<PAGE>
                                          
                                      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 April 30, 1998
                           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 I.D.
     incorporation or organization)                       number)

4601 NE 77th Avenue, Suite 200, 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)                3,298,162


<PAGE>

                          WESTERN POWER & EQUIPMENT CORP.
                                       INDEX
<TABLE>
<CAPTION>
PART I.   FINANCIAL INFORMATION                                      Page Number
<S>                                                                  <C>
     Item 1.   Financial Statements

      Consolidated Balance Sheet
        April 30, 1998 (Unaudited) and July 31, 1997                       1

      Consolidated Statement of Operations
        Three months ended April 30, 1998 (Unaudited)
        and April 30, 1997 (Unaudited)                                     2
     
      Consolidated Statement of Operations
        Nine months ended April 30, 1998 (Unaudited)
        and April 30, 1997 (Unaudited)                                     3

      Consolidated Statement of Cash Flows
        Nine months ended April 30, 1998 (Unaudited)
        and April 30, 1997 (Unaudited)                                     4

      Notes to Consolidated Financial Statements                           5 - 6

     Item 2.   Management's Discussion and Analysis of
               Financial Condition and Operating Results                   7 -10


PART II.  OTHER INFORMATION

     Item 1.   Legal Proceedings                                           N/A

     Item 2.   Changes in Securities                                       N/A

     Item 3.   Defaults Upon Senior Securities                             N/A

     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                            10

</TABLE>

<PAGE>

ITEM 1.
                          WESTERN POWER & EQUIPMENT CORP.
                             CONSOLIDATED BALANCE SHEET
                               (Dollars in thousands)
<TABLE>
<CAPTION>
                                                          April 30,    July 31,
                                                            1998         1997  
                                                          ---------   --------
                                                        (Unaudited)
                ASSETS
<S>                                                     <C>            <C> 
Current assets:
   Cash and cash equivalents                               $1,001      $ 1,875
   Accounts receivable, less allowance for 
     doubtful accounts of $862 and $651                    16,615        9,677
   Inventories                                             95,952       83,369
   Prepaid expenses                                            96           39
   Income taxes receivable                                    392          514
   Deferred income taxes                                      936          936
                                                        ---------     --------
       Total current assets                               114,992       96,410

   Property, plant and equipment, net                       8,322        8,149
   Intangibles and other assets                             3,013        2,864
                                                        ---------     --------
       Total assets                                      $126,327     $107,423
                                                        ---------     --------
                                                        ---------     --------

               LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:
   Borrowings under floor plan financing                  $12,484      $55,490
   Short-term borrowings                                   72,521        4,074
   Accounts payable                                        10,955       18,107
   Accrued payroll and vacation                               899          736
   Other accrued liabilities                                2,536        1,914
   Capital lease obligation                                    73          106
   Covenant Not to Compete                                     75          100
                                                        ---------     --------
       Total current liabilities                           99,543       80,527

Covenant Not to Compete                                         -           46
Deferred income taxes                                         364          364
Capital lease obligation                                    2,438        2,453
Long-term borrowings                                        1,171        1,268
                                                        ---------     --------
       Total liabilities                                  103,516       84,658
                                                        ---------     --------

Commitments and contingencies

Stockholders' equity:
   Preferred stock-10,000,000 shares authorized;
     none issued and outstanding                                -            -
   Common stock-$.001 par value; 20,000,000 
     shares authorized; 3,298,162 issued and 
     outstanding                                                4            4
   Additional paid-in capital                              16,073       16,047
   Treasury stock                                          (1,210)           -
   Retained earnings                                        7,944        6,714
                                                        ---------     --------
       Total stockholders' equity                          22,811       22,765
                                                        ---------     --------

       Total liabilities and stockholders'
         equity                                          $126,327     $107,423
                                                        ---------     --------
                                                        ---------     --------

                  See accompanying notes to financial statements.


