```

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                   [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                     For the Quarter ended December 31, 2002

                             Commission file number:
                                    333-55284

                                  CRYOCON, INC.
        (Exact name of small business issuer as specified in its charter)

              Colorado84-1026503
     State or other jurisdiction of                  I.R.S. Employer
     incorporation or organization                  Identification No.

                              2773 Industrial Drive
                                Ogden, Utah 84401
                     (Address of principal executive office)

                                 (801) 395-2796
                 (Issuer's telephone number including area code)

                            (All Correspondence to:)
                               Brenda Lee Hamilton
                         Hamilton, Lehrer & Dargan P.A.
                          2 East Camino Real Suite 202
                            Boca Raton Florida 33432

           Securities registered pursuant to Section 12(g) of the Act:
      Title of each className of each exchange on which registered
            Common Stock                   OTC Bulletin Board

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 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.  [X] Yes     [ ] No

Indicate by check mark if disclosure of delinquent filers pursuant to ITEM 405
of Regulation S-K (§229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.

As of December 31, 2002, there were 25,216,680 shares of our common stock issued
and outstanding, which includes 70,000 shares held by us as Treasury Shares.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.  Not Applicable

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Transitional Small Business Disclosure Format (check one)   Yes [ ]   No [X]

                       TABLE OF CONTENTS TO ANNUAL REPORT
                                 ON FORM 10-QSB
                         QUARTER ENDED DECEMBER 31, 2002

                                     PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

        Consolidated Balance Sheets ........................................4-5
        Consolidated Statement of Operations.................................6
        Consolidated Statement of Stockholders' Equity (Deficit)............7-12
        Consolidated Statement of Cash Flows...............................13-14
        Notes to Unaudited Consolidated Financial Statements...............15-21

Item 2. Managements Discussion and Analysis and Plan of Operations...........22
Item 3. Controls and Procedures..............................................24

                                     PART II
OTHER INFORMATION

Item 1. Legal Proceedings....................................................25
Item 2. Changes in Securities & Use of Proceeds..............................27
Item 3. Defaults on Senior Securities........................................27
Item 4. Submission of Matters to a Vote of Security Holders..................27
Item 5. Other Information....................................................27
Item 6. Exhibits and Reports on Form 8-K.....................................28

                  (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)

                                       2

Forward-Looking Statements:

This quarterly report on Form 10-QSB for the period ending December 31, 2002,
contains forward-looking statements. Cryocon, Inc. is referred to in this report
as "we", "us" or "our." The words or phrases "would be," "will allow," "intends
to," "will likely result," "are expected to," "will continue," "is anticipated,"
"estimate," "project," or similar expressions are intended to identify
"forward-looking statements". Actual results could differ materially from those
projected in the forward-looking statements as a result of a number of risks and
uncertainties, including the risk factors set forth in our "Management's
Discussion and Analysis of Financial Condition and Results of Operations".
Statements made in this report are as of the date of the filing of this Form
10-QSB with the Securities and Exchange Commission and should not be relied upon
as of any subsequent date. Unless otherwise required by applicable law, we do
not undertake, and we specifically disclaim any obligation, to update any
forward-looking statements to reflect occurrences, developments, unanticipated
events or circumstances after the date of such statements.

**Item 1. Financial Statements**

The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-QSB pursuant to the rules and
regulations of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a complete presentation of
our financial position, results of operations, cash flows, an stockholders'
equity in conformity with accounting principles generally accepted in the United
States of America. In the opinion of management, all adjustments considered
necessary for a fair presentation of the results of operations and financial
position have been included and all such adjustments are of a normal recurring
nature.

Our unaudited consolidated balance sheet as of December 31, 2002 and our audited
restated consolidated balance sheet as of March 31, 2002 and the related
unaudited consolidated statements of operations and cash flows for the three and
nine month periods ended December 31, 2002 and 2001 and from inception from
October 20, 1999 through December 31, 2002, are attached hereto and incorporated
herein by this reference.

                                       3
**CRYOCON, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                        CONSOLIDATED FINANCIAL STATEMENTS
                      December 31, 2002 and March 31, 2002****CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
                           Consolidated Balance Sheets

                                  ASSETS

                                             December 31,      March 31,
                                                2002             2002
                                              ---------      ------------
                                             (Unaudited)      (Restated)
CURRENT ASSETS
   Cash                                       $   9,164     $        2,914
   Accounts receivable, net                      17,114             34,850
   Accounts receivable, related party             4,797                  -
   Deposits and prepaid expenses                 16,556             11,703
   Inventory                                        101                  -
                                              ---------      -------------
     Total Current Assets                        47,732             49,467
                                              ---------      -------------
PROPERTY AND EQUIPMENT, NET                     111,405            135,880
                                              ---------      -------------
OTHER ASSETS
   Patents, trademarks and licenses, net        172,097            239,467
                                              ---------      -------------
     Total Other Assets                         172,097            239,467
                                              ---------      -------------
     TOTAL ASSETS                             $ 331,234      $     424,814
                                              =========      =============

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

                                       4

**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
                           Consolidated Balance Sheets

              LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

                                             December 31,       March 31,
                                                 2002             2002
                                           ---------------    -------------
                                             (Unaudited)        (Restated)

CURRENT LIABILITIES
   Accounts payable                        $       380,948    $     293,097
   Accrued expenses                              1,168,013        1,218,439
   Notes payable, related party                    130,000           37,000
   Current portion long-term debt                   65,445          125,874
   Stock subscription deposits                     101,200                -
                                           ---------------    -------------
     Total Current Liabilities                   1,845,606        1,674,410
                                           ---------------    -------------
LONG-TERM LIABILITIES
   Notes payable, related party                          -           50,000
   Long-term debt                                  105,412          144,983
                                           ---------------    -------------
     Total Long-Term Liabilities                   105,412          194,983
                                           ---------------    -------------
     TOTAL LIABILITIES                           1,951,018        1,869,393
                                           ---------------    -------------
STOCKHOLDERS' EQUITY (DEFICIT)
   Common stock: 50,000,000 shares
    authorized of no par value,
    25,216,680 and 21,140,680 shares
    issued, 25,146,680 and
    21,070,680 outstanding, respectively         9,165,006        8,708,866
   Treasury stock                                 (140,000)        (140,000)
   Additional paid in capital                    1,282,624          433,274
   Deficit accumulated during the
    development stage                          (11,927,414)     (10,446,719)
                                           ---------------    -------------
     Total Stockholders' Equity (Deficit)       (1,619,784)      (1,444,579)
                                           ---------------    -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
      (DEFICIT)                            $       331,234    $     424,814
                                           ===============    =============

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

                                       5

**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
                      Consolidated Statements of Operations
                                   (Unaudited)

                                                                                                 From
                                                                                             Inception on
                                            For the                       For the             October 20,
                                        Nine Months Ended            Three Months Ended      1999 Through
                                           December 31,                December 31,           December 31,
                                   --------------------------   --------------------------   ------------
                                      2002           2001          2002           2001           2002
                                   ------------   -----------   ------------   -----------   ------------
REVENUES                           $     44,657   $    30,191   $     12,430   $     3,791   $    266,493
                                   ------------   -----------   ------------   -----------   ------------
EXPENSES
   Cost of sales                         13,025        16,731          6,281         3,066        101,006
   Advertising                                -        19,539              -             -        461,331
   Bad debt expense                           -         9,000              -             -         43,875
   Depreciation and amortization        114,811       177,358         39,436        59,120        596,703
   Loss on disposal of assets             1,169             -              -             -        278,260
