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

                                    FORM 10-K
                                 AMENDMENT NO. 2

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

                   For the fiscal year ended December 31, 1999
                         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:   $562,403.00

The  aggregate  market  value  of  voting  stock  held  by non-affiliates of the
Registrant  was approximately $2,258,284, which is based on the closing price of
$0.5625  on December 31, 1999.  The number of shares of Common Stock outstanding
on December 31, 1999  was 7,876,641.  The  number of shares  of Preferred  Stock
outstanding on December 31, 1999  was  1,250,000.

Documents  Incorporated  By  Reference:     None
Transitional  Small  Business  Disclosure  Format:     Yes  [  ]  No  [X]
<PAGE>





                                      INDEX
                                      -----


     PART  I                                                               PAGE

ITEM  1.     DESCRIPTION  OF  BUSINESS                                        3
ITEM  2.     DESCRIPTION  OF  PROPERTY                                       12
ITEM  3.     LEGAL  PROCEEDINGS                                              12
ITEM  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS     12

     PART  II

ITEM  5.     MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
             STOCKHOLDER MATTERS                                             13

ITEM  6.     SELECTED  FINANCIAL  DATA                                       13

ITEM  7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
             AND  RESULTS  OF  OPERATION                                     14

ITEM  8.     FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA                 20

ITEM  9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
             AND  FINANCIAL  DISCLOSURE                                      21


     PART  III


ITEM  10.     DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT       21

ITEM  11.     EXECUTIVE  COMPENSATION                                        22

ITEM  12.     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
              AND MANAGEMENT                                                 22

ITEM  13.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS             23

     PART  IV


ITEM  14.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
              ON FORM 8-K                                                    24

     SIGNATURES                                                              25











<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.

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

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 refrigeration
systems,  Technicold  Services  provide   consulting  services   for  commercial
refrigeration  and freezing systems for use worldwide, and Nauticon manufactures
and  markets a unique product line of patented evaporative heat exchange systems
for  the  HVAC  and  refrigeration  industry.

Two  of  the Company's executives /directors, President and Treasurer, have been
affiliated  with the public company since 1988 and were also affiliated with the
private  company  as  directors  prior  to  the  merger.

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.


<PAGE>  3

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 provides 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  will  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.

The  total value of the transaction was $724,224.90. Two of the six individuals,
(Terrence J. Dunne and Francis L. Simola) receiving 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.

The  structure and organization of PowerCold as a public entity through 1993 and
1994  was considered as a development stage company. The design, manufacture and
testing of two major freeze machine products, and the restructure from a private
company  to  a  public  company  expended  company  time  and capital. The newly
designed and manufactured Star Wheel freezer machine was completed and operating
consistently  as  of  March  1994.  This  was a major undertaking and technology
breakthrough  proving  that  the new immersion freezer design concept worked. In
June  1994  a  marketing  program was initiated for the freezer machine, and the
progress  in  business  activity  projected  the  company  into a true operating
entity.

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, Ltd.
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  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  combines the
technical  expertise and experience of RealCold with the marketing of Wittemann.
Wittemann  is  the  world's  leading  manufacturer of carbon dioxide systems and
refrigeration accessories employed by brewers and other fermentation processors.
Wittemann  has  carbon  dioxide systems operating in almost every country in the
world.  George  Briley,  President  of  RealCold  Systems  with  over  45  years
experience, is a renown expert in the innovative design and building of merchant
carbon  dioxide  systems.  This  industry  combination  of technology, sales and
manufacturing  experience  is  unsurpassed  and  provides  an effective and cost
efficient entry for this worldwide market. Subsequently, Wittcold Systems, Inc.,
a  division  of  Wittemann  Company,  acquired  RealCold  Systems  in July 1997.

<PAGE>  4

In  August  1995,  PowerCold acquired Nauticon Inc., a company that manufactures
and  markets  a product line of innovative evaporative heat exchange systems for
the  HVAC  and  refrigeration   industry,  representing   over  five   years  of
development.  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
heat exchangers 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.
The  Nauticon  application  should reduce these traditional concerns and enhance
the  industry's  growth.

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.

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; a marketing agreement with the
world's  largest  supplier  of supermarket refrigeration equipment for marketing
the  natural  gas  engine  screw  compressor  systems to supermarkets; the North
American  rights  to the small 65 series Mazda natural gas engine block, subject
to  Mazda Agreement; and Distributor Agreement for the 580 and 40 series engines
from Rotary Power International, Inc.  The rotary engine driven screw compressor
refrigeration  system  significantly  reduces  refrigeration  electrical  demand
during  the  most  expensive  periods  of  the  day  and  year.

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.  Supermarkets,  as the initial target market, have seven natural
gas  engine  screw compressor systems installed. The systems currently provide a
minimum  of  15%  energy  savings with one engine per store. The market includes
over  30,000  supermarkets  that consume 4% of the electrical energy used in the
US.  Also,  through  associated overseas markets there is a complementary demand
and  need  for low cost energy for similar refrigeration systems in remote areas
of  the  world.


<PAGE>  5

Other  target  markets  for  the  rotary  engines  include:  Large  cold storage
facilities, food processing plants, ice rinks and natural gas wellhead, pipeline
and  distribution network. 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 was designed using
natural  gas  rotary  engine  and  the  Nauticon evaporative condenser for large
building  facilities.

Channel  Freeze  Technologies,  Inc. was formed as a new PowerCold entity, which
acquired  80%  of the assets of Channel Ice Technologies, 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 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.

Alturdyne  Energy  Systems,  Inc. - A Letter of Agreement has been signed by The
Company  to  acquire  Alturdyne  Energy  Systems from Alturdyne, a San Diego, CA
based  company.  A formal Agreement was signed and a $50,000.00 deposit was paid
to  Alturdyne. Alturdyne Energy Systems as a wholly subsidiary of PowerCold will
market  natural  gas  engine  driven  water chillers, pumps, air compressors and
generators. RealCold Products will manufacture the water chillers under the name
ALTURCOLD.

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.

There  were  two  major  reasons for the acquisition of RPI. - The refrigeration
industry  desires  packaged  refrigeration  systems and RPI'S engines add growth
value  to our products along with packaging ability. Current deregulation of gas
and  electric  utilities is creating major competitive changes in energy use and
costs.  RPI'S  natural  gas  engines enhance the customers' economic benefits by
reducing  energy  costs  while  supporting  the environment with a clean burning
energy  source.  Through  associated  markets  overseas there is a complementary
demand  and need for energy, (portable generators) and for refrigeration and CO2
systems  in  remote areas of the world. RPI primarily marketed engines to the US
government.  The  Company  now  had  the  opportunity  to commercialize a proven
product that has tens of millions of dollars and years of development experience
behind  it.


<PAGE>  6

Since the Company initially entered into an Agreement to merge with Rotary Power
International,  Inc.,  there  was  a  continuing deterioration in Rotary Power's
negative  cash  flow  from  operations.  Funding  provided  by the Company, that
initially  invested  $1,000,000  in  equity  and the $1,000,000 in proceeds from
bondholders,  was  not  sufficient  to support daily cash flow needs through the
first  (5)  months  of  1997. The Company did not have any obligation to support
Rotary  Power  with  any  additional  financing.  The Company voluntarily loaned
Rotary  Power  $100,000  for  back due rent on the building, $75,000 for the May
interest  payment  on  bond debt, and on June 19, 1997 the Company loaned Rotary
Power  an  additional $41,767 due employees for payroll. In June 1997 Management
decided  not  to  loan  Rotary  Power  any additional funds for two reasons; the
uncertainty  of  Rotary Power's collateral for the Company's financing and after
receiving   documentation   from   Company's   General  Counsel   based  on  his
investigation   of    Rotary   Power,    which   recently   uncovered   probable
misrepresentation  of  material  financial  information  by  RPI to PowerCold in
December  1996  and  thereafter.  Consequently, Rotary Power International, Inc.
requires  additional  funding for its daily operations.  Therefore, the economic
viability  and  long-term  future of Rotary Power International, Inc. depends on
its  ability  to  obtain  additional  sources  of financing, and there can be no
assurance that such financing can be obtained on acceptable terms or at all.  In
November  1997, a new president took over operations of Rotary Power. Subsequent
events  have  led  to  the  restructure  of  the  bond  debt  and  creditors.

STRATEGIC  ALLIANCE

Alturdyne - An innovative manufacturer of standby diesel generator sets, turbine
and  rotary  generator  sets,  pumps  and  natural  gas  engine-driven chillers.
Alturdyne  is  an  approved  vendor for all the "Baby Bells" telephone companies
that  are  regulated  to  maintain standby power. This regulation results in the
telephone  companies  purchasing  a  significant  number of generator sets every
year.  There are over 3600 units installed, and Alturdyne provides service field
support for these systems and other manufactured units. 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  in  the  design  and  production  of  rotary  engines.

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.

