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                                    FORM 10-Q



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                     For the Quarter Ended January 31, 2003
                         Commission File Number 0-26230





                         WESTERN POWER & EQUIPMENT CORP.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)



            DELAWARE                                         91-1688446
 ------------------------------                              ----------
(State or other jurisdiction of                           (I.R.S. Employer
 incorporation or organization)                              I.D. number)



6407-B N.E. 117th Avenue, Vancouver, WA                         98662
---------------------------------------                         -----
(Address of principal executive offices)                      (Zip Code)



                    Registrant's telephone no.:  360-253-2346
                                                 ------------



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 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.

                           YES  [X]       NO  [_]



Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report.

         Title of Class                                Number of shares
          Common Stock                                   Outstanding
  (par value $.001 per share)                             4,003,162

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<PAGE>
                         WESTERN POWER & EQUIPMENT CORP.
                                      INDEX


                                                                        Page
PART I.  FINANCIAL INFORMATION                                          Number

         Item 1.  Financial Statements

         Consolidated Balance Sheets
           January 31, 2003 (Unaudited) and July 31, 2002..................2

         Consolidated Statements of Operations
           Three months ended January 31, 2003 (Unaudited)
           and January 31, 2002 (Unaudited)................................3

         Consolidated Statements of Operations
           Six months ended January 31, 2003 (Unaudited)
           and January 31, 2002 (Unaudited)................................4

         Consolidated Statements of Cash Flows
           Six months ended January 31, 2003 (Unaudited)
           and January 31, 2002 (Unaudited)................................5

         Notes to Consolidated Financial Statements........................6-9


         Item 2.  Management's Discussion and Analysis of
                  Financial Condition and Operating Results................10-13


         Item 3.  Quantitative & Qualitative Disclosures about
                  Market Risk..............................................13


         Item 4.  Evaluation of Disclosure Controls and Procedures.........13



PART II. OTHER INFORMATION

         Item 1.  Legal Proceedings........................................N/A


         Item 2.  Changes in Securities....................................N/A


         Item 3.  Defaults Upon Senior Securities..........................14


         Item 4.  Submission of Matters to a Vote of Security Holders......N/A


         Item 5.  Other Information........................................N/A


         Item 6.  Exhibits and Reports on Form 8-K.........................N/A



SIGNATURES.................................................................15

CERTIFICATIONS.............................................................16-17
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
        --------------------

                         WESTERN POWER & EQUIPMENT CORP.
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)


                                                          January 31,  July 31,
                                                             2003        2002
                                                           --------    --------
                                                          (Unaudited)

                                ASSETS (PLEDGED)
Current assets:
    Cash and cash equivalents ..........................   $      5    $      5
    Accounts receivable, less allowance for doubtful
      accounts of $671 and $646, respectively ..........      6,974      10,304
    Inventories ........................................     23,126      26,915
    Prepaid expenses ...................................        129          48
                                                           --------    --------
         Total current assets ..........................     30,234      37,272

Fixed assets:
    Property, plant and equipment (net) ................      3,138       3,434
    Rental equipment fleet (net) .......................     15,052      18,696
                                                           --------    --------
         Total fixed assets ............................     18,190      22,130

Other assets ...........................................        152         174
                                                           --------    --------
Total assets ...........................................   $ 48,576    $ 59,576
                                                           ========    ========

                       LIABILITIES & STOCKHOLDERS' DEFICIT

Current liabilities:
    Borrowings under floor plan financing ..............   $  6,625    $ 10,974
    Short-term borrowings ..............................     34,178      41,322
    Term debt ..........................................        140         218
    Accounts payable and accrued expenses ..............      8,828       8,585
    Accrued payroll and vacation .......................        506         659
    Capital lease obligation ...........................          6          26
                                                           --------    --------
        Total current liabilities ......................     50,283      61,784

Capital lease obligation ...............................        928         928
                                                           --------    --------
      Total long-term liabilities ......................        928         928
                                                           --------    --------
Total liabilities ......................................     51,211      62,712
                                                           --------    --------

Stockholders' deficit:
    Preferred stock-10,000,000 shares authorized;
      none issued and outstanding ......................       --          --
    Common stock-$.001 par value; 20,000,000 shares
      authorized; 4,003,162 issued and outstanding .....          4           4
    Additional paid-in capital .........................     16,025      16,025
    Accumulated deficit ................................    (17,820)    (18,322)
    Less common stock in treasury, at cost
      (130,300 shares) .................................       (844)       (844)
                                                           --------    --------
        Total stockholders' deficit ....................     (2,635)     (3,136)
                                                           --------    --------
Total liabilities and stockholders' deficit ............   $ 48,576    $ 59,576
                                                           ========    ========

