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 October 31, 1999
                         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)


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)                       3,303,162

<PAGE>
                         WESTERN POWER & EQUIPMENT CORP.
                                      INDEX


PART I.  FINANCIAL INFORMATION                                       Page Number

         Item 1.  Financial Statements

         Consolidated Balance Sheet
           October 31, 1999 (Unaudited) and July 31, 1999................ 1

         Consolidated Statement of Operations
           Three months ended October 31, 1999 (Unaudited)
           and October 31, 1998 (Unaudited).............................. 2

         Consolidated Statement of Cash Flows
           Three months ended October 31, 1999 (Unaudited)
           and October 31, 1998 (Unaudited).............................. 3

         Notes to Consolidated Financial Statements...................... 4

         Item 2.  Management's Discussion and Analysis of
                  Financial Condition and Operating Results.............. 5 - 8


PART II. OTHER INFORMATION

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

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

         Item 3.  Defaults Upon Senior Securities........................ 9

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

         Item 5.  Other Information...................................... 10

         Item 6.  Exhibits and Reports on Form 8-K....................... 10

<PAGE>
ITEM 1.

<TABLE>
<CAPTION>
                         WESTERN POWER & EQUIPMENT CORP.
                           CONSOLIDATED BALANCE SHEET
                             (Dollars in thousands)


                                                                         October 31,       July 31,
                                                                               1999           1999
                                                                         ----------     ----------
                                                                         (Unaudited)
<S>                                                                      <C>            <C>
                ASSETS
                ------
Current assets:
    Cash and cash equivalents..........................................  $    1,935     $    2,629
    Accounts receivable, less allowance for
      doubtful accounts of $812 and $724...............................      17,276         15,500
    Inventories........................................................      59,745         67,068
    Prepaid expenses...................................................         147            233
    Income taxes receivable............................................         301            354
    Deferred income taxes..............................................       1,410          1,410
                                                                         ----------     ----------
         Total current assets..........................................      80,814         87,194

Fixed Assets:
    Property, plant and equipment (net)................................       9,653          9,818
    Rental equipment fleet (net).......................................      31,503         31,366
    Leased equipment fleet (net).......................................       5,137          5,264
                                                                         ----------     ----------
         Total fixed assets............................................      46,293         46,448

Intangibles and other assets, net of accumulated
      amortization of $601 and $570....................................       2,920          2,952
                                                                         ----------     ----------
Total assets...........................................................  $  130,027     $  136,594
                                                                         ==========     ==========

               LIABILITIES & STOCKHOLDERS' EQUITY
               ----------------------------------
Current liabilities:
    Borrowings under floor plan financing..............................  $   12,976     $   17,128
    Short-term borrowings..............................................      70,609         70,883
    Accounts payable...................................................      10,474         12,702
    Accrued payroll and vacation.......................................         862            825
    Other accrued liabilities..........................................       1,846          1,756
    Capital lease obligation...........................................          13             17
                                                                         ----------     ----------
        Total current liabilities......................................      96,780        103,311

Deferred income taxes..................................................         837            837
Capital lease obligation...............................................       4,747          4,755
Long-term borrowings...................................................          43             48
Deferred gain..........................................................         139            140
Deferred lease income..................................................       6,034          6,181
                                                                         ----------     ----------
      Total long-term liabilities......................................      11,800         11,961
                                                                         ----------     ----------
Total liabilities......................................................     108,580        115,272
                                                                         ----------     ----------

Stockholders' equity:
    Preferred stock-10,000,000 shares authorized;
      none issued and outstanding......................................           -              -
    Common stock-$.001 par value; 20,000,000 shares
      authorized; 3,303,162 issued and outstanding.....................           4              4
    Additional paid-in capital.........................................      16,072         16,072
    Retained earnings..................................................       6,862          6,737
    Less common stock in treasury, at cost
      (230,300 shares).................................................      (1,491)        (1,491)
                                                                         ----------     ----------
        Total stockholders' equity.....................................      21,447         21,322
                                                                         ----------     ----------
Total liabilities and stockholders' equity.............................  $  130,027     $  136,594
                                                                         ==========     ==========