Intermagnetics  is  the  largest  integrated  developer  and manufacturer in the
United States, of superconducting LTS and HTS magnets, wire and cable as well as
associated  low-temperature  refrigeration  equipment,  and radio-frequency (RF)
coils,  the  combination  of  which  is  essential  to successful application of
superconductivity  such  as  Magnetic  Resonance  Imaging  (MRI). The Company is
dedicated  to the development and commercialization of applied superconductivity
and  refrigeration  systems. The Company also supplies permanent magnet systems,
materials  separation  equipment  and  FRIGC(R) refrigerants as replacements for
ozone-depleting  refrigerants.


<PAGE>  7

The  strategic  alliance with IMG complimented both companies and supported each
other's  desire  and  needs  with their respective energy efficient products and
services.  PowerCold  has  key personnel, industry contacts and unique products,
and  Intermagnetics  General  has  the  management  and  financial  strength and
complimenting  products.  Although  this  new  emerging  opportunity had all the
necessary  ingredients  for  success,  to  date the strategic alliance was never
fully  implemented  by  the  companies.

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 150 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 (40) years technical experience in
refrigeration  engineering  and  design;  a  well-known expert consultant in the
refrigeration  industry.  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.





<PAGE>  8

EVAPORATIVE  HEAT EXCHANGE SYSTEMS - Nauticon Inc., a wholly owned subsidiary of
PowerCold  manufactures  and markets a product line of evaporative 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.

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. The larger and smaller
size  systems  are  marketed  by  some of the major competitors in the industry;
larger  systems  by  Evapco  and BAC, smaller systems by York and Carrier. 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.
BiofreezeTM  automates  this process. There are literally thousands of potential


<PAGE>  9

users  of this product. The Channel Ice 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.

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
bv  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).

ENGINE  DRIVEN  CHILLERS

In  1991  Alturdyne  began manufacturing engine driven chillers as a new product
line.  Chillers  are  cooling  systems  normally  used  for  buildings, offices,
schools,  hospitals  or  factories and provide 30 to 1100 tons of chilled water.
Currently  99%  of  the  chillers  manufactured  are  driven by electric motors.
However, there is a growing demand for natural gas engine driven chillers due to
deregulation  of  the  electric  and gas utilities. In some areas of the country
electric power is very expensive and operating on natural gas can save thousands
of  dollars  a  year  for  user.  Also in some areas gas companies provide large
rebates  to  natural gas users which helps reduce the higher capital cost of the
chiller.  A  natural  gas  engine  is more expensive than a very high production
electrical motor and this difference makes engine driven chillers more difficult
to  sell  unless  there  is  an  early pay off through cost savings on the users
energy  bill.  Applications  with co-fueled diesel engines are in development by
Alturdyne.

Since  1991, Alturdyne has developed 22 standard chiller models rated from 30 TO
300  tons  that  are certified by Environmental Test Labs which is comparable to
the  UL listing. Designs have been made for units rated from 30 to 1100 tons and
several  large units placed into service. Alturdyne has have sold over 140 units
to  date  and that places us in second place for this industry. Tecochill is the
industry leader, and while they enjoy sponsorship by Gas Research Institute they
utilize  short  life  automotive  derivative  engines  as  opposed  to long life
Caterpillar  industrial  engines  used  by  Alturdyne.

While  the  Alturdyne  chiller  products  have  been  a  technical  success, the
competitive marketplace has limited its financial success.  Therefore, Alturdyne
has  recently  sold  off  the  Chiller Business to PowerCold.  PowerCold has the
refrigeration  expertise and resources and the rotary power engine as a solution
integrator  to  economically produce the chillers.  Alturdyne and PowerCold have
entered  into is a strategic alliance for packaging PowerCold rotary engines and
Alturdyne  generator  sets  for  the  power  industry  market.



<PAGE>  10

ROTARY  POWER  NATURAL  GAS  ENGINES  OFFERS:
     20.000  Hour  engine  reliability
     Low  fixed  maintenance  cost
     Few  moving  parts
     Low  noise
     Compact  configuration
     Wide  horsepower  range  20-15OOHP
     2000 to 42OORPM variable speed capability (>1OOHP  -  36OORPM  maximum)
     Internal  gear  drives  shaft  at  three  times  rotor  speed
     No  external  gearing  required
     Light  weight
     Low  vibration
     No  special  or  massive  foundations  required
     Minimal  structural  bases  required
     Black  start  capability
     Only  control  circuit  power  required
     Eliminates  new  electrical  feeders  in  many  new  installations

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.   RPI   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. Model RN-065x2-NA, 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.

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.
<PAGE>  11

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

Management of the Company is seeking to recoup damages from the former president
and  director  of  Nauticon,  in  connection  with Nauticon's acquisition by the
Company.  Related  to this matter is the ownership of certain patents. It is the
opinion  of  management that this matter will not have any adverse effect on the
Company  at  this  time,  because the Company legally acquired all the assets of
Nauticon  including  the  patents in exchange for stock. The former president of
Nauticon  has  filed  a  counter  claim  against  the  Company  and  two Company
Executives/Directors.  Because of the financial and managerial problems incurred
by  the  previous management, Nauticon has incurred bad debts and certain claims
have  been  filed  against  Nauticon.

Subsequent  event  to  this  filing:  Effective  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.

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

On October 11, 1999, the following majority shareholders of the Company voted in
favor  of  election  of Company Directors to a new three year term by a majority
vote  of  3,840,583 votes or 51.1% of the outstanding 7,518,653 common shares of
the  Company:

     Simco  Group,  Inc.,  Francis  L.  Simola  &  Family     2,611,846  Shares
     George  C.  Briley                                         652,602  Shares
     Terrence  J.  Dunne                                        414,135  Shares
     Jack  Kazmar                                               162,000  Shares

The  following  were  elected Directors of the Company to serve for three years.

     Francis  L.  Simola
     George  C.  Briley
     Jack  Kazmar
     Carl  H.  Rosner

Intermagnetics  General Corporation's investment in the Company entitled them to
have  a  position on the Board of Directors.  Mr. Carl Rosner was never formally
elected  a director of the Company prior to this election.  Subsequently Carl H.
Rosner  has  resigned  as  a  Company  director.








<PAGE>  12
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.


                             1998  Bid               1998  Ask
                            High     Low            High     Low
                           -----    -----          -----    -----
     First  Quarter        1 1/2      1/4          1 3/8      5/8
     Second  Quarter       1 7/8    1 1/4          2        1
     Third  Quarter        1 7/8      5/8          2        1
     Fourth  Quarter       1          1/2          1 1/4      7/8

                             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

(b)  Holders:  As  of  December  31,  1999,  there were approximately 280 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 1,028,005 unregistered shares during the
fiscal  year  1999.  The Company issued 536,938 shares for recorded expenses and
consulting  services  at  an average share price of $0.30 per share. The Company
issued 491,067 shares to investors for private placements for $340,100 in equity
capital  at  an average share price of $0.69 per share. 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,
1995  through  December  31,  1999  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>  13

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

Year  Ended  December  31,     1999     1998     1997     1996     1995
--------------------------     -------  -------  -------  -------  -------
Revenues                       $   562  $   442  $   393  $ 1,452  $ 2,244
Operating  (loss)              $(1,199) $(1,203) $(1,713) $  (573) $(1,060)
Net  Income  (loss)            $(1,253) $(1,690) $(2,720) $ 2,209  $(1,089)
Net  Income (loss) per share   $ (0.18) $ (0.27) $ (0.46) $  0.39  $ (0.23)
Weighted average number
   of shares                     7,107    6,377    5,893    5,662    4,776


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

Year  Ended  December  31,     1999     1998     1997     1996     1995
--------------------------     -------  -------  -------  -------  -------
Total  assets                 $  1,634  $ 2,322  $ 2,229  $ 5,146  $ 2,298
Total  liabilities            $  1,220  $ 1,164  $   817  $ 1,076  $   759
Long  term  debt              $      0  $     0  $     0  $     0  $     0
Shareholders'  equity         $    414  $ 1,158  $ 1,412  $ 4,070  $ 1,539

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  also
supports Rotary Power Enterprise and Alturdyne Energy Systems by engineering and
packaging  their  products.  RealCold  Products will also support Channel Freeze
Technologies  by  designing  and  packaging   their  accompanying  refrigeration
systems.  Management  believes that the recent acquisition of Channel Freeze and
Alturdyne  Energy  Systems should provide improved revenues and profits (subject
to  sufficient  working  capital)  for RealCold Products in 2000, based upon its
expertise  in  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.

During  1999,  RealCold  Products has generated some $10M in customer proposals.
Because  of  insufficient  working  capital for raw materials and labor directly
needed  for  RealCold,  sales  and  revenue  was  greatly impaired.  The working
capital  shortage  for  RealCold  Products  was  mainly due because of the large
amounts  of Company funds that was used for the promotion and support of the new
Channel  Freeze  business.






<PAGE>  14
NAUTICON  INC. - manufactures and markets a product line of patented evaporative
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, subcoolers, and cooling towers. Nauticon products can
produce  power  cost  in  the  refrigeration industry by 20% to 30% making these
units  contribute to the utilities' needs to reduce power demand. There are over
150  systems  installed.