                                       - 1 -

</TABLE>

<PAGE>


                          WESTERN POWER & EQUIPMENT CORP.
                        CONSOLIDATED STATEMENT OF OPERATIONS
                                    (UNAUDITED)
                  (Dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                                  April 30,   
                                                             1998       1997
                                                             ----       ----
<S>                                                       <C>          <C> 
Net sales                                                 $40,947      $42,043

Cost of goods sold                                         36,557       37,444
                                                        ---------     --------
Gross profit                                                4,390        4,599

Selling, general and administrative expenses                3,078        2,974

Other (income) expense:
   Interest expense                                         1,288          894
   Other income                                              (243)         (41)
                                                        ---------     --------

Income before taxes                                           267          772

Income tax provision                                          167          313
                                                        ---------     --------

Net income                                                $   100      $   459
                                                        ---------     --------
                                                        ---------     --------

Basic earnings per common share                           $  0.03      $  0.13
                                                        ---------     --------
                                                        ---------     --------

Average outstanding common shares for 
  basic earnings per share                                  3,515        3,533
                                                        ---------     --------
                                                        ---------     --------

Average outstanding common shares and equivalents
 for diluted earnings per share                             3,905        3,638
                                                        ---------     --------
                                                        ---------     --------

Diluted earnings per share                                $  0.03      $  0.13
                                                        ---------     --------
                                                        ---------     --------


                  See accompanying notes to financial statements.
                                          


                                       - 2 -

<PAGE>

                          WESTERN POWER & EQUIPMENT CORP.
                        CONSOLIDATED STATEMENT OF OPERATIONS
                                    (UNAUDITED)
                  (Dollars in thousands, except per share amounts)
                                          
                                          
                                          
                                                             Nine Months Ended
                                                                 April 30,
                                                              1998        1997
                                                              ----        ----

Net sales                                                $117,563     $108,244

Cost of goods sold                                        103,849       96,279
                                                          -------      -------
Gross profit                                               13,714       11,965


Selling, general and administrative expenses                9,009        7,609

Other (income) expense:
   Interest expense                                         3,128        2,572
   Other income                                              (485)        (374)
                                                          -------      -------

Income before taxes                                         2,062        2,158

Income tax provision                                          832          848
                                                          -------      -------

Net income                                                $ 1,230      $ 1,310
                                                          -------      -------
                                                          -------      -------

Basic earnings per common share                            $ 0.35      $  0.37
                                                          -------      -------
                                                          -------      -------

Average outstanding common shares for 
  basic earnings per share                                  3,527        3,533
                                                          -------      -------
                                                          -------      -------

Average outstanding common shares and equivalents
 for diluted earnings per share                             3,808        3,611
                                                          -------      -------
                                                          -------      -------

Diluted earnings per share                                $  0.32      $  0.36
                                                          -------      -------
                                                          -------      -------

</TABLE>


                  See accompanying notes to financial statements.


                                       - 3 -

<PAGE>

                          WESTERN POWER & EQUIPMENT CORP.
                        CONSOLIDATED STATEMENT OF CASH FLOWS
                                    (UNAUDITED)
                               (Dollars in thousands)

<TABLE>
<CAPTION>
                                                             Nine Months Ended
                                                                  April 30,   
                                                            1998         1997
                                                            ----         ----
<S>                                                       <C>          <C>
Cash flows from operating activities:
   Net income                                              $1,230      $ 1,310
   Adjustments to reconcile net income to net cash
     (used in) provided by operating activities:
       Depreciation                                           885          803
       Amortization                                           158            4
       (Gain) Loss on sale of fixed assets                     --          (17)
       Changes in assets and liabilities:
           Accounts receivable                             (6,087)      (5,231)
           Inventories                                     (6,231)      (7,203)
           Floor plan financing                           (45,800)      (3,147)
           Short-term borrowings                           63,554        3,648
           Prepaid expenses                                   (57)         (76)
           Accounts payable                                (7,151)       8,667
           Accrued payroll and vacation                       163         (115)
           Other accrued liabilities                         (258)         766
           Income taxes payable                             1,003         (519)
           Other assets                                        --           14
                                                          --------     --------

