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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 October 31, 2000

Commission File Number 0-26230

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

|Delaware(State or other jurisdiction of
incorporation or organization)                |  | 91-1688446(I.R.S. Employer
I.D. number)
|------------------------------------------------------------------------------------- |  | ---------------------------------------
|4601 NE 77th Avenue, Suite 200, Vancouver, WA(Address of principal executive offices) |  | 98662(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

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

3,353,162


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WESTERN POWER & EQUIPMENT CORP.

INDEX

|         |  |                       |  |                                                                                                                       |  | Page Number
|-------- |  | --------------------- |  | --------------------------------------------------------------------------------------------------------------------- |  | -----------
|PART I.  |  | FINANCIAL INFORMATION |  |                                                                                                                      
|         |  | Item 1.               |  | Financial Statements                                                                                                  |  |            
|         |  |                       |  | Consolidated Balance Sheet
October 31, 2000 (Unaudited) and July 31, 2000                                             |  | 1          
|         |  |                       |  | Consolidated Statement of Operations
Three months ended October 31, 2000 (Unaudited) and October 31, 1999 (Unaudited) |  | 2          
|         |  |                       |  | Consolidated Statement of Cash Flows
Three months ended October 31, 2000 (Unaudited) and October 31, 1999 (Unaudited) |  | 3          
|         |  |                       |  | Notes to Consolidated Financial Statements                                                                            |  | 4 - 5      
|         |  | Item 2.               |  | Management's Discussion and Analysis of Financial Condition and Operating Results                                     |  | 6 - 7      
|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                                                                                                     |  | 8          
|         |  | Item 6.               |  | Exhibits and Reports on Form 8-K                                                                                      |  | 8          
|         |  |                       |  |                                                                                                                       |  |            

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## 

ITEM 1.  FINANCIAL STATEMENTS

WESTERN POWER & EQUIPMENT CORP.

CONSOLIDATED BALANCE SHEET

(Dollars in thousands)

|                                                                               |                                                                                              | October 31,
2000            |         | July 31,
2000 |       
|------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------- | --------------------------- | ------- | ------------- | ------
|
|ASSETS                                                                         |                                                                                             
|Current assets:                                                                |                                                                                              |                             |         |               |       
|                                                                               | Cash and cash equivalents                                                                    |                             | $       | 388           |       
|                                                                               | Accounts receivable, less allowance for doubtful accounts of $724 and $563                   |                             |         | 17,596        |       
|                                                                               | Inventories                                                                                  |                             |         | 56,458        |       
|                                                                               | Prepaid expenses                                                                             |                             |         | 146           |       
|                                                                               | Income taxes receivable                                                                      |                             |         | 122           |       
|                                                                               | Deferred income taxes                                                                        |                             |         | 2,273         |       
|                                                                               |                                                                                              |                             |         |               |       
|                                                                               |                                                                                              | Total current assets        |         |               | 76,983
|Fixed Assets:                                                                  |                                                                                              |                             |         |               |       
|                                                                               | Property, plant and equipment (net)                                                          |                             |         | 5,983         |       
|                                                                               | Rental equipment fleet (net)                                                                 |                             |         | 25,250        |       
|                                                                               | Leased equipment fleet (net)                                                                 |                             |         | 4,921         |       
|                                                                               |                                                                                              |                             |         |               |       
|                                                                               |                                                                                              | Total fixed assets          |         |               | 36,154
|Intangibles and other assets, net of accumulated amortization of $601 and $683 |                                                                                              |                             | 2,833   |               |       
|                                                                               |                                                                                              |                             |         |               |       
|Total assets                                                                   |                                                                                              | $                           | 115,970 |               | $     
|                                                                               |                                                                                              |                             |         |               |       
|LIABILITIES & STOCKHOLDERS' EQUITY                                             |                                                                                             
|Current liabilities:                                                           |                                                                                              |                             |         |               |       
|                                                                               | Borrowings under floor plan financing                                                        |                             | $       | 19,830        |       
|                                                                               | Short-term borrowings                                                                        |                             |         | 60,684        |       
|                                                                               | Accounts payable                                                                             |                             |         | 9,385         |       
|                                                                               | Accrued payroll and vacation                                                                 |                             |         | 825           |       
|                                                                               | Other accrued liabilities                                                                    |                             |         | 1,238         |       
|                                                                               | Capital lease obligation                                                                     |                             |         | 48            |       
|                                                                               |                                                                                              |                             |         |               |       
|                                                                               |                                                                                              | Total current liabilities   |         |               | 92,010
|Deferred income taxes                                                          |                                                                                              |                             | 2,273   |               |       
|Capital lease obligation                                                       |                                                                                              |                             | 900     |               |       
|Long-term borrowings                                                           |                                                                                              |                             | 28      |               |       
|Deferred lease income                                                          |                                                                                              |                             | 5,919   |               |       
|                                                                               |                                                                                              |                             |         |               |       
|                                                                               |                                                                                              | Total long-term liabilities |         |               | 9,120 
|                                                                               |                                                                                              |                             |         |               |       
|Total liabilities                                                              |                                                                                              |                             | 101,130 |               |       
|                                                                               |                                                                                              |                             |         |               |       
|Stockholders' equity:                                                          |                                                                                              |                             |         |               |       
|                                                                               | Preferred stock10,000,000 shares authorized; none issued and outstanding                    |                             |         |              |       
|                                                                               | Common stock$.001 par value; 20,000,000 shares authorized; 3,353,162 issued and outstanding |                             |         | 4             |       
|                                                                               | Additional paid-in capital                                                                   |                             |         | 16,005        |       
|                                                                               | Retained earnings                                                                            |                             |         | (1            | )     
|                                                                               | Less common stock in treasury, at cost (180,300 shares)                                      |                             |         | (1,168        | )     
|                                                                               |                                                                                              |                             |         |               |       
|                                                                               |                                                                                              | Total stockholders' equity  |         |               | 14,840
|                                                                               |                                                                                              |                             |         |               |       
|Total liabilities and stockholders' equity                                     |                                                                                              | $                           | 115,970 |               | $     
|                                                                               |                                                                                              |                             |         |               |       