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

                                        2
<PAGE>
                         WESTERN POWER & EQUIPMENT CORP.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                (Dollars in thousands, except per share amounts)


                                                         Three Months Ended
                                                             January 31,
                                                     --------------------------
                                                         2003           2002
                                                     -----------    -----------

Net revenue ......................................   $    24,663    $    26,229

Cost of revenues (includes depreciation and
   amortization of $787 and $807, respectively) ..        21,232         23,379
                                                     -----------    -----------

Gross profit .....................................         3,430          2,850

Selling, general and administrative expenses .....         2,374          2,551
                                                     -----------    -----------

Operating income .................................         1,056            299

Other income (expense):
    Interest expense .............................          (852)        (1,026)
    Other income (expense) .......................            31            (27)
                                                     -----------    -----------

Income (loss) before income tax provision ........           235           (754)

Income tax provision .............................            12             12
                                                     -----------    -----------

Net income (loss) ................................   $       223    $      (766)
                                                     ===========    ===========

Average outstanding common shares for
  basic and diluted earnings per share ...........     4,003,162      3,403,162
                                                     ===========    ===========

Basic and diluted earnings per common share ......   $      0.06    $     (0.23)
                                                     ===========    ===========





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

                                        3
<PAGE>
                         WESTERN POWER & EQUIPMENT CORP.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                (Dollars in thousands, except per share amounts)




                                                          Six Months Ended
                                                             January 31,
                                                     --------------------------
                                                         2003           2002
                                                     -----------    -----------

Net revenue ......................................   $    48,757    $    54,729

Cost of revenues (includes depreciation and
   amortization of $1,853 and $2,132,
   respectively) .................................        41,866         47,762
                                                     -----------    -----------

Gross profit .....................................         6,891          6,967

Selling, general and administrative expenses .....         4,664          5,121
                                                     -----------    -----------

Operating income .................................         2,227          1,846

Other income (expense):
    Interest expense .............................        (1,796)        (2,284)
    Other income .................................            96             54
                                                     -----------    -----------

Income (loss) before income tax provision ........           526           (384)

Income tax provision .............................            25             24
                                                     -----------    -----------

Net income (loss) ................................   $       501    $      (408)
                                                     ===========    ===========

Average outstanding common shares for
  basic and diluted earnings per share ...........     4,003,162      3,403,162
                                                     ===========    ===========

Basic and diluted earnings per common share ......   $      0.13    $     (0.12)
                                                     ===========    ===========




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

                                        4
<PAGE>
                        WESTERN POWER & EQUIPMENT CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                             (Dollars in thousands)


                                                    Six Months Ended
                                                       January 31,
                                                  --------------------
                                                    2003        2002
                                                  --------    --------
Cash flows from operating activities:
    Net income (loss) .........................   $    501    $   (408)
Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation ..............................      3,482       4,272
    Amortization ..............................          0          63
    Gain on sale of fixed assets and
         rental equipment .....................       (226)       (493)
    Changes in assets and liabilities:
        Accounts receivable ...................      3,352       2,142
        Inventories ...........................      2,265       4,878
        Prepaid expenses ......................        (81)         74
        Accounts payable ......................        173      (2,400)
        Accrued payroll and vacation ..........       (153)        (77)
        Other accrued liabilities .............         60        (321)
        Income taxes receivable/payable .......          5           3
                                                  --------    --------
Net cash provided by operating activities .....      9,379       7,733
                                                  --------    --------

Cash flows from investing activities:
    Purchase of fixed assets ..................        (48)       (146)
    Purchases of rental equipment .............       (789)     (1,992)
    Proceeds on sale of fixed assets ..........          5         271
    Proceeds on sale of rental equipment ......      3,040       2,814
    Purchase of other assets ..................          0          10
                                                  --------    --------
Net cash provided by investing activities .....      2,208         957
                                                  --------    --------

Cash flows from financing activities:
    Principal payments on capital leases ......        (20)        (12)
    Payments on inventory floor-plan financing      (4,341)     (3,957)
    Payments on short-term financing ..........     (7,149)     (5,108)
    Convertible debt ..........................        (77)          0
                                                  --------    --------
Net cash used in financing activities .........    (11,587)     (9,077)
                                                  --------    --------

