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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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FORM 10-Q

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

For the Quarter Ended April 30, 2001

Commission File Number 0-26230

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

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

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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
Common Stock

Number of shares
Outstanding(par value $.001 per share)

3,403,162


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WESTERN POWER & EQUIPMENT CORP.  INDEX

|                               |         |                                                                                                                    |                                                                                   | Page Number
|------------------------------ | ------- | ------------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------- | -----------
|PART I.  FINANCIAL INFORMATION |         |                                                                                                                   
|                               | Item 1. |                                                                                                                    | Financial Statements                                                              |            
|                               |         | Consolidated Balance Sheets
April 30, 2001 (Unaudited) and July 31, 2000                                           |                                                                                   | 1          
|                               |         | Consolidated Statements of Operations
Three months ended April 30, 2001 (Unaudited) and
April 30, 2000 (Unaudited) |                                                                                   | 2          
|                               |         | Consolidated Statements of Operations
Nine months ended April 30, 2001 (Unaudited) and
April 30, 2000 (Unaudited)  |                                                                                   | 3          
|                               |         | Consolidated Statements of Cash Flows
Nine months ended April 30, 2001 (Unaudited) and
April 30, 2000 (Unaudited)  |                                                                                   | 4          
|                               |         | Notes to Consolidated Financial Statements                                                                         |                                                                                   | 5-6        
|                               | Item 2. |                                                                                                                    | Management's Discussion and Analysis of Financial Condition and Operating Results |            
|PART II.  OTHER INFORMATION    |         |                                                                                                                   
|                               | Item 1. |                                                                                                                    | Legal Proceedings                                                                 |            
|                               | Item 2. |                                                                                                                    | Changes in Securities                                                             |            
|                               | Item 3. |                                                                                                                    | Defaults Upon Senior Securities                                                   |            
|                               | Item 4. |                                                                                                                    | Submission of Matters to a Vote of Security Holders                               |            
|                               | Item 5. |                                                                                                                    | Other Information                                                                 |            
|                               | Item 6. |                                                                                                                    | Exhibits and Reports on Form 8-K                                                  |            

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ITEM 1.