See
accompanying notes to financial statements.

1

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WESTERN POWER & EQUIPMENT CORP.

CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

(Dollars in thousands, except per share amounts)

|                                                                                 |                  | Three Months Ended
October 31, |       
|-------------------------------------------------------------------------------- | ---------------- | ------------------------------ | ------
|
|Net revenue                                                                      |                  | $                              | 37,783
|Cost of revenues                                                                 |                  |                                | 32,925
|                                                                                 |                  |                                |       
|Gross profit                                                                     |                  |                                | 4,858 
|Selling, general and administrative expenses                                     |                  |                                | 3,280 
|                                                                                 |                  |                                |       
|Operating Income                                                                 |                  |                                | 1,578 
|Other income (expense):                                                          |                  |                                |       
|                                                                                 | Interest expense |                                |       
|                                                                                 | Other income     |                                |       
|                                                                                 |                  |                                |       
|Income before taxes                                                              |                  |                                | 755   
|Income tax provision                                                             |                  |                                | 294   
|                                                                                 |                  |                                |       
|Net income                                                                       |                  | $                              | 461   
|                                                                                 |                  |                                |       
|Basic earnings per common share                                                  |                  | $                              | 0.14  
|                                                                                 |                  |                                |       
|Average outstanding common shares for basic earnings per share                   |                  |                                | 3,353 
|                                                                                 |                  |                                |       
|Average outstanding common shares and equivalents for diluted earnings per share |                  |                                | 3,353 
|                                                                                 |                  |                                |       
|Diluted earnings per share                                                       |                  | $                              | 0.14  
|                                                                                 |                  |                                |       

See
accompanying notes to financial statements.

2

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WESTERN POWER & EQUIPMENT CORP.

