SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D C 20549

                                    FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                    FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

                         COMMISSION FILE NUMBER 33-19584

                              POWERCOLD CORPORATION
        (Exact name of small business issuer as specified in its charter)

        NEVADA                                            23-2582701
(State of Incorporation)                      (IRS Employer Identification No.)

                                115 CANFIELD ROAD
                             LA VERNIA, TEXAS 78121
                    (Address of principal executive offices)

                                  210-659-8450
                         (Registrant's telephone number)


Check whether the issuer (1) 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  the number of shares outstanding of the Registrant's Common Stock, par
value  $0.001  -  16,256,567  shares  outstanding  at  March  31,  2002.
























<page>
                      POWERCOLD CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                        For the period ending March 31, 2002

                                      INDEX
                                      -----

                                                                         PAGE

PART  I.     FINANCIAL  INFORMATION

     ITEM  1:     CONSOLIDATED  FINANCIAL  STATEMENTS                      3

     Accountants  Review  Report

     Consolidated  Balance  Sheets

     Consolidated  Statement  of  Operations  -  Three  Months

     Consolidated  Statement  of  Operations  -  Six  Months

     Consolidated  Statement  of  Stockholders'  Equity

     Consolidated  Statement  of  Cash  Flows

     Notes  to  Consolidated  Financial  Statements

     ITEM  2:     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION  AND  RESULTS  OF  OPERATIONS.


PART  II.   OTHER  INFORMATION

     ITEM  1.     LEGAL  PROCEEDINGS.

     ITEM  2.     CHANGES  IN  SECURITIES.

     ITEM  3.     DEFAULTS  UPON  SENIOR  SECURITIES.

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

     ITEM  5.     OTHER  INFORMATION.

     ITEM  6.     EXHIBITS  AND  REPORTS  ON  FORM  8-K.

SIGNATURES
















<page>
                      POWERCOLD CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                        For the period ending March 31, 2002


PART I

Item 1 - Consolidated financial statements.





                              POWERCOLD CORPORATION

                        CONSOLIDATED FINANCIAL STATEMENTS

                                 MARCH 31, 2002






                              WILLIAMS & WEBSTER PS
                          CERTIFIED PUBLIC ACCOUNTANTS
                        BANK OF AMERICA FINANCIAL CENTER
                           W 601 RIVERSIDE, SUITE 1940
                                SPOKANE, WA 99201
                                 (509) 838-5111





                              POWERCOLD CORPORATION

                                TABLE OF CONTENTS

                                 March 31, 2002



ACCOUNTANT'S  REVIEW  REPORT                                               1


FINANCIAL  STATEMENTS

     Consolidated  Balance  Sheets                                         2

     Consolidated  Statements  of  Operations                              3

     Consolidated  Statement  of  Stockholders'  Equity                    4

     Consolidated  Statements  of  Cash  Flows                             5


NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS                             6




<page>


To  the  Board  of  Directors
PowerCold  Corporation
Cibolo,  Texas

                           ACCOUNTANT'S REVIEW REPORT
                           --------------------------


We  have  reviewed  the  accompanying  consolidated  balance  sheet of PowerCold
Corporation  as  of  March  31, 2002, and the related consolidated statements of
operations,  stockholders'  equity,  and  cash  flows  for the three months then
ended.  All  information   included  in  these   financial  statements   is  the
representation  of  the  management  of  PowerCold  Corporation.

We conducted our review in accordance with standards established by the American
Institute  of  Certified  Public  Accountants.  A  review  of  interim financial
information  consists principally of applying analytical procedures to financial
data  and  making  inquiries of persons responsible for financial and accounting
matters.  It  is  substantially  less  in scope than an audit in accordance with
auditing  standards  generally  accepted  in  the  United States of America, the
objective  of  which  is  the  expression  of an opinion regarding the financial
statements  taken  as  a whole.  Accordingly, we do not express such an opinion.

Based  on our review, we are not aware of any material modifications that should
be  made  to  the  accompanying  financial statements in order for them to be in
conformity with accounting principles generally accepted in the United States of
America.

The  consolidated financial statements for the year ended December 31, 2001 were
audited  by  us  and  we  expressed an unqualified opinion on them in our report
dated  March  4, 2002.  We have not performed any auditing procedures since that
date.

The  accompanying  financial  statements  have  been  prepared assuming that the
Company  will  continue as a going concern.  As discussed in Note 3, the Company
has  sustained  substantial  operating  losses  in  recent  years  and  has used
substantial  amounts  of working capital in its operations.  These factors raise
substantial  doubt  about  the Company's ability to continue as a going concern.
Management's  plans  regarding  those matters also are described in Note 3.  The
financial  statements  do not include any adjustments that might result from the
outcome  of  this  uncertainty.