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

|                                                                               |                                                                                                                         | April 30,
2001 |                             | July 31,
2000 |  
|------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------- | -------------- | --------------------------- | ------------- | -
|
|ASSETS                                                                         |                                                                                                                         |                |                             |               |  
|Current assets:                                                                |                                                                                                                         |                |                             |               |  
|                                                                               | Cash and cash equivalents                                                                                               |                | $                           | 248           |  
|                                                                               | Accounts receivable, less allowance for doubtful accounts of $930 and $563                                              |                |                             | 11,216        |  
|                                                                               | Inventories                                                                                                             |                |                             | 49,033        |  
|                                                                               | Prepaid expenses                                                                                                        |                |                             | 282           |  
|                                                                               | Income taxes receivable                                                                                                 |                |                             | -0-           |  
|                                                                               | Deferred income taxes                                                                                                   |                |                             | 2,273         |  
|                                                                               |                                                                                                                         |                |                             |               |  
|                                                                               |                                                                                                                         |                | Total current assets        |               |  
|Fixed Assets:                                                                  |                                                                                                                         |                |                             |               |  
|                                                                               | Property, plant and equipment (net)                                                                                     |                |                             | 5,886         |  
|                                                                               | Rental equipment fleet (net)                                                                                            |                |                             | 23,178        |  
|                                                                               | Leased equipment fleet (net)                                                                                            |                |                             | 552           |  
|                                                                               |                                                                                                                         |                |                             |               |  
|                                                                               |                                                                                                                         |                | Total fixed assets          |               |  
|Intangibles and other assets, net of accumulated amortization of $776 and $683 |                                                                                                                         |                | 2,770                       |               |  
|                                                                               |                                                                                                                         |                |                             |               |  
|Total assets                                                                   |                                                                                                                         | $              | 95,437                      |               | $
|                                                                               |                                                                                                                         |                |                             |               |  
|LIABILITIES & STOCKHOLDERS' EQUITY                                             |                                                                                                                         |                |                             |               |  
|Current liabilities:                                                           |                                                                                                                         |                |                             |               |  
|                                                                               | Borrowings under floor plan financing                                                                                   |                | $                           | 14,633        |  
|                                                                               | Short-term borrowings                                                                                                   |                |                             | 53,965        |  
|                                                                               | Accounts payable                                                                                                        |                |                             | 9,171         |  
|                                                                               | Accrued payroll and vacation                                                                                            |                |                             | 787           |  
|                                                                               | Other accrued liabilities                                                                                               |                |                             | 1,035         |  
|                                                                               | Capital lease obligation                                                                                                |                |                             | 4             |  
|                                                                               |                                                                                                                         |                |                             |               |  
|                                                                               |                                                                                                                         |                | Total current liabilities   |               |  
|Deferred income taxes                                                          |                                                                                                                         |                | 2,273                       |               |  
|Capital lease obligation                                                       |                                                                                                                         |                | 938                         |               |  
|Long-term borrowings                                                           |                                                                                                                         |                | 28                          |               |  
|Deferred lease income                                                          |                                                                                                                         |                | 973                         |               |  
|                                                                               |                                                                                                                         |                |                             |               |  
|                                                                               |                                                                                                                         |                | Total long-term liabilities |               |  
|                                                                               |                                                                                                                         |                |                             |               |  
|Total liabilities                                                              |                                                                                                                         |                | 83,807                      |               |  
|                                                                               |                                                                                                                         |                |                             |               |  
|Stockholders' equity:                                                          |                                                                                                                         |                |                             |               |  
|                                                                               | Preferred stock10,000,000 shares authorized; none issued and outstanding                                               |                |                             |              |  
|                                                                               | Common stock$.001 par value; 20,000,000 shares authorized; 3,403,162 and 3,353,162 issued and outstanding respectively |                |                             | 4             |  
|                                                                               | Additional paid-in capital                                                                                              |                |                             | 15,894        |  
|                                                                               | Retained earnings                                                                                                       |                |                             | (3,424        | )
|                                                                               | Less common stock in treasury, at cost (130,300 and 180,300 respectively)                                               |                |                             | (844          | )
|                                                                               |                                                                                                                         |                |                             |               |  
|                                                                               |                                                                                                                         |                | Total stockholders' equity  |               |  
|                                                                               |                                                                                                                         |                |                             |               |  
|Total liabilities and stockholders' equity                                     |                                                                                                                         | $              | 95,437                      |               | $
|                                                                               |                                                                                                                         |                |                             |               |  

See accompanying notes to financial statements.

1

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

|                                                                             |                  | Three Months Ended
April 30, |       
|---------------------------------------------------------------------------- | ---------------- | ---------------------------- | ------
|
|Net revenue                                                                  |                  | $                            | 33,641
|Cost of revenues                                                             |                  |                              | 31,283
|                                                                             |                  |                              |       
|Gross profit                                                                 |                  |                              | 2,358 
|Selling, general and administrative expenses                                 |                  |                              | 3,117 
|                                                                             |                  |                              |       
|Operating (loss) income                                                      |                  |                              | (759  
|Other income (expense):                                                      |                  |                              |       
|                                                                             | Interest expense |                              |       
|                                                                             | Other income     |                              |       
|                                                                             |                  |                              |       
|Loss before taxes                                                            |                  |                              | (2,076
|Income tax (expense) benefit                                                 |                  |                              | (3,043
|                                                                             |                  |                              |       
|Net loss                                                                     |                  | $                            | (5,119
|                                                                             |                  |                              |       
|Basic loss per common share                                                  |                  | $                            | (1.53 
|                                                                             |                  |                              |       
|Average outstanding common shares for basic loss per share                   |                  |                              | 3,371 
|                                                                             |                  |                              |       
|Average outstanding common shares and equivalents for diluted loss per share |                  |                              | 3,371 
|                                                                             |                  |                              |       
|Diluted loss per share                                                       |                  | $                            | (1.53 
|                                                                             |                  |                              |       

See
accompanying notes to financial statements.