Management believes that Nauticon did not meet its sales and revenue projections
in 1999 due to lack of operating cash flow and limited marketing support because
of  the  concentrated  support  on  the  Channel Freeze business.  PowerCold has
funded  Nauticon  over  $1M  in  operating  capital,  but  the  Company has been
continually hindered by major operating and legal expenses due to previous inept
management.  Because  of  the  major  operating  losses   incurred  by  previous
management,  Nauticon does not have sufficient resources to continue operations.
The  Nauticon product technology was licensed to RealCold Products for a two and
one  half  per  cent  royalty  fee  on  product  sales.

ROTARY  POWER  ENTERPRISE, INC. - was formed (September 1998) as a new PowerCold
entity  to acquire the Natural Gas Business from Rotary Power International. The
agreement  includes:  the  business   assets  including  intellectual  property,
inventory  and  manufacturing  capability; a marketing agreement with one of the
world's  largest  supplier of supermarket refrigeration equipment, for marketing
the  natural  gas  engine  screw  compressor  systems to supermarkets; the North
American  rights  to the small 65 series Mazda natural gas engine block, subject
to  Mazda Agreement; and an exclusive Distributor Agreement for the Rotary Power
580  series  engines  form  Rotary  Power  International,  Inc.  The Company has
delivered  fourteen  65  HP  engines  and  one  500 HP engine on its major sales
agreement  with  Kem  Equipment Company, an engine packager for OEM applications
for the oil and gas industry in Western Canada.  The Sales Agreement is for (100
small  65  HP  and  60 large 500 HP) natural gas engines valued by management at
over  $5  million.  The major application is for oil and gas field systems.  The
initial (160) engines are scheduled for delivery to a major Canadian oil and gas
operation  in  Western  Canada.

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  did not meet its sales and revenue projections in 1999.
Channel  Freeze has generated over $10M in proposal quotations.  The new Channel
Freeze  management  support  team  believes  that  the  product is now ready for
customer  delivery  and  acceptance.

ALTURDYNE  ENERGY  SYSTEMS  -  PowerCold  signed a Letter of Agreement (December
1998),  to  acquire  a  division  of  Alturdyne that produces natural gas engine
driven  water chillers. The new company Alturdyne Energy System, Inc. was formed
in  September  1999.  The  Company  also  announced  a  Strategic  Alliance with
Alturdyne  for  manufacturing  and  marketing  of  their  respective  products.
<PAGE>  15

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.

Alturdyne Energy Systems, as an Alturdyne division installed over (140) chillers
systems.  The manufacturing operations have been moved to the Company's facility
in  Cibolo,  Texas.  The  added  expertise  of RealCold Products engineering and
manufacturing  should  enhance  the   existing  chiller  business  and  generate
additional  revenue  for  the  Company  in  2000.

RESULTS  OF  OPERATIONS       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,
                                        -------------------------------
                                          1999       1998       1997
                                        ---------  ---------  ---------

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 ($1,1,796,291) 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.





<PAGE>  16

The  Company's  Consolidated  Balance Sheet as of December 31, 1999 and December
31,  1998 respectively: Total current assets decreased 63.5%, $ 323,180 for 1999
and  $886,496  for  1998;  total assets decreased 29.6%, $1,634,361 for 1999 and
$2,321,970  for  1998; total liabilities increased 4.6%, $1,220,303 for 1999 and
$1,164,377  for  1998;  total  stockholders'  equity  was $414,058  for 1999 and
$1,157,593  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).

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  shares of new common restricted shares in
1999.  483,000  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 1,250,00
preferred  shares  outstanding  to  one  shareholder.
Liquidity  and  Capital  Resources:  At December 31, 1999, the Company's working
capital  was  ($887,514)  compared  with  ($277,881)  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 $14,455 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.

<PAGE>  17

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 continuos financial support of Simco Group,
the  Company  would  never  have  remained  in  business.

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, loosing personal interest and principal money, and
incurring  losses  due  in  personal  stock  transactions.

PREVIOUS  FINANCIAL  ACTIVITY  -  1998

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.

RESULTS  OF  OPERATIONS  -  1998

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,
                                        -------------------------------
                                          1998       1997       1996
                                        ---------  ---------  ---------

Revenue                                    100.0%     100.0%     100.0%
Cost  of  revenue                           89.7       83.3       62.8
Gross  margin                               10.3       16.7       37.2
Operating  expenses                       (282.5)    (453.9)      76.7
Operating  income  (loss)                 (272.1)    (437.2)     (39.5)
Other  income  (expense)                  (102.0)      22.0      200.2
Net  income  (loss)                       (382.2)    (694.1)     152.2

FISCAL  1998  AND  1997  RESULTS  -  The  Company's  Consolidated  Statements of
Operations  for  the fiscal year ended December 31, 1998 compared to fiscal year
ended  December  31,  1997:  Total  revenue  for 1998 was  $ 442,172 compared to
$391,819  for  1997;  operating  loss  of  ($1,203,301)  for  1998  compared  to
($1,713,203)  for  1997;  and  net loss of ($1,690,187) or ($0.27) per share for
1998  compared  to a net loss of ($2,719,633) or ($0.46) per share for 1997. Net
income  (loss)  per  share  was  based  on  weighted average number of shares of
6,376,647  for  1998  compared  to  5,893,000  for  1997.

<PAGE>  18

The  Company's  Consolidated Balance Sheets as of December 31, 1998 and December
31,  1997  respectively:  Total  current  assets  were  $853,996  for  1998  and
$1,581,736  for  1997;  total assets were $2,321,970 for 1998 and $2,229,357 for
1997;  total  liabilities  were $1,164,377 for 1998 and $817,191 for 1997; total
stockholders'  equity  was  $1,157,593  for  1998  and  $1,412,166  for  1997.

The  company's  revenues and expenses resulted in an operating loss ($1,203,301)
for  1998 compared to an operating loss of ($1,713,203) for 1997, these are both
operating  losses.  The  Company's  operating loss in 1998 was 30% less than the
operating loss in 1997, and the net loss for 1998 was 38% less than the net loss
in  1997.  The  decrease  in  operating losses was due to a reduction of some $1
million in general and administrative expenses; and the decrease in the net loss
was  due  to the write-off of the failed merger with Rotary Power International,
Inc.  in  1997.

LIQUIDITY  AND  CAPITAL  RESOURCES

At December 31, 1998, the Company's working capital was ($310,381) compared with
$764,545  at  December 31, 1997.  The decrease was primarily attributable to the
Company's  write-off  of  $557,145  as  of  December  31,  1998,  in  marketable
securities  that  were  permanently  impaired.  The  company's cash resources at
December  31,  1998  were  $21,781 reflecting an increase in cash resources from
$2,274  at  December  31,  1997.

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.  Management believes that without
the  continuos  financial  support  of Simco Group, the Company would never have
remained  in  business.

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, loosing personal interest money, and incurring
losses  due  in  personal  stock  transactions.

At  December  31, 1997, the Company had $597,300, ($607,960 in 1996) held by and
invested  in an account in the name of Simco. These funds were invested in short
and  long-term liquid marketable securities; these funds have been classified as
advances  to affiliate. Simco has guaranteed the Company a mini-mum 8% return on
these  funds.  During 1998, Simco paid the Company interest of $49,284, ($48,000
in  1997  and  $12,000  in  1996).  Management  believes  these terms reflect an
arms-length  transactions.

In  early 1998, a major security investment decreased in value substantially and
quickly  due  to  uncontrolled market conditions.  Simco Group, at its own risk,
used  its own money to support the investment during 1998, and continued to fund
and  support  the  Company  as needed.  Simco also paid interest to the Company.
Management and a majority of the Directors decided to write -off, as of December
31,  1998,  the  loss  of  $557,145.




<PAGE>  19

During  1998,  the  Company  issued 120,000 restricted shares of common stock to
Simco  as  compensation  at  an  expense  of  $30,000. The Company also recorded
$60,000  related  to  payment for expenses and $120,000 for services and $75,000
for  consulting services provided for the three new acquisitions of Rotary Power
Enterprise,  Channel  Freeze  Technologies  and Alturdyne Energy Systems.  These
amounts  were  credited  to  the  investment  account  funds to reduce the loss.

During  1997,  the  Company  issued  120,000  restricted  shares of common stock
(150,000  shares  in  1996) to Simco in satisfaction of prior years' liabilities
related  to  expenses and consulting services provided. During 1997, the Company
recorded expense of $48,000 related to the issuance of 120,000 restricted shares
as payment for expenses and consulting services provided. The shares were issued
at 50% of the bid price on date of issuance varying from $.30 to $.625 per share
during  1997.

In  September  1998,  the  Company  received  $1,000,000  through  the sale of a
redeemable,  convertible,  preferred series A Preferred Stock, $0.001 par value,
$0.80  stated  value.  1,250,000  preferred  shares  are issued and outstanding.

The  Company issued a total of 838,867 shares of new common restricted shares in
1998.  117,647  shares  were  issued at $0.85 per share for a private placement,
which  raised  $100,000.  100,000 shares were issued for an acquisition at $0.63
per  share.  19,000  shares  were  issued  to the Company Directors at $0.50 per
share.  285,000  shares  were  issued  to  key  executives as compensation at an
average  of  $0.33  per  share.  317,220  share  were issued for satisfaction of
recorded  liabilities  for  expenses  and  services  rendered.