   Loss on forfeiture of assets               -       227,388              -             -        614,498
   Impairment of goodwill                     -       419,198              -             -        600,673
   Financing expense                    627,887             -              -             -        627,887
   General and administrative           773,471     2,537,214        237,998     1,111,809      8,455,671
                                   ------------   -----------   ------------   -----------   ------------
     Total Expenses                   1,530,363     3,406,428        283,715     1,173,995     11,779,904
                                   ------------   -----------   ------------   -----------   ------------
OPERATING LOSS                       (1,485,706)   (3,376,237)      (271,285)   (1,170,204)   (11,513,411)
                                   ------------   -----------   ------------   -----------   ------------
OTHER INCOME (EXPENSE)
   Interest income                          580           304              -           299          5,156
   Other income                               -         9,687              -             -          5,188
   Interest expense                     (40,919)      (65,943)        (9,569)        7,221       (885,702)
                                   ------------   -----------   ------------   -----------   ------------
     Total Other Income (Expense)       (40,339)      (55,952)        (9,569)        7,520       (875,358)
                                   ------------   -----------   ------------   -----------   ------------
NET LOSS BEFORE
 EXTRAORDINARY ITEM                  (1,526,045)   (3,432,189)      (280,854)   (1,162,684)    12,388,769)
EXTRAORDINARY ITEM
   Gain on extinguishment of debt        45,350             -         45,350             -        461,355
                                   ------------   -----------   ------------   -----------   ------------
     Total Extraordinary Items           45,350             -         45,350             -        461,355
                                   ------------   -----------   ------------   -----------   ------------
NET LOSS                           $ (1,480,695)  $(3,432,189)  $   (235,504)  $(1,162,684)  $(11,927,414)
                                   ============   ===========   ============   ===========   ============
BASIC LOSS PER SHARE
Net loss per share before
 extraordinary item                $      (0.07)  $     (0.17)  $      (0.01)  $     (0.06)
Extraordinary item                        (0.00)        (0.00)         (0.00)        (0.00)
                                   ------------   -----------   ------------   -----------
Net loss per share                 $      (0.07)  $     (0.17)  $      (0.01)  $     (0.06)
                                   ============   ===========   ============   ===========
WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING                  22,762,578    20,205,245     23,275,908    20,761,280
                                   ============   ===========   ============   ===========

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

                                       6

**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
            Consolidated Statement of Stockholders' Equity (Deficit)

                                                                                                     Deficit
                                      Common Stock                                                  Accumulated
                                 --------------------         Additional                             During the
                                                               Paid in       Treasury    Deferred   Development
                                 Shares          Amount        Capital        Stock     Consulting     Stage
                               ------------   ------------   ------------  -----------  ----------  -----------
Balance at inception on
 October 20, 1999                         -   $          -   $          -  $         -  $        -  $         -
Issuance of common stock
 to founders for services at
 $0.00 per share                      1,000              -              -            -           -            -
Issuance of common stock
 to founders for services at
 $0.00 per share                    524,000              -              -            -           -            -
Issuance of common stock
 to founders for services
 and intangible assets at
 $0.00 per share                  9,700,000              -              -            -           -            -
Issuance of common stock
 for services at $0.75 per
 share                              100,000         75,000              -            -           -            -
Issuance of common stock
 for cash at $0.50 per share         10,000          5,000              -            -           -            -
Issuance of common stock
 for services at $0.50 per
 share                                5,000          2,500              -            -           -            -
Issuance of common stock
 for cash at $0.50 per share         10,000          5,000              -            -           -            -
Issuance of common stock
 for cash at $0.50 per share          4,000          2,000              -            -           -            -
Issuance of common stock
 for services at $0.50 per
 share                               16,000          8,000              -            -           -            -
Issuance of common stock
 for services at $0.50 per
 share                              100,000         75,000              -            -           -            -
Issuance of common stock
 for services at $0.75 per
 share                              500,000        375,000              -            -           -            -
Issuance of common stock
 for cash at $1.00 per share         10,000         10,000              -            -           -            -
                               ------------   ------------   ------------  -----------  ----------  -----------
Balance Forward                  10,980,000   $    557,500   $          -  $         -  $        -  $         -
                               ------------   ------------   ------------  -----------  ----------  -----------

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

                                       7

**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
            Consolidated Statement of Stockholders' Equity (Deficit)

                                                                                                     Deficit
                                      Common Stock                                                  Accumulated
                                 --------------------         Additional                             During the
                                                               Paid in       Treasury    Deferred   Development
                                 Shares          Amount        Capital        Stock     Consulting     Stage
                               ------------   ------------   ------------  -----------  ----------  -----------
Balance Forward                  10,980,000   $    557,500   $             $         -  $        -  $         -
Issuance of common stock
 for cash at $1.00 per share         10,000         10,000              -            -           -            -
Issuance of common stock
 for cash at $1.00 per share         10,000         10,000              -            -           -            -
Additional interest recorded
 on convertible debentures                -        514,050              -            -           -            -
Net loss from inception on
 October 20, 1999 through
 March 31, 2000                           -              -              -            -           -   (1,583,981)
                               ------------   ------------   ------------  -----------  ----------  -----------
Balance, March 31, 2000          11,000,000      1,091,550              -            -           -   (1,583,981)

Recapitalization                  1,237,724              -              -            -           -            -
Warrants issued below
 market value                             -        980,000              -            -           -            -
Issuance of common stock
 upon exercise of options
 at $0.50 per share                  17,500          8,750              -            -           -            -
Issuance of common stock
 for services at $5.375 per
 share                               10,000         53,750              -            -           -            -
Issuance of common stock
 upon exercise of options at
 $0.50 per share                     31,650         15,825              -            -           -            -
Issuance of common stock
 for convertible debentures
 at $0.01 per share               2,880,000         28,800              -            -           -            -
Issuance of common stock
 for convertible debentures
 at $0.50 per share               1,294,000        647,000              -            -           -            -
Issuance of common stock
 for convertible debentures
 at $1.00 per share               1,355,437      1,355,437              -            -           -            -
Issuance of common stock
 for convertible debentures
 at $2.00 per share                 237,500        475,000              -            -           -            -
                               ------------   ------------   ------------  -----------  ----------  -----------
Balance Forward                  18,063,811   $  4,656,112   $          -  $         -  $        -  $(1,583,981)
                               ------------   ------------   ------------  -----------  ----------  -----------

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

                                       8

**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
            Consolidated Statement of Stockholders' Equity (Deficit)

                                                                                                     Deficit
                                      Common Stock                                                  Accumulated
                                 --------------------         Additional                             During the
                                                               Paid in       Treasury    Deferred   Development
                                 Shares          Amount        Capital        Stock     Consulting     Stage
                               ------------   ------------   ------------  -----------  ----------  -----------
Balance Forward                  18,063,811   $  4,656,112   $          -  $         -  $        -  $ 1,583,981)

Stock issuance costs                      -       (390,708)             -            -           -            -
Issuance of common stock
 for convertible debentures
 at $2.00 per share                 782,118      1,564,236              -            -           -            -
Issuance of common stock
 upon exercise of options at
 $0.50 per share                     13,250          6,625              -            -           -            -
Issuance of common stock
 for services at $2.25 per
 share                              300,000        675,000              -            -           -            -
Options issued below market
 value                                    -        268,110              -            -           -            -
Issuance of common stock
 upon exercise of options
 at $0.50 per share                   6,000          3,000              -            -           -            -
Issuance of common stock
 for services at $3.063 per
 share                                3,658         11,204              -            -           -            -
Issuance of common stock
 for services at $2.25 per