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

(Dollars in thousands)

|                                                 |                                                                                   | Three Months Ended
October 31,     |                                
|------------------------------------------------ | --------------------------------------------------------------------------------- | ---------------------------------- | -------------------------------
|
|Cash flows from operating activities:            |                                                                                   |                                    |                                
|                                                 | Net income                                                                        |                                    | $                              
|                                                 | Adjustments to reconcile net income to net cash provided by operating activities: |                                    |                                
|                                                 |                                                                                   | Depreciation                       |                                
|                                                 |                                                                                   | Amortization                       |                                
|                                                 |                                                                                   | Gain on sale of fixed assets       |                                
|                                                 |                                                                                   | Changes in assets and liabilities: |                                
|                                                 |                                                                                   |                                    | Accounts receivable            
|                                                 |                                                                                   |                                    | Inventories                    
|                                                 |                                                                                   |                                    | Leased equipment, net          
|                                                 |                                                                                   |                                    | Inventory floor-plan financing 
|                                                 |                                                                                   |                                    | Short-term financing           
|                                                 |                                                                                   |                                    | Deferred income tax liability  
|                                                 |                                                                                   |                                    | Prepaid expenses               
|                                                 |                                                                                   |                                    | Accounts payable               
|                                                 |                                                                                   |                                    | Accrued payroll and vacation   
|                                                 |                                                                                   |                                    | Other accrued liabilities      
|                                                 |                                                                                   |                                    | Deferred lease income          
|                                                 |                                                                                   |                                    | Income taxes receivable/payable
|                                                 |                                                                                   |                                    | Other assets/liabilities       
|                                                 |                                                                                   |                                    |                                
|                                                 | Net cash 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 intangibles                                                           |                                    |                                
|                                                 |                                                                                   |                                    |                                
|                                                 | Net cash used in investing activities                                             |                                    |                                
|                                                 |                                                                                   |                                    |                                
|Cash flows from financing activities:            |                                                                                   |                                    |                                
|                                                 | Principal payments on capital leases                                              |                                    |                                
|                                                 | Long-term borrowings (repayments)                                                 |                                    |                                
|                                                 |                                                                                   |                                    |                                
|                                                 | Net cash used in financing activities                                             |                                    |                                
|                                                 |                                                                                   |                                    |                                
|Decrease in cash and cash equivalents            |                                                                                   |                                    | (436                           
|Cash and cash equivalents at beginning of period |                                                                                   |                                    | 824                            
|                                                 |                                                                                   |                                    |                                
|Cash and cash equivalents at end of period       |                                                                                   | $                                  | 388                            
|                                                 |                                                                                   |                                    |                                

See
accompanying notes to financial statements.

3

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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:

October 31,
2000

July 31,
2000Equipment (net of reserve allowances of 4,027 and 4,770 respectively):New equipment

$
39,571

$
40,148Used equipment


6,179


7,442Parts (net of reserve allowance of 560 and 522 respectively)


10,708


10,707$
56,458

$
58,297


3.  Fixed Assets

Fixed Assets consist of the following:

October 31,
2000

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

$
500

$
500Buildings


1,575


5,334Machinery and equipment


3,993


4,030Office furniture and fixtures


2,379


2,360Computer hardware and software


1,440


1,869Vehicles


1,897


1,428Leasehold improvements


664


55012,448


16,071Less: accumulated depreciation


(6,465
)

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

$
5,983

$
9,450Rental equipment fleet

$
32,300

$
32,493Less: accumulated depreciation


(7,050
)

(6,417
)Rental equipment (net)

$
25,250

$
26,076Leased equipment fleet

$
5,481

$
5,481Less: accumulated amortization


(560
)

(506
)Leased equipment fleet (net)

$
4,921

$
4,975


4

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4.  Short-term Borrowings

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. The amended DFS facility matures December 28, 2001 and is a floating rate facility based on prime with rates between 0.75% under prime to 0.25% over prime depending on the amount of
total debt leverage of the Company.

5.  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:

Three Months Ended
October 31,Business Component
Net Revenues

2000

1999Equipment Sales

$
17,724

$
21,031Equipment Rental


6,982


7,355Product Support


13,077


13,677Totals

$
37,783

$
42,063


5

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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 due to a number of risks and uncertainties, including but not limited to fluctuations in the construction, agricultural, and industrial sectors; the success of the Company's
entry into new markets; 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; the continued availability of financing; governmental regulations and environmental matters;
risks associated with regional, national, and world economies; and consummation of the merger and asset purchase transactions (see below). Any forward-looking statements should be considered in light
of these factors.