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.

Company  operating  revenues  and  profit  should  increase  because  of the new
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.

YEAR  2000  ISSUES  -  The  company  has  formed  a committee to investigate any
liabilities  resulting  from  the  Y2K  problem. The Company's internal computer
systems and programs are being reviewed to make sure they are up to date. If any
are  not  in  compliance, steps are being taken to upgrade the programs from the
manufacturers.  Any  new computers and/or software programs to be purchased this
year  will  be  purchased as Y2K complied. This same procedure will be addressed
for all office equipment as well. Questionnaires are being sent to the Company's
vendors  and  materials  suppliers  to determine their compliance and actions in
place to do so. We are targeting June 1, 1999 to be complete with all compliance
actions.

ITEM  8.     FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA

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







<PAGE>  20
ITEM  9.     CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON
ACCOUNTING  AND  FINANCIAL  DISCLOSURE

During  the registrant's fiscal year ending December 31, 1999 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 account 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
---------------------  ---   ------------------------------  -------------------

Francis  L.  Simola.    60   Chairman  of  the  Board         January 1, 1993
                             President  and  CEO

George  C.  Briley      74   Director,  and  CTO
                             Secretary,  Treasurer            September 1, 1994
                             President:
                             Technicold Services, Inc.        September 1, 1994
                             RealCold Products, Inc           September 1, 1994
                             Nauticon, Inc.                   October  1,  1998
                             Channel Freeze
                               Technologies, Inc.             October  1,  1998

H.  Jack  Kazmar        68   Director and COO                 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.

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

<PAGE>  21

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  has  devoted  100% of their time for PowerCold's daily
operating  activities  during  the  last  fiscal  year  1999.

ITEM  11.     EXECUTIVE  COMPENSATION

No  executive officer or director of the parent Company received any cash salary
as  compensation  during  the  year  ended  1999.  And  no officer of the parent
Company  was  paid  by  a source other than PowerCold for time that was actually
spent  in  furtherance  of  PowerCold's  affairs.

Mr.  Simola/Simco  Group  received 120,000 shares of common restricted stock for
services rendered the Company for 1999.  Simco Group received $60,000 related to
payment  due for expenses, which has accumulated with  loans due Simco Group for
a  total  due  of  $365,254.00  loaned  the  Company.

ITEM  12.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND
MANAGEMENT

The  following  table  sets forth information as of December 31, 1999, 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.







<PAGE>  22

NAME  AND  ADDRESS                    AMOUNT  AND  NATURE           PERCENT
OF  BENEFICIAL  OWNER               OF BENEFICIAL OWNERSHIP (1)     OF CLASS (2)
--------------------------------    ---------------------------     ------------

George  C.  Briley                             652,602                 8.29%
17  Pembroke  Lane
San  Antonio,  TX.  78240

Terrence  J.  Dunne                            438,488                 5.57%
West 717 Sprague Ave. No. 1100
Spokane, Washington  99204

Robert  E.  Jenkins                            403,728                 5.13%
2903  Hillview  Road
Austin,  Texas  78703

H.  Jack  Kazmar                               162,000                 2.06%
36  West  Beechcroft  Road
Short  Hills,  NJ  07078

Francis  L.  Simola  and  (3)                1,058,596                13.44%
Veronica  M.  Simola
9408  Meadowbrook  Ave.
Philadelphia,  Pa.  19118

Simco  Group,  Inc.  (4)                     1,146,500                14.56%
650  Sentry  Parkway,  Ste.1
Blue  Bell,  PA.  19422

Total  Common  Stock                         3,861,914                49.03%
--------------------------------    ---------------------------     ------------

Intermagnetics General Corporation           1,250,000                100.00%
450  Old  Niskayuna  Road
Latham,  NY  12110

Total  Preferred  Stock                      1,250,000                100.00%
--------------------------------    ---------------------------     ------------

(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.

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.  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  continuos  financial  support  of Simco Group, the Company would never have
remained  in  business.



<PAGE>  23

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,  loosing  personal  interest and principal money, and incurring
losses  due  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  1999  Financial  Statements

        Report  on  the  1998  and  1997  Financial  Statements

     Consolidated  Financial  Statements:

        Balance  Sheets  -  December  31,  1999  and  1998

        Statements of Operations - Years ended December 31, 1999, 1998 and 1997

        Statements of Stockholders' Equity - Years ended December 31, 1999,
        1998 and 1997

        Statements of Cash Flows - Years ended December 31, 1999, 1998 and 1997

     Notes  to  Consolidated  Financial  Statements

(B)  REPORTS  ON  FORM  8-K:

     8-K  May  7,  1999  -  Resignation  of  Registrants  Director
     8-K  December  12,  1999  -  Changes  in  Registrants Certifying Accountant
















<PAGE>  24

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:    November  10,  2000


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
                                        Director  and  President

                                   Dated:  November  10,  2000

                                        /s/ George C. Briley
                                   By:  __________________________
                                        George  C.  Briley
                                        Director,  Secretary  and  Treasurer

                                   Dated:  November  10,  2000

                                        /s/ H. Jack Kazmar
                                   By:  __________________________
                                        H.  Jack  Kazmar
                                        Director

                                   Dated:  November  10,  2000
















<PAGE> 25

                     POWERCOLD CORPORATION AND SUBSIDIARIES

                                      INDEX


Independent  Auditors'  Reports

     Report  on  the  1999  Financial  Statements

     Report  on  the  1998  and  1997  Financial  Statements

Consolidated  Financial  Statements:

     Balance  Sheets  -  December  31,  1999  and  1998

     Statements  of  Operations  -  Years  ended  December  31,  1999,  1998
     and 1997

     Statements  of  Stockholders'  Equity  - Years ended December 31, 1999,
     1998 and 1997

     Statements of Cash Flows - Years ended December 31, 1999, 1998 and 1997

Notes  to  Consolidated  Financial  Statements





































<PAGE> 26
R.  E.  BASSIE  &  CO.,  P.C.
CERTIFIED  PUBLIC  ACCOUNTANTS
A  PROFESSIONAL  CORPORATION

7171  Harwin  Drive,  Suite  306
Houston,  Texas  77036-2197
Tel:  (713)  266-0691  Fax:  (713)  266-0692
E-Mail:  Rebassie@aol.com

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

The  Board  of  Directors
PowerCold  Corporation:

We  have  audited  the  consolidated  balance sheet of PowerCold Corporation and
subsidiaries as of December 31, 1999, and the related consolidated statements of
operations,  changes  in  stockholders'  equity,  and  cash flows for year ended
December   31,  1999.   These  consolidated   financial   statements   are   the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  these  consolidated  financial  statements  based  on  our  audit.

We conducted our audit in accordance with generally accepted auditing standards.
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 consolidated financial statements referred to above present
fairly,  in  all  material  respects,  the  financial  position of PowerCold and
subsidiaries  as  of  December  31, 1999 and the results of their operations and
their  cash flows for the year then ended, in conformity with generally accepted
accounting  principles.

The  accompanying  consolidated financial statements have been prepared assuming
the  Company  will continue as a going concern.  As shown in Note 2, the Company
has  suffered  recurring  losses  from  operations  and has net negative working
capital  that raise substantial doubt about the Company's ability to continue as
a going concern.  Management plans in regard to these matters are also described
in Note 2.  The consolidated financial statements do not include any adjustments
that  might  result  from  the  outcome  of  this  uncertainty.

As discussed in Note 17, the Company's consolidated financial statements for the
year ended December 31, 1999 have been restated to reflect the proper accounting
for  the  investment  in  a  wholly  owned  subsidiary.


/s/ R.  E.  BASSIE  &  CO.,  P.C.


Houston,  Texas
March  30,  2000,  except  with  respect  to
Note  3  to  which  date  is  September  15,  2000






<PAGE>  27
PADGETT, STRATEMANN & CO., L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS ADVISORS
1635 N.E. Loop410, Suite 700 - San Antonio, Texas 78209-1684
elephone (210) 828-6281 - Fax (210) 826-8606

An Independently Owned Member of The McGladrey Network Worldwide Services
through RSM International

REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
PowerCold Corporation and Subsidiaries

We  have  audited  the  accompanying  consolidated  balance  sheets of PowerCold
Corporation   (formerly   International   Cryogenic  Systems   Corporation)  and
Subsidiaries  (the  "Company") as of December 31, 1998 and 1997, and the related
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the years ended December 31, 1998 and 1997. These financial statements
are  the  responsibility  of  the Company's management. Our responsibility is to
express  an  opinion  on  these  consolidated  financial statements based on our
audits.  The  financial statements of the Company for 1996 were audited by other
auditors,  whose  report, dated March 7, 1997, included an explanatory paragraph
describing  the  uncertainty  of  the  recovery of the Company's primary assets,
comprising  patent  rights  and related technology of $1,155,986 and goodwill of
$491,892.

We  conducted  our  audits  in   accordance  with  generally  accepted  auditing
standards. Those standards require that we plan and perform the audits 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  audits  provide  a  reasonable  basis  for  our opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material  respects, the consolidated financial position of the
Company  as of December 31, 1998 and 1997, and the consolidated results of their
operations  and their cash flows for the years ended December 31, 1998 and 1997,
in  conformity  with  generally  accepted  accounting  principles.