 share                               51,000        114,750              -            -           -            -
Issuance of common stock
 for services at $2.50 per
 share                              100,000        250,000              -            -           -            -
Net loss for the year ended
 March 31, 2001                           -              -              -            -           -   (6,104,246)
                               ------------   ------------   ------------  -----------  ----------  -----------
Balance, March 31, 2001          19,319,837      7,158,329              -     (140,000)          -   (7,688,227)

Issuance of common stock
 for xTool at $2.37 per share       250,000        593,750              -            -           -            -
Issuance of common stock
 for services at $2.10 per
 share                               20,000         42,000              -            -           -            -
Issuance of common stock
 for debt at $2.25 per share         25,000         56,250              -            -           -            -
                               ------------   ------------   ------------  -----------  ----------  -----------
Balance Forward                  19,614,837   $  7,850,329   $          -  $  (140,000) $        -  $(7,688,227)
                               ------------   ------------   ------------  -----------  ----------  -----------

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

                                       9

**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
            Consolidated Statement of Stockholders' Equity (Deficit)

                                                                                                     Deficit
                                      Common Stock                                                  Accumulated
                                 --------------------         Additional                             During the
                                                               Paid in       Treasury    Deferred   Development
                                 Shares          Amount        Capital        Stock     Consulting     Stage
                               ------------   ------------   ------------  -----------  ----------  -----------
Balance Forward                  19,614,837   $  7,850,329   $          -  $ (140,000)  $        -  $(7,688,227)
Issuance of common stock
 for services at $2.10 per
 share                              100,000        210,000              -            -           -            -
Issuance of common stock
 for warrants exercised at
 $0.10 per share                    150,000         15,000              -            -           -            -
Issuance of common stock
 in lieu of debt at $2.00 per
 share                              139,100        284,392              -            -           -            -
Issuance of common stock
 for services at $1.75 per
 share                              100,000        174,750              -            -           -            -
Issuance of common stock
 for cash at $1.75 per share         57,000        100,000              -            -           -            -
Issuance of common stock
 for warrants exercised at
 $1.50 per share                        243            365              -            -           -            -
Issuance of common stock
 for services at $0.06 per
 share                              600,000         36,000              -            -           -            -
Issuance of common stock
 for services at $0.12 per
 share                              125,000         15,000              -            -           -            -
Issuance of common stock
 for services at $0.10 per
 share                               12,500          1,250              -            -           -            -
Issuance of common stock
 for debt at $0.09 per share        142,000         12,780        167,700            -           -            -
Issuance of common stock
 for debt at $0.09 per share        100,000          9,000              -            -           -            -
Contributed capital (restated)            -              -        265,574            -           -            -
Net loss for the year ended
 March 31, 2002 (restated)                -              -              -            -           -   (2,758,492)
                               ------------   ------------   ------------  -----------  ----------  -----------
Balance, March 31, 2002
 (restated)                      21,140,680   $  8,708,866   $    433,274  $  (140,000) $        - $(10,446,719)
                               ------------   ------------   ------------  -----------  ----------  -----------

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

                                       10

**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
            Consolidated Statement of Stockholders' Equity (Deficit)

                                                                                                     Deficit
                                      Common Stock                                                  Accumulated
                                 --------------------         Additional                             During the
                                                               Paid in       Treasury    Deferred   Development
                                 Shares          Amount        Capital        Stock     Consulting     Stage
                               ------------   ------------   ------------  -----------  ----------  -----------

Balance Forward                  21,140,680   $  8,708,866   $    433,274  $  (140,000) $        - $(10,446,719)

Issuance of common stock
 for services at $0.08 per
 share (unaudited)                  500,000         40,000              -            -           -            -
Issuance of common stock
 for services at $0.25 per
 share (unaudited)                   75,000         18,750              -            -           -            -
Issuance of common stock
 for services at $0.09 per
 share (unaudited)                  100,000          9,000              -            -           -            -
Issuance of common stock
 for services at $0.30 per
 share (unaudited)                   70,000         21,000              -            -           -            -
Issuance of common stock
 for services at $0.27 per
 share (unaudited)                   25,000          6,750              -            -           -            -
Issuance of common stock
 for services at $0.27 per
 share (unaudited)                   20,000          5,400              -            -           -            -
Issuance of common stock
 for fixed assets at $0.10 per
 share (unaudited)                  190,000         19,000              -            -           -            -
Issuance of common stock
 for services at $0.27 per
 share (unaudited)                   20,000          5,400              -            -           -            -
Issuance of common stock
 for equipment at $0.10 per
 share (unaudited)                   50,000          5,000              -            -           -            -
Issuance of common stock
 for domain name at $0.10
 per share (unaudited)               10,000          1,000              -            -           -            -
                               ------------   ------------   ------------  -----------  ----------  -----------
Balance Forward                  22,200,680   $  8,840,166   $    433,274  $  (140,000) $        - $(10,446,719)
                               ------------   ------------   ------------  -----------  ----------  -----------

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

                                       11

**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
            Consolidated Statement of Stockholders' Equity (Deficit)

                                                                                                     Deficit
                                      Common Stock                                                  Accumulated
                                 --------------------         Additional                             During the
                                                               Paid in       Treasury    Deferred   Development
                                 Shares          Amount        Capital        Stock     Consulting     Stage
                               ------------   ------------   ------------  -----------  ----------  -----------
Balance Forward                  22,200,680   $  8,840,166   $    433,274  $  (140,000) $        - $(10,446,719)

Issuance of common stock
 for debt at $0.05 per share
 (unaudited)                      1,000,000         51,534              -            -           -            -
Issuance of common stock
 for services at $0.15 per
 share (unaudited)                   18,000          2,700              -            -           -            -
Issuance of common stock
 for deferred consulting at
 $0.10 per share (unaudited)         92,000          9,200              -            -      (9,200)           -
Additional expense for options
 issued (unaudited)                       -              -         37,995            -           -            -
Contributed capital
 (unaudited)                              -              -        804,788            -           -            -
Issuance of common stock
 for services at $0.09 per
 share (unaudited)                    6,000            540              -            -           -            -
Issuance of common stock
 for debt at $0.08 per share
 (unaudited)                      1,000,000         80,000              -            -           -            -
Issuance of common stock
 for cash at $0.10 per share
 (unaudited)                        200,000         20,000              -            -           -            -
Issuance of common stock
 for services at $0.16 per
 share (unaudited)                  200,000         32,000              -            -           -            -
Issuance of common stock
 for debt at $0.258 per
 share (unaudited)                  500,000        128,866              -            -           -            -
Amortization of deferred
 consulting (unaudited)                   -              -              -            -       9,200            -
Additional expense for
 options issued (unaudited)               -              -          6,567            -           -            -
Net loss for the nine months
 ended December 31, 2002
 (unaudited)                              -              -              -            -           -   (1,480,695)
                               ------------   ------------   ------------  -----------  ----------  -----------
Balance, December 31, 2002
 (unaudited)                     25,216,680   $  9,165,006   $  1,282,624  $  (140,000) $        - $(11,927,414)
                               ============   ============   ============  ===========  ==========  ===========

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

                                       12

**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
                Consolidated Statements of Cash Flows (Unaudited)

                                                                                From
                                                                             Inception on
                                                      For the                 October 20,
                                                   Nine Months Ended         1999 Through
                                                     December 31,            December 31,
                                             ----------------------------    ------------
                                                2002             2001            2002
                                             ------------    ------------    ------------

CASH FLOWS FROM OPERATING ACTIVITIES