2

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

|                                                                             |                  | Nine Months Ended
April 30, |        
|---------------------------------------------------------------------------- | ---------------- | --------------------------- | -------
|
|Net revenue                                                                  |                  | $                           | 105,723
|Cost of revenues                                                             |                  |                             | 95,550 
|                                                                             |                  |                             |        
|Gross profit                                                                 |                  |                             | 10,173 
|Selling, general and administrative expenses                                 |                  |                             | 9,473  
|                                                                             |                  |                             |        
|Operating income                                                             |                  |                             | 700    
|Other income (expense):                                                      |                  |                             |        
|                                                                             | Interest expense |                             |        
|                                                                             | Other income     |                             |        
|                                                                             |                  |                             |        
|Loss before taxes                                                            |                  |                             | (2,671 
|Income tax (expense) benefit                                                 |                  |                             | (292   
|                                                                             |                  |                             |        
|Net loss                                                                     |                  | $                           | (2,963 
|                                                                             |                  |                             |        
|Basic loss per common share                                                  |                  | $                           | (0.88  
|                                                                             |                  |                             |        
|Average outstanding common shares for basic loss per share                   |                  |                             | 3,358  
|                                                                             |                  |                             |        
|Average outstanding common shares and equivalents for diluted loss per share |                  |                             | 3,358  
|                                                                             |                  |                             |        
|Diluted loss per share                                                       |                  | $                           | (0.88  
|                                                                             |                  |                             |        

See
accompanying notes to financial statements.

3

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

|                                                                      |                                                                                           | Nine Months Ended
April 30,           |                                
|--------------------------------------------------------------------- | ----------------------------------------------------------------------------------------- | ------------------------------------- | -------------------------------
|
|Cash flows from operating activities:                                 |                                                                                           |                                       |                                
|                                                                      | Net loss                                                                                  |                                       | $                              
|                                                                      | Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |                                       |                                
|                                                                      |                                                                                           | Depreciation                          |                                
|                                                                      |                                                                                           | Amortization                          |                                
|                                                                      |                                                                                           | Gain on sale of fixed assets          |                                
|                                                                      |                                                                                           | Stock in lieu of services rendered    |                                
|                                                                      |                                                                                           | Compensation related to stock options |                                
|                                                                      |                                                                                           | Changes in assets and liabilities:    |                                
|                                                                      |                                                                                           |                                       | Accounts receivable            
|                                                                      |                                                                                           |                                       | Inventories                    
|                                                                      |                                                                                           |                                       | Leased equipment, net          
|                                                                      |                                                                                           |                                       | Inventory floor-plan financing 
|                                                                      |                                                                                           |                                       | Short-term financing           
|                                                                      |                                                                                           |                                       | Prepaid expenses               
|                                                                      |                                                                                           |                                       | Accounts payable               
|                                                                      |                                                                                           |                                       | Accrued payroll and vacation   
|                                                                      |                                                                                           |                                       | Other accrued liabilities      
|                                                                      |                                                                                           |                                       | Deferred lease income          
|                                                                      |                                                                                           |                                       | Deferred income taxes          
|                                                                      |                                                                                           |                                       | Deferred gain                  
|                                                                      |                                                                                           |                                       | Income taxes receivable/payable
|                                                                      |                                                                                           |                                       |                                
|                                                                      | Net cash (used in) provided by operating activities                                       |                                       |                                
|                                                                      |                                                                                           |                                       |                                
|Cash flow from investing activities:                                  |                                                                                           |                                       |                                
|                                                                      | Purchase of fixed assets                                                                  |                                       |                                
|                                                                      | Purchase/sales of rental equipment, net                                                   |                                       |                                
|                                                                      | Proceeds on sale of fixed assets                                                          |                                       |                                
|                                                                      | Purchase of other assets                                                                  |                                       |                                
|                                                                      |                                                                                           |                                       |                                
|                                                                      | Net cash used in investing activities                                                     |                                       |                                
|                                                                      |                                                                                           |                                       |                                
|Cash flows from financing activities:                                 |                                                                                           |                                       |                                
|                                                                      | Principal payments on capital leases                                                      |                                       |                                
|                                                                      | Convertible Debt                                                                          |                                       |                                
|                                                                      | Long-term repayments                                                                      |                                       |                                
|                                                                      |                                                                                           |                                       |                                
|                                                                      | Net cash provided by financing activities                                                 |                                       |                                
|                                                                      |                                                                                           |                                       |                                
|Decrease in cash and cash equivalents                                 |                                                                                           |                                       | (576                           
|Cash and cash equivalents at beginning of period                      |                                                                                           |                                       | 824                            
|                                                                      |                                                                                           |                                       |                                
|Cash and cash equivalents at end of period                            |                                                                                           | $                                     | 248                            
|                                                                      |                                                                                           |                                       |                                
|Supplemental disclosures of cash flow information:                    |                                                                                           |                                       |                                
|Cash paid during the period for:                                      |                                                                                           |                                       |                                
|                                                                      | Interest                                                                                  |                                       | $                              
|                                                                      | Income taxes                                                                              |                                       |                                
|Supplemental schedule of non-cash investing and financing activities: |                                                                                           |                                       |                                
|                                                                      | Capital leases reclassified to operating leases                                           |                                       |                                
|                                                                      | Re-issuance of treasury stock                                                             |                                       |                                

See accompanying notes to financial statements.

