION                 PERIOD SERVED SINCE
-------------------------  ---  ------------------------  ---------------------

Francis  L.  Simola.        62  Chairman of the Board       January  1,  1993
                                President  and  CEO

George  C.  Briley          75  Director, CTO
                                and Secretary               September 1, 1994
                                President:
                                Technicold Services, Inc.   September  1,  1994
                                RealCold Products, Inc      September  1,  1994
                                Nauticon, Inc.              October  1,  1998
                                Channel Freeze
                                  Technologies,  nc.        October  1,  1998

H.  Jack  Kazmar            68  Director,  COO  and
                                  Treasurer                 October  1,  1998
                                President:
                                Rotary Power
                                  Enterprise, Inc.          October  1,  1998
                                Alturdyne  Energy
                                 Systems,  Inc.             September  1,  1999

A  summary  of  the business experience and background of the Company's officers
and  directors  is  set  forth  below.





<PAGE> 18
FRANCIS  L.  SIMOLA    Mr.  Simola  has  been  Chairman,  CEO  and  President of
PowerCold since the Company's inception in January 1993. Mr. Simola's background
and  experience  includes; over 28 years in the computer industry with positions
in various marketing and management operations with Unisys Corporation, formerly
Burroughs  Corporation;  over  15 years as a consultant and principal in various
high-tech  companies.  Mr.  Simola  is  the founder and president of Simco Group
Inc.,  a private investment company that controls a major interest in PowerCold.
Simco  provides  services  consisting  of  financing,  marketing  and management
consulting  for  small technical start-up companies that have proven specialized
niche  products.  Mr.  Simola  is  a  graduate of Peirce Business College with a
degree in Marketing and Management, and attended Villanova University and Drexel
University Evening College for additional course studies in Finance and Business
Administration.

GEORGE  C.  BRILEY    Mr.  Briley  has  been  a  director of the PowerCold since
September  1994,  and  is President of RealCold Products, Inc., and President of
Technicold  Services, Inc., PowerCold subsidiary companies.  Mr. Briley has over
forty-seven  years  experience in engineering and marketing in the refrigeration
industry.  After  receiving  his BSEE at Louisiana Polytechnic University, Summa
Cum  Laude,  Mr.  Briley  was  employed by York Corp. for twelve years, where he
attended  the York Engineering Training Program.  At York he served as a Project
Engineer and Sales Manager prior to management positions as a Branch Manager and
Regional Manager. He then served with Frick Company for two years as Field Sales
Manager.  Mr.  Briley  was  employed for thirteen years with Lewis Refrigeration
Company,  as  Vice  President   and  Board  Member;   and  fifteen  years   with
Refrigeration  Engineering  Corp.  (RECO),  as  Vice  President,  Marketing  and
Research  and  Board  Member.  While serving Lewis and RECO, he helped build the
companies  into  multi  million  dollar   organizations,  where  they  designed,
engineered,  manufactured,  installed  and  serviced   industrial  refrigeration
systems.  Mr.  Briley  holds  four  US patents, and is a Registered Professional
Engineer  in five states. He is the author of many articles and papers regarding
all  aspects  of  industrial   refrigeration.   His  services   on  professional
organizations  include;  Founding  President  of  the International Institute of
Ammonia   Refrigeration   (IIAR);   Fellow  in  American   Society   of  Heating
Refrigeration  and  Air Conditioning Engineers (ASHRAE), fellow and life member;
Chairman  and  member  of  many  committees,  and  a  member  at  present of the
ANSI-ASHRAE  15-1993  "Safety  Code  for  Air  Conditioning  and Refrigeration".

H.  JACK KAZMAR     Marketing Consultant with Rotary Power International, Inc. -
1993  - 1997.  Mr. Kazmar is also a representative for several specialty heating
and air conditioning products.  Previously he worked at ICC as Vice President of
Sales  and  Marketing.  Mr.  Kasmar has had more than 30 years experience in the
commercial  heating,  ventilation and air conditioning equipment industry.  From
1981  till  1969,  Jack  Kasmar  was  President  and  co-founder   of  Skil-Aire
Corporation,  a manufacturer of standardized commercial heating, ventilation and
air  conditioning  products. From 1971 to 1981, Mr. Kasmar served in a number of
positions of increasing responsibility at Fedders Corporation, including General
Manager  of  Residential  and  Commercial Products Division and Airtemp Applied.
Prior to joining Fedders, he held various positions with Worthington Corporation
in  direct  sales  and  field management in NYC, Washington D. C., Baltimore and
Philadelphia  areas.  Jack  Kasmar  holds  a  Bachelor  of  Science - Mechanical
Engineering  from  Lafayette  College  in  Easton,  Pennsylvania.

Directors  of  the  Company  are  elected  every  three  years.  Officers of the
Company,  elected by the Board of Directors, serve annually. There are no family
relationships among the Directors and Officers of the Company.   Mr. Simola, Mr.
Briley  and  Mr.  Kazmar  have  devoted 100% of their time for PowerCold's daily
operating  activities  during  the  last  fiscal  year  1999.




<PAGE> 19
ITEM  11.     EXECUTIVE  COMPENSATION

No  executive officer or director of the parent Company received any cash salary
as  continuous  payroll compensation during the year ended 2000.  And no officer
of the parent Company was paid by any other source other than PowerCold for time
that  was  actually  spent  in  furtherance  of  PowerCold's  affairs.

Mr. Briley has received less than $40,000 from Technicold Services. Inc. for his
consulting  services.  Mr.  Kazmar received $60,000 for consulting services, and
was granted 100,000 options for three years to purchase the Company's  shares at
$0.50  per  share,  which  expire  in  June  2003.  Simco Group/ Simola received
120,000 shares of common restricted stock for services rendered the Company, and
received  $60,000  related  to  payment  due  for  operating expenses, which has
accumulated  with  loans  due  Simco Group  for a total due of $73.636.00 loaned
the  Company.

ITEM  12.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND
              MANAGEMENT

The  following  table  sets forth information as of December 31, 2000, regarding
the number of shares of the Company's common stock beneficially owned by (i) all
beneficial  owners  of  five percent (5%) or more of common stock, and (ii) each
director.  (iii)  beneficial  owner  of  outstanding  preferred  stock.

NAME  AND  ADDRESS                    AMOUNT  AND  NATURE           PERCENT
OF  BENEFICIAL  OWNER               OF BENEFICIAL OWNERSHIP (1)     OF CLASS (2)
---------------------               ---------------------------     ------------
George  C.  Briley                           634,602                   5.01%
17  Pembroke  Lane
San  Antonio,  TX.  78240

H.  Jack  Kazmar                             262,000                   2.07%
36  West  Beechcroft  Road
Short  Hills,  NJ  07078

Francis  L.  Simola  and  (3)               1,092,432                  8.62%
Veronica  M.  Simola
9408  Meadowbrook  Ave.
Philadelphia,  Pa.  19118

Simco  Group,  Inc.  (4)                    1,800,664                  14.21%
1800  E.  Sahara,  Suite  107
Las  Vegas,  Nevada  89104

Intermagnetics General Corporation          1,354,785                  10.69%
450  Old  Niskayuna  Road
Latham,  NY  12110

Total  Common  Stock                        5,144,483                  40.60%

(1)  The  nature  of  beneficial  ownership  for  all  shares is sole voting and
     investment  power.
(2)  The  per  cent  of  class  is  all  common  stock  and  preferred stock.
(3)  Includes  minor  children
(4)  Simco  Group  Inc., a privately held Nevada Corporation, (100%) owned by
     Francis  L.  Simola and  Veronica  M.  Simola.






<PAGE> 20

ITEM  13.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

The  Company  has  received  funding on several occasions from Simco Group, Inc,
(Simco),  a  separate  legal  entity  wholly-owned by the Company's Chairman and
Chief  Executive  Officer. Simco Group, Inc. has financed the Company on several
occasions since the Company's inception.  In 1999 the Board of Directors elected
to  give  Simco  group  8%  interest on outstanding loans to the Company.  Simco
Group has never requested payment of any interest from the Company for providing
said financing, and has never received interest except as stated.  In 2000 Simco
Group  accepted  $10,249.36,  as  adjusted  back  interesting from 1999, and the
amount  was  included  with loans due Simco Group, Inc.  As of December 31, 2000
there  was  an  outstanding  loan  of  $73,636  due  Simco  Group.,  Inc.