    Net loss                                  $(1,480,695)   $ (3,432,189)   $(11,927,414)
    Adjustments to reconcile net loss to net
     cash used by operating activities:
    Amortization and depreciation                 114,811         177,358         596,703
    Financing expense                             627,887               -         627,887
    Options and warrants issued below
     market value                                  44,562               -       1,292,672
    Impairment of goodwill                              -         419,198         600,673
    Loss on sale and disposal of assets             1,169               -         278,260
    Gain on extinguishment of debt                (45,350)              -        (461,355)
    Loss on forfeiture of assets                        -         227,388         614,498
    Bad debt expense                                    -               -          11,000
    Amortization of deferred consulting             9,200               -           9,200
    Additional expense recorded on
     convertible debentures                             -               -         514,050
    Common stock issued for services
     rendered                                     141,540         753,207       2,304,213
    Common stock issued for domain name             1,000               -           1,000
    (Increase) decrease in:
    Accounts receivable                            17,736          (1,853)        (28,114)
    Accounts receivable - related                  (4,797)              -          (4,797)
    Deposits and prepaids                          (1,103)         27,339         (12,806)
    Inventory                                        (101)              -            (101)
    Increase (decrease) in:
    Common stock deposits                               -               -         284,392
    Accounts payable and accrued expenses          78,777         944,590       1,766,371
                                             ------------    ------------    ------------

      Net Cash Used by Operating Activities      (495,364)       (884,962)     (3,533,668)
                                             ------------    ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES

    Cash acquired from subsidiary                       -               -              77
    Purchase or development of intangibles              -               -        (449,000)
    Proceeds from sales of assets                       -          19,170          15,811
    Equipment purchases                            (4,285)         (2,661)       (390,106)
    Purchase of building                                -               -      (2,050,000)
                                             ------------    ------------    ------------

      Net Cash Provided (Used) by
       Investing Activities                        (4,285)         16,509      (2,873,218)
                                             ------------    ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES

    Issuance of common stock for cash              20,000         100,000         211,565
    Stock subscription deposits                   101,200               -         101,200
    Stock offering costs                                -               -        (390,708)
    Issuance of notes payable and debentures      385,699         801,695       7,012,159
    Payments made on notes payable                 (1,000)         (9,350)       (518,166)
                                             ------------    ------------    ------------

      Net Cash Provided by Financing
       Activities                             $   505,899    $    892,345    $  6,416,050
                                             ------------    ------------    ------------

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

                                       13
**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
                Consolidated Statements of Cash Flows (Continued)
                                   (Unaudited)

                                                                                From
                                                                             Inception on
                                                      For the                 October 20,
                                                   Nine Months Ended         1999 Through
                                                     December 31,            December 31,
                                             ----------------------------    ------------
                                                2002             2001            2002
                                             ------------    ------------    ------------

NET INCREASE (DECREASE) IN CASH               $     6,250    $     23,892    $      9,164

CASH AT BEGINNING OF PERIOD                         2,914           8,980               -
                                             ------------    ------------    ------------

CASH AT END OF PERIOD                         $     9,164    $     32,872    $      9,164
                                             ============   =============    ============

CASH PAID FOR:

   Interest                                   $         -    $         45    $    123,969
   Income taxes                               $         -    $          -    $          -

SCHEDULE OF NON-CASH FINANCING ACTIVITIES:

   Common stock issued for services rendered  $   141,540    $    753,207    $  2,304,213
   Common stock issued for domain name        $     1,000    $          -    $      1,000
   Common stock issued in lieu of debt        $   260,400    $     56,250    $    282,180
   Vehicles purchased under notes payable     $         -    $     35,215    $     65,549
   Common stock issued in conversion of
    convertible debentures                    $         -    $          -    $  4,070,473
   Common stock issued for fixed assets       $    24,000    $          -    $     24,000
   Common stock issued for deferred
    consulting                                $     9,200    $          -    $      9,200
   Common stock issued for investment
    in Xtool                                  $         -    $          -    $    593,750
   Contribution of capital by shareholders    $   804,788    $          -    $  1,238,062
   Options and warrants issued below market
    value                                     $    44,562    $          -    $  1,292,672
   Conversion of stock deposits to equity     $         -    $          -    $    284,391

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

                                       14

**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                      December 31, 2002 and March 31, 2002

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated financial statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted in accordance with such rules and regulations. The
information furnished in the interim condensed consolidated financial statements
include normal recurring adjustments and reflects all adjustments, which, in the
opinion of management, are necessary for a fair presentation of such financial
statements. Although management believes the disclosures and information
presented are adequate to make the information not misleading, it is suggested
that these interim condensed consolidated financial statements be read in
conjunction with the Company's most recent audited restated financial statements
and notes thereto included in its March 31, 2002 Annual Report on Form 10-KSB.
Operating results for the nine months ended December 31, 2002 are not
necessarily indicative of the results that may be expected for the year ending
March 31, 2003.

NOTE 2 - GOING CONCERN

The Company's consolidated financial statements are prepared using accounting
principles generally accepted in the United States of America applicable to a
going concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the Company does not have
significant cash or other material assets, nor does it have an established
source of revenues sufficient to cover its operating costs and to allow it to
continue as a going concern. Until that time, the stockholders or control
persons have committed to covering the operating costs of the Company.

To the extent that funds generated from operations does not cover operations,
the Company will have to raise additional working capital. No assurance can be
given that additional financing will be available, or if available, will be on
terms acceptable to the Company. If adequate working capital is not available,
the Company may be required to curtail its operations.

The consolidated financial statements do not include any adjustments relating to
the recoverability and classification of asset carrying amounts or the amount
and classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.

                                       15
**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                      December 31, 2002 and March 31, 2002

NOTE 3 - MATERIAL EVENTS

During the period from February 16, 2001 to March 1 2001, the Company raised
$278,200 through sale of 139,100 shares of common stock at $2.00 per share to
eight individuals. At the time of the securities sales, the Company believed
that the offer and sale of these securities were exempt from registration under
Section 4(2) of the Securities Act of 1933. The current shareholders received
the Company's periodic reports and were familiar with its operations and
financial condition. No public solicitation or general advertising was done in
connection with this sale and the Company did not pay any fees or commissions in
connection with the sales. Nonetheless, on April 30, 2001, the Securities and
Exchange Commission ("the Commission") indicated to the Company that the sale of
the shares which all occurred during the Commission's ongoing review of the
Company's Form SB-2 registration statement may have been in violation of the
registration provisions of the federal securities laws, specifically, Securities
Act of 1933 Section 5. During the month of July 2001, the Company filed an
amendment to the Form SB-2 Registration Statement to include (subject to the
Commission's review and clearance) the registration of the 139,100 shares along
with a proposed Rescission offer to the 8 investors that had invested in those
shares. As of March 31, 2002, the 139,100 shares of common stock were issued and
outstanding for the funds previously received. However, on July 12, 2002, the
Company affected the withdrawal of the Form SB-2 Registration Statement, which
included the proposed Rescission Offer submitted as part of that registration
statement.

As part of the Rescission Offer, in exchange for their shares, the investors
were offered a note payable from the Company, bearing interest at 12% per annum,
and secured by free trading shares equal to twice the number of shares
previously held. The securing stock was owned by the former Chief Executive
Officer/Founder of the Company. During the year ended March 31, 2001, four
shareholders accepted the above mentioned Rescission Offer and returned 70,000
shares of the Company's previously purchased restricted common stock valued at
$2.00 per share, or a cost of $140,000. During the year ended March 31, 2002,
the Company defaulted on the notes payable. As a result, the Company has caused
the free trading common shares to be transferred to the note holders. In a
previous period, the Company recorded the stock returned that is associated with
this transaction as treasury stock of $140,000 and the contribution of the free
trading shares for $120,000 in notes payable and $21,265 in accrued interest as
contributed capital. During the nine months ended December 31, 2002, the Company
recorded the balance of the remaining note payable of $20,000 and accrued
interest of $3,695 as contributed capital. As of December 31, 2002, all notes
payable and accrued interest relating to this transaction have been satisfied.