                 See accompanying notes to financial statements.
</TABLE>

                                       1
<PAGE>
<TABLE>
<CAPTION>
                         WESTERN POWER & EQUIPMENT CORP.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (UNAUDITED)
                (Dollars in thousands, except per share amounts)


                                                                            Three Months Ended
                                                                                October 31,
                                                                               1999           1998
                                                                         ----------     ----------
<S>                                                                      <C>            <C>
Net revenue............................................................  $   42,063     $   40,365

Cost of revenues.......................................................      37,144         37,890
                                                                         ----------     ----------

Gross profit...........................................................       4,919          2,475

Selling, general and administrative expenses...........................       3,458          3,126
                                                                         ----------     ----------

Operating Income (loss)................................................       1,461           (651)

Other income (expense):
    Interest expense...................................................      (1,492)        (1,768)
    Other income.......................................................         218            251
                                                                         ----------     ----------

Income (loss) before taxes.............................................         187         (2,168)

Income tax provision (benefit).........................................          62           (880)
                                                                         ----------     ----------

Net income (loss)......................................................  $      125     $   (1,288)
                                                                         ==========     ==========

Basic earnings (loss) per common share                                   $     0.04     $    (0.39)
                                                                         ==========     ==========

Average outstanding common shares for
  basic earnings (loss) per share......................................       3,303          3,303
                                                                         ==========     ==========

Average outstanding common shares and equivalents
  for diluted earnings (loss) per share................................       3,303          3,303
                                                                         ==========     ==========

Diluted earnings (loss) per share......................................  $     0.04     $    (0.39)
                                                                         ==========     ==========


                 See accompanying notes to financial statements.
</TABLE>

                                       2
<PAGE>
<TABLE>
<CAPTION>
                         WESTERN POWER & EQUIPMENT CORP.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)
                             (Dollars in thousands)


                                                                            Three Months Ended
                                                                                October 31,
                                                                               1999           1998
                                                                         ----------     ----------
<S>                                                                      <C>            <C>
Cash flows from operating activities:
    Net (loss) income..................................................  $      125     $   (1,288)
    Adjustments to reconcile net income to net cash
      provided by (used in) operating activities:
        Depreciation...................................................       3,500          1,346
        Amortization...................................................          31             95
        Changes in assets and liabilities:
            Accounts receivable........................................      (1,776)         5,349
            Inventories................................................       5,407          4,929
            Leased equipment, net......................................         127             -0-
            Inventory floor-plan financing.............................      (4,151)           815
            Short-term financing.......................................        (274)        (6,770)
                Deferred income tax liability..........................           7             -0-
            Prepaid expenses...........................................          87             (5)
            Accounts payable...........................................      (2,228)        (5,997)
            Accrued payroll and vacation...............................          38            (63)
            Other accrued liabilities..................................          82            (83)
            Deferred lease income......................................        (148)         2,918
            Income taxes receivable/payable............................          53         (1,245)
            Other assets/liabilities...................................          -0-            -0-
                                                                         ----------     ----------
    Net cash provided by operating activities..........................         880              1
                                                                         ----------     ----------

Cash flow from investing activities:
    Purchase of fixed assets...........................................         (58)        (1,522)
    Purchase/sales of rental equipment, net............................      (1,498)            -0-
    Proceeds on sale of fixed assets...................................          -0-            -0-
    Covenant not to compete............................................          -0-           (11)
                                                                         ----------     ----------
    Net cash used in investing activities                                    (1,556)        (1,533)
                                                                         ----------     ----------

Cash flows from financing activities:
    Principal payments on capital leases...............................         (14)            (9)
    Purchase of treasury stock.........................................          -0-            -0-
    Long-term borrowings (repayments)..................................          (4)            12
                                                                         ----------     ----------
    Net cash provided by
     (used in)financing activities.....................................         (18)             3
                                                                         ----------     ----------

Decrease in cash and cash equivalents..................................        (694)        (1,529)
Cash and cash equivalents at beginning of
 period................................................................       2,629          2,555
                                                                         ----------     ----------

Cash and cash equivalents at end of period.............................  $    1,935     $    1,026
                                                                         ==========     ==========

                 See accompanying notes to financial statements.
</TABLE>

                                       3
<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, 1999 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, 1999 filed with the Securities and Exchange Commission.