4

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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, 2000 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, 2000 filed with the Securities and Exchange Commission.

2.  Inventories

Inventories consist of the following:

April 30,
2001

July 31,
2000Equipment (net of reserve allowances of $3,732 and $4,770 respectively):New equipment

$
33,482

$
40,148Used equipment


6,058


7,442Parts (net of reserve allowances of $444 and $522 respectively)


9,493


10,707$
49,033

$
58,297


3.  Fixed Assets

Fixed Assets consist of the following:

April 30,
2001

July 31,
2000Operating property, plant and equipment:Land

$
500

$
500Buildings


1,706


5,334Machinery and equipment


4,042


4,030Office furniture and fixtures


2,377


2,360Computer hardware and software


1,452


1,869Vehicles


2,018


1,428Leasehold improvements


922


55013,017


16,071Less: accumulated depreciation


(7,131
)

(6,621
)Property, plant, and equipment (net)

$
5,886

$
9,450Rental equipment fleet

$
30,244

$
32,493Less: accumulated depreciation


(7,066
)

(6,417
)Rental equipment (net)

$
23,178

$
26,076Leased equipment fleet

$
565

$
5,481Less: accumulated amortization


(13
)

(506
)Leased equipment fleet (net)

$
552

$
4,975


5

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4.  Convertible Debt

In September 2000, the Company sold a total of $182,000 convertible promissory notes pursuant to Rule 506 of Regulation D. The notes are due on
or before December 31, 2001 and accrue interest at the rate of 10% payable in stock after March 1, 2001, payable upon the earlier of maturity or conversion. The Notes are presently
convertible into shares of Common Stock at a Conversion Price of $3.00 per share.

5.  Stock Options

On March 22, 2001, the Board of Directors authorized the issuance of 1,200,000 stock options to certain employees and board members with an exercise
price of $0.53 per option. These options vested immediately and resulted in compensation expense amounting to $112,800 for the quarter.

6.  Segment Information

In fiscal 1999, the Company adopted Statement of Financial Accounting Standards No. 131 (SFAS 131), "Disclosures about Segments of an Enterprise and
Related Information," which requires the reporting of certain financial information by business segment. 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:

Business
Component
Net Revenues

3 Months
Ended
April 30,
2001

3 Months
Ended
April 30,
2000

9 Months
Ended
April 30,
2001

9 Months
Ended
April 30,
2000Equipment Sales

$
22,328

$
21,989

$
63,353

$
65,755Equipment Rental


3,263


4,538


15,651


18,153Product Support


8,050


8,813


26,719


27,484Totals

$
33,641

$
35,340

$
105,723

$
111,392


Business
Component
Gross Margins

3 Months
Ended
April 30,
2001

3 Months
Ended
April 30,
2000

9 Months
Ended
April 30,
2001

9 Months
Ended
April 30,
2000Equipment Sales

$
1,073

$
789

$
2,147

$
2,683Equipment Rental


363


543


3,393


4,301Product Support


922


1,904


4,633


5,037Totals

$
2,358

$
3,236

$
10,173

$
12,021


There
are no inter-segment revenues. Asset information by reportable segment is not reported, since the Company does not produce such information internally.

7.  Subsequent Events

On May 15, 2001 the Company announced that it had merged with SupplyPoint, Inc., based in San Jose, California conditioned on certain closing
requirements, including, but not limited to, approval by Deutsche Financial Services and Case Corporation.

6

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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 and Six Months ended April 30, 2001 compared to the Three Months and Six Months ended April 30, 2000.

Revenues for the three-month period ended April 30, 2001 decreased 4.8% to $33.6 million compared with $35.3 million for the three-month period
ended April 30, 2000. Revenues were down from the prior year's third quarter in the rental, parts and service departments. The decrease in sales was primarily due to slowing of the economy over
the past year.