The  Board of Directors unanimously approved establishing Simco Group, Inc. with
fiduciary responsibility for the Company, effective December 27, 1994.  On April
15,  1996  and  on May 1, 1999 the Board of Directors again voted unanimously to
have  Simco  Group,  Inc. continue to support the financial needs of the Company
and  its  subsidiaries  whenever necessary; making loans and borrowing money for
the Companies, selling personal stock or assets of Francis Simola to support the
Company,  or  to  make  loans  to support financial transactions of the Company.
Because  of  these financial transactions, Simco Group, Inc. knowingly knew that
it  may be at financial risk, loosing personal interest and principal money, and
incurring  losses  in  personal  stock  transactions.

George  Briley,  Chief  Technology  Officer of PowerCold, has loaned the Company
$27,000.  Mr.  Briley  has  received  no  interest  on  the  loan  transaction.

ITEM  14.     EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES AND REPORTS ON FORM 8-K

(a)     List  the  following  documents  filed  as  a  part  of  the  report:

Financial  Statements exhibited herein the Form 10-K Annual Report and are filed
as  a  part  hereof:

     Independent  Auditors'  Reports:

     Report  on  the  2000  Financial  Statements

     Consolidated  Financial  Statements:

     Balance  Sheets  -  December  31,  2000,  1999  and  1998

     Statements  of  Operations  -  Years ended December 31, 2000, 1999 and 1998

     Statements  of  Stockholders'  Equity - Years ended December 31, 2000, 1999
     and  1998

     Statements  of  Cash  Flows  - Years ended December 31, 2000, 1999 and 1998

     Notes  to  Consolidated  Financial  Statements

(B)     REPORTS  ON  FORM  8-K:

     8-K  April 5, 2000  -  Resignation of Director and Cancel Funding Agreement
     8-K  August  18,  2000  -  License  Agreement  and Settlement of Litigation
     8-K  December  1,  2000  -  Changes  Certifying  Accountant
     8-K  December  27,  2000  -  Technology  License  Agreement




<PAGE> 21








                              POWERCOLD CORPORATION

                        CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 2000






                              WILLIAMS & WEBSTER PS
                          CERTIFIED PUBLIC ACCOUNTANTS
                        BANK OF AMERICA FINANCIAL CENTER
                           W 601 RIVERSIDE, SUITE 1940
                                SPOKANE, WA 99201
                                 (509) 838-5111










                              POWERCOLD CORPORATION
                                TABLE OF CONTENTS
                                December 31, 2000



INDEPENDENT  AUDITOR'S  REPORT                                         1


FINANCIAL  STATEMENTS

     Consolidated  Balance  Sheets                                     2

     Consolidated  Statements  of  Operations                          3

     Consolidated  Statement  of  Stockholders' Equity (Deficit)       4

     Consolidated  Statements  of  Cash  Flows                         5


NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS                         6






<PAGE> 22






To  the  Board  of  Directors
PowerCold  Corporation
Cibolo,  Texas


                          INDEPENDENT AUDITOR'S REPORT
                          ----------------------------


We  have  audited  the  accompanying  consolidated  balance  sheet  of PowerCold
Corporation  as of December 31, 2000, and the related consolidated statements of
operations,  stockholders' equity and cash flows for the year then ended.  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 audit.  The consolidated financial statements of PowerCold Corporation as of
December  31,  1999  and 1998 were audited by other auditors whose reports dated
March  30,  2000,  except  with  respect  to  Note  3  to  which   the  date  is
September  15,  2000,  and March 5, 1999, respectively, expressed an unqualified
opinion  on  those  statements.

We  conducted our audit in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards 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.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable  basis  for  our  opinion.

In  our  opinion,  the financial statements referred to above present fairly, in
all  material  respects,  the  financial position of PowerCold Corporation as of
December  31, 2000, and the results of its operations and its cash flows for the
year  then  ended in conformity with accounting principles generally accepted in
the  United  States  of  America.

The  accompanying  financial  statements  have  been  prepared assuming that the
Company  will  continue as a going concern.  As discussed in Note 3, the Company
has  sustained  substantial operating losses in recent years and the Company has
used  substantial amounts of working capital in its operations.  At December 31,
2000,  intangible  assets  comprise  a material portion of the Company's assets.
These factors raise substantial doubt about the Company's ability to continue as
a  going concern.  Management's plans regarding those matters also are described
in  Note  3.  The financial statements do not include any adjustments that might
result  from  the  outcome  of  this  uncertainty.

/s/ Williams & Webster, P.S>

Williams  &  Webster,  P.S.
Certified  Public  Accountants
Spokane,  Washington

March  9,  2001



<PAGE> 23
                            POWERCOLD CORPORATION
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
                                                  December 31,
                                 -----------------------------------------------
                                      2000            1999             1998
                                 -------------    -------------    -------------
<C>                              <S>              <S>              <S>
ASSETS

CURRENT  ASSETS

Cash                             $     106,864    $     14,464     $     21,781
Restricted cash                            -               -            400,000
Securities available for sale              -               -             32,500
Trade accounts receivable,
  net of allowance                      38,665         152,154            6,313
Receivables from related parties           -               -             72,618
Interest receivable                        -               -              9,918
Refundable income taxes                    -               -             71,934
Inventory                              241,272          34,993          156,699
Prepaid expenses                       307,500          69,347           62,511
                                 -------------    -------------    -------------
Total Current Assets                   694,301         270,958          834,274
                                 -------------    -------------    -------------

OTHER  ASSETS

Investments in affiliate                   -               -            825,988
Deposits                                 7,705             -                -
Property and equipment, net             73,570          29,229           42,483
Patent rights and related
  technology, net                    1,195,627       1,166,554          441,078
Goodwill, net                           27,392         115,398          125,925
                                 -------------    -------------    -------------
Total Other Assets                   1,304,294       1,311,181        1,435,474
                                 -------------    -------------    -------------

TOTAL ASSETS                     $  1,998,595     $  1,582,139     $   ,269,748
                                 =============    =============    =============
</TABLE>


















The accompanying notes are an integral part of these financial statements.

<PAGE> 24
                            POWERCOLD CORPORATION
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
                                                  December 31,
                                 -----------------------------------------------
                                      2000            1999             1998
                                 -------------    -------------    -------------
<C>                              <S>              <S>              <S>
LIABILITIES  AND  STOCKHOLDERS'  EQUITY

CURRENT  LIABILITIES

Accounts payable and
  accrued expenses               $     195,460    $    578,258      $   397,934
Account payable - related party         10,567             -               -
ommissions payable                      42,240          42,240          42,240
Advances from affiliate                 73,636         365,254              -
Short-term borrowings                   43,328          21,378          424,203
Current portion of long-term debt      203,419         203,564          300,000
                                 -------------    -------------    -------------
Total Current Liabilities              568,650       1,210,694        1,164,377
                                 -------------    -------------    -------------

LONG-TERM DEBT,
  less current portion                   6,826           9,609              -
                                 -------------    -------------    -------------

COMMITMENTS AND CONTINGENCIES          168,300             -                -
                                 -------------    -------------    -------------

STOCKHOLDERS'  EQUITY
Convertible preferred stock,
  Series A, $0.001  par  value;
  1,250,000 authorized, 0,
  1,250,000, and 1,250,000
  shares issued and outstanding,
  respectively                             -             1,250            1,250
Common stock, $0.001 par value;
  200,000,000 shares authorized,
  12,669,383, 7,876,641 and
  6,834,000 shares issued and
  outstanding, respectively             12,669           7,876            6,834
Additional paid-in-capital           8,252,727       6,044,092        5,534,274
Accumulated deficit                 (7,001,077)     (5,681,882)      (4,428,487)
Stock subscriptions receivable          (9,500)         (9,500)          (8,500)
                                 -------------    -------------    -------------
                                     1,254,819         361,836        1,105,371
                                 -------------    -------------    -------------
TOTAL LIABILITIES AND
  STOCKHOLDERS' EQUITY           $   1,998,595    $  1,582,139     $  2,269,748
                                 =============    =============    =============

</TABLE>






The accompanying notes are an integral part of these financial statements.