Net cash (used in) provided by operating
    activities                                              1,409       (1,096)
                                                          --------     --------

Cash flow from investing activities:
   Purchase of fixed assets                                  (658)      (1,081)
   Purchase of intangibles                                    (71)          (8)
   Proceeds on sale of fixed assets                            --           21
                                                          --------     --------
   Net cash used in investing activities                     (729)      (1,068)
                                                          --------     --------

Cash flows from financing activities:
   Principal payments on capital leases                       (51)        (105)
   Notes Payable--Long-term                                   (97)         (94)
   Purchase of treasury stock                              (1,406)          --
                                                          --------     --------

   Net cash provided by (used in)
    financing activities                                   (1,554)         (199)
                                                          --------     --------

Decrease in cash and cash equivalents                        (874)      (2,363)
Cash and cash equivalents at beginning of 
 period                                                     1,875        2,721
                                                          --------     --------
Cash and cash equivalents at end of period                 $1,001       $  358
                                                          --------     --------
                                                          --------     --------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
   Interest                                                $3,128       $2,572
   Income taxes                                             1,158          832
</TABLE>

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

A capital lease obligation of $292 was incurred during the year ended July 31,
1997 when the Company entered into a lease for computer equipment and software. 
A capital lease obligation of $680 was incurred in June 1997 when the Company
entered into a 20-year lease for the Kent, Washington facility.

                  See accompanying notes to financial statements.
                                          
                                       - 4 -


<PAGE>

                          Western Power & Equipment Corp.
                                          
                     Notes to Consolidated Financial Statements
                               (Dollars in thousands)

1.   BASIS OF PRESENTATION

The financial information included in this report has been prepared in
conformity with the accounting principles and practices reflected in the
financial statements for the preceding year included in the annual report on
Form 10-K for the year ended July 31, 1997 filed with the Securities and
Exchange Commission.  All adjustments are of a normal recurring nature and are,
in the opinion of management, necessary for a fair statement of the results for
the interim periods.  This report should be read in conjunction with the
Company's financial statements included in the annual report on Form 10-K for
the year ended July 31, 1997 filed with the Securities and Exchange Commission.


2.   INVENTORIES
<TABLE>
<CAPTION>
Inventories consist of the following:
                                                          April 30,    July 31,
                                                               1998        1997
                                                               ----        ----
<S>                                                       <C>          <C>

     Equipment:
       New equipment                                      $76,197      $66,976
       Used equipment                                      10,269        8,234
       Parts                                                9,486        8,159
                                                           ------       ------

                                                          $95,952      $83,369
                                                           ------       ------
                                                           ------       ------
</TABLE>

3.   CHANGE IN ACCOUNTING ESTIMATE

Effective August 1, 1997, the Company changed its estimate of depreciation on
its rental equipment inventory from 80% of billings to 70% of billings.  This
change in accounting estimate resulted in an increase in rental equipment
inventory and a decrease in cost of goods sold of approximately $314 and $944
for the quarter and nine months ended April 30, 1998, respectively.

4.   FISCAL 1998 EVENTS

On December 11, 1997 the Company acquired substantially all of the operating
assets used by Case Corporation in connection with its business of servicing and
distributing agricultural equipment at a distribution facility located in Yuba
City, California.  The real property and improvements used in connection with
the Yuba City operation and upon which the Yuba City operation is located, were
sold to McLain-Rubin Realty III, L.L.C. (MRR III) under the terms of a separate
real property purchase and sale agreement.  MRR III is a Delaware limited
liability company the owners of which are Messrs. C. Dean McLain, the President
and a director of the Company, and Robert M. Rubin, the Chairman and a director
of the Company.

The purchase price was an aggregate of $1,945, of which approximately $142 was
paid in cash, consisting of approximately $1,427 for equipment inventory, $383
for parts inventories, $38 for fixed assets, $64 for accounts receivable, and
$33 for other assets.  MRR III acquired the real property and improvements used
in connection with and upon which the Yuba City operation is located for $450
via a promissory note from MRR III to Case Corporation with a 12 month term. 