                                       16
**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                      December 31, 2002 and March 31, 2002

NOTE 3 - MATERIAL EVENTS (Continued)

During April 2002, the Company issued 500,000 shares of common stock to a
director for services valued at $40,000.

During April 2002, the Company issued 75,000 shares of common stock to a
director for services on the Company's board of directors valued at $18,750.

During April 2002, the Company issued 100,000 shares of common stock to a
director for services on the Company's board of directors valued at $9,000.

During June 2002, the Company issued 70,000 shares of common stock to the
Company's legal counsel for services valued at $21,000.

During June 2002, the Company recorded accrued compensation of $10,125 for
shares earned but not issued during the period to a director for services on the
Company's board of directors based on the market value of the shares owed at
June 30, 2002.

During June 2002, the Company recorded accrued compensation of $3,921 for shares
earned but not issued during the period to a director for services on the
Company's board of directors based on the market value of the shares owed at
June 30, 2002.

During June 2002, the Company recorded accrued compensation of $3,750 for shares
earned but not issued during the period to the Company's director of research
and development for services based on the market value of the shares owed at
June 30, 2002.

During July 2002, the Company (Licensor) entered into a License Agreement with
Licensee for the right to use the Company's Deep Cryogenic Solutions process
technology within the territory of New England and certain counties in New York.
Licensor retains title and ownership of the technology. Licensee agrees to pay a
royalty of 15% of all gross revenues related to the technology.

During August 2002, the Company issued 25,000 shares of common stock to a
consultant for services valued at $6,750.

During August 2002, the Company issued 20,000 shares of common stock to a
consultant for services valued at $5,400.

During August 2002, the Company issued 190,000 shares of common stock to an
independent contractor for fixed assets valued at $19,000. As of December 31,
2002, 37,500 of these shares valued at $3,750 were prepaid.

During August 2002, the Company issued 20,000 shares of common stock to a
consultant for services valued at $5,400.

During August 2002, the Company issued 50,000 shares of common stock to an
independent contractor for equipment valued at $5,000.

                                       17
**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                      December 31, 2002 and March 31, 2002

NOTE 3 - MATERIAL EVENTS (Continued)

During August 2002, the Company issued 10,000 shares of common stock to an
independent contractor for a domain name valued at $1,000.

During August 2002, the Company accepted the resignation of James Cundiff as
Corporate Secretary and appointed P. Clay Thomas to the office of Corporate
Secretary.

During August 2002, the Company issued 1,000,000 shares of common stock to a
director of the Company for $51,534 of debt.

During September 2002, the Company issued 18,000 shares of common stock to legal
counsel for services valued at $2,700.

During September 2002, the Company issued 92,000 shares of common stock to legal
counsel for deferred consulting valued at $9,200. As of December 31, 2002, all
of the consulting expense has been recognized.

In exchange for cash received during August 2002, the Company entered into loan
agreement with a director of the Company for $20,000 to be repaid within 90 days
at an interest rate of 8% per annum with 275,000 shares of the Company's common
stock as collateral for the loan.

In exchange for cash received during September 2002, the Company issued a
promissory note to a director of the Company for $8,000 with interest of 8% per
annum due on demand.

During July 2002, the Company recognized contributed capital for free-trading
shares of the Company's common stock held by a related party given in settlement
of shareholder loans and related accrued interest totaling $804,788.

On August 15, 2002, the Company issued options to a consultant to purchase
125,000 shares of common stock at $0.10 per share. The Company recognized
$30,591 in expense associated with these options calculated using the
Black-Scholes option pricing model with the following assumptions: risk-free
interest rate of 1.78%, volatility of 279.85% and expected lives of 1 year.

On September 30, 2002, the Company issued options to a consultant to purchase
200,000 shares of common stock at $0.10 per share. The Company recognized $7,404
in expense associated with these options calculated using the Black-Scholes
option pricing model with the following assumption: risk-free interest rate of
1.53%, volatility of 192.14% and expected life of four months.

During October 2002, the Company authorized the sale of $1,500,000 worth of
restricted common shares in a private placement with the first 500,000 shares to
be sold at $0.05 to $0.10 per share and the balance to be sold at or near market
value. The purchaser will be given an option to purchase additional shares
equaling 50% of the original shares purchased at the average 30-day closing
price of the Company's common stock multiplied by 50%. The option would be
available 3 months following the date of the Option Agreement and end on the
Option ending date.

                                       18
**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                      December 31, 2002 and March 31, 2002

NOTE 3 - MATERIAL EVENTS (Continued)

During October 2002, the Company issued 6,000 shares of common stock to an
independent contractor for services valued at $540.

During November 2002, the Company issued 200,000 shares of common stock to a
director of the Company for services valued at $32,000.

During October 2002, the Company issued 1,000,000 shares of common stock to a
director of the Company for $125,350 of debt.

During December 2002, the Company issued 200,000 shares of common stock to
investors for cash of $20,000.

During December 2002, the Company issued 500,000 shares of common stock to a
noteholder for debt of $128,866.

During December 2002, the Company authorized the issuance of 500,000 shares of
common stock to a consultant for services pursuant to a Consulting Agreement
with a term of 2 years. Shares are to be issued as agreed upon by the parties as
services are performed.

In exchange for cash received during November 2002, the Company issued a
promissory note to a director of the Company for $45,000 at 8% interest per
annum with a term of 3 months. This note is secured by production equipment
owned by the Company with a net book value of $39,029.

As of December 31, 2002, shareholders have loaned a total of $123,000 to the
Company. These amounts are secured by free-trading shares of common stock of the
Company upon default. Interest is accrued at 8% to 12% and at December 31, 2002
$12,198 of interest was accrued.

On October 14, 2002, the Company issued an option to a consultant to purchase
150,000 shares of common stock at $0.10 per share. The Company recognized $6,567
in expense associated with these options calculated using the Black-Scholes
option pricing model with the following assumptions: risk-free interest rate of
1.53%, volatility of 182% and expected life of 210 days.

NOTE 4 - COMMITMENTS AND CONTINGENCIES

The Company is the defendant in several pending lawsuits. The Company is
aggressively defending these actions. However, the final outcome is uncertain.
Whenever it is probable that a loss will result from these lawsuits and the
amounts of the losses are reasonably estimable, the Company accrues a related
expense. Accordingly, obligations associated with the related expenses for the
period ended December 31, 2002 are included in the consolidated financial
statements as accounts payable and accrued expenses.

                                       19
**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                      December 31, 2002 and March 31, 2002

NOTE 4 - COMMITMENTS AND CONTINGENCIES (Continued)

The Company has been served with several judgments wherein substantial amounts
are claimed. Whenever it is probable that a loss will result from these lawsuits
and the amounts of the losses are reasonably estimable, the Company accrues a
related expense. Accordingly, obligations associated with the related expenses
for the period ended December 31, 2002 are included in the consolidated
financial statements as accounts payable and accrued expenses.

NOTE 5 - STOCK SUBSCRIPTION DEPOSITS

During the nine months ended December 31, 2002, the Company received a total of
$101,200 for the purchase of 1,012,000 shares of common stock. As of December
31, 2002, none of these shares were issued.

NOTE 6 - SUBSEQUENT EVENTS

During January 2003, the Company issued 303,000 shares to investors for stock
subscription deposits totaling $30,300.

During January 2003, the Company received cash of $34,100 resulting from out of
court settlements of two lawsuits on January 28, 2003. Additionally, the parties
agreed to a license agreement for the cryogenic treatment of rifle barrels at
stipulated prices.