<PAGE> 25
                           POWERCOLD CORPORATION
          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
<TABLE>
                                        For the Years Ended  December 31,
                                 -----------------------------------------------
                                      2000            1999             1998
                                 -------------    -------------    -------------
<C>                              <S>              <S>              <S>
REVENUES
Product sales                    $    312,865     $    461,572     $    148,659
Services                               82,175          100,831          293,513
                                 -------------    -------------    -------------
Total Revenues                        395,040          562,403          442,172
                                 -------------    -------------    -------------
COST  OF  REVENUES
Product sales                         266,243          564,938          119,532
Services                               16,994           37,132          276,923
                                 -------------    -------------    -------------
Total Cost of Revenues                283,237          602,070          396,455
                                 -------------    -------------    -------------
GROSS PROFIT (LOSS)                   111,803          (39,667)          45,717
                                 -------------    -------------    -------------
OPERATING  EXPENSES
Sales and marketing                   648,060          168,003          509,464
General and administrative            711,524          647,089          502,610
Research and development                  -            166,262           55,229
Provision (recovery) for
  doubtful accounts                    10,379           (2,754)          81,778
Equity loss in unconsolidated
  Affiliate                               -                -             35,845
Write-off of advances to
  Affiliate                               -                -            557,145
Depreciation and amortization         153,494          181,675           99,937
                                 -------------    -------------    -------------
Total Operating Expenses            1,523,457        1,160,275        1,842,008
                                 -------------    -------------    -------------
LOSS FROM OPERATIONS               (1,411,654)      (1,199,942)      (1,796,291)
OTHER  INCOME  (EXPENSES)
Interest income                         6,622            8,706           97,969
Interest expense                       (2,763)         (70,249)         (31,289)
Gain on settlement of
  Litigation                           88,600              -                -
Other income                              -              8,090           39,424
                                 -------------    -------------    -------------
Total Other Income (Expenses)          92,459          (53,453)         106,104
                                 -------------    -------------    -------------
LOSS BEFORE INCOME TAX             (1,319,195)      (1,253,395)      (1,690,187)

INCOME TAX EXPENSE                        -                -                -
                                 -------------    -------------    -------------
NET LOSS                         $ (1,319,195     $ (1,253,395)    $ (1,690,187)
                                 =============    =============    =============
LOSS  PER  COMMON  SHARE,
     BASIC AND DILUTED           $     (0.13)     $      (0.18)    $      (0.27)
                                 =============    =============    =============
WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING,
  BASIC AND DILUTED                10,156,716        7,106,638        6,376,647
                                 =============    =============    =============
</TABLE>
The accompanying notes are an integral part of these financial statements.

<PAGE> 26
                           POWERCOLD CORPORATION
                  CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                                                         Accum-
                                                                                                          ulated
                         Preferred Stock          Common Stock                               Stock       Other       Total
                     ------------------------ ---------------------- Additional  Accum-      Sub-        Comphre-    Stock-
                     Number of                Number of              Paid-in      ulated      cription    hensive     holders'
                     Shares      Amount       Shares     Amount      Capital     Deficit     Receivable  Income      Equity
                     ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<C>                  <S>         <S>         <S>         <S>         <S>         <S>         <S>         <S>         <S>
Balance, January 1,
 1998 as previously
 reported                   -    $      -     5,995,000  $    5,995  $4,099,799  $(2,686,078)$   (7,500) $       (50) $1,412,166
Prior year
 adjustment - error
 in  calculation of
 refund of income
 taxes in 1997              -           -            -          -           -        (52,222)       -           -       (52,222)
                     ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance, January 1,
 1998 as restated           -           -      5,995,000      5,995   4,099,799   (2,738,300)    (7,500)        (50)  1,359,944
Issuance of
 preferred stock,
 Series A             1,250,000       1,250          -          -       978,246          -          -           -       979,496
Issuance of common
 stock as follows:
 - for cash                 -           -         18,000        118      99,882          -          -           -       100,000
 - for services             -           -        621,000        621     293,447          -          -           -       294,068
 - for purchase
   of subsidiary            -           -        100,000        100      62,900          -          -           -        63,000
Change in net
 unrealized loss on
 securities
 available-for-sale,
 net of
 reclassification
 adjustment                 -           -            -          -           -            -          -            50          50
Subscriptions due
 from stockholders          -           -            -          -           -            -       (1,000)        -        (1,000)
Net loss, December
 31, 1998                   -           -            -          -           -            -   (1,690,187)        -    (1,690,187)
                     ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance, December
 31, 1998              1,250,000      1,250    6,834,000      6,834   5,534,274   (4,428,487)    (8,500)        -     1,105,371
Issuance of common
 stock as follows:
 - for services              -          -        483,641        483     161,627          -          -           -       162,110
- for cash                   -          -        559,000        559     348,191          -          -           -       348,750
Subscriptions due
 from stockholders           -          -            -          -           -            -       (1,000)        -        (1,000)
Net loss, December
 31, 1999                    -          -            -          -           -            -   (1,253,395)        -    (1,253,395)
                     ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance, December
 31, 1999              1,250,000      1,250    7,876,641      7,876   6,044,092   (5,681,882)    (9,500)        -       361,836
Stock issued for
 cash at an average
 of $0.87 per
 common share                -          -      1,329,602      1,330   1,156,670          -          -           -     1,158,000
Stock issued as
 prepaid consulting
 fees at $0.50 per
 common share                -           -       615,000        615    306,885           -          -           -       307,500
Stock issued for
 services at an
 average of $.058
 per common share            -           -       593,355        593    296,085           -          -           -       296,678
Perferred stock
 converted to
 common stock at par  (1,250,000)     (1,250)  1,354,785      1,355       (105)          -          -           -           -
Stock issued and
 options exercised
 in exchange for debt
 at $0.50 per
 common share                -           -       100,000        100     49,900           -          -           -        50,000
Stock issued in
  exchange for debt at
 $0.50 per common share      -           -       800,000        800    399,200           -          -           -       400,000
Net loss, December
 31, 2000                    -           -           -          -          -             -    (1,319,195)       -    (1,319,195)
                     ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance, December
 31, 2000                    -   $       -    12,669,383 $   12,669  $8,252,727          =   $(7,001,077)$   (9,500) $1,254,819
                     =========== =========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 27
                            POWERCOLD CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
                                        For the Years Ended  December 31,
                                 -----------------------------------------------
                                      2000            1999             1998
                                 -------------    -------------    -------------
<C>                              <S>              <S>              <S>
CASH FLOWS FRO  OPERATING
  ACTIVITIES:

Net loss                         $  1,319,195)    $  (1,253,395)   $ (1,690,187)
Adjustments to reconcile net
  loss to net cash used in
  operating  activities:
    Depreciation and amortization     153,494           181,675          99,937
    Gain on sale of investment
    in unconsolidated affiliate           -                 -           (37,121)
    Gain on settlement
    of litigation                     (88,600)              -               -
    Loss realized on
    disposition of subsidiary             -                 -             6,028
    Equity in loss of
    unconsolidated affiliate              -                 -            35,845
   Write-off of advances
   to affiliate                           -                 -           557,145
   Provision for doubtful
   accounts                               -                 -            76,815
   Issuance of common stock
   for services                       604,178           162,110         294,068
  Issuance of common stock
  for current debt                    108,383               -               -
(Increase) decrease in assets:
  Accounts receivable                 113,489          (145,841)          10,098
  Receivable from related party           -              72,618              -
  Interest receivable                     -               9,918              -
  Refundable income taxes                 -              71,934              -
  Inventories                        (206,279)          121,706          (87,617)
  Prepaid expenses                   (245,858)           (6,836)         (49,349)
Increase (decrease) in
liabilities:
  Accounts payable and
   accrued expenses                  (214,498)           53,215           66,007
  Commissions payable                     -                 -             42,240
  Income taxes payable                    -                 -            (74,156)
                                 -------------    -------------    -------------
Net cash used in operating
Activities                         (1,094,886)        (732,896)        (750,247)
                                 -------------    -------------    -------------

</TABLE>








The accompanying notes are an integral part of these financial statements.

<PAGE> 28
                            POWERCOLD CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
                                        For the Years Ended  December 31,
                                 -----------------------------------------------
                                      2000            1999             1998
                                 -------------    -------------    -------------
<C>                              <S>              <S>              <S>
CASH FLOWS FROM INVESTING
ACTIVITIES:
  Purchase of property and
  Equipment                               (885)         (15,636)         (3,637)
  Investment in affiliate                 -                -           (572,095)
  Proceeds from sale of
  investment in
  unconsolidated affiliate                -                -              44,984
  Cash released from escrow
  related to sale
  of subsidiary                           -                -             200,000
  Proceeds from sale of
  Securities
  available-for-sale                      -             32,500            81,716
  Release of restriction
  on cash                                 -            400,000               -
  Purchase of securities
  available-for-sale                      -                -            (234,152)
  Increase in advances
  from affiliate                          -            365,254               -
  Decrease in advances
   to affiliate                           -                -             160,347
                                 -------------    -------------    -------------
Net cash provided by (used in)
  investing activities                   (885)         782,118         (322,837)
                                 -------------    -------------    -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on
  long-term debt                        (2,527)         (2,464)             -
  Proceeds from short-term
  Borrowings                            32,698             -             25,061
  Repayment of short-term
  Borrowings                               -          (402,825)         (11,966)
  Proceeds from issuance of
  shares under private
  placement                          1,158,000         348,750          100,000
  Proceeds from sales of
  preferred stock                          -               -            979,496
  Repayment of short-term
  borrowings, related parties              -               -                -
                                 -------------    -------------    -------------
Net cash provided by (used in)
 financing activities               1,188,171          (56,539)       1,092,591
                                 -------------    -------------    -------------
Net increase (decrease) in cash        92,400           (7,317)          19,507
Cash at beginning of year              14,464           21,781            2,274
                                 -------------    -------------    -------------
Cash at end of year              $    106,864     $     14,464     $      21,781
                                 =============    =============    =============
</TABLE>
The accompanying notes are an integral part of these financial statements.