As  shown  in  the consolidated financial statements, the Company incurred a net
loss  of $1,690,187 for 1998 and has incurred substantial net losses for each of
the  past  two  years.  At December 31, 1998, current liabilities exceed current
assets  by  $310,381.  These factors, and the others discussed in Note 18, raise
substantial  doubt  about  the Company's ability to continue as a going concern.
The consolidated financial statements do not include any adjustments relating to
the  recoverability  and  classification  of recorded assets, or the amounts and
classification  of  liabilities that might be necessary in the event the Company
cannot  continue  in  existence.

Intangible  assets,  which  comprise a material portion of the Company's assets,
include  patent  rights  and  related  technology  of  $441,078  and goodwill of
$125,925,  as  of  December 31, 1998. The recovery of these intangible assets is
dependent  upon  achieving profitable operations and favorable resolution of the
matter  discussed in Note 14. The ultimate outcome of these uncertainties cannot
presently  be  determined. Accordingly, the consolidated financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome of these
uncertainties.

/s/PADGETT, STRATEMANN & CO.
Certified Public Accountants
March 5, 1999 San Antonio, Texas
<PAGE>   28

                     POWERCOLD CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1999 and 1998

<TABLE>
                                                      1999           1998
                                                 --------------  --------------
<S>                                              <C>             <C>
ASSETS

Current  assets:
  Cash                                           $      14,464   $      21,781
  Restricted cash (note 7)                                 -           400,000
  Securities available for sale (note 5)                   -            32,500
  Trade accounts receivable, net of allowance
    for doubtful accounts of $138,379 in 1999
    and $84,533 in 1998                                152,154           6,313
  Receivables from related parties                         -            72,618
  Interest receivable                                      -             9,918
  Refundable income taxes                               52,222         124,156
  Inventories                                           34,993         156,699
  Prepaid expenses                                      69,347          62,511
                                                 --------------  --------------
                       Total current assets            323,180         886,496
                                                 --------------  --------------

Investment in affiliate (note 17)                          -           825,988
Property and equipment, net (note 6)                    29,229          42,483
Patent rights and related technology, net of
  accumulated amortization of $365,932 in 1999
  and $242,591 in 1998 (note 17)                     1,166,554         441,078
Goodwill, net of accumulated amortization of
  $52,635 in 1999 and $42,108 in 1998                  115,398         125,925
                                                 --------------  --------------

                         Total assets            $   1,634,361   $   2,321,970
                                                 ==============  ==============

</TABLE>




















See  accompanying  notes  to  consolidated  financial  statements.

<PAGE>  29
                     POWERCOLD CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 1999 and 1998

<TABLE>
                                                      1999           1998
                                                 --------------  --------------
<S>                                              <C>             <C>
Liabilities and Stockholders' Equity

Current  liabilities:
  Accounts payable and accrued expenses                778,258         697,934
  Commissions payable                                   42,240          42,240
  Advances from affiliates (note 3)                    365,254             -
  Short-term borrowings (note 7 )                       21,378         424,203
  Current installments of long-term debt (note 8)        3,564             -
                                                 --------------  --------------
                   Total current liabilities         1,210,694        1,164,377
Long-term debt, less current
  installments (note 8)                                  9,609              -
                                                 --------------  --------------
                      Total liabilities              1,220,303       1,164,377
                                                 --------------  --------------

Stockholders' equity (notes 2, 9, 10 and 17):
  Convertible preferred stock, Series A, $.001 par
    value, $1,000,000 in liquidation, 1,250,000
    shares authorized, issued, and outstanding           1,250            1,250

  Common stock, $.001 par value. Authorized
    200,000,000 shares: issued and outstanding,
    7,876,641 shares at December 31, 1999 and
    6,834,136 shares at December 31, 1998               7,876            6,834
  Additional paid-in capital                        6,044,092        5,534,274
  Accumulated deficits                             (5,629,660)      (4,376,265)
                                                 --------------  --------------
                                                      423,558        1,166,093
Less receivables for stock subscription                 9,500            8,500
                                                 --------------  --------------
             Total stockholders' equity                414,058       1,157,593
Commitments and contingent liabilities (notes 2, 14 and 15)
Total liabilities and stockholders' equity       $   1,634,361   $   2,321,970
                                                 ==============  ==============
















See  accompanying  notes  to  consolidated  financial  statements.


<PAGE>  30
                      POWERCOLD CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   Years ended December 31, 1999, 1998 and 1997


</TABLE>
<TABLE>
                                              1999           1998            1997
                                          -------------  -------------  -------------
<S>                                       <C>            <C>            <C>
Revenues
  Product sales                          $     461,572   $    148,659   $    229,445
  Services                                     100,831        293,513        162,374
                                          -------------  -------------  -------------
       Total revenues                          562,403        442,172        391,819
                                          -------------  -------------  -------------
Cost  of  revenue:
  Product sales                                564,938        119,532        271,640
  Services                                     37,132         276,923         54,769
                                          -------------  -------------  -------------
       Total cost of revenue                   602,070        396,455        326,409
                                          -------------  -------------  -------------
       Gross margin                            (39,667)        45,717         65,410
Operating  expenses:
  Sales and marketing                          168,003        509,464        252,292
  General and administrative                   647,089        502,610      1,234,167
  Research and development                     166,262         55,229         66,114
  Provision (recovery) for doubtful accounts    (2,754)        81,778          7,718
  Equity loss in unconsolidated affiliate          -           35,845        427,593
  Write-off of advances to affiliate               -          557,145        789,175
  Depreciation and amortization                181,675         99,937        218,322
                                          -------------  -------------  -------------
       Total operating expenses              1,160,275      1,842,008      2,995,381
                                          -------------  -------------  -------------
Operating loss                              (1,199,942)    (1,796,291)    (2,929,971)
Other income (expense):
  Interest income                                8,706         97,969         85,947
  Interest expense                             (70,249)       (31,289)       (59,875)
  Other income                                   8,090         39,424         60,110
                                          -------------  -------------  -------------
Total other income (expense)                   (53,453)       106,104         86,182
                                          -------------  -------------  -------------
Loss before provision for income taxes      (1,253,395)    (1,690,187)    (2,843,789)
Federal income expense (benefit) (note 12)         -              -         (124,156)
                                          -------------  -------------  -------------
Net loss                                  $ (1,253,395)  $ (1,690,187)  $ (2,719,633)
                                          =============  =============  =============
Earnings per common share -
  basic and diluted                       $      (0.18)  $      (0.27)  $      (0.46)
                                          =============  =============  =============
Weighted average number of common shares     7,106,638      6,376,647      5,893,000
                                          =============  =============  =============
Consolidated statements of
   comprehensive loss

Net loss                                  $ (1,253,395)  $  (1,690,187)  $ (2,719,633)
Unrealized gain (loss) on shares
  available-for-sale                               -                50         (1,050)
                                          -------------  -------------  -------------
Comprehensive loss                        $ (1,253,395)  $ (1,690,137)  $ (2,720,683)
                                          =============  =============  =============
</TABLE>
See  accompanying  notes  to  consolidated  financial  statements.

<PAGE>  31
                    POWERCOLD CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 1999, 1998 and 1997

<TABLE>
                                              1999           1998            1997
                                          -------------  -------------  -------------
<S>                                       <C>            <C>            <C>

Cash flows from operating activities:

  Net loss                                $ (1,253,395)  $ (1,690,187)  $ (2,719,633)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
    Depreciation of property and equipment      34,890         22,335         20,093
    Amortization of patients and
      related technology                       136,258         67,075        139,732
    Amortization of goodwill                    10,527         10,527         58,497
    Net loss realized on
      available-for-sale securities                -              -           24,493
    Gain on sale of investment in
      unconsolidated affiliate                     -          (37,121)           -
    Loss realized on disposition
      of subsidiary                                -            6,028            -
    Equity in loss of unconsolidated
     Affiliate                                     -           35,845        427,593
    Write-off of advances to affiliate             -          557,145            -
    Write-off of investment in
      unconsolidated affiliate                     -              -          789,175
    Write-off of intangible assets                 -              -          867,807
    Provision for doubtful accounts                -           76,815          5,638
    Issuance of common stock for services      162,110        294,068         63,323
    (Increase) decrease  in  assets:
      Accounts receivable                     (145,841)        10,098       (132,812)
      Receivable from related party             72,618            -              -
      Interest receivable                        9,918            -              -
      Refundable income taxes                   71,934            -         (124,156)
      Inventories                              121,706        (87,617)            14
      Prepaid expenses                          (6,836)       (49,349)         5,850
    Increase (decrease) in liabilities:
      Accounts payable and accrued expenses     53,215         66,007        194,266
      Commissions payable                          -           42,240            -
      Income taxes payable                         -          (74,156)       (50,000)
                                          -------------  -------------  -------------

Net cash used in operating activities         (732,896)      (750,247)      (430,120)
                                          -------------  -------------  -------------

</TABLE>











See  accompanying  notes  to  consolidated  financial  statements.