The majority of the purchase price was financed by the Company through various
promissory notes to Case Corporation dated December 11, 1997.  The promissory
notes are generally non-interest bearing for a short period (ranging from three
to ten months) and then, if not paid in full, bear interest at prime 


                                       - 5 -

<PAGE>

plus two percent.  The promissory notes carry repayment terms ranging from 
three equal monthly payments to over one year. All of the notes are 
cross-collateralized and secured by all the assets acquired in the Yuba City 
purchase.

Subsequent to the closing of the Yuba City acquisition, the Company entered into
a 20-year lease agreement with MRR III for the Yuba City facility at an initial
rental rate of $54 per year with increases at 5, 10, and 15 years.  The lease is
a net lease with payment of insurance, property taxes and maintenance costs by
the Company.

On April 30, 1998 the Company acquired substantially all of the operating 
assets of Yukon Equipment, Inc. (Yukon) in connection with Yukon's business 
of servicing and distributing construction, industrial, and agricultural 
equipment in Alaska.  Yukon has facilities in Anchorage, Fairbanks, and 
Juneau, Alaska. At closing, the Company assumed Yukon's existing lease 
obligations on the Fairbanks and Juneau facilities. The real property and 
improvements used in connection with Yukon's Anchorage operation and upon 
which the Anchorage operation is located (Yukon Anchorage Property), is being 
leased on a month-to-month basis pending Yukon's sale of the Yukon Anchorage 
Property to the Company at fair market value subject to acceptable appraisals 
and an acceptable environmental report.

The purchase price was an aggregate of $7,710 consisting of approximately $5,680
for equipment inventory, $613 for parts inventory, $399 for fixed assets, $651
for accounts receivable, and $367 for other assets. 

Approximately $4,566 of the purchase price was paid in cash which was funded 
through a short-term note payable.  The majority of the balance of the 
purchase price was floor plan and open account financing assumed by the 
Company.  Yukon also received 50,000 shares of the Company's common stock in 
partial payment of the purchase price.

                                       - 6 -

<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
Financial Statements and Notes thereto appearing elsewhere in this Form 10-Q.

GENERAL

In December 1997, the Company completed the acquisition of a Case Corporation
owned agricultural equipment store in Yuba City, California.  In addition, in
December 1997, the Company opened a new construction equipment store in
Clarkston, Washington.  In April 1998, the Company completed the acquisition of
the assets of Yukon Equipment, Inc., a three-store Alaska distributor of
construction, industrial, and agricultural equipment, including Case Corporation
products, bringing the total number of retail distribution outlets owned and
operated by the Company to 28.  The Company plans to open and acquire additional
distribution outlets for Case products, as well as for products which may be
manufactured by other companies.

RESULTS OF OPERATIONS

THE THREE AND NINE MONTHS ENDED APRIL 30, 1998 COMPARED TO THE THREE AND NINE
MONTHS ENDED APRIL 30, 1997.

Revenues for the three month period ended April 30, 1998 decreased $1,096,000 or
approximately 3% over the three month period ended April 30, 1997, due in 
part to inclement weather in the Northwest. Same store revenues decreased 4% 
for the three month period ended April 30, 1998, as compared to the prior 
year period. The decrease in same store revenues resulted from decreases in 
the Washington and Oregon stores due mainly to higher than normal 
precipitation levels. Sales were up from the prior year's third quarter in 
all departments except machinery sales.  Machinery sales were down 5%.

Revenues for the nine month period ended April 30, 1998 increased $9,319,000 to
$117,563,000 or approximately 9% over the nine month period ended April 30,
1997.  The increase was due solely to the contribution of the stores acquired or
opened in the last year.  Same store revenues decreased 1% for the nine month
period ended April 30, 1998, as compared to the nine month period ended April
30, 1997. For the nine month period ended April 30, 1998, sales in all
departments were up from the same period in the prior year.