<PAGE> 29
                            POWERCOLD CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
                                        For the Years Ended  December 31,
                                 -----------------------------------------------
                                      2000            1999             1998
                                 -------------    -------------    -------------
<C>                              <S>              <S>              <S>
Supplemental cash flow
information:
  Interest paid                  $      2,763    $      50,628     $     25,261
                                 =============    =============    =============
  Income taxes paid              $         -      $        -       $     74,156
                                 =============    =============    =============

NON  CASH  TRANSACTIONS:
  Unrealized gain (loss) on
  securities available-for-sale  $         -      $        -      $          50
  Issuance of common stock for
  purchase of subsidiary         $         -      $        -      $      63,000
  Issuance of common stock as
  prepayment for consulting
  services                       $     307,500    $        -      $         -
  Issuance of common stock
  for services                   $     296,678    $        -      $         -
  Issuance of common stock as
  payment of current debt        $     108,383    $        -      $         -
  Issuance of common stock
  for technology license         $      50,000    $        -      $         -
  Issuance of common stock for
  payment of advances from
  affiliate                     $      291,617    $        -      $         -
  Reclassification of deposit
  to equipment                  $       50,000    $        -      $         -

</TABLE>























The accompanying notes are an integral part of these financial statements.

<PAGE> 30
                            POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE  1  -  ORGANIZATION  AND  DESCRIPTION  OF  BUSINESS

PowerCold  Corporation,  formerly  International  Cryogenic Systems Corporation,
(the  Company)  was  incorporated  on  October  7,  1987 in the State of Nevada.
PowerCold  is  a  solution  provider  of  energy  efficient  products   for  the
refrigeration,  air  condition and power industries. The Company operates across
many  market  sectors  from large industrial food processors to small commercial
air  conditioning  systems.  The  company  develops,  manufactures  and  markets
proprietary  equipment  to  achieve  significant electric power cost savings for
commercial   and   industrial   firms.    PowerCold's   energy   efficient   and
environmentally  safe  products  are  designed  to  reduce  power  costs for air
conditioning,  refrigeration and on-site building power. The Company derives its
revenues from three principal product lines.  The first is a line of evaporative
heat  exchange  systems for the HVAC and refrigeration industry. The second line
is  the design and production of unique products for the refrigeration industry.
The  third  is  consulting   engineering  services,   including  process  safety
management  compliance,  and  ammonia  refrigeration  and  carbon dioxide system
design.

On  December  28,  1992, the Company acquired the patent rights (U.S. Patent No.
4,928,492) and related engineering and technology to a process of quick freezing
food  products, and cleaning and treating various nonfood products. This process
was accomplished by using a circulating cryogenic liquid in a closed pressurized
vessel system.  The patent acquisition was made in exchange for 2,414,083 shares
of the company's common stock.  Two directors of the Company were also directors
of  the  company  selling  the  patent  rights.

On  August  4,  1995, the Company acquired Nauticon, Inc., including its related
technology  and  assets for 900,000 shares and 300,000 options (expired July 31,
2000) of the Company's stock.  The assets currently include United States Patent
5,501,269  issued  on  March  26,  1996, and entitled Condenser Unit, and United
States  Patent 5,787,722 issued August 4, 1998, and entitled Heat Exchange Unit.

On  May  18,  1998,  the Company incorporated a wholly owned subsidiary, Channel
Freeze  Technologies,  Inc.,  to acquire intellectual property rights on Channel
Ice  Technologies.  The Company has produced its first unit with this technology
(see  Note  18)  and  is  awaiting  its  sale.

The  Company  formed Alturdyne Energy Systems, Inc. in September 1999 to support
the  natural gas engine driven water chiller business.  Subsequently, the entity
has  not  been  in  operation  because  of  lack  of  operating  capital.

On  December  1,  2000, the Company acquired Ultimate Comfort Systems, Inc., the
technology  rights,  patent  rights  (U.S.  Patent  No.  5,183,102), and license
agreement  for  integrated  piping technology for a heating and air conditioning
system.  This  acquisition  gave the Company exclusive, non-transferrable United
States transfer rights to the technology and all related assets. This technology
was  then  placed  into  a newly formed, wholly-owned subsidiary of the Company,
Ultimate  Comfort  Systems.  See  Note  5.









<PAGE>  31
                            POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

This  summary  of  significant  accounting  policies  is  presented to assist in
understanding  the financial statements.  The financial statements and notes are
representations  of  the  Company's  management,  which is responsible for their
integrity  and  objectivity.  These  accounting  policies  conform to accounting
principles generally accepted in the U. S. and have been consistently applied in
the  preparation  of  the  financial  statements.

Accounting  Methods
-------------------
The  Company's  financial  statements  are  prepared using the accrual method of
accounting.

Use  of  Estimates
------------------
The  process  of  preparing  financial  statements in conformity with accounting
principles  generally  accepted in the United States of America requires the use
of  estimates  and  assumptions  regarding certain types of assets, liabilities,
revenues,   and  expenses.   Such  estimates   primarily  relate   to  unsettled
transactions  and   events  as  of  the  date  of   the   financial  statements.
Accordingly,  upon settlement, actual results may differ from estimated amounts.

Principles  of  Consolidation
-----------------------------
The  consolidated  financial  statements include the accounts of the Company and
its  wholly  owned  subsidiaries, after elimination of the intercompany accounts
and  transactions.  Wholly  owned subsidiaries of the Company are listed in Note
12.

Reclassification
----------------
Certain  amounts  from  prior  periods  have been reclassified to conform to the
current  period  presentation.  This reclassification has resulted in no changes
to  the  Company's  accumulated  deficit  or  net  losses  presented.

Cash  and  Cash  Equivalents
----------------------------
For  purposes  of the statements of cash flows, the Company considers all highly
liquid  investments  with original maturities of three months or less to be cash
equivalents.

Inventories
-----------
Inventories  are  stated at the lower of cost or market on a first-in, first-out
basis.  See  Note  7.

Investment  in  Securities
--------------------------
Pursuant  to  Statement  of  Financial  Accounting Standards (SFAS) No. 115, the
Company's  investments  in  securities are classified as either trading, held to
maturity, or available-for-sale.  During the years ended December 31, 2000, 1999
and 1998, the Company did not own any securities classified as either trading or
held to maturity.  However, at December 31, 1998, the Company did own securities
classified  as  available-for-sale.



<PAGE>  32
                            POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Investment  in  Securities  (continued)
---------------------------------------
Securities  available-for-sale  consist  of  debt  and   equity  securities  not
classified  as  trading  securities  or  as  securities  to be held to maturity.
Unrealized  holding  gains  and losses, net of tax, on securities available-for-
sale are reported as a net amount in a separate component of other comprehensive
income.

Gains  and  losses  on  the sale of securities available-for-sale are determined
using the specific identification method and are included in earnings.

Fair  Value  of  Financial  Instruments
---------------------------------------
The  Company's  financial  instruments  as defined by SFAS No. 107, "Disclosures
about Fair Value of Financial Instruments," include cash, advances to affiliate,
trade  accounts   receivable,   investment  in   securities  available-for-sale,
restricted   cash,  accounts   payable  and   accrued  expenses  and  short-term
borrowings.   All  instruments   other   than   the  investment   in  securities
available-for-sale  are  accounted for on a historical cost basis, which, due to
the  short  maturity  of these financial instruments, approximates fair value at
December  31,  2000, 1999 and 1998.  Investment in securities available-for-sale
is  recorded  at  fair  value  at  December  31,  1998.

Derivative  Instruments
-----------------------
In  June  1998,  the  Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  ("SFAS")  No.  133, "Accounting for Derivative
Instruments  and  Hedging Activities."  This standard establishes accounting and
reporting  standards  for  derivative  instruments, including certain derivative
instruments  embedded  in  other  contracts,  and  for  hedging  activities.  It
requires  that  an  entity  recognize  all  derivatives   as  either  assets  or
liabilities  in  the  balance sheet and measure those instruments at fair value.

At December 31, 2000, the Company has not engaged in any transactions that would
be  considered  derivative  instruments  or  hedging  activities.