Decrease in cash and cash equivalents .........          0        (388)
Cash and cash equivalents at beginning of
 period .......................................          5         494
                                                  --------    --------

Cash and cash equivalents at end of period ....   $      5    $    107
                                                  ========    ========






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

                                        5
<PAGE>
                        WESTERN POWER & EQUIPMENT CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (Dollars in thousands)


1. BASIS OF PRESENTATION

The accompanying consolidated financial statements are unaudited and in the
opinion of management contain all the adjustments (consisting of those of a
normal recurring nature) considered necessary to present fairly the consolidated
financial position and the consolidated results of operations and cash flows for
the periods presented in conformity with accounting principles generally
accepted in the United States applicable to interim periods. This report should
be read in conjunction with the Company's consolidated financial statements
included in the Annual Report on Form 10-K for the fiscal year ended July 31,
2002 filed with the Securities and Exchange Commission.

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business.

The Company has recurring losses and is currently in default on its short-term
borrowing facility as discussed in Note 4 of these consolidated financial
statements, both of which create substantial doubt about the Company's ability
to continue as a going concern. The accompanying unaudited consolidated
financial statements do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.


2. RECENT ACCOUNTING PRONOUNCEMENTS

In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"),
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45 requires that upon
issuance of a guarantee, the guarantor must recognize a liability for the fair
value of the obligation it assumes under that guarantee. FIN 45 also requires
additional disclosures by a guarantor in its interim and annual financial
statements about the obligations associated with guarantees issued. The
disclosure requirements are effective for financial statements of interim or
annual periods ending after December 15, 2002. The recognition and measurement
provisions are effective on a prospective basis to guarantees issued or modified
after December 31, 2002. The adoption of this interpretation is not expected to
have an impact on the Company's consolidated financial statements.

In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
Consolidation of Variable Interest Entities. FIN 46 provides guidance on the
identification of entities for which control is achieved through means other
than through voting rights, variable interest entities, and how to determine
when and which business enterprises should consolidate variable interest
entities. This interpretation applies immediately to variable interest entities
created after January 31, 2003. It applies in the first fiscal year or interim
period beginning after June 15, 2003, to variable interest entities in which an
enterprise holds a variable interest that it acquired before February 1, 2003.
The adoption of this interpretation is not expected to have an impact on the
Company's consolidated financial statements.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of FASB Statement No.
123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based
Compensation," to provide alternative methods of transition for a voluntary

                                        6
<PAGE>

change to the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure requirements of
SFAS No. 123 to require prominent disclosures in both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. The
disclosure requirements apply to all companies for fiscal years ending after
December 15, 2002. The interim disclosure provisions are effective for financial
reports containing financial statements for interim periods beginning after
December 15, 2002. The adoption of SFAS No. 148 is not expected to have a
material impact on the Company's consolidated financial statements.


3. INVENTORIES

Inventories consist of the following:
                                                          January 31,   July 31,
                                                             2003        2002
                                                           --------    --------
         Equipment (net of reserve allowances of
          $6,071 and $7,770, respectively):
           New                                             $ 10,597    $ 13,834
           Used                                               5,919       5,915

         Parts (net of reserve allowances of $384
          and $286, respectively)                             6,610       7,166
                                                           --------    --------
                                                           $ 23,126    $ 26,915
                                                           ========    ========

4. FIXED ASSETS

Fixed assets consist of the following:
                                                          January 31,  July 31,
                                                             2003        2002
                                                           --------    --------
         Operating property, plant and equipment:
           Land                                            $    522    $    522
           Buildings                                          1,749       1,749
           Machinery and equipment                            3,113       3,137
           Office furniture and fixtures                      2,220       2,220
           Computer hardware and software                     1,514       1,501
           Vehicles                                           1,340       1,406
           Leasehold improvements                               966         960
                                                           --------    --------
                                                             11,424      11,495
           Less: accumulated depreciation
               and amortization                               8,286       8,061
                                                           --------    --------
         Property, plant, and equipment (net)              $  3,138    $  3,434
                                                           ========    ========

         Rental equipment fleet                            $ 22,330    $ 25,833
           Less: accumulated depreciation                     7,278       7,137
                                                           --------    --------
         Rental equipment (net)                            $ 15,052    $ 18,696
                                                           ========    ========