/s/ Williams & Webster, P.S.

Williams  &  Webster,  P.S.
Certified  Public  Accountants
Spokane,  Washington

May  13,  2002











<page>
POWERCOLD  CORPORATION
CONSOLIDATED  BALANCE  SHEETS


<table>
                                        March 31,             December 31,
                                        2002           ----------------------------
                                        Unaudited           2001          2000
                                        -------------  -------------  -------------

                                     <c>            <c>            <c>
ASSETS

CURRENT  ASSETS
  Cash                                  $  1,338,493   $    290,174   $    106,864
  Securities available for sale              485,000        970,000            -
  Trade accounts receivable, net
    of  allowance                          1,171,473      1,094,919         38,665
  Receivables from related parties            15,360          1,686            -
  Inventory                                  275,041        241,853        241,272
  Unbilled  revenue                           49,676         49,676            -
  Prepaid  expenses                          82,000          22,500        307,500
                                        -------------  -------------  -------------

     Total Current Assets                  3,417,043      2,670,808        694,301
                                        -------------  -------------  -------------

Property  and  equipment,  net               139,964         77,660         73,570
Patent rights and related
  technology,  net                         1,258,451      1,282,937      1,195,627
Loan  receivable,  Alturdyne                 250,000            -              -
Goodwill, net                                 14,234         16,866         27,392
Deposits  and  prepaid  rent                  17,644          9,645          7,705
                                        -------------  -------------  -------------

     TOTAL  ASSETS                      $  5,097,336   $  4,057,916   $  1,998,595
                                        =============  =============  =============
</table>























See accompanying notes and accountants' review report.

<page>
POWERCOLD  CORPORATION
CONSOLIDATED  BALANCE  SHEETS (Continued)

<table>
                                        March 31,             December 31,
                                           2002        ----------------------------
                                        Unaudited           2001          2000
                                        -------------  -------------  -------------

                                     <c>            <c>            <c>
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT  LIABILITIES
  Accounts payable and accrued
    expenses                            $  1,050,252   $   1,023,596   $   195,460
  Overdrafts  payable                         40,020             -             -
  Account payable - related party                -               -          10,567
  Commissions and royalty payable             55,067          55,067        42,240
  Advances  from  affiliate                      -               -          73,636
  Notes  payable                              34,940          36,329        43,328
  Acquisition  payable                       200,000         200,000       200,000
  Current portion of capital lease
    payable                                    1,474           3,018         3,419
                                        -------------  -------------  -------------
     Total  Current Liabilities            1,381,753      1,318,010        568,650
                                        -------------  -------------  -------------

CAPITAL LEASE PAYABLE, net of
  current  portion                             5,413          5,413          6,826
                                        -------------  -------------  -------------

COMMITMENTS  AND  CONTINGENCIES              389,184        395,300        168,300
                                        -------------  -------------  -------------

STOCKHOLDERS'  EQUITY
  Convertible preferred stock, Series
    A, $0.001 par value; 5,000,000
    shares authorized, 0 shares
    issued and outstanding,
    respectively                                 -              -              -
  Common stock, $0.001 par value;
    200,000,000 shares authorized,
    17,439,767, 16,027,882 and
    12,669,383, shares issued and
    outstanding,  respectively                17,439         16,027         12,669
  Additional paid-in capital              12,433,710     10,210,665      8,243,227
  Stock options and warrants                 471,980        471,980            -
  Accumulated deficit                    (10,087,143)    (9,329,479     (7,001,077)
  Accumulated other comprehensive
    income                                   485,000       970,000             -
                                        -------------  -------------  -------------
                                           3,320,986      2,339,193      1,254,819
                                        -------------  -------------  -------------
     TOTAL LIABILITIES AND
         STOCKHOLDERS' EQUITY           $  5,097,336   $  4,057,916   $  1,998,595
                                        =============  =============  =============
</table>




See accompanying notes and accountants' review report.