Revenues
for the nine-month period ended April 30, 2001 decreased $5,669,000 or approximately 5.1% over the nine-month period ended April 30, 2000. The decrease was due
primarily to the consolidation of stores and a slowing economy during the past year. For the nine-month period ended April 30, 2000, revenues in all departments, except rentals, were down from
the same period in the prior year.

The
Company's gross profit margin of 7.0% for the three-month period ended April 30, 2001 was down from the prior year comparative period margin of 9.2%. The decrease in gross
profit margins was partly the result of increased pressure from an economic downturn in the equipment industry. For the nine-month period ended April 30, 2001, the Company's gross margin was
9.6%, down from the 10.8% gross margin for the nine-month period ended April 30, 2000 due to the same factors mentioned previously.

For
the three-month period ended April 30, 2001, selling, general, and administrative ("SG&A") expenses, as a percentage of sales, were 9.3%, slightly up from 9.1% for the
prior year's third quarter. This increase in SG&A expenses is attributable to one time costs associated with compensation expense of $112,800 related to the issue of stock options. SG&A expenses for
the nine-month period ended April 30, 2001 were 9.0%, slightly up from the 8.9% for the nine-month period ended April 30, 2000 due to the same factors mentioned previously.

Interest
expense for the three months ended April 30, 2001 of $1,425,000 was down from the $1,641,000 in the prior year comparative period. This decrease is the result of lower
inventory levels in the quarter. Interest expense for the nine-month period ended April 30, 2001 was $4,654,000 compared to $4,386,000 for the nine-month period ended April 30, 2000, due
to higher average interest rates during the first half of the year.

The
provision for taxes in the third quarter relates to re-establishing a valuation allowance related to deferred tax assets. The effective tax rate for the nine-months ended
April 30, 2001, differs from the

7

---

expected rate primarily due to increasing the valuation allowance for the amount of the tax benefit of the net operating loss during the period by approximately $900,000. As of April 30, 2001,
the Company has an accumulative valuation allowance offsetting the deferred tax asset of approximately $3,800,000.

The
Company had a net loss for the quarter ended April 30, 2001 of $3,117,000 or $(1.53) per (basic and diluted) share compared with a net loss of $947,000 or $(0.29) per
(basic and diluted) for the prior year's third quarter. The slowing of the economy and the equipment industry have contributed to these losses. For reasons stated in the previous paragraph, the
provision for taxes has also affected the net loss for the three-month period ended April 30, 2001. For the nine-month period ended April 30, 2001, the Company reported a loss of $0.88
per share (basic and diluted) compared with a net loss of $0.43 per (basic and diluted) share for the nine-month period ended April 30, 2000. This loss is a result of the factors previously
mentioned.

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 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 April 30, 2001, the Company was
indebted under manufacturer-provided floor planning arrangements in the aggregate amount of $14,633,000.

The
Company recently amended its inventory flooring and operating line of credit through DFS. The amended DFS credit facility matures December 28, 2001 and is a floating rate
facility based on prime with rates between 0.75% under prime to 2.25% over 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 April 30, 2001, approximately $53,778,000 was outstanding under the DFS credit facility.

As
of October 31,2000, the Company and DFS signed an amendment to the existing loan and security agreement. The amendment waived all prior defaults under the agreement and
established revised financial covenants to be measured at the Company's second and fourth quarters. In addition, the amendment included several, periodic mandatory reductions in the credit limit.

During
the quarter ended April 30, 2001, cash and cash equivalents decreased by $1,317,000. For the nine-month period ended April 30, 2001, cash and cash equivalents
decreased by $576,000. The Company had negative cash flow from operating activities for the first nine months reflecting an increase in short term financing. Purchases of fixed assets during the
period were related mainly to the purchase of vehicles company wide and leasehold improvements to the Portland branch facility.

8

---

The Company's cash and cash equivalents of $248,000 as of April 30, 2001 and available credit facilities are considered sufficient to support current 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 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 cyclical 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.

The
Company's sales and profit margins can be affected by Case Corporation because approximately 50% of the Company's product sales are products provided by Case Corporation.

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PART II.  OTHER INFORMATION

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



ITEM 5.OTHER INFORMATION



ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K





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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 14, 2001                   |  | By: |  | /s/MARK J. WRIGHTMark J. Wright Vice President of Finance and
Chief Financial Officer

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