5. SHORT-TERM BORROWINGS

As of October 31, 2000, the Company and GE Commercial Distribution Finance
("GE"), formerly known as Deutsche Financial Services, signed an amendment to
the existing loan and security agreement. The amendment waived all prior


                                        7
<PAGE>

defaults under the agreement, and established revised financial covenants to be
measured at the end of the Company's second and fourth quarters. In addition,
the amendment included periodic mandatory reductions in the credit limit. The
amended GE facility, matured on December 28, 2001, is a floating rate facility
based on prime (4.25% as of January 31, 2003), with rates between 0.75% under
prime to 2.25% over prime depending on the amount of total debt leverage of the
Company. On June 21, 2002, the Company entered into a Forbearance Agreement with
GE under terms in which GE extended the due date until December 31, 2002, raised
the interest rate to prime plus 4% while the Company is in default, and required
the Company to pay a $45,000 fee to GE for the forbearance. In addition, under
the terms of the Forbearance Agreement, the Company is required to meet certain
financial covenants and meet certain debt reduction schedules. The Forbearance
Agreement expired on December 31, 2002. GE is entitled to demand repayment of
the entire outstanding balance at any time.

As of January 31, 2003, the Company was in technical default of the financial
covenants in the GE Forbearance Agreement. The Company has not received a waiver
of such defaults from GE, and although GE has not called the loan, there is no
guarantee that it will not do so in the future. The Company currently is still
in negotiations with GE to extend or renew the credit facility beyond its
current expiration of December 28, 2001, as extended to December 31, 2002 under
the Forbearance Agreement. The Company believes that it can reach an agreement
with GE to further extend or renew the agreement on reasonably acceptable terms.
However, in the event that the Company cannot reach a reasonably acceptable
agreement to extend or renew the current GE credit facility, GE is entitled to
demand repayment of the entire outstanding balance at any time. In such case,
the Company would be unable to repay the entire GE outstanding balance. There
can be no assurance that the Company will be able to successfully negotiate an
acceptable extension or renewal of the existing GE credit facility or that GE
will not call the balance due at any time.

6. SEGMENT INFORMATION.

For the purpose of providing segment information, management believes that all
of the Company's operations consist of one segment. However, the Company
evaluates performance based on revenue and gross margin of three distinct
business components. Revenue and gross margin by component are summarized as
follows:

                              Three Months Ended       Six Months Ended
Business Component                January 31,             January 31,
Net Revenues                   2003        2002        2003        2002
------------------           --------    --------    --------    --------
Equipment Sales              $ 17,579    $ 18,541    $ 32,696    $ 37,419

Equipment Rental                1,229         998       3,049       2,693

Product Support                 5,855       6,690      13,012      14,617
                             --------    --------    --------    --------
Total                        $ 24,663    $ 26,229    $ 48,757    $ 54,729
                             ========    ========    ========    ========



                                        8
<PAGE>

                              Three Months Ended       Six Months Ended
Business Component                January 31,             January 31,
Gross Margins                  2003        2002        2003        2002
------------------           --------    --------    --------    --------
Equipment Sales              $  2,519    $  1,942    $  3,975    $  4,104

Equipment Rental                  (17)         69         588         624

Product Support                   928         839       2,328       2,239
                             --------    --------    --------    --------
Total                        $  3,430    $  2,850    $  6,891    $  6,967
                             ========    ========    ========    ========


7. CONTINGENCY

On January 29, 2003, the Company entered into an agreement to sell substantially
all of its business assets in California and Nevada to CDKnet.com, Inc.
(OTCBB:CDKX). The transaction will involve CDK's acquisition of approximately
$15 million of tangible assets, operations which had nearly $50 million of total
revenue for the fiscal year ended July 31, 2002 in exchange for the assumption
or replacement of existing debt in the amount of approximately $15 million,
along with $500,000 and a five-year promissory note of $500,000. In addition to
continuing its current operations in Oregon, Washington, and Alaska, the Company
will receive payment from the purchasing entity for certain management and
administrative services to be provided to the purchasing entity pursuant to a
management services agreement to be entered into at closing. Two members of the
Company's current management will be shareholders in the purchasing entity. The
completion of the transaction remains subject to several conditions including
shareholder approval, the approval of an institutional revolving credit facility
and other financing for the purchase, the receipt of other required third party
approvals, delivery of audited financial statements of the business to be
acquired, additional due diligence, and compliance with applicable regulatory
requirements. There can be no assurance that the transaction will be
consummated.