The Company's gross profit margin of 10.7% for the three month period ended
April 30, 1998 was down slightly from the prior year comparative period margin
of 10.9%.  The decrease in gross profit margins was primarily the result of
increased sales in the governmental sector. For the nine month period ended
April 30, 1998, the Company's gross margin was 11.7% up from the 11.1% gross
margin for the nine month period ended April 30, 1997.

For the three month period ended April 30, 1998, selling, general, and
administrative ("SG&A") expenses, as a percentage of sales, were 7.5%, up from
7.1% for the prior year's quarter.  SG&A expenses for the nine month period
ended April 30, 1998 were 7.7% of sales compared to 7.0% of sales for the prior
year nine month period. Executive management has put in place a plan to reduce
SG&A expenses as a percentage of sales over the next several fiscal quarters.

Interest expense for the three months ended April 30, 1998 of $1,288,000 was up
significantly from $894,000 in the prior year comparative period.  This increase
is the result of a build up in inventory levels to support the Company's higher
equipment sales level, including a significant investment in equipment dedicated
to the rental fleet.  Interest expense for the nine month period ended April 30,
1998 was $3,128,000 compared to $2,572,000 for the nine month period ended April
30, 1997, due to the increased inventory carried by the Company.

The effective tax rate for the nine months ended April 30, 1998 was
approximately 40.3%, which is slightly higher than the 39.3% effective tax rate
for the prior year comparative period.  The Company anticipates the effective
tax rate to remain at or near the current level for the foreseeable future.

Net income for the quarter ended April 30, 1998 was $100,000 or $.03 per share
compared with $459,000 or $0.13 per share for the prior year's third quarter.
For the nine month period ended April 30, 1998, earnings per share were $0.35,
compared with $0.37 earnings per share for the nine month period ended April 30,
1997. The number of weighted average common shares and equivalents used for
computing diluted earnings per share for the quarter and nine months ended April
30, 1998 reflects the incremental number of shares calculated using the treasury
stock method for 1,506,000 options and warrants whose exercise prices range from
$4.375 to $10.375.

LIQUIDITY AND CAPITAL RESOURCES

                                       - 7 -

<PAGE>

The Company's primary source of internal liquidity has been its profitable
operations since its inception in November 1992.  As more fully described below,
the Company's primary sources of external liquidity were contributions to the
Company by its parent, American United Global, Inc. ("AUGI"), and equipment
inventory floor plan financing arrangements provided to the Company by the
manufacturers of the products the Company sells, Seattle-First National Bank
("Seafirst Bank"), and Deutsche Financial Services.  In addition, in fiscal
1995, the Company completed an initial public offering of 1,495,000 shares of
common stock at $6.50 per share, generating net proceeds of $7,801,000.  The net
proceeds of the offering were utilized to repay amounts due to AUGI and to Case,
the acquisition and opening of additional outlets, as well as to reduce floor
plan debt.  

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 two to three 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 April 30, 1998,
the Company was indebted under manufacturer provided floor planning arrangements
in the aggregate amount of $12,484,000.

In order to take advantage of cash discount offered by Case and other
manufacturers, to provide financing beyond the term of applicable manufacturer
provided floor plan financing, or as an alternative to various manufacturer
provided floor plan financing arrangements, the Company has entered into a
separate secured floor planning line of credit with Seafirst Bank.  The Seafirst
line of credit was entered into in June 1994 and renewed on September 1, 1997. 
This is a $22,000,000 line of credit which can be used to finance new and used
equipment or equipment to be held for rental purposes. Borrowings under this
line of credit bear interest at approximately .50 percent below the bank's prime
rate.  The line of credit is subject to annual review and renewal on July 1,
1998. On April 30, 1998, there was no outstanding indebtedness under Seafirst's
line of credit.