In exchange for cash received during February 2003, the Company issued a
promissory note to a consultant for $5,000 at 8% per annum with a term of 44
days secured by a 0.5% shared interest in the brake patent (Patent Pending
Serial #09/844,526) and any subsequent brake rotor patents filed by the Company.

In exchange for cash received during February 2003, the Company issued a
promissory note to a director of the Company for $10,000 at 8% per annum with a
term of 44 days secured by a 10% security interest in the Cryo-Accurizing US
Patent # 5,865,913 owned by the Company.

In exchange for cash received during February 2003, the Company issued a
promissory note an investor for $20,000 at 8% per annum with a term of 90 days
secured by a 2% shared interest in the brake patent (Patent Pending Serial
# 09/844,526) and any subsequent brake rotor patents filed by the Company.

In exchange for cash received during April 2003, the Company issued a promissory
note to an investor for $20,000 at 8% per annum with a term of 149 days secured
by a 20% security interest in the Cryo-Accurizing US Patent #5,865,913 owned by
the Company.

During March 2003, the Company issued 100,000 shares to a director pursuant to
an agreement dated December 1, 2000 and reversed an accrual for these shares of
$257,800 which was accrued in a prior period.

                                       20
**CRYOCON, INC. AND SUBSIDIARIES**
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                      December 31, 2002 and March 31, 2002

NOTE 6 - SUBSEQUENT EVENTS (Continued)

During March 2003, the Company issued 19,975 shares of common stock to a
shareholder for settlement of debt at $0.10 per share.

During March 2003, the Company issued 37,500 shares of common stock for exercise
of option for services valued at $1,875 to a former employee. No cash
consideration was given; therefore the Company recognized an expense for the
value of the shares issued.

During March 2003, the Company issued 20,000 shares to a consultant for services
pursuant to an agreement dated January 3, 2003 valued at $200.

During March 2003, the Company issued 50,000 shares of common stock to a
consultant for services valued at $5,000.

During March 2003, the Company issued 500,000 shares to investors for stock
subscription deposits totaling $50,000.

                                       21
**Item 2. Management's Discussion and Analysis.**

The following discussion and analysis provides information that we believe is
relevant to an assessment and understanding of our consolidated results of
operations and financial condition. This discussion and analysis covers material
changes in our financial condition and results of operations since our year end
at March 31, 2002 and for the quarter and nine months ended December 31, 2002.
The terms "we" or "our" or "us" or "the Company" are used in this discussion to
refer to Cryocon.

**Quarter Ended December 31, 2001 and 2002*****Statement of Operations*****Revenues.** Revenues for the nine months ended December 31, 2002 increased by 48%
to $44,657, from $30,191 for the same period in 2001. This increase in revenues
is attributable primarily to corporate refocusing and restructuring through
pricing and market development.

**Cost of Revenues.** Cost of revenues consists primarily of materials and supplies.
Cost of revenues decreased by 22% to $13,025 for the nine months ended December
31, 2002, from $16,731 for the nine months ended December 31, 2001, representing
29% and 55% of the total revenues for the nine months ended December 31, 2002
and December 31, 2001, respectively. The cost of revenues has decreased because
the Company has installed more efficient equipment, supplies contracts and
operating efficiencies.

**Gross Profit.** Gross profit is total revenues less cost of revenues. Gross profit
excludes general corporate expenses, finance expenses and income tax. For the
nine months ended December 31, 2002 and 2001, respectively, gross profit was
$31,632 and $13,460, which represents a 135% increase. The gross profit as a
percentage of revenues increased to 71% for the nine months ended December 31,
2002, from 45% for the nine months ended December 31, 2001. This increase of the
gross profit as a percentage of revenues is attributable to an increase in our
service sales price and increased efficient production procedures and costs.

**Marketing and Selling Expenses.** Marketing and selling expenses decreased to $0
from $19,539 for the nine months ended December 31, 2002 and 2001, respectively.
Marketing and selling expenses as a percentage of revenues were 0% and 65% for
the nine months ended December 31, 2002 and 2001, respectively. The decrease in
marketing and selling expenses can be attributed to our limited revenues.

**General and Administrative Expenses.** General and administrative expenses
decreased to $773,471 for the nine months ended December 31, 2002 from
$2,537,214 for the nine months ended December 31, 2001. As a percentage of
revenues, general and administrative expenses decreased to 1732% for the nine
months ended December 31, 2002 from 8404% for the nine months ended December 31,
2001. This decrease is mainly attributable to a reduction of our professional
and payroll costs.

**Financing Expenses.** Financing expenses, net, remained at $627,887 for the nine
months ended December 31, 2002, from $0.00 for the nine months ended December
31, 2001. These financing expenses relate to liabilities for stockholders shares
pledged for defaulted loans made to the Company.

**Interest Expenses.** Interest expenses, net, decreased to $ 40,919 for the nine
months ended December 31, 2002 from $ 65,943 for the nine months ended December
31, 2001. The decrease in interest expense was due to the decrease in notes
payable.

**Income (Loss) Before Taxes.** Loss before taxes for the nine months ended December
31, 2002 decreased by 57% to ($1,480,695) from ($3,432,189) for the nine months
ended December 31, 2001. Income before taxes as a percentage of revenues was
3316% for the nine months ended December 31, 2002, and 11368% for the nine
months ended December 31, 2001.

                                       22
**Taxes on Income.** Taxes on income for the nine months ended December 31, 2002
amounted to $0 which represents 0% of the income before taxes as compared with
$0 for the nine months ended December 31, 2001 that represents 0% of the income
before taxes.

**Net Income.** Net loss for the nine months ended December 31, 2002 amounted to
$1,480,695 and represents 3316% of the revenues, as compared with 11368% of the
revenues, for the nine months ended December 31, 2001. The decrease in the net
loss is mainly attributable to the decrease in general and administrative costs,
impairment of goodwill and loss on forfeiture of assets.

**Earnings per share.** The earnings per share for the nine months ended December
31, 2002 was ($0.07) for the basic 22,762,578 weighted average shares.

***Balance Sheet*****Current Assets.** Current Assets amounted to $47,732 as of December 31, 2002
compared to current assets of $49,467 as of March 31, 2002, representing a 4%
decrease in current assets. This increase is mainly attributable to a decrease
in accounts receivable.

**Fixed assets.** Fixed assets after depreciation decreased to $111,405 as of
December 31, 2002, as compared with $135,880 as of March 31, 2002. Purchase of
equipment during the nine months ended December 31, 2002 amounted to $4,285.
Depreciation and amortization for the nine months ended December 31, 2002
amounted to $114,811.

**Current Liabilities.** As of December 31, 2002, Current Liabilities increased by
$171,196 to $1,845,606 as compared with $1,674,410 as of March 31, 2002. This
increase is attributable to an increase in loans from related parties, stock
subscription deposits, accounts payable and a decrease in the current portion of
long term debt.

**Liquidity and Capital Resources**

Net cash used by operating activities for the nine months ended December 31,
2002 was $495,364.

The cash used by operating activities for the nine months ended December 31,
2002 was primarily attributable to $457,369 from professional fees, costs of
financing activities of $627,887, Common Stock issued for services of $141,540
and payroll of $143,389.

Net financing activities for the nine months ended December 31, 2002 provided
$505,899.

Cash at December 31, 2002 amounted to $9,164, an increase of $6,250 since March
31, 2002. Our current assets for December 31, 2002 are lower than our current
liabilities by $1,797,874.

Our commitments for capital expenditures as of December 31, 2002 were $0.