                                        9
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
        -----------------------------------------------------------------
        LIQUIDITY AND CAPITAL RESOURCES
        -------------------------------

The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements and Notes thereto appearing elsewhere in this
Form 10-Q. Information included herein relating to projected growth and future
results and events constitutes forward-looking statements. Actual results in
future periods may differ materially from the forward-looking statements due to
a number of risks and uncertainties, including but not limited to fluctuations
in the construction, agricultural, and industrial sectors; the success of the
Company's restructuring and cost reduction plans; the success of the Company's
equipment rental business; rental industry conditions and competitors;
competitive pricing; the Company's relationship with its suppliers; relations
with the Company's employees; the Company's ability to manage its operating
costs; the continued availability of financing; the Company's ability to
refinance/restructure its existing debt; governmental regulations and
environmental matters; risks associated with regional, national, and world
economies; and consummation of the merger and asset purchase transactions. Any
forward-looking statements should be considered in light of these factors.

Results of Operations
---------------------

The Three Months and Six Months ended January 31, 2003 compared to the Three
----------------------------------------------------------------------------
Months and Six Months ended January 31, 2002.
---------------------------------------------

Revenues for the three-month period ended January 31, 2003 decreased 5.7% to
$24.7 million compared with $26.2 million for the three-month period ended
January 31, 2002. Revenues were down from the prior year's first quarter in
most departments and in most store locations due to prior year store closures
and the generally soft economy.

Revenues for the six-month period ended January 31, 2003 decreased 10.8% to
$48.8 million compared with $54.7 million for the six-month period ended January
31, 2002. Revenues were down from the prior year in every department and in most
store locations for the same reasons stated above.

The Company's gross profit margin of 13.9% for the three-month period ended
January 31, 2003 was up from the prior year comparative period margin of 10.8%.
The Company's gross profit margin of 14.1% for the six-months ended January 31,
2003 was up from the comparative period margin of 12.7% Margins on equipment
sales in the current quarter were generally higher than compared with the prior
year period due in part to fewer rental-purchase conversions by customers in the
second quarter. This was offset by a slightly lower percentage of revenue
generated from parts and service sales. Historically, the Company experiences
higher gross margins in the first quarter. This higher gross margin is a result
of more high margin rentals as compared to second and third quarters when more
customers purchase their rental equipment as the end of the calendar year
approaches. As discussed above, the Company experienced fewer rental purchase
conversions in the second quarter than customary.

For the three-month period ended January 31, 2003, selling, general, and
administrative ("SG&A") expenses as a percentage of sales were 9.6% down from
9.7% for the prior year's quarter. For the six-month period ended January 31,
2003, SG&A expenses were 9.6% of sales, up from 9.3% in the comparable period
ended January 31, 2002 due to the decrease in overall revenues.

Interest expense for the three months ended January 31, 2003 of $852,000 was
down from $1,026,000 in the prior year comparative period and for the six months
ended January 31, 2003 interest expense was $1,796,000 compared with $2,284,000
for the prior year comparative period. This decrease is the result of


                                       10
<PAGE>

reduced overall inventory levels as well as lower average interest rates and a
lower balance on the GE facility.

The Company had net income for the quarter ended January 31, 2003 of $223,000 or
$.06 per share (basic and diluted) compared with a net loss of $766,000 or $0.23
per share (basic and diluted) for the prior year's comparable quarter and a net
income of $501,000 or $0.13 per (basic and diluted) share for the six months
ended January 31, 2003 as compared to net loss of $408,000 or $0.12 per (basic
and diluted) share for the six months ended January 31, 2002.

Liquidity and Capital Resources
-------------------------------

The Company's primary needs for liquidity and capital resources are related to
its inventory for sale and its rental and lease fleet inventories. The Company's
primary source of internal liquidity has been its operations. The Company's
primary sources of external liquidity are equipment inventory floor plan
financing arrangements provided to the Company by the manufacturers of the
products the Company sells, the GE Commercial Distribution Finance, formerly
known as Deutsche Financial Services, ("GE") credit facility, and, with respect
to acquisitions, secured loans from Case Corporation (now CNH Global).