Property  and  Equipment
Property  and  equipment  are  stated  at  cost.  Depreciation  of  property and
equipment is calculated using the straight-line method over the estimated useful
lives  of  the  assets,  which  range  from  three  to  ten  years.  See Note 8.

Concentration  of  Credit  Risk
-------------------------------
The  Company  maintains  its cash in one commercial account at a major financial
institution.  Although  the financial institution is considered creditworthy and
has  not  experienced  any  losses  on  its  deposits, at December 31, 2000, the
Company's  cash  balance  exceeded  Federal Deposit Insurance Corporation (FDIC)
limits  by  $6,864.








<PAGE> 33
                            POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Impaired  Asset  Policy
-----------------------
In  March  1995,  the Financial Accounting Standards Board issued statement SFAS
No.  121  titled  "Accounting for Impairment of Long-lived Assets." In complying
with  this  standard,  the  Company  reviews  its long-lived assets quarterly to
determine  if  any  events  or  changes  in  circumstances have transpired which
indicate  that  the  carrying  value  of  its assets may not be recoverable. The
Company  determines  impairment  by comparing the undiscounted future cash flows
estimated  to  be  generated by its assets to their respective carrying amounts.

The Company does not believe any adjustments are needed to the carrying value of
its  assets  at  December  31,  2000.

Goodwill
--------
Goodwill  represents  the  excess of the purchase price and related direct costs
over  the  fair  value of net assets acquired as of the date of the acquisition.
Goodwill  is  amortized  on  a  straight-line  basis over 10 years.  The Company
periodically  reviews  its  goodwill to assess recoverability based on projected
undiscounted  cash  flows  from  operations.   Impairments  are   recognized  in
operating  results  when  a  permanent  diminution  in  value  occurs.

Revenue  Recognition
--------------------
The Company recognizes revenue from product sales upon shipment to the customer.
Service  revenue  is  recognized  when  services  are  performed  and  billable.

Bad  Debts
----------
The  Company estimates bad debts utilizing the allowance method, based upon past
experience  and current market conditions.  At December 31, 2000, 1999 and 1998,
the  allowance  for  doubtful  accounts  was  $6,478,   $138,379,  and  $84,533,
respectively.

Research  and  Development
--------------------------
Research  and  development  expenses  are charged to operations as incurred. The
cost  of  intellectual  property  purchased  from  others  that  is  immediately
marketable or that has an alternative future use is capitalized and amortized as
intangible  assets.  Capitalized  costs  are  amortized  using the straight-line
method  over  the  estimated  economic  life, typically 10 years, of the related
asset.  The  Company periodically reviews its capitalized patent costs to assess
recoverability  based  on the projected undiscounted cash flows from operations.
Impairments  are  recognized in operating results when a permanent diminution in
value  occurs.

Advertising  Expenses
---------------------
Advertising  expenses  consist  primarily  of  costs  incurred  in  the  design,
development,  and  printing  of Company literature and marketing materials.  The
Company  expenses  all  advertising  expenditures  as  incurred.  The  Company's
advertising  expenses  were  $2,021,  $54,763,  and  $3,219  for the years ended
December  31,  2000,  1999,  and  1998,  respectively.



<PAGE> 34
                            POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

Stock  Based  Compensation
--------------------------
The  Company  accounts  for stock issued for compensation in accordance with APB
25,  "Accounting   for  Stock  Issued   to  Employee."   Under   this  standard,
compensation cost is the difference between the exercise price of the option and
fair  market of the underlying stock on the grant date.  In accordance with SFAS
No. 123, "Accounting for Stock Based Compensation," the Company provides the pro
forma  effects  on net income and earnings per share as if compensation had been
measured  using  the  "fair  value  method"  described  therein.

Compensated  Absences
---------------------
Employees  of the Company are entitled to paid vacation, sick, and personal days
off, depending on job classification, length of service, and other factors.  The
Company  accrues  vacation  expense throughout the year and, if employees do not
utilize  their  allotment,  the Company will cash out all unused pay on the last
calendar  day  of  the  year.

Income  Taxes
-------------
The  Company  accounts  for  income  taxes  in  accordance  with  SFAS  No. 109,
"Accounting  for  Income  Taxes,"  which  requires  recognition  of deferred tax
liabilities  and  assets for the expected future tax consequences of events that
have  been  included  in  the  financial  statements or tax returns.  Under this
method,  deferred  tax  liabilities  and  assets  are  determined  based  on the
difference  between  the  financial  statements  and  tax  basis  of  assets and
liabilities using statutory income tax rates in effect for the year in which the
differences  are  expected  to  reverse.

Earnings  Per  Share
--------------------
On  January  1,  1998,  the  Company  adopted  SFAS  No. 128, which provides for
calculation  of  "Basic"  and  "Diluted" earnings per share.  Basic earnings per
share  includes  no dilution and is computed by dividing net income available to
common  shareholders  by  the weighted average common shares outstanding for the
period.  Diluted earnings per share reflect the potential dilution of securities
that  could share in the earnings of an entity similar to fully diluted earnings
per share.  Although there were common stock equivalents outstanding at December
31,  2000,  1999 and 1998, they were not included in the calculation of earnings
per  share  because  they  would  have  been  considered  anti-dilutive.

Comprehensive  Income
---------------------
Effective  January  1,  1998,  the  Company  adopted  SFAS  No.  130, "Reporting
Comprehensive  Income"  (SFAS  130),  which  was  issued in June 1997.  SFAS 130
establishes  rules for the reporting and display of comprehensive income and its
components,  but  had  no  effect  on  the  Company's net income (loss) or total
stockholders'  equity.  SFAS  130  requires  unrealized  gains and losses on the
Company's  available-for-sale  securities, which prior to adoption were reported
separately  in  stockholders'  equity,  to  be included in comprehensive income.






<PAGE> 35
                            POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE  3  -  GOING  CONCERN

The  accompanying  consolidated  financial  statements  have  been  prepared  in
conformity with accounting principles generally accepted in the United States of
America,  which  contemplates  continuation  of  the Company as a going concern.
However,  the Company has sustained substantial operating losses in recent years
and  the  Company  has  used  substantial  amounts  of  working  capital  in its
operations.  At December 31, 2000, intangible assets comprise a material portion
of  the  Company's assets.  The recovery of these intangible assets is dependent
upon  achieving  profitable  operations  and  favorable resolution of the matter
discussed  in  Note  15.  The  ultimate  outcome  of  these uncertainties cannot
presently  be  determined.  Management  is  actively  seeking  additional equity
financing.  Additionally, management believes that the prior year's acquisitions
and  the  acquisition  of  Ultimate  Comfort Systems technology will lead to the
overall  structure  necessary  to fulfill the Company's current strategic plans.

In  view  of  these matters, realization of a major portion of the assets in the
accompanying  balance  sheet  is  dependent  upon  continued  operations  of the
Company,  and  the  success  of its future operations.  Management believes that
actions presently being taken to obtain additional equity financing and increase
sales  provide  the  opportunity  to  continue  as  a  going  concern.

NOTE  4  -  RELATED  PARTY  TRANSACTIONS

The  Company  has  received  funding on several occasions from Simco Group, Inc,
("Simco"),  a  separate  legal entity wholly-owned by the Company's chairman and
chief  executive  officer.

During  2000,  Simco converted $400,000 of its loans to the Company into 800,000
shares  of  the  Company's  common  stock.  See  Note  11.

During  1999,  Simco advanced $365,254 to the Company.  During 1998, the Company
advanced  funds  to  Simco  to  invest  in  short-term  and long-term marketable
securities.  At December 31, 1998, management of the Company determined that the
value  of  the  marketable  securities had been permanently impaired.  The total
amount  of advances to affiliates of $557,145 was written-off.  Simco guaranteed
the  Company  an  8%  annual  return on these funds.  Simco paid interest to the
Company  for  the year ended December 31, 1998 of $49,284.  During 1998, a total
of  $195,000  was  recorded as compensation for the Company's chairman and chief
executive  officer.  No  cash  was paid related to the $195,000, but instead was
used  to  reduce  the  funds  advanced  to  Simco  during  1998.

During  1998, the Company recorded expense of $30,000 related to the issuance of
120,000  shares  of restricted common stock to Simco as payment for expenses and
consulting  services  provided.  An  additional  100,000  shares  were issued to
reimburse  Simco  for  payment  of  $63,000  in expenses of the Company, paid by
Simco.  The  shares  were  issued  at  50%  of the bid price on date of issuance
ranging  from  $0.25  per  share  to  $.063  per  share.