We believe that our future cash flow from operations together with our current
cash is inadequate to provide for 60 days of operations; therefore, we may need
funding traditional bank financing or from a debt of equity offering; however,
we may have difficulty in obtaining funding due to our poor financial condition.

                                       23
**Risk Factors**

Our business is also subject to certain other risk factors, as follows:

**Because we have a limited operating history with limited revenues, you will be
unable to determine whether we will ever become profitable.**
Because we are a development stage company with minimal operations and limited
revenues, you will be unable to evaluate our performance or potential
profitability.

**We have a history of losses and expect losses for the foreseeable future due to
increasing costs which may prevent us from ever becoming profitable.**
Through December 31, 2002, we have accumulated losses of $(11,927,414). We
believe that our costs will increase over the next twelve months and our losses
will continue to increase in the foreseeable future. As a result, we may never
achieve or sustain profitability.

**If we are unable to obtain financing to support our operations and future growth
plans, we will have to curtail our operations and our growth plans.**
Our auditors have issued a going concern opinion based upon our lack of
significant cash or material assets or established sources of revenues
sufficient to cover our operating costs. Our future operations involve
substantial research and development and marketing costs. If our revenues and
existing cash are insufficient to support our operations and/or future plans, we
may need traditional bank financing or financing from a debt or equity offering.
If we are unable to obtain financing when needed on favorable terms, we may be
forced to curtail our operations and our growth plans.

**If we fail to expand our services business to other product areas, we will be
unable to expand our revenues or compete effectively against our competitors.**
Currently, 43% of our business is concentrated on applying our cryogenic process
to gun barrels with 57% of our business in other non-gun barrel cryogenics. If
we fail to expand our services business to other product areas, it will be more
difficult to expand our revenues or compete effectively against our competitors.

**If we fail to devote funds to advertising costs, our business and revenues will
not expand.**
We currently rely upon individual contact by our Marketing Manager or
independent sales representatives to generate sales of our services; however, we
have not spent any funds on advertising our services. If we fail to expend any
funds towards advertising, we will be unable to expand our business or revenues.

**We may be subject to litigation costs and/or judgments which may affect our
ability to continue as a going concern.**
Certain securities that we sold during 2001, as explained in note 3 to our
financial statements for the period ending December 31, 2002, may have been
offered and sold in violation of state and/or federal securities laws. Should
these securities holders bring lawsuits or obtain judgments against us, we may
be required to curtail our operations or obtain financing to meet litigation
costs or such judgments. If we cannot obtain financing or the financing is
inadequate we may not be able to continue as a going concern.

**Item 3. Controls and Procedures**

The Company's Chief Executive Officer and Chief Financial Officer evaluated the
Company's disclosure controls and procedures within the 90 days preceding the
filing date of this quarterly report. Based upon this evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective in ensuring that material
information required to be disclosed is included in the reports that it files
with the Securities and Exchange Commission.

There were no significant changes in the Company's internal controls or, to the
knowledge of the management of the Company, in other factors that could
significantly affect these controls subsequent to the evaluation date.

                                       24
**PART II****Item 1. Legal Proceedings**Bourns, Inc. v. Cryocon, Inc. (Case No. MMOJ File No. 3853).
On September 4, 2001, Bourn, Inc. filed a Notice of Default with the Weber
County Recorder, to commence foreclosure on the deed of trust on our then
administrative and operational facility located at 2250 North 1500 West, in
Ogden, Weber County, Utah. On September 1, 2000, Bourn, Inc. had loaned us
$2,050,000. The promissory note became due on February 28, 2001. The balance due
as of the foreclosure action was $1,350,000. On October 30, 2001, the building
and property were sold through a Trustee sale by bid to Bourn, Inc. for
$1,100,000. As a result of this sale, a second deed of trust to Amerifirst
Foundation became an unsecured note. The Internal Revenue Service holds a lien
against the building from past due dues equaling $141,602. The Internal Revenue
Service has reviewed our financial status. We understand that the Internal
Revenue Service has placed the account in an "uncollectible" status.

Rushford/Ross/Orton, L.C., a Utah Limited Liability Company, v. Cryocon, Inc., a
Colorado Corporation, Fourth Judicial District Court of Utah County, State of
Utah, Division 10 (Case No. 010403425).
On August 7, 2001, we were served with legal process pertaining to a claim of a
debt owed in the amount of $7,709.26, interest and costs in collection. On
November 20, 2001, the court awarded a Judgment and Notice of Lien for the total
amount of $7,709.26 plus attorney's fees and costs. No payments have been made
on this judgment.

Staffing Solutions Southwest, Inc. d/b/a Staffing Solutions v. Cryocon, County
Court of Dallas, Texas, At Law No. 3 (Case No. 026901592).
On September 26, 2001, we were served with a legal process in the collection of
an outstanding payable to Staffing Solutions Southwest, Inc., d/b/a Staffing
Solutions, in the amount of $5,922.76. On December 10, 2001, judgment was
awarded for $4,993.76 plus interest of $172.29. The matter was settled on May
31, 2002 for $1,500, which has been paid.

Maxim Technologies v. Cryocon, Inc., Third District Court, State of Utah, Salt
Lake County, Salt Lake Department (Case No. 018903673). On October 9, 2001, we
were served with a small claims judgment for $3,425 in favor of Maxim
Technologies. No amounts have been paid on this judgment.

Reed Exhibition Companies v. Cryocon, Inc., Second Judicial District Court,
State of Utah, Weber County, Ogden Department (Case No. 010907747DC).
On October 24, 2001, we were served with a legal process in the collection of an
outstanding payable to Reed Exhibition Companies in the amount of $2,882.50.
Judgment was received on March 25, 2002 for $3,329.37. This claim was paid in
full on September 11, 2002.

North Coast Investments, Inc. v. Cryocon, Inc. and Brian Morrison, Circuit Court
of Cook County, Illinois, Municipal Department, Third District
(Case No. 01M3-003818).
On January 28, 2002, we, along with our Chief Executive Officer Brian Morrison,
were served with a legal process for breach of contract by North Coast
Investments. The amount of the claim was $70,000. We have retained an attorney
in Illinois and are preparing to file a countersuit. On March 27. 2003 the
courts dismissed the case against Cryocon, Inc. and Brian Morrison.

                                       25
Wasatch Mountain Publishing, Inc. v. Cryocon, Inc., Third Judicial District
Court of Salt Lake County, State of Utah (Case No. 020900526_).
On April 9, 2002 Wasatch Mountain Publishing, Inc. received a judgment against
us for the collection of advertising for $7,344.43. The debt was settled in full
on May 30, 2002 for $5,500, which has been paid.

Kreiger Barrels, Inc. and Crierion Barrels, Inc. v. Cryocon, Inc., United States
District Court for the Eastern District of Wisconsin (Case No. 01-C-0771).
Kreiger Barrels, Inc. and Criterion Barrels, Inc. of Germantown, Wisconsin has
filed a civil action against us alleging that our U.S. Patent # 5,865,913 was
invalid and, therefore, our letter to discontinue the cryogenic treatment of
barrels without paying an appropriate royalty was invalid. The lawsuit was
settled on January 28, 2003 with Kreiger paying Cryocon $34,200 in a settlement
agreement. Settlement agreement included a license agreement for future
treatment of gun barrels.

Cryocon, Inc. v. Kreiger Barrels, Inc. and Criterion Barrels, Inc., United
States District Court for the District of Utah (Case No. 1:02 CV 30-ST).
On March 15, 2002, we filed a civil action against Kreiger Barrels, Inc. and
Criterion Barrels, Inc., in the State of Utah, requesting relief from Plaintiff
for making use of a patented process without proper licensing for use of the
patent. With the settlement of the Kreiger Barrel lawsuit, this action was in
the settlement agreement above.