Under inventory floor planning arrangements the manufacturers of products sold
by the Company provide interest-free credit terms on new equipment purchases for
periods ranging from one to twelve months, after which interest commences to
accrue monthly at rates ranging from zero percent to two percent over the prime
rate of interest. Principal payments are typically made under these agreements
at scheduled intervals and/or as the equipment is rented, with the balance due
at the earlier of a specified date or sale of the equipment. At January 31,
2003, the Company was indebted under manufacturer-provided floor planning
arrangements in the aggregate amount of $6,625,000.

The amended GE credit facility matured December 28, 2001 and was a floating rate
facility based on prime with rates between 0.75% under prime to 0.25% over prime
(4.25% as of January 31, 2003) depending on the amount of total debt leverage of
the Company. On June 21, 2002, the Company entered into a Forbearance Agreement
with GE under the terms of which GE raised the interest rate to prime plus 4%
while the Company is in default and required the Company to pay a $45,000 fee to
GE for the forbearance. In addition, under the terms of the Forbearance
Agreement, the Company is required to meet certain financial covenants and meet
certain debt reduction schedules. The Forbearance Agreement expired on December
31, 2002. GE is entitled to demand repayment of the entire outstanding balance
at any time. As of January 31, 2003, the Company was in technical default of the
financial covenants in the GE credit facility. The Company has not received a
waiver of such defaults from GE and although GE has not called the loan, there
is no guarantee that it will not do so in the future.

Borrowings under the GE credit facility are secured by the Company's assets,
including accounts receivable, parts, new equipment, rental fleet, and used
equipment. The Company uses this borrowing facility to provide operating capital
for the Company. As of January 31, 2003, approximately $34,178,000 was
outstanding under the GE credit facility.

The Company currently is still in negotiations with GE to extend or renew the
credit facility beyond its current expiration of December 28, 2001. The Company
believes that it can reach agreement with GE to extend or renew the facility on
reasonably acceptable terms. However, in the event that the Company cannot reach
a reasonably acceptable agreement to extend or renew the current GE credit
facility, GE could demand repayment of the entire outstanding balance at any
time. In such case, the Company would be unable to


                                       11
<PAGE>

repay the entire GE outstanding balance. There can be no assurance that the
Company will be able to successfully negotiate an acceptable extension or
renewal of the existing GE credit facility or that GE will not call the balance
due at any time.

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business.

During the six months ended January 31, 2003, cash and cash equivalents remained
the same. The Company had positive cash flow from operating activities in the
first six months reflecting the net income for the period and adding back
depreciation.

The Company's cash and cash equivalents as of January 31, 2003 were $5,000. The
Company cannot fund current levels of operations without the continued
availability of borrowing from its current lender GE. Although the Company and
GE are in negotiations to extend or renew the credit facility beyond its
expiration of December 28, 2001, there can be no assurance that the Company will
be able to successfully negotiate an acceptable extension or renewal of the
expired GE credit facility or that GE will continue to make borrowing available
to the Company.

INVENTORY; EFFECTS OF INFLATION AND INTEREST RATES; GENERAL ECONOMIC CONDITIONS

Controlling inventory is a key ingredient to the success of an equipment
distributor because the equipment is characterized by long order cycles, high
ticket prices, and the related exposure to "flooring" interest. The Company's
interest expense may increase if inventory is too high or interest rates rise.
The Company manages its inventory through Company-wide information and inventory
sharing systems wherein all locations have access to the Company's entire
inventory. In addition, the Company closely monitors inventory turnover by
product categories and places equipment orders based upon targeted turn ratios.

All of the products and services provided by the Company are either capital
equipment or included in capital equipment, which are used in the construction,
industrial, and agricultural sectors. Accordingly, the Company's sales are
affected by inflation or increased interest rates which tend to hold down new
construction, and consequently adversely affect demand for the equipment sold
and rented by the Company. In addition, although agricultural equipment sales
are less than 2% of the Company's total revenues, factors adversely affecting
the farming and commodity markets also can adversely affect the Company's
agricultural equipment related business.

The Company's business can also be affected by general economic conditions in
its geographic markets as well as general national and global economic
conditions that affect the construction, industrial, and agricultural sectors. A
further erosion in North American and/or other countries' economies could
adversely affect the Company's business.

Although the principal products sold, rented, and serviced by the Company are
manufactured by Case, the Company also sells, rents, and services equipment and
sells related parts (e.g., tires, trailers, and compaction equipment)
manufactured by others. Approximately 41% of the Company's net sales for the six
months ended January 31, 2003 resulted from sales, rental, and servicing of
products manufactured by companies other than Case. That compares with a figure
of 48% for the first quarter of the current fiscal year and 51% for the fiscal
year ended July 31, 2002. Manufacturers other than Case represented by the
Company offer various levels of supplies and marketing support along with
purchase terms which vary from cash upon delivery to interest-free, 12-month
flooring.