<PAGE>  32
                      POWERCOLD CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                  Years ended December  31, 1999, 1998 and 1997

<TABLE>
                                                                                      Accumulated     Total
                                             Additional                    Stock         Other        Stock-
                 Preferred       Common       Paid-in     Accumulated   Subscription  Comprehensive   holders'
                   Stock          Stock       Capital       Deficit      Receivable     Income        Equity
                ------------  ------------  ------------  ------------  ------------  ------------  ------------
<S>             <C>           <C>           <C>           <C>           <C>           <C>           <C>
Balance,
 Dec. 31,1996   $        -    $      5,838  $ 4,036,633   $    33,555   $    (7,500)  $     1,000   $ 4,069,526

Issuance of
  common  tock
  for services           -             157       63,166           -             -             -          63,323
Change in net
  unrealized gain
  on securities
  available-
  for-sale, net
  of reclass-
  ification
  adjustment             -              -            -            -             -          (1,050)     (1,050)
Net loss                 -              -            -     (2,719,633)          -             -    (2,719,633)
                ------------  ------------  ------------  ------------  ------------  ------------  ------------
Balance,
  Dec. 31, 1997          -           5,995     4,099,799   (2,686,078)       (7,500)          (50)     1,412,166

Issuance of
  preferred
  stock Series A       1,250           -         978,246          -             -             -          979,496
Issuance of
  common stock
  for cash               -             118        99,882          -             -             -          100,000
Issuance of
  common stock
  for services           -             621       293,447          -             -             -          294,068
Issuance of
  common stock
  for purchase
  of subsidiary          -             100        62,900          -             -             -           63,000
Change in net
  Unrealized
  loss on
  securities
  available-
  for-sale, net
  of reclass-
  ification
  adjustment             -              -            -            -             -              50            50
Amounts due
  from stock-
  holders                -              -            -            -          (1,000)          -         (1,000)
Net loss                 -              -            -     (1,690,187)          -             -      (1,690,187)
                ------------  ------------  ------------  ------------  ------------  ------------  ------------
Balance,
  Dec. 31, 1998        1,250         6,834     5,534,274   (4,376,265)       (8,500)          -       1,157,593
Issuance of
  common stock
  for services           -             483       161,627          -             -             -         162,110
Issuance of
  common  stock
  for cash               -             559        348,191         -             -             -         348,750
Amounts due
  from stock-
  holders                -             -              -           -          (1,000)          -          (1,000)
Net loss                 -             -              -    (1,253,395)          -             -      (1,253,395)
                ------------  ------------  ------------  ------------  ------------  ------------  ------------
Balance,
  Dec. 31, 1999 $      1,250  $      7,876  $  6,044,092  $(5,629,660)  $    (9,500)  $       -     $    414,058
                ============  ============  ============  ============  ============  ============  ============
</TABLE>

See  accompanying  notes  to  consolidated  financial  statements.
<PAGE>  33
                    POWERCOLD CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  Years ended December 31, 1999, 1998 and 1997

<TABLE>
                                              1999           1998            1997
                                          -------------  -------------  -------------
<S>                                       <C>            <C>            <C>
Cash flows from investing  activities:
  Purchase of property and equipment           (15,636)        (3,637)       (14,219)
  Purchased of patent rights                       -              -              -
  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      1,308,727
  Release of restriction on cash               400,000            -              -
  Advances to affiliate                            -              -         (216,768)
  Purchase of certificate of deposit               -              -         (100,000)
  Purchase of securities
    available-for-sale                             -         (234,152)      (610,164)
  Increase in advances from affiliate          365,254            -              -
  Decrease in advances to affiliate                -          160,347         10,660
                                          -------------  -------------  -------------
Net cash provided by (used in)
  investing activities                         782,118        (322,837)      378,236
                                          -------------  -------------  -------------
Cash flows from financing activities:
  Principal payments on long-term debt          (2,464)            -             -
  Proceeds from short-term borrowings              -            25,061       169,315
  Repayment of short-term borrowings          (402,825)        (11,966)     (557,709)
  Proceeds from issuance of shares
     under private placement                   348,750         100,000           -
  Proceeds from sales of preferred stock           -           979,496           -
  Repayment of short-term borrowings,
     related parties                               -               -         (15,000)
                                          -------------  -------------  -------------
Net cash provided by (used in)
  financing activities                         (56,539)     1,092,591       (403,394)
                                          -------------  -------------  -------------
Net increase (decrease) in cash                 (7,317)        19,507       (455,278)
Cash at beginning of year                       21,781          2,274       457,552
                                          -------------  -------------  -------------
Cash at end of year                       $     14,464   $     21,781   $      2,274
                                         ==============  =============  =============
Supplemental schedule of cash flow information:
    Interest paid                        $      50,628   $     25,261   $     35,382
                                         ==============  =============  =============
    Cash paid for income taxes           $         -     $     74,156   $     50,000
                                         ==============  =============  =============
Noncash investing activities:
  Unrealized gain (loss)
    on securities available-for-sale     $         -     $         50   $     (1,050)
                                         ==============  =============  =============
Noncash  financing  activities:
  Issuance of common stock for purchase
     of subsidiary                       $         -     $     63,000   $        -
                                         ==============  =============  =============
</TABLE>
See  accompanying  notes  to  consolidated  financial  statements.
<PAGE>  34
                     POWERCOLD CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

(1)     SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

THE  COMPANY

PowerCold  Corporation,  formally  International  Cryogenic Systems Corporation,
(the  Company  or PowerCold) was incorporated on October 7, 1987 in the State of
Nevada  and  operates  in   one  business   market;  the   development,  design,
manufacturing,  distribution,  and   servicing  of  refrigeration  systems.  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  is  consulting  engineering  services, including process
safety management compliance and ammonia refrigeration and carbon dioxide system
design.  As  part  of  this  product  line, the Company also provides operation,
maintenance,  and  safety  seminars  for  ammonia  refrigeration technicians and
supervisors.  The third line is the design and production of unique products for
the  refrigeration  industry.

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 by using a
circulating  cryogenic liquid in a closed pressurized vessel system, in exchange
for  2,414,083  shares  of common stock.  Two directors of the Company were also
directors  of  the  company  selling  such  patent  rights.

PRINCIPLES  OF  CONSOLIDATION

The  consolidated  financial  statements include the accounts of the Company and
its  wholly  owned  subsidiaries, after elimination of Intercompany accounts and
transactions.  Wholly  owned  subsidiaries of the Company are listed in Note 10,
reportable  segments.

STATEMENTS  OF  CASH  FLOWS

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.

INVESTMENT  IN  SECURITIES

Pursuant  to  Statement  of  Financial  Accounting Standards (SFAS) No. 115, the
Company  investments  in  securities  are  classified  in  three  categories and
accounted  for  as  follows:

TRADING  SECURITIES  - Debt and equity securities held principally for resale in
the  near  term  are classified as trading securities and recorded at their fair
values.  Unrealized gains and losses on trading securities are included in other
income.  During  the  years  ended December 31, 1999, 1998 and 1997, the Company
had  no  securities  classified  as  trading  securities.





<PAGE>  35
                     POWERCOLD CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

SECURITIES  TO  BE  HELD TO MATURITY - Debt securities for which the Company has
the  positive  intent  and  ability  to  hold  to  maturity are reported at cost
adjusted  for  amortization  of  premiums  and accretion of discounts, which are
recognized  in  interest  income  using  the  interest method over the period to
maturity.  During  the years ended December 31, 1999, 1998 and 1997, the Company
had  no  securities  classified  as  securities  to  be  held  to  maturity.

SECURITIES  AVAILABLE-FOR-SALE  -  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.

Declines in the fair value of individual held-to-maturity and available-for-sale
securities  below  their  cost  that  are  other  than temporary would result in
write-downs  of  the  individual  securities  to  their fair value.  The related
write-downs  would  be  included  in  current  year earnings as realized losses.

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

Premiums  and  discounts are recognized in interest income using interest method
over  the  period  to  maturity.

The transfer of a security between categories of investments is accounted for at
fair  value.  For  a  debt  security  transferred  into  the  available-for-sale
category from the held-to-maturity category, the unrealized holding gain or loss
at  the  date  of  the  transfer  is recognized in a separate component of other
comprehensive  income.

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 and cash equivalents,
advances  to  affiliate,  trade  accounts  receivable,  investment in securities
available-for-sale,  restricted  cash, accounts payable and accrued expenses and
short-term borrowings.  All instrutments 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,  1999  and  1998.  Investment  in securities available-for-sale is
recorded  at  fair  value  at  December  31,  1998.

CONCENTRATION  OF  CREDIT  RISK

Financial  instruments which potentially expose the Company to concentrations of
credit  risk,  as defined in SFAS No. 105, "Disclosure of Information about Fair
Value  of  Financial  Instruments  with  Off-Balance  Sheet  Risk  and Financial
Instruments  with Concentrations of Credit Risk," consists primarily of cash and
cash  equivalents, advances to affiliate, trade accounts receivable, investments
in  securities  available-for-sale,  and restricted cash.  The Company maintains
its  cash and cash equivalents in major, creditworthy financial institutions and
has  not  experienced  any losses on its deposits.  The Company's receivables do
not  represent  a  significant concentration of credit risk at December 31, 1999
and  1998.