On September 30, 1994, the Company's board of directors approved agreements with
three  key  executives.  The  agreements  provide that compensation for services
rendered  be  paid  through  cash  payments  or  through  a  stock  option plan,
determined  annually  by the board.  Sale of stock is subject to approval by the
treasurer and president of the Company.  During 1998, the Company issued a total
of  335,000  restricted  shares  on  common  stock  to  these  three executives,
including  the  220,000  shares  noted  above  for  a total expense of $136,750.
Shares  are  issued  at 50% of the current bid price of the Company's stock.  No
cash  was  paid  to  these  three  executives  during  1998.
<PAGE> 36
                            POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE  4  -  RELATED  PARTY  TRANSACTIONS (CONTINUED)

In  addition,  the  directors receive an annual payment of $2,500 for director's
fees.  The  agreements  further provide that two of the Company's officers shall
receive  a 2% commission not to exceed 5% on any direct sales of the Company.  A
third  officer shall receive the highest of 3% commission on the Company's gross
revenues  or  5% on the Company's gross operating profits, or $10,000 per month.
These  employees  also  have the option to purchase shares of common restrictive
stock  of  the  Company at 50% of bid price 30 days after receiving payments for
these  services.  In  order to obtain these benefits, the employees must perform
services for a period of three years effective on date of agreement or receive a
pro  rata  share  based  on  years  of  service.  No additional commissions were
accrued  related  to  the  agreements  at  December  31,  2000,  1999  and 1998.

Included  in  accounts  payable  and accrued expenses as of December 31, 1999 is
$97,000  for  amounts  owed to the president of Technicold Services, Inc. and to
the  former  President  of  Nauticon  Inc.

NOTE  5  -  ACQUISITIONS

Acquisition  of  Heating  and  Air  Conditioning  System  Technology
--------------------------------------------------------------------
On  December 1, 2000, the Company acquired the technology rights, patent rights,
and  license  agreement  for  integrated piping technology for a heating and air
conditioning   system.    This   acquisition   gave   the   Company   exclusive,
non-transferrable  United  States  transfer  rights  to  the  technology and all
related  assets.  In  exchange, the Company paid $65,000 cash, assumed two lines
of  credit  (see  Note 9), foregone payment of $28,571 from projects in process,
issued  100,000  shares  of  its  common stock (see Note 11), granted 150,000 of
stock  options  at  $1.00  per share (see Note 12), and agreed to the payment of
royalties  at  no  more  than  $3,000  per month for one year.  In addition, the
Company hired the seller of the technology for an annual salary of $70,000, with
annual  renewals,  based  upon  performance   as  defined  within  the  purchase
agreement.  This  technology  was  then placed into a newly formed, wholly-owned
subsidiary  of  the  Company,  Ultimate  Comfort  Systems.

Acquisition  of  Rotary  Power  Enterprise,  Inc.
-------------------------------------------------
Pursuant  to  the  terms  of  the  Rotary  Power  Enterprise,  Inc.  acquisition
agreement,  effective  October  1,  1998,  the  Company issued 100,000 shares of
common  stock  in  exchange  for  100%  of the outstanding stock of Rotary Power
Enterprise,  Inc.  Rotary  Power Enterprise, Inc. was formed during 1998 for the
purpose  of  developing  a  new  product  line  for  PowerCold.  The acquisition
resulted  in  goodwill  of  $65,399, which is being amortized on a straight-line
basis  over  10  years.

NOTE  6  -  SECURITIES  AVAILABLE-FOR-SALE

During  the  year  ended  December  31,  1999,  the  Company sold all securities
available-for-sale  at  cost  providing  the  Company  with  $32,500  of  cash.








<PAGE> 37
                            POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE  7  -  INVENTORY

Inventories  at  December  31,  2000,  1999,  and 1998 consist of the following:

                                 2000            1999             1998
                            -------------    -------------    -------------
Materials inventory         $    132,851     $     34,993     $    156,699
Finished goods inventory         108,421              -                 -
                            -------------    -------------    -------------
                            $    241,272     $     34,993     $    156,699
                            =============    =============    =============

Finished  goods inventory consists of the specialized quick freezing unit of the
Company's  Channel  Freeze  Technology,  Inc.  subsidiary.

NOTE  8  -  PROPERTY,  EQUIPMENT  AND  INTANGIBLES

Property  and  equipment  is  summarized  as  follows:

                                                December 31,
                               -----------------------------------------------
                                    2000            1999             1998
                               -------------    -------------    -------------
Machinery and equipment        $     87,342     $     32,877     $     12,540
Prototypes and molds                 71,030           73,420           71,030
Furniture and fixtures                7,614            8,804            9,894
                               -------------    -------------    -------------
Total Property and Equipment        165,986          115,101           93,464
Less: Accumulated Depreciation       92,416           85,872           50,981
                               -------------    -------------    -------------
   Net Property and Equipment  $     73,570     $     29,229     $     42,483
                               =============    =============    =============

Depreciation  expense  for the years ended December 31, 2000, 1999, and 1998 was
$7,616,  $33,819,  $22,335,  respectively.

Intangibles  is  summarized  as  follows:

                                                December 31,
                               -----------------------------------------------
                                    2000            1999             1998
                               -------------    -------------    -------------
Patents and related technology $  1,684,001     $  1,532,486     $    683,669
Goodwill                            105,269          168,033          168,033
                               -------------    -------------    -------------
Total Intangibles                 1,789,270        1,700,519          851,702
Less: Accumulated Amortization      566,251          418,567          284,699
                               -------------    -------------    -------------
Net Intangibles                $  1,223,019     $  1,281,952     $    567,003
                               =============    =============    =============








<PAGE> 38
                            POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE  9  -  NOTES  PAYABLE

At  December  31, 2000, 1999 and 1998, notes payable consisted of the following:

A  note  payable  to  Southtrust  Bank,  secured  by  G.  Briley,  the Company's
president,  for  $5,913  with  an  annual interest rate of 14.99%.  This note is
payable  in  March  2002.

Two  lines  of credit were assumed as part of the consideration for the December
2000  acquisition  of  a technology license and intellectual property. (See Note
5.)  One  line  of  credit was payable to Royal Bank of Canada for $34,014 U.S.,
and  the  second  to  T.  D.  Bank  for  $3,401  U.S.

A note payable to a bank under a financing agreement that permits the Company to
borrow  up to $25,000. The agreement provides for interest at 9.25%. The note is
secured by the personal guarantee from one of the officers. At December 31, 1999
and  1998, $21,378 and $25,000, respectively, were outstanding against the note.
The  financing  agreement  matured  in  July  1999.

A note payable to a bank under a financing agreement that permits the Company to
borrow  up  to $400,000. The agreement provides for interest at 7%. The note was
secured by a $400,000 certificate of deposit. At December 31, 1998, $399,142 was
outstanding against the note. The note was repaid in 1999 with the proceeds from
the  above-mentioned  certificate  of  deposit.

NOTE  10  -  PREFERRED  STOCK

The  Company  is  authorized  to  issue  5,000,000  shares  of  $0.001 par value
preferred stock, which contains no voting privileges.  Shareholders are entitled
to cumulative dividends, and each share of preferred stock may be converted into
the  Company's  common  stock.

At  December  31,  1999  and 1998, the Company had 1,250,000 shares of preferred
stock  issued  and  outstanding.  This  stock  was  designated  as   Series  "A"
Convertible Preferred Stock and was issued to a single investor.  This stock has
a  par  value  of  $0.001  per  share  and  a stated value of $0.80 per share in
liquidation  and  has  preference  over  common  stock  in  liquidation.

Each  issued and outstanding share of Series "A" Convertible Preferred Stock was
entitled to receive cumulative preferential dividends, payable in cash or common
stock  at  the  option  of  the Company, at the annual rate of $0.064 per share,
payable  quarterly.

On  June  30,  2000,  100%  of  the Company's outstanding Series "A" Convertible
Preferred  Stock  was  converted  to the Company's common stock.  The conversion
resulted in the issuance of 1,354,785 shares of the Company's common stock at an
approximate  conversion  rate of one share of preferred stock for 1.08 shares of
common  stock.  At  December  31,  2000,  the Company did not have any shares of
preferred  stock  outstanding.









<PAGE> 39
                            POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE  11  -  COMMON  STOCK

Upon  incorporation,  the  Company was authorized to issue 200,000,000 shares of
its  $0.001  par  value  common  stock.

During  the  year  ended December 31, 1998, the Company issued 839,000 shares of
its  common  stock  of  which  118,000  shares were issued for cash of $100,000,
621,000  shares  were issued for services valued at $294,068, and 100,000 shares
for  the  purchase  of  a  subsidiary  valued  at  $63,000.