In June 1997, the Company obtained a $75 million inventory flooring and 
operating line on credit through Deutsche Financial Services ("DFS"). The 
DFS credit facility is a three-year, floating rate facility based on prime 
with rates between 0.50 percent under prime to 1.00 percent over prime 
depending on the amount of total borrowing under the facility. Amounts are 
advanced against the Company's assets, including accounts receivable, parts, 
new equipment, rental fleet, and used equipment. The Company expects to use 
this borrowing facility to lower flooring related interest expense by using 
advances under such line to finance inventory purchases in lieu of financing 
provided by suppliers, to take advantage of cash purchase discounts from its 
suppliers, to provide operating capital for further growth, and to refinance 
some its acquisition related debt at a lower interest rate. As of April 30, 
1998, approximately $67,491,000 was outstanding under this facility at an 
interest rate of 8.00 percent.

Amounts owing under these floor plan financing agreements are secured by
inventory purchases financed by these lenders, as well as all proceeds from
their sale or rental, including accounts receivable thereto.

On December 11, 1997, the Company acquired substantially all of the operating
assets used by Case in connection with its business of servicing and
distributing Case agricultural equipment at a facility located in Yuba City,
California.  The acquisition was consummated for approximately $142,000 in 


                                       - 8 -

<PAGE>

cash, $628,000 in installment notes payable to Case and the assumption of 
$1,175,000 in inventory floor plan debt with Case and its affiliates.  The 
acquisition has been accounted for under the purchase method of accounting. 

The real property and improvements upon which the Yuba City, California facility
acquired from Case is located, was purchased by McLain-Rubin Realty Company III,
LLC ("MRR III"), a Delaware limited liability company, the owners of which are
Messrs. C. Dean McLain, the President and a director of the Company, and Robert
M. Rubin, the Chairman and a director of the Company. MRR III is leasing such
real property and improvements to the Company under the terms of a Commercial
Lease Agreement dated as of December 11, 1997.  In accordance with SFAS 13, the
building portion of the lease is being accounted for as a capital lease while
the land portion of the lease qualifies for treatment as an operating lease.

On April 30, 1998, the Company acquired substantially all of the operating 
assets of Yukon Equipment, Inc. (Yukon) in connection with Yukon's business 
of servicing and distributing construction, industrial, and agricultural 
equipment in Alaska. The purchase price was an aggregate of $7,710,000 
consisting of approximately $4,566,000 in cash which was funded through a 
short-term note payable and the assumption of approximately $2,786,000 in 
floor plan and open account obligations.  Yukon also received 50,000 shares 
of the Company's common stock in partial payment of the purchase price. The 
acquisition has been accounted for under the purchase method of accounting.

During the nine months ended April 30, 1998, cash and cash equivalents decreased
by $874,000, reflecting the net effect of higher borrowings to reflect increased
inventory, increased accounts receivable, and lower accounts payable plus the
repurchase of the Company's common stock. A portion of the increased accounts
receivable and inventory increases are attributable to the Yukon Equipment
acquisition.  As of April 30, 1998, pursuant to its stock buyback program the
Company had repurchased approximately 235,000 shares of its common stock at an
aggregate cost of approximately $1,535,000. The Company intends to continue its
stock buyback program as conditions warrant.

The Company's cash and cash equivalents of $1,001,000 as of April 30, 1998 and
available credit facilities are considered sufficient to support current or
higher levels of operations for at least the next twelve months. 

Certain matters discussed herein contain forward-looking statements that are
subject to risks and uncertainties any one or more of which could cause actual
results to differ materially from those projected.


                                       - 9 -

<PAGE>

PART II.  OTHER INFORMATION


     ITEM 5.   OTHER INFORMATION


     ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K
                --------------------------------
           A.   EXHIBITS.                                                   NONE

           B.   REPORTS ON FORM 8-K.                              

                Form 8-K filed May 11, 1998 reporting on the acquisition of the
                operating assets of Yukon Equipment, Inc.


                                       - 10 -

<PAGE>

                                     SIGNATURE


Pursuant to the requirements 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.


WESTERN POWER & EQUIPMENT CORP.

June 15, 1998

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


                                       - 11 -