Revcovar Group, LLC, (United Parcel Service) v. Cryocon, Inc., Third District
Court, State if Utah, Salt Lake County, Sandy Department ( Case No. 020409870).
On September 10, 2002 Revcovar Group filed a complaint for payment of past due
services for $3,450.10. In January 3, 2003 the debt was settled in full.

Cryocon, Inc. v. Xtech Industries International, Inc. et. al., United States
District Court for the District of Utah, Northern Division, (Case
No. 1:01CV0140DAK)
On November 7, 2002, Cryocon filed a civil complaint against Xtech and several
of our former employees of the company for; A) removing and/or destroying our
corporate documents and B) not abiding by our non-disclosure/non-compete
contracts. The defendants made contact with a customer of Cryocon's with the
intent of selling the customer Cryocon's type of services. The Court issued a
Temporary Restraining Order against the defendents, but the Court would not
issue a Preliminary Restraining Order in the matter. On December 23, 2002, the
defendents filed a counter claim against Cryocon, its officers and board of
directors (past and present) concerning various claims of breach of contract and
misconduct. The parties are currently preparing answers to the complaints.

State of Utah, Department of Commerce, Division of Securities v. Robert Wooley
Brunson and Cryocon, Inc., Third Judicial District Court in and for Salt Lake
County, State of Utah (Civil No. 030909619)
On April 30, 2003 the State of Utah filed a complaint against Robert Wooley
Brunson and Cryocon, Inc. alleging that: (a) Mr. Brunson offered and sold his
"personal stock" to at least 12 unaccredited individuals for a total of
$128,150, without providing or allowing investors to view a prospectus; (b) Mr.
Brunson, directly or indirectly, made certain misrepresentations to investors
and omitted to state material facts in connection with the investments; and (c)
as a result of (a) and (b), the defendants violated Section 61-1-1 of the Utah
Uniform Securities Act, which essentially constitutes the anti-fraud provision
of the Utah securities laws. The complaint requests permanent injunctions from
violating these anti-fraud provisions and restitution to investors. It is our
position that this is a matter between Mr. Brunson and the State of Utah and
should not include us because we: (a) were not a party to any of the
transactions; (b) never made any representations to the investors; and (c) we
had no knowledge of the alleged offers or sales. We have retained counsel to
request removal of Cryocon, Inc. as a defendant in this action; however, we
cannot predict the outcome of this action.

                                       26

In addition to the above described litigation, there is a threat of litigation
involving our agreement with 300 Below, Inc., a company located in Decaytur,
Illinois. In accordance with the terms of a November 10, 1999 agreement we have
with 300 Below, in return for purchasing the names, rights, licenses, titles and
property of 300 Below's Cryo-Accuring Division, we are required to pay $449,000,
including an option payment of $2,500 to $449,000. Since February 2001 we have
been in default on our required payments totaling $40,519.57 to 300 Below.

Should judgments be rendered in the above matters and we are required to make
payments in satisfaction, such payments will have a materially adverse affect on
our consolidated results of operations and financial condition.

We have not been served with any other legal process providing us with legal
notice of any other pending proceedings. We are not a plaintiff in any other
pending action. We are not aware of any contemplated legal proceeding by a
governmental authority in which we may be involved.

Item 2.  Changes in Securities & Use of Proceeds

None

Item 3.  Defaults on Senior Securities

None

Item 4.  Submission of Matters to a Vote of Security Holders

None

Item 5.  Other Information

None

                                       27

Item 6.  Exhibits and Reports on Form 8-K

Exhibit
Number                  Description
--------                -----------

 2.1        Agreement and Plan of Reorganization dated April 25, 2000
            (incorporated by reference to Exhibit 2.1 to Form 8-K dated August
            18, 2000)

 3.1        Articles of Incorporation of the Company (incorporated by reference
            to Exhibit 3.1 to registration statement on Form S-8 of Champion
            Computer Rentals, Inc., file no. 33-23257-D)

 3.2        Bylaws of Cryocon (incorporated by reference to Exhibit on Form
            10-KSB for fiscal year ended 1993)

 3.3        Certificate of Amendment and Restatement to Articles of
            Incorporation (incorporated by reference to Exhibit 3.4 to Form 8-K
            dated February 10, 1994)

 3.4        Certificate of Amendment and Restatement to Articles of
            Incorporation (incorporated by reference to Exhibit 3.4 to Form 8-K
            dated February 10, 1994)

3.5         Certificate of Amendment to Articles of Incorporation, changing the
            Company's name to Iso-Block Products USA, Inc. (incorporated by
            reference to Exhibit 2(c) to registration statement on Form 8-A,
            file no. 0-25810)

 3.6        Certificate of Amendment to Articles of Incorporation, changing the
            Company's name to Cryocon, Inc., authorizing a four to one reverse
            split, authorizing the increase of capital stock to 50,000,000
            shares of Common Stock, and ratifying the change of auditors to
            HJ & Associates of Salt Lake City, Utah. (Incorporated by reference
            to Exhibit 3.6 to the quarterly report filed on Form 10-QSB for the
            Quarter ending December 31, 2000)

 4.0        Convertible Debenture Due January 3, 2003 between Cryocon,Inc. and
            Robert Brunson in the Principal Amount of $50,000.00,incorporated by
            reference to Exhibit 4.1 to Form S-3 filed February 9, 2001

10.1        (2) XTool, Inc. Acquisition Contract incorporated by reference to
            Exhibit 4.11 in Amendment No. 1 to Form SB-2 filed April 17, 2001.

10.2        Agreement between Cryocon, Inc. and Robert W. Brunson

10.3        Lease between Halverson Real Estate and Investments, Inc. Landlord)
            and Cryocon, Inc. (Tenant)

16.0        Letter on Change in Certifying Account Incorporated by reference to
            Exhibit 16.0 in Form S-3 filed

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

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

                                       28

                                   SIGNATURES
---------------------------------------------------------------------------

 In accordance with the requirements of the Exchange Act, the Registrant caused
    this Report on Form 10-QSB to be signed on its behalf by the undersigned
                           thereunto duly authorized.

                                               Dated: May 20, 2003

CRYOCON, INC.

By:/s/ J. Brian Morrison
J. BRIAN MORRISON
Chairman/Chief Executive Officer

By:/s/ Vaughn P. Griggs
VAUGHN P. GRIGGS
Chief Financial Officer

                                       29

    CERTIFICATION ACCOMPANYING PERIODIC REPORT PURSUANT TO SECTION 302 OF THE
                           SARBANES-OXLEY ACT OF 2002

I, J. Brian Morrison, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Cryocon, Inc.;

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

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

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
     a) designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is
     being prepared;
     b) evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and
     c) presented in this quarterly report our conclusions about the
     effectiveness of the disclosure controls and procedures based on our
     evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
     a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and
     b) any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

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

Date: May 20, 2003

/s/ J. Brian Morrison
J. Brian Morrison
Chief Executive Officer

                                       30

   CERTIFICATION ACCOMPANYING PERIODIC REPORT PURSUANT TO SECTION 302 OF THE
                           SARBANES-OXLEY ACT OF 2002

I, Vaughn P. Griggs, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Cryocon, Inc.;

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

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

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
     a) designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is
     being prepared;
     b) evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and
     c) presented in this quarterly report our conclusions about the
     effectiveness of the disclosure controls and procedures based on our
     evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
     a) all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and
     b) any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

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

Date: May 20, 2003

/s/ Vaughn P. Griggs
Vaughn P. Griggs
Chief Financial Officer and Principal Accounting Officer

                                       31
```