Results of Operations

The Three Months ended October 31, 2000 compared to the Three Months ended October 31, 1999.

Revenues for the three-month period ended October 31, 2000 decreased 10.2% to $37.8 million compared with $42.1 million for the three-month period ended
October 31, 1999. Revenues were down from the prior year's first quarter in every department. The decrease in sales was primarily due to the closure of four branches during the fiscal year ending July
31, 2000.

The
Company's gross profit margin of 12.9% for the three-month period ended October 31, 2000 was up from the prior year comparative period margin of 11.7%. The increase in gross
profit margins was partly the result of a higher concentration of overall business coming from the relatively higher margin rental, parts and service business.

For
the three-month period ended October 31, 2000, selling, general, and administrative ("SG&A") expenses, as a percentage of sales, were 8.7%, up from 8.2% for the prior year's
quarter. Some of the increased SG&A expenses are attributable to costs associated with the consolidation of the Kent facility and the ongoing expenses still being incurred for the vacated locations.

Interest
expense for the three months ended October 31, 2000 of $1,679,000 was up from the $1,492,000 in the prior year comparative period. This increase is the result of higher
average interest rates on the Deutsche Financial Services facility.

The
effective tax rate for the three months ended October 31, 2000 was approximately 39.0%, which is higher than the 33.2% effective tax rate for the prior year comparative period.
The effective tax rate in the current year more closely approximates statutory levels.

The
Company had net income for the quarter ended October 31, 2000 of $461,000 or $.14 per (basic and diluted) share compared with a net income of $125,000 or $0.04 per (basic and
diluted) for the prior year's first quarter. The first quarter of FY01 included a non-recurring pre-tax gain of $589,000 for the conversion of capital leases to operating leases.

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, the Deutsche Financial Services ("DFS") credit facility, and, with respect to acquisitions, secured loans from Case Corporation (now CNH
Global).

6

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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, 2000, the Company was indebted under
manufacturer-provided floor planning arrangements in the aggregate amount of $19,814,000.

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. 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 0.25% over prime depending on the amount of total debt
leverage of the Company.

Borrowings
under the DFS credit facility are secured by the Company's assets, including accounts receivable, parts, new equipment, rental fleet, and used equipment. The Company uses
this borrowing facility to 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, 2000,
approximately $60,684,000 was outstanding under the DFS credit facility.

During
the quarter ended October 31, 2000, cash and cash equivalents decreased by $436,000. 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 vehicles and leasehold
improvements to the Portland branch facility.

The
Company's cash and cash equivalents of $388,000 as of October 31, 2000 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 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.

7

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PART II.  OTHER INFORMATION

ITEM 5.  OTHER INFORMATION

On November 2, 2000, the Company announced the signing of a definitive Merger Agreement between the Company and e-Mobile, Inc. ("EMI") pursuant to which a
newly formed holding company will acquire both the Company and EMI. The Company simultaneously announced the signing of an Asset Purchase Agreement pursuant to which the current management of the
Company would purchase substantially all of the assets and assume substantially all of the liabilities of the Company. Consummation of these transactions is subject to shareholder approval, regulatory
approval, and other contractual obligations.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

A.

EXHIBITS.Exhibit 10.1

Amended and Restated Loan and Security Agreement between the Company and Deutsche Financial ServicesExhibit 10.2

Asset Purchase Agreement between the Company and Western Power & Equipment, L.L.C. (exhibits excluded)Exhibit 10.3

Agreement and Plan of Reorganization and Merger by and among the Company, e-Mobile, Inc., and e-Mobile Holdings, Inc. (exhibits excluded)Exhibit 27

Financial Data ScheduleB.

REPORTS ON FORM 8-K.None.


8

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SIGNATURE

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

|                  |  | WESTERN POWER & EQUIPMENT CORP.
|----------------- |  | -------------------------------
|December 15, 2000 |  | By:                            

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