During  the year ended December 31, 1999, the Company issued 1,042,641 shares of
its  common  stock  of  which  483,641 shares were issued for services valued at
$162,110  and  559,000  shares  were  issued  for  cash  of  $348,750.

During  the year ended December 31, 2000, the Company issued 3,437,957 shares of
its  common  stock of which 1,329,602 shares were issued for cash of $1,158,000,
615,000  shares  for prepaid consulting valued at $307,500, 593,355 for services
valued  at $296,678, 100,000 shares for a technology license (see Note 5) valued
at  $50,000,  and  800,000  shares  for  debt  valued  at  $400,000.  A total of
1,480,000  shares  were  issued  to  officers,  directors,  or affiliates of the
Company  and  are subject to transfer restrictions as defined by Rule 144 of the
Securities  Act  of  1933.

In  addition,  1,354,785  shares  were  issued for the conversion of 100% of the
Company's  Series  "A"  Convertible  Preferred  Stock.  See  Note  10.

NOTE  12  -  STOCK  BASED  COMPENSATION  AND  STOCK  OPTIONS

During  1998, the Company authorized and issued a total of 650,000 options at an
exercise  price  of $0.50 per share for employee compensation.  The Company also
issued a total of 400,000 options during 1998 as consideration for acquisitions.
During  1999,  the Company authorized and issued a total of 1,004,558 options at
an  exercise price of $0.50 for employee compensation.  During 2000, the Company
authorized and issued a total of 750,000 options at an average exercise price of
$1.20  for  investment funding, and 250,000 options at an average exercise price
of  $0.50  as  compensation.

The  significant  characteristics  of  these  options are summarized as follows:

The  Company  applies  APB  Opinion  No.  25  in  accounting  for  options  and,
accordingly, recognized no compensation cost for its stock options in 2000, 1999
or  1998.  The  following  reflect the Company's pro-forma net loss and net loss
per  share  had the Company determined compensation costs based upon fair market
values of options at the grant date, as well as the related disclosures required
by  SFAS  123.













<PAGE> 40
                            POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE  12  -  STOCK  BASED  COMPENSATION  AND  STOCK  OPTIONS  (CONTINUED)


                                                        Weighted
                                                          Average
                                  Number of              Exercise
                                    Shares                 Price
                                 -------------         -------------
Outstanding, January 1, 1998          300,000          $       2.00
     Granted                        1,150,000                  1.19
     Exercised                             -                   -
     Forfeited                             -                   -
     Expired                               -                   -
                                 -------------         -------------
Outstanding, December 31, 1998       1,450,000         $       1.36
                                 =============         =============
Exercisable, December 31, 1998       1,450,000         $       1.36
                                 =============         =============

Outstanding, January 1, 1999         1,450,000         $       1.36
     Granted                         1,004,558                 0.50
     Exercised                             -                   -
     Forfeited                             -                   -
     Expired                               -                   -
                                 -------------         -------------
Outstanding, December 31, 1999       2,454,558         $        1.01
                                 =============         =============
Exercisable, December 31, 1999       2,454,558         $        1.01
                                 =============         =============

Outstanding, January 1, 2000         2,454,558         $        1.01
     Granted                         1,000,000                  0.77
     Exercised                        (450,000)                 0.50
     Forfeited                             -                    -
     Expired                          (700,000)                 2.29
                                 -------------         -------------
Outstanding, December 31, 2000       2,304,558          $       0.74
                                 =============         =============
Exercisable, December 31, 2000       2,304,558          $       0.74
                                 =============         =============

At  December  31, 2000 exercise prices for outstanding options ranged from $0.50
to  $3.00.  The  weighted average contractual life remaining of such options was
2.3  years.

In  accordance with Statement on Financial Accounting Standard No. 123, the fair
value  of the options granted was estimated using the Black-Scholes Option Price
Calculation.  The  following  assumptions  were made to value the stock options:

                                      2000            1999             1998
                                 -------------    -------------    -------------

       Risk-free Interest Rate         5.25%            5.45%         5.23%
       Expected Life                   3 years          3 years       2.67 years
       Expected Volatility             105%             105%          160%



<PAGE> 41
                            POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE  12  -  STOCK  BASED  COMPENSATION  AND  STOCK  OPTIONS  (CONTINUED)

The Black-Scholes option valuation model was developed for use in estimating the
fair  value  of traded options, which have no vesting restrictions and are fully
transferable.  In  addition, option valuation models require the input of highly
subjective  assumptions  including the expected stock price volatility.  Because
the  Company's  employee  stock   options  have   characteristics  significantly
different  from  those  of  trade options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion,  the  existing  models  do  not  necessarily  provide a reliable single
measure  of  the  fair  value  of  its  employee  stock  options.

Pro  forma  net  income and earnings per share had the Company accounted for its
options  under  the  fair  value  method  of  SFAS  123  is  as  follows:

                                                  December 31,
                                 -----------------------------------------------
                                      2000            1999             1998
                                 -------------    -------------    -------------
Net loss as reported             $ (1,322,123)    $ (1,253,395)    $ (1,690,187)
Adjustment required by SFAS 123      (287,273)        (524,890)        (177,517)
                                 -------------    -------------    -------------
Pro forma net loss               $ (1,609,396)    $ (1,778,285)    $ (1,867,704)
                                 =============    =============    =============
Pro forma net loss per share,
  Basic and diluted              $     (0.16)     $      (0.25)    $      (0.29)
                                 =============    =============    =============

NOTE  13  -  REPORTABLE  SEGMENTS

PowerCold  currently  has  five  reportable  segments:  Nauticon  Inc., RealCold
Products,  Inc.,  Technicold  Services,  Inc., Rotary Power Enterprise, Inc. and
Channel  Freeze  Technologies,  Inc.  Nauticon  Inc.  offers  a  product line of
evaporative  heat  exchange  systems  for  the  HVAC and refrigeration industry.
Technicold  Services,  Inc.  offers  consulting  engineering services, including
process  safety  management compliance and ammonia refrigeration technicians and
supervisors.  RealCold  Products,  Inc. designs and produces unique products for
the  refrigeration  industry.  Rotary Power Enterprise, Inc. provides customized
rotary  engines  to  power  a  variety  of  chiller  and  refrigeration systems.



















<PAGE> 42
                            POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE  13  -  REPORTABLE  SEGMENTS  (CONTINUED)

Channel  Freeze Technologies, Inc. generates revenue through the manufacture and
sale of bulk freezing systems.  Segment information for the years ended December
31,  2000,  1999,  and  1998  are  as  follows:

                                                  December 31,
                                 -----------------------------------------------
                                      2000            1999             1998
                                 -------------    -------------    -------------
Revenues:
Nauticon, Inc.                   $     3,754     $      91,006     $    112,522
RealCold Products, Inc.              309,111           212,596          224,477
Technicold Services, Inc.             82,175            50,611          105,173
Rotary Power Enterprises, Inc.           -             187,025              -
Channel Freeze Technologies, Inc.        -                 -                -
Corporate                                -              21,165              -
                                 -------------    -------------    -------------
Total Revenues                   $    395,040     $    562,403     $    442,172
                                 =============    =============    =============
Operating  loss:
Nauticon, Inc.                   $    (33,331)    $   (290,569)    $   (461,212)
RealCold Products, Inc.              (504,144)        (243,429)         (79,689)
Technicold Services, Inc.            (109,771)           7,538           (5,943)
Rotary Power Enterprises, Inc.       (109,025)          (8,454)          (7,671)
Channel Freeze Technologies, Inc.    (215,808)        (313,801)             -
Corporate                            (439,575)        (351,227)      (1,241,776)
                                 -------------    -------------    -------------
Total Operating Loss             $ (1,411,654)    $ (1,199,942)    $ (1,796,291)
                                 =============    =============    =============

Identifiable  assets:
Nauticon, Inc.                   $    280,375     $    385,927     $    545,060
RealCold Products, Inc.               132,371          144,650           76,304
Technicold Services, Inc.             120,833          122,137          240,359
Rotary Power Enterprises, Inc.         75,386          129,992           96,563
Channel Freeze Technologies, Inc.     848,777          797,531              -
Ultimate Comfort Services             152,415              -                -
Corporate                             388,438            1,902        1,311,462
                                 -------------    -------------    -------------
Total Identifiable assets        $  1,998,595     $  1,582,139     $  2,269,748
                                 =============    =============    =============
Depreciation  and  amortization:
Nauticon, Inc.                  $      83,046     $     96,761     $     85,699
RealCold Products, Inc.                   900            2,419              440
Technicold Services, Inc.              12,090           12,090           12,163
Rotary Power Enterprises, Inc.            334              365              -
Channel Freeze Technologies, Inc.      57,124           70,040              -
Corporate                                 -                -              1,635
                                 -------------    -------------    -------------
Total  Depreciation  and
Amortization                     $    153,494     $    181,675     $     99,937
                                 =============    =============    =============

All  of  the Company's assets are held within the United States and all material
revenue  was  generated  within  the  United  States.