2.   Inventories

Inventories consist of the following:

<TABLE>
<CAPTION>
                                               October 31,       July 31,
                                                     1999           1999
                                               ----------     ----------
     <S>                                       <C>            <C>
     Equipment:
       New equipment                           $   42,526     $   49,325
       Used equipment                               7,092          7,642

     Parts                                         10,127         10,101
                                               ----------     ----------

                                               $   59,745     $   67,068
                                               ==========     ==========
</TABLE>

3.   Fixed Assets

Fixed Assets consist of the following:

<TABLE>
<CAPTION>
                                               October 31,       July 31,
                                                     1999           1999
                                               ----------     ----------
     <S>                                       <C>            <C>
     Operating property, plant
       and equipment:
       Land                                    $      420     $      420
       Buildings                                    5,128          5,126
       Machinery and equipment                      3,951          3,869
       Office furniture and fixtures                2,294          2,291
       Computer hardware and software               1,371          1,299
       Vehicles                                     1,805          1,841
       Leasehold improvements                         411            360
                                               ----------     ----------
                                                   15,380         15,206
       Less: accumulated depreciation              (5,727)        (5,388)
                                               ----------     ----------
     Property, plant, and equipment (net)      $    9,653     $    9,818
                                               ==========     ==========

     Rental equipment fleet                        37,381         36,395
       Less: accumulated depreciation              (5,878)        (5,029)
                                               ----------     ----------
     Rental equipment (net)                        31,503         31,366
                                               ==========     ==========

     Leased equipment fleet (net)                   5,137          5,264
                                               ==========     ==========
</TABLE>

                                       4
<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.
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 because of a number of
risks and uncertainties, including but not limited to fluctuations in the
construction, agricultural and industrial sectors and general economic cycles;
the success of the Company's entry into new markets through store openings or
acquisitions; the success of the Company's expansion of its 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 and to integrate
acquired businesses in an effective manner; the continued availability of
financing; governmental regulations and environmental matters; risks associated
with regional, and national and world economies. Any forward-looking statements
should be considered in light of these factors.

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

The Three Months ended October 31, 1999 compared to the Three Months ended
October 31, 1998.

Revenues for the three-month period ended October 31, 1999 increased 4% to $42.1
million compared with $40.4 million for the three-month period ended October 31,
1998. Revenues were up from the prior year's first quarter in every department
other than service. Equipment sales have rebounded somewhat in Oregon which had
been down in prior quarters due to competitive pressures, a slower northwest
economy, and some especially inclement weather. Equipment sales were also up
strongly in Alaska, due in large part to higher sales to governmental entities.

The Company's gross profit margin of 11.7% for the three-month period ended
October 31, 1999 was up from the prior year comparative period margin of 8.7%.
The increase in gross profit margins was partly the result of increased
percentage of overall business coming from the relatively higher margin rental
business.

For the three-month period ended October 31, 1999, selling, general, and
administrative ("SG&A") expenses, as a percentage of sales, were 8.2%, up from
7.7% for the prior year's quarter. Some of the increase SG&A expenses are
attributable to costs associated with the consolidation of stores that began in
the last quarter of FY99 and the ongoing expenses still being incurred for those
vacated locations.

Interest expense for the three months ended October 31, 1999 of $1,492,000 was
down from the $1,768,000 in the prior year comparative period. This decrease is
the result of lower average borrowings on the Deutsche Financial Services
facility.

The effective tax rate for the three months ended October 31, 1999 was
approximately 33.2%, which is lower than the 40.6% effective tax rate for the
prior year comparative period. The Company anticipates the effective tax rate to
more closely approximate prior year levels in future quarters.

The Company had net income for the quarter ended October 31, 1999 of $125,000 or
$.04 per (basic and diluted) share compared with a net loss of $1,288,000

                                       5
<PAGE>
or $0.39 per (basic and diluted) for the prior year's first quarter. The first
quarter of FY99 included a non-recurring pre-tax charge of $1,061,000 for used
equipment inventory reserves.

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 profitable 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 and Deutsche Financial Services ("DFS") 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 October 31,
1999, the Company was indebted under manufacturer-provided floor planning
arrangements in the aggregate amount of $12,976,000.