                                       12
<PAGE>

The Company purchases its equipment and parts inventory from Case and other
manufacturers. No supplier other than Case accounted for more than 10% of such
inventory purchases during the six months ended January 31, 2003. While
maintaining its commitment to Case to primarily purchase Case Equipment and
parts as an authorized Case dealer, the Company plans to expand the number of
products and increase the aggregate dollar value of those products which the
Company purchases from manufacturers other than Case in the future.

The generally soft economic conditions in the equipment market, particularly in
the northwest, have contributed to a decline in equipment sales. A further
softening in the industry could severely affect the Company's sales and
profitability. Market specific factors could also adversely affect one or more
of the Company's target markets and/or products. The Company expects the
construction equipment market in its store locations to remain flat or slightly
down over the next 6 to 12 months.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
        ----------------------------------------------------------

         The Company is exposed to market risk from changes in interest rates.
Market risk is the potential loss arising from adverse changes in market rates
and prices such as interest rates. For fixed rate debt, interest rate changes
affect the fair value of financial instruments but do not impact earnings or
cash flows. Conversely for floating rate debt, interest rate changes generally
do not affect the fair market value but do impact future earnings and cash
flows, assuming other factors are held constant. At January 31, 2003, the
Company had variable rate floor plan payables, notes payable, and short-term
debt of approximately $40.8 million. Holding other variables constant, the
pre-tax earnings and cash flow impact for the next 12 months resulting from a
one percentage point increase in interest rates would be approximately $0.4
million. The Company's policy is not to enter into derivatives or other
financial instruments for trading or speculative purposes.


ITEM 4. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
        ------------------------------------------------

(a) Evaluation of disclosure controls and procedures. Our Chief Executive
Officer and our Chief Financial Officer, after evaluating the effectiveness of
the Company's "disclosure controls and procedures" (as defined in the Securities
Exchange Act of 1934 Rules 13a-14(c) and 15-d-14(c)) as of a date (the
"Evaluation Date") within 90 days before the filing date of this quarterly
report, have concluded that as of the Evaluation Date, the Company's disclosure
controls and procedures were adequate and designed to ensure that material
information relating to the Company would be made known to them by others within
those entities.

(b) Changes in internal controls. There were no significant changes in the
Company's internal controls or to our knowledge, in other factors that could
significantly affect the Company's disclosure controls and procedures subsequent
to the Evaluation Date.

                                       13
<PAGE>

PART II. OTHER INFORMATION


         ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
                  -------------------------------
                  As of January 31, 2003, the Company was in technical default
                  of the financial covenants in the GE Forbearance Agreement.
                  The Company has not received a waiver of such defaults from GE
                  and although GE has not called the loan, there is no guarantee
                  that it will not do so in the future.


         ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
                  ---------------------------------------------------
                  None.


         ITEM 5.  OTHER INFORMATION
                  -----------------
                  None.


         ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
                  --------------------------------
                  A.  EXHIBITS.

                      99.1 Certification Pursuant to 18 U.S.C. Section 1350 as
                           Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                           Act of 2002.

                      99.2 Certification Pursuant to 18 U.S.C. Section 1350 as
                           Adopted Pursuant to Section 906 of the Sarbanes-Oxley
                           Act of 2002.

                  B.  REPORTS ON FORM 8-K.

                      None.





                                       14
<PAGE>

SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



WESTERN POWER & EQUIPMENT CORP.


March 15, 2003                           By: /s/ Mark J. Wright
                                             -----------------------------
                                             Mark J. Wright
                                             Vice President of Finance and
                                             Chief Financial Officer




















                                     15
<PAGE>

I, C. Dean McLain, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Western Power &
Equipment Corp.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

         c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

         a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

         b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: March 15, 2003


/s/ C. Dean McLain
-------------------------
C. Dean McLain
President and Chief Executive Officer

                                       16
<PAGE>

I, Mark J. Wright, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Western Power &
Equipment Corp.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

         a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

         c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

         a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

         b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: March 15, 2003


/s/ Mark J. Wright
---------------------------
Mark J. Wright
Chief Financial Officer

                                       17