<PAGE> 43
                            POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE  13  -  REPORTABLE  SEGMENTS  (CONTINUED)

PowerCold's  reportable  segments  are  strategic  business  units  that  offer
different  products  or  services.  They  are  managed  separately  because each
business  requires  different  technology  and  marketing  strategies.

NOTE  14  -  CONCENTRATION  OF  RISK

During  the  year  ended  December  31,  1998, sales to one customer amounted to
approximately  $224,000.

NOTE  15  -INCOME  TAXES

The  Company incurred net operating losses for income tax purposes of $719,000 ,
$778,000,  and $1,055,000 for the years ended December 31, 2000, 1999, and 1998,
respectively.  The  Company  utilized  approximately  $365,000 as a carryback to
1996  to  reduce  the  federal  tax  provision  in that year.  The Company's net
operating   loss   carryforwards  for  income  tax   purposes  is  approximately
$2,929,000, which will expire on various dates through the year 2020.

NOTE  16  -LEASES

Capital  Lease
--------------
In  1999,  the Company acquired a forklift, which was financed through a capital
lease.  This  capital  lease at December 31, 2000 and 1999 is payable in monthly
installments  of  $297,  with  interest  at 9.5%, through April 2004.  Aggregate
yearly  maturities  of  this capital lease for the years after December 31, 2000
are  as  follows:

Year          Amount
----     ------------

2001     $     2,762
2002           3,018
2003           3,298
2004           1,166
         ------------
Total    $    10,244
         ============

Operating  Lease
----------------
The  Company  leases  certain  sales  offices,  plant space, and equipment under
operating  lease  agreements,  which  expire  at  various times throughout 2002.
Total  rent  expense  was $97,900, $95,322, and $100,902 in 2000, 1999 and 1998,
respectively.

Future  minimum  rental  commitments  as  of  December 31, 2000 were as follows:

Year  ending  December  31,
       2001     $     100,231
       2002            50,891
                -------------
                $     151,122
                =============


<PAGE> 44
                            POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE  17  -  LITIGATION

Management of the Company is seeking to recoup damages from the former president
and  shareholder of Nauticon Inc. in connection with Nauticon Inc.'s acquisition
by  the  Company.  Related  to  this  matter is the ownership of certain patents
($441,078  carrying  value  at December 31, 1998) and the amount of compensation
owed  to  the  former Nauticon Inc. shareholder ($88,600 accrued and included in
accounts payable and accrued expenses at December 31, 1999 and 1998). The former
Nauticon  Inc.  shareholder  was  granted  options to purchase 133,763 shares of
common  stock  of  the Company at $1.50 per share (increasing to $2.00 per share
before expiring in July 2000).  Nauticon Inc. is a defendant in several lawsuits
filed by suppliers. Nauticon Inc. denies any liability. Counsel has advised that
it  is  not  possible  to project the outcome at this time. It is the opinion of
management  that  this  matter  will  not  have a material adverse effect on the
Company's  financial  position  or  results  of  operations.

On  August  31,  2000, Nauticon Inc. and its former president agreed upon a full
and  final  settlement of the lawsuit mentioned above.  This settlement resulted
in  a  gain  for  the  Company  of  $88,600  which was recorded as other income.

NOTE  18  -  SUBSIDIARY  -  CHANNEL  FREEZE  TECHNOLOGIES,  INC.

On  May  18,  1998,  Channel  Freeze  Technologies,  Inc. (CFTI) was formed as a
wholly-owned  subsidiary  of  the  Company  to  accommodate  the  acquisition of
intellectual  property  assets  related to Channel Ice Technology.  On September
15,  1998, the Company entered into an agreement to acquire eighty percent (80%)
of  the  assets  (primarily  patients)  of  Channel  Ice  Technologies  from SIR
Worldwide  LLC (SIR) for $850,000 and options for SIR to purchase 400,000 shares
of PowerCold stock at a price of $2.50 per share, for a period not to exceed two
years  from  the  date  of  closing.  After  the  Company  made cash payments of
$550,000  in  1998 and $100,000 in 1999, and the remaining acquisition liability
was  $200,000,  at December 31, 2000. The agreement also required the Company to
issue two-thirds of the stock of CFTI to SIR, which would leave the Company with
only  a  one-third  ownership  in  CFTI.  The  Board of Directors of the Company
passed  a  resolution approving the issuance of two-third of the shares of stock
of  CFTI  to  SIR; however, the shares were never issued. The agreement provided
the  Company  the ability to increase (buy back) their ownership interest (up to
80%)  in  CFTI  by  making additional payments totaling $5,950,000.  For each $1
million dollars in Channel Ice Technology unit sales, PowerCold shall acquire an
additional  1%  equity  interest  in  CFTI  for each payment of $85,000, up to a
maximum  ownership  interest  by  PowerCold  in  CFTI  of  80%.

Also,  as  part  of  the  purchase  agreement,  CFTI  has  agreed  to additional
compensation  to  SIR  by  payment  of either a 10% net fee payment or a 13% net
sales  fee payment.  Ten percent net fee payments are payments of 10% of the net
gross  invoice  price  on all Channel Ice Technology Units sold to distributors.
Thirteen  percent  net fee payments are payments of 13% of the net gross invoice
price  on  all  Channel  Ice  Technology  Units  of  direct  sales to end users.










<PAGE> 45
                            POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

NOTE  18  -  SUBSIDIARY  - CHANNEL FREEZE TECHNOLOGIES, INC. (CONTINUED)

In 1998, the transaction was accounted for using the equity method of accounting
since  the  Company only owned a one-third interest in CFTI (based solely on the
Board  approval  of  a  resolution  to issue two-third of CFTI's common stock to
SIR).  Financial  information  for  Channel  Freeze  Technologies,  Inc.  as  of
December  31,  1998,  and  three  months  then  ended  is summarized as follows:

Current assets               $     1,609
Non-current assets               836,869
                             ------------
Total assets                     838,478
Less: current liabilities         93,548
                             ------------
Equity                       $   744,930
                             ============
Net loss                     $   105,069
                             ============

Since  1999, the Company has maintained its investment in CFTI as a wholly owned
subsidiary.  The  patent  and  intellectual  property owned by the subsidiary is
consolidated  with  the  Company's  other  activities.

For  the  year ended December 31, 1998, $35,845 was included in the consolidated
statement  of  operations  as  equity  loss  in  unconsolidated  affiliate.

NOTE  19  -  PRIOR  PERIOD  ADJUSTMENT

Accumulated  deficit  at  the  beginning of 1998 has been adjusted to correct an
error  made  in  a  prior  year.  In 1997, the Company elected to carry back net
operating  losses  on its income tax returns and calculated a preliminary income
tax refund without taking into account alternative minimum tax.  The preliminary
refund  calculation was overstated by $52,222, which caused an understatement of
accumulated  deficit.  The  error  had  no  effect  on  net  income  for  1998.

NOTE  20  -  COMMITMENTS  AND  CONTINGENCIES

Officers  and  Directors  Compensation
--------------------------------------
See  Note  4  relating  to  contingent  compensation  to  Company  directors and
officers.

Accounts  Payable
-----------------
The  Company  has trade accounts payable that date back to 1996.  Management had
tried  to contact these vendors to arrange settlement agreements.  The amount in
commitments  and  contingencies  are the balances from vendors that could not be
contacted  or  did  not  respond  to  management's  correspondence.










<PAGE> 46


SIGNATURES

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

                                   POWERCOLD  CORPORATION


                                        /S/ Francis L. Simola
                                   By:  __________________________
                                        Francis  L.  Simola
                                        President  and  Chief  Executive Officer

                                   Dated:     March  26,  2001

Pursuant  to  the  requirements of the Securities and 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  date  indicated.

                                        /s/ Francis L. Simola
                                   By:  __________________________
                                        Francis  L.  Simola
                                        Chairman  and  President
                                        Chief  Executive  Officer

                                   Dated:     March  26,  2001

                                        /s/ George C. Briley
                                   By:  __________________________
                                        George  C.  Briley
                                        Director  and  Secretary
                                        Chief  Technology  Officer

                                   Dated:     March  26,  2001

                                        /s/ H. Jack Kazmar
                                   By:  __________________________
                                        H  Jack  Kazmar
                                        Director  and  Treasurer
                                        Chief  Operating  Officer

                                   Dated:     March  26,  2001