The Company recently amended its $75 million inventory flooring and operating
line of credit through DFS. The amended DFS credit facility is a three-year,
floating rate facility based on prime with rates between 0.75% under prime to
prime depending on the amount of total debt leverage of the Company. Borrowings
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 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 October 31, 1999, approximately
$70,609,000 was outstanding under the DFS credit facility. The Company is in
technical default of the minimum tangible net worth covenant in the DFS Loan
Agreement. The Company requested but did not obtain a waiver for the period
through October 31, 1999. Although DFS has not called the debt due to such
default, there is no guarantee that DFS will not call this debt at any time
after October 31, 1999.

During the quarter ended October 31, 1999, cash and cash equivalents decreased
by $694,000. The Company had positive cash flow from operating activities in the
first quarter reflecting the net income for the quarter and adding depreciation
and amortization. Purchases of fixed assets during the period were related
mainly to the purchase of new equipment for the rental fleet.

The Company's cash and cash equivalents of $1,935,000 as of October 31, 1999 and
available credit facilities are considered sufficient to support current or
higher levels of operations for at least the next twelve months.

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

                                       6
<PAGE>
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.
An erosion in North American and/or other countries' economies could adversely
affect the Company's business. Market specific factors could also adversely
affect one or more of the Company's target markets and/or products.

Impact of the Year 2000 Issue

The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.

The company has completed upgrades of its enterprise application to include Y2K
fixes uncovered during the company's internal testing of the vendor's software.
The Company presently believes that with this upgrade to the existing software,
the Year 2000 issue can be mitigated. However, if the upgrade does not work as
anticipated, the Year 2000 issue could have a material impact on the operations
of the Company.

The Company has contacted all of its significant suppliers to determine the
extent to which the Company is vulnerable to those third parties' failure to
remediate their own Year 2000 issues. The Company has received a favorable
response from about half of the suppliers contacted to date. There can be no
guarantees that the systems of third parties on which the Company's systems rely
or which influence the business of the Company's customers will be timely
remediated, that any attempted remediation will be successful, or that such
conversions would be compatible with the Company's systems. The Company has not
yet determined the projected costs of the Company's Year 2000 project and cannot
yet determine whether the Company has any exposure to contingencies related to
the Year 2000 issue for the products it has previously sold.

The Company will utilize both internal and external resources to reprogram, or
replace, and test the Company's software for Year 2000 modifications. The
Company plans to complete its Year 2000 project on or before December 31, 1999.
Funding for the costs of the program are anticipated to come from operating cash
flows.

                                       7
<PAGE>
The Company's current plan to complete the Year 2000 modifications are based on
management's best estimates, which were derived using numerous assumptions of
future events including the continued availability of certain resources, third
party modification plans, and the ability to meet projected time lines. There
can be no guarantee that these estimates will be achieved and actual results
could differ materially from those plans. Specific factors that might cause such
material differences include, but are not limited to, the availability and cost
of personnel trained in this area, the ability to locate and correct all
relevant computer codes, and other uncertainties.

                                       8
<PAGE>
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

At October 31, 1999, the Company was in technical default of the minimum
tangible net worth covenant in the DFS Loan Agreement. As of October 31, 1999,
the outstanding balance owed to DFS was approximately $70,589,000. The Company
requested but did not obtain a waiver of the default for the period through
October 31, 1999. Although DFS has not called the debt due to such default,
there is no guarantee that DFS will not call this debt at any time after October
31, 1999. See Item 1, "Liquidity and Capital Resources."

                                       9
<PAGE>
PART II. OTHER INFORMATION

     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.

              Exhibit 4               Amended and Restated Loan and Security
                                      Agreement between Western Power &
                                      Equipment and Deutsche Financial Services

              Exhibit 27              Financial Data Schedule

          B.  REPORTS ON FORM 8-K.    NONE

                                       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.

December 15, 1999

                     By: MARK J. WRIGHT
                         ---------------------------------
                         Mark J. Wright
                         Vice President of Finance and
                         Chief Financial Officer

                                       11
<PAGE>
                                 EXHIBIT INDEX

              Exhibit
                 No.        Description
              -------       -----------

               Ex. 4        Amended and Restated Loan and Security
                            Agreement between Western Power &
                            Equipment and Deutsche Financial Services

               Ex. 27       Financial Data Schedule