<PAGE>  36
                     POWERCOLD CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

PROPERTY  AND  EQUIPMENT  AND  DEPRECIATION

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.

RESEARCH  AND  DEVELOPMENT

Research  and  development  expenses are charged to operations as incurred.  The
cost  of  intellectual  property  purchased  from  others  that  are immediately
marketable  or that have an alternative future use are capitalized and amortized
as  intangible  assets.  Capitalized costs are amortized using the straight-line
method  over  the  estimated  economic  life  of the related asset, typically 10
years.  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.

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.

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.

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  $54,763,  $3,219  and  $1,060  for  the years ended
December  31,  1999,  1998  and  1997,  respectively.









<PAGE>  37
                     POWERCOLD CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

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.

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  enacted  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.  SFAS 128 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.

USE  OF  ESTIMATES

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

RECLASSIFICATIONS

Certain  1998  and  1997  amounts  have been reclassified to conform to the 1999
presentation.














<PAGE>  38
                     POWERCOLD CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

(2)     GOING  CONCERN

The  accompanying  consolidated  financial  statements  have  been  prepared  in
conformity  with  generally  accepted  accounting principles, 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, 1999,
current  liabilities  exceed  current  assets  by $887,514 and 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 14.  The ultimate outcome
of  these  uncertainties cannot presently be determined.  Management is actively
seeking additional equity financing.  Additionally, management believes that the
prior  year acquisitions will lead to the overall structure necessary to fulfill
the  Company's  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.

(3)     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  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 guarantees
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, 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 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>  39
                     POWERCOLD CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

In  addition,  the  directors receive an annual payment of $2,500 for director's
fees.  The  agreements  further provide that two of the individuals receive a 2%
commission  not  to  exceed  5%  on  any direct sales of the Company.  The third
individual  receives  the  highest  of 3% commission on gross revenues and 5% on
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  commissions were accrued related to the agreements at December
31,  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  Nauticom  Inc.

(4)     ACQUISITION

     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:

Purchase  price                                                  $   65,399
Fair  value  of  net  asset  acquired                                   -
                                                                 ----------
Excess  of  purchase  price  over  fair  value  of
     net  assets  acquired                                       $   65,399
                                                                 ==========

(5)     SECURITIES  AVAILABLE-FOR-SALE

Investments  include the following securities available-for-sale (stated at fair
value)  at  December  31,  1998.

                          Years                          Gross        Gross
                            To      Fair              unrealized   unrealized
                         maturity   value     Cost       gains        gains
                         --------   -------   ------   ----------   ----------

Corporate  equity
   Securities            $    -     $32,500   $32,500  $      -     $      -
                         =========  =======   =======  ==========   ==========

Proceeds,  gross  realized  gains,  and  gross  realized losses from the sale of
securities  classified  as  available-for-sale  for the years ended December 31,
1999  and  1998  were  $32,500,  $0,  $0  and  $81,716,  $50,  $0, respectively.






<PAGE>  40
                     POWERCOLD CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


(6)     PROPERTY  AND  EQUIPMENT

Property  and  equipment  is  summarized  as  follows:

                                               December  31,
                                          ----------------------
                                             1999         1998
                                          ----------  ----------

Machinery  and  equipment                 $  26,877   $  12,540
Prototypes  and  molds                       73,420      71,030
Furniture  and  fixtures                      8,804       9,894
                                          ----------  ----------
     Total  property  and  equipment        109,101      93,464
Less  accumulated  depreciation  and         84,800      50,981
                                          ----------  ----------
     Net  property  and  equipment        $  24,301   $  42,483
                                          ==========  ==========

Depreciation  expense  for  the years ended December 31, 1999, 1998 and 1997 was
$33,819,  $22,335  and  $20,092,  respectively.

(7)     NOTES  PAYABLE

At  December  31,  1999  and  1998,  notes  payable  represented  the following:

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.

(8)     LONG-TERM  DEBT

Long-term  debt  at  December  31,  1999  represents  a  note payable in monthly
installments  of  $297,  with  interest  at 9.5%, through April 2004.  Aggregate
yearly  maturities of long-term debt for the year after December 31, 1999 are as
follows:

2000               $   3,564
2001                   2,783
2002                   3,041
2003                   3,785
                     -------
                     $13,173
                     ========





<PAGE>  41
                     POWERCOLD CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

(9)     PREFERRED  STOCK

The  Company  currently  has  1,250,000 shares of preferred stock outstanding at
December 31, 1999.  This stock is designated as Series "A" Convertible Preferred
Stock  and was issued to a single investor.  This stock has a par value of $.001
per share and a stated value of $.80 per share in liquidation and has preference
over  common  stock  in  liquidation.

The  stock  is  convertible  at the option of the holder at a rate determined by
dividing $1.00 by the conversion price.  Each share of stock shall automatically
be  converted into shares of common stock at the then effective conversion price
on  September  14,  2002.  Each  share  of  the  stock may, at the option of the
Company,  be converted into shares of common stock at 120% of the then effective
conversion  price.

Holders  of  Series  "A" Convertible Preferred Stock are entitled to a number of
votes  per  share  equal to the number of shares of common stock into which each
such  share  of  Series  "A"  Convertible Preferred Stock held by such holder is
convertible  at  the  time  of  such  vote.

Each  issued  and  outstanding  share  of Series "A" Convertible Preferred Stock
shall  be 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.

(10)     STOCK  BASED  COMPENSATION

In  fiscal  1995, the company adopted a concept of awarding stock options to key
employees  and  outside  directors  of the Company.  The concept surrounding the
idea  of  awarding stock options is to increase the ownership of common stock of
the  Company  by those key employees and outside directors who contribute to the
continued  growth,  development  and  financial  success  of the Company and its
subsidiaries,  and  to  attract and retain key employees and reward them for the
Company's  future  profitable  performance.

The  options  granted might be either incentive stock options under the Internal
Revenue  Code  or  options,  which  do  not  qualify as incentive stock options.
Options  are  granted  for  a  period of up to three years.  The options granted
under  this  plan  were  fully  vested  at  grant  date.

On  October  1,  1999,  the Company's Board of Directors authorized and issued a
total  of  1,004,558  options  at  an  exercise  price  of  $0.50  for  employee
compensation.  On  February  7,  1998  and July 10, 1998, the Company's Board of
Directors  authorized and issued 450,000 and 300,000 options, respectively at an
exercise  price  of  $0.50  for  employee compensation and an additional 400,000
options were authorized and issued at an exercise price $2.50 for an acquisition
on  September  30,  1998.  On  April  30, 1997, the Company's Board of Directors
authorized  and  issued a total of $60,000 options at an exercise price of $0.50
for services.  Stock and stock options issued in relation to the acquisition and
services  are  valued  based  upon the fair value of the consideration received.

The  Company applies Accounting Principles Board Opinion Number 25 in accounting
for  options  and  accordingly  recognized  no  compensation  cost for its stock
options in 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>  42
                     POWERCOLD CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


                                                     Weighted
                                                     Average
                                         Options     Exercise-Price
                                       ------------  --------------
Balance outstanding- January 1, 1997       600,000   $         1.75
Issued                                      60,000   $         0.50
Exercised                                      -
Cancelled                                      -
Expired                                        -
Balance outstanding- December 31, 1997     660,000   $         1.75
Issued                                   1,150,000            $1.20
Exercised                                      -
Cancelled                                 (300,000)  $         1.75
Expired                                        -
Balance outstanding-December 31, 1998    1,510,000   $         1.33
Issued                                   1,004,558   $         0.50
Exercised                                      -
Cancelled                                      -
Expired                                    (60,000)  $         1.33
Balance outstanding-December 31, 1999    2,454,558   $         1.00

At  December  31, 1999 exercise prices for outstanding options ranged from $0.50
to  $2.50.  The  weighted average contractual life remaining of such options was
2.3  years.

The  per share weighted average fair of stock options issued during fiscal 1999,
fiscal  1998,  and fiscal 1997 were $0.50, $1.20 and $0.50, respectively, on the
dates  of  issuance  using  the  Black-Scholes  option  pricing  model  with the
following  weighted  average assumptions: expected dividend yield- 0.0% in 1999,
0.0%  in 1998, and 0.0% in 1997; risk free interest rate- 30.31% in 1999, 33.10%
in  1998,  and  27.01% in 1997; expected life of 3 years in 1999, 1998 and 1997,
and  volatility  factor  of  1.05  in  1999,  1.15  in  1998,  and 0.94 in 1997.

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.















<PAGE>  43
                     POWERCOLD CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

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:


                                         1999          1998          1997
                                     ------------  ------------  ------------
Net loss as reported                 $(1,253,395)  $(1,690,187)  $(2,719,633)
Adjustment required by SFAS 123         (505,130)     (805,432)      (64,342)
                                     ------------  ------------  ------------
Pro-forma  net  loss                 $(1,758,525)  $(2,495,619)  $(2,783,975)
                                     ============  ============  ============
Pro-forma  net  loss  per  share:
Basic  and  diluted                        $(.25)        $(.39)        $(.47)


(11)     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   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.  offered custom industrial refrigeration
packages  and  merchant  carbon  dioxide  plants  in  a  joint  venture with the
Wittemann  Company,  Inc.  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.  Channel  Freeze  Technologies,  Inc.  generates  revenue  through  the
manufacture  and  sale  of  bulk  freezing systems.  Segment information for the
years  ended  December  31,  1999,  1998  and  1997  are  as  follows:



























<PAGE>  44
                     POWERCOLD CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

                                                   December  31,
                                     ----------------------------------------
                                         1999          1998          1997
                                     ------------  ------------  ------------

Revenues:
Nauticon  Inc.                       $    91,006   $   112,522   $   229,445
RealCold  Products  Inc.                 212,596       224,477           -
Technicold  Services,  Inc.               50,611       105,173       162,374
Rotary  Power  Enterprises,  Inc.        187,025           -             -
Channel  Freeze  Technologies,  Inc.         -             -             -
Corporate                                 21,165           -             -
                                     ------------  ------------  ------------
                                     $   562,403   $   442,172   $   391,819
                                     ============  ============  ============

Operating  loss:
Nauticon  Inc.                       $  (290,569)  $  (461,212)  $  (379,207)
RealCold  Products  Inc.                (243,429)      (79,689)     (169,273)
Technicold  Services,  Inc.                7,538        (5,943)           25
Rotary  Power  Enterprises,  Inc.         (8,454)       (7,671)          -
Channel  Freeze  Technologies, Inc.     (313,801)          -             -
Corporate                               (351,227)   (1,241,776)   (2,381,516)
                                     ------------  ------------  ------------
                                     $(1,199,942)  $(1,796,291)  $(2,929,971)
                                     ============  ============  ============

Identifiable  assets:
Nauticon  Inc.                       $   385,927   $   545,060   $   744,924
RealCold  Products  Inc.                 144,650        76,304        20,187
Technicold  Services,  Inc.              122,137       240,359       196,189
Rotary  Power  Enterprises,  Inc.        129,992        96,563           -
Channel  Freeze  Technologies,  Inc.     797,531           -             -
Corporate                                110,725     1,363,684     1,268,057
                                     ------------  ------------  ------------
                                     $ 1,690,962   $ 2,321,970   $ 2,229,357
                                     ============  ============  ============

Depreciation  and  Amortization:
Nauticon  Inc.                       $    96,761   $    85,699   $   109,201
RealCold  Products  Inc.                   2,419           440        14,300
Technicold  Services,  Inc.               12,090        12,163        12,163
Rotary  Power  Enterprises,  Inc.            365           -             -
Channel  Freeze  Technologies,  Inc.      70,040           -             -
Corporate                                    -           1,635        82,658
                                     ------------  ------------  ------------
                                     $   181,675   $    99,937   $   218,322
                                     ============  ============  ============

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

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.

During  the  year  ended  December  31,  1998, sales to one customer amounted to
approximately  $224,000.
<PAGE>  45
                     POWERCOLD CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


(12)     FEDERAL  INCOME  TAX  EXPENSE

Income  tax  expense  from  continuing operations differs from the amount, which
would  be provided by applying the statutory federal income tax rates because of
the  following  for  the  years  ended  December  31,  1999,  1998  and  1997.

                                            1999          1998          1997
                                        ------------  ------------  ------------

Computed at the expected statutory rate $  (426,154)  $  (574,664)  $   793,188
Nondeductible  items  and  other
  permanent  differences                        938           654           475
Change  in  valuation  allowance            425,216       574,010       436,715
                                        ------------  ------------  ------------
Prior year unrecognized deferred
  tax  asset                            $       -     $       -     $  (124,156)
                                        ============  ============  ============

The  temporary  differences  that  result in deferred tax assets are as follows:

                                                   December  31,
                                     ----------------------------------------
                                         1999          1998          1997
                                     ------------  ------------  ------------

Deferred  tax  assets:
Accrued wages payable to shareholder  $      -     $       -     $    13,600
Write-off  of  intangible assets         334,686       334,686       295,055
Losses related to unconsolidated
  affiliate                              413,700       413,700       413,700
Loss on write-off of impaired stock      189,430       189,430           -
Net  operating  loss  carryforward       911,825       486,609       129,060
                                     ------------  ------------  ------------
Gross  deferred  tax  assets           1,849,641     1,424,425       850,415
Valuation  allowance                  (1,849,641)   (1,424,425)     (850,415)
                                     ------------  ------------  ------------
Net  deferred tax assets             $       -     $       -    $        -
                                        ============  ============  ============

The  Company  incurred  tax  net  operating  losses  of  approximately $778,000,
$1,055,000  and  $742,000  for the years ended December 31, 1999, 1998 and 1997,
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
$2,210,000,  of which $778,000 expires in 2019, $1,055,000 in 2018, and $377,000
in  2012.











<PAGE>  46
                     POWERCOLD CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

(13)     EARNINGS  PER  SHARE

Diluted  earnings  per share is not presented due to the loss from operations in
the  years  presented.  In  accordance  with  the  requirements  of SFAS 128, no
potential  common  shares  are  included in the computation of diluted per share
amounts  due  to  the  loss  from  continued  operations.  Options  to  purchase
2,554,558  shares  of  common  stock  were  outstanding  at December 31, 1999 at
exercise  prices  ranging  from $0.50 per share to $2.50 per share, but were not
included  because they would have been anti-dilutive to the loss from continuing
operations.  The  options  expire  over  the  period from April 30, 1999 through
February  7,  2001.  Preferred  dividends  of  $20,000 increase the loss used to
calculate  earnings  per  share.

(14)     OPERATING  LEASES

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  $95,322,  $100,902  and  $108,676  in  1999  and 1998
respectively.

Future  minimum  rental  commitments  as  of  December 31, 1999 were as follows:

     Year  ending  December  31,
     2000                              $  102,934
     2001                                 100,231
     2002                                  50,891
                                       ----------
                                       $  254,056
                                       ==========

(15)     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  and  $508,153   carrying  value   at  December  31,   1998  and  1997
respectively)  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, 1998 and 1997).  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.

(16)     YEAR  2000  ISSUE

The  Year  2000 issue is the result of computer programs being written using two
digits rather than four to define a specific year.  Absent corrective actions, a
computer  program  that  has  date-sensitive software may recognize a date using
"00"  as  the  year 1900 rather than the year 2000.  This could result in system
failures  or  miscalculations  causing  disruptions  to  various  activities and
operations.



<PAGE>  47
                     POWERCOLD CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998

The  Company  primarily uses licensed software products in its operations with a
significant  portion  of  processes  and  transactions  centralized  in  several
particular  accounting  software  packages.  The Company has not experienced any
year  2000  problems  to date; however, the Company plans to continue to monitor
the  situation  closely.

(17)     RESTATEMENT

On  May  18,  1998,  Channel  Freeze  Technologies,  Inc. (CFTI) was formed as a
wholly-owned  subsidiary  of  the  Company  for  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.  The Company made cash payment of $550,000 in
1998  and  $100,000 in 1999, with a remaining liability of $200,000 and $300,000
at  December  31,  1999 and 1998, respectively.  The agreement also required the
Company  to  issue  two-third 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.

In  1998,  the  transaction  was accounted 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  below:

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

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




<PAGE>  48
                     POWERCOLD CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 1999 and 1998


In  late  1999, the Company discovered problems with the design of the machinery
and  spent  considerable  resources  to  redesign  the  machinery.  Due to these
problems, the Company decided not to issue two-third of the common stock of CFTI
to  SIR,  which  effectively  revert  100%  ownership in CFTI back to PowerCold.
Based  on  the  fact  that  the  stock was never issued to SIR, the consolidated
financial  statements  for  1999  are being restated to correct the treatment of
CFTI  as  an equity investment and consolidate CFTI as a wholly-owned subsidiary
of  PowerCold.

The  restatement  (correction  of  an  error)  is  as  follows:

                              As previously        Increase
                                reported          (decrease)       Restated
                              --------------   --------------   --------------
Investment  in  affiliate     $     621,092    $    (621,092)   $         -
Accounts  receivable                150,791           57,964          208,755
Receivable  from  CFTI              274,910         (274,910)             -
Property  and  equipment,  net       24,300            4,929           29,229
Patent  rights  and  related
   technology,  net                 374,003          792,551        1,166,554
Total  liabilities                1,139,636          137,268        1,276,904
Equity loss in unconsolidated
   affiliate                       (204,896)         204,896              -
                              --------------   --------------   --------------
Net  loss                     $  (1,075,265)     $  (178,130)   $  (1,253,395)
                              ==============   ==============   ==============

The  restated  net  loss  for  1999  is  reconciled  as  follow:

Net  loss  as  reported                                      $  (1,075,265)
Less  equity  loss  in  unconsolidated  affiliate                  204,896
Plus  100%  of  CFTI's  loss  in  consolidation                   (313,801)
Plus  1998  loss  not  included  in  the 1998 consolidation        (69,225)
                                                             --------------
Restated  net  loss                                          $  (1,253,295)
                                                             ==============