<page>
POWERCOLD  CORPORATION
CONSOLIDATED  STATEMENTS  OF  OPERATIONS  AND  COMPREHENSIVE  LOSS

<table>
                                             Three  Months  Ended  March  31,
                                        -------------------------------------------
                                             2002           2001           2000
                                          Unaudited      Unaudited      Unaudited
                                        -------------  -------------  -------------

                                     <c>            <c>            <c>
REVENUES
  Product  sales                        $    327,587   $    247,004   $     28,708
  Services                                   23,163          43,106         14,190
                                        -------------  -------------  -------------
     Total  Revenues                         350,750        290,110         42,898
                                        -------------  -------------  -------------
COST  OF  REVENUES                           287,130        149,691         44,821

GROSS  PROFIT  (LOSS)                         63,620        140,419         (1,923)
                                        -------------  -------------  -------------

OPERATING  EXPENSES
  Sales  and  marketing                      138,286        130,716            -
  General  and  administrative               639,178        291,113        295,352
  Depreciation  and  amortization             42,248         37,427         33,195
                                        -------------  -------------  -------------
     Total  Operating  Expenses              819,712        459,256        328,547
                                        -------------  -------------  -------------

LOSS  FROM  OPERATIONS                      (756,092)      (318,837)      (330,470)

OTHER  INCOME  (EXPENSES)
  Royalty  income                                -           44,785            -
  Interest  income                             1,572          1,996            -
  Interest  and financing expense                -          (55,834)       (11,317)
  Other  income                                  -              -           (1,322)
                                        -------------  -------------  -------------
     Total Other Income (Expenses)             1,572         (9,053)       (12,639)
                                        -------------  -------------  -------------

LOSS  BEFORE  INCOME  TAX                   (757,664)      (327,890)      (343,109)

INCOME  TAX  EXPENSE                             -              -              -
                                        -------------  -------------  -------------
NET  LOSS                                   (757,664)      (327,890)      (343,109)

OTHER COMPREHENSIVE INCOME
  Unrealized gain on investments             485,000            -              -
                                        -------------  -------------  -------------

COMPREHENSIVE  LOSS                     $   (272,664)  $   (327,890)  $   (343,109)
                                        =============  =============  =============

LOSS PER COMMON SHARE,
  BASIC AND DILUTED                     $      (0.02)  $      (0.02)  $     (0.03)
                                        =============  =============  =============
WEIGHTED AVERAGE NUMBER OF COMMON
  SHARES OUTSTANDING, BASIC AND DILUTED   16,256,567     15,005,371     10,156,716
                                        =============  =============  =============
</table>

See accompanying notes and accountants' review report.
<page>
POWERCOLD CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                         Accum-
                                                                                                          ulated
                         Preferred Stock          Common Stock                               Stock       Other       Total
                     ------------------------ ---------------------- Additional  Accum-      Options     Comphre-    Stock-
                     Number of                Number of              Paid-in      ulated     and          hensive     holders'
                     Shares      Amount       Shares     Amount      Capital     Deficit     Warrants    Income      Equity
                     ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<C>                  <S>         <S>         <S>         <S>         <S>         <S>         <S>         <S>         <S>
Balance, December
 31, 1999              1,250,000      1,250    7,876,641      7,876   6,034,592   (5,681,882)       -           -       362,836

Stock issued for
 cash at an average
 of $0.87 per
 common share                -          -      1,329,602      1,330   1,156,670          -          -           -     1,158,000

Stock issued as
 prepaid consulting
 fees at $0.50 per
 common share                -           -       615,000        615    306,885           -          -           -       307,500

Stock issued for
 services at an
 average of $.058
 per common share            -           -       593,355        593    296,085           -          -           -       296,678

Perferred stock
 converted to
 common stock at par  (1,250,000)     (1,250)  1,354,785      1,355       (105)          -          -           -         1,250

Stock issued and
 options exercised in
 exchange for
 technology license
 at $0.50 per
 common share                -           -       100,000        100     49,900           -          -           -        50,000

Stock issued and options
 exercised in
 exchange for debt at
 $0.50 per common share      -           -       800,000        800    399,200           -          -           -       400,000

Net loss, December
 31, 2000                    -           -           -          -          -      (1,319,195)       -           -    (1,319,195)
                     ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance, December
 31, 2000                    -           -    12,669,383     12,669   8,243,227  (7,001,077)$       -           -     1,257,069
</table>






















See accompanying notes and accountants' review report.

<page>
POWERCOLD CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                                         Accum-
                                                                                                          ulated
                         Preferred Stock          Common Stock                               Stock       Other       Total
                     ------------------------ ---------------------- Additional  Accum-      Options     Comphre-    Stock-
                     Number of                Number of              Paid-in      ulated     and          hensive     holders'
                     Shares      Amount       Shares     Amount      Capital     Deficit     Warrants    Income      Equity
                     ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<C>                  <S>         <S>         <S>         <S>         <S>         <S>         <S>         <S>         <S>
Balance carryforward,
 December  31, 2000          -           -    12,669,383     12,669   8,243,227  (7,001,077) $      -           -     1,257,069
Common stock issued
 for services at
 $0.59 per share             -           -        42,500         43      24,958         -           -           -        25,000
Common stock issued
 for consulting
 services at $0.50
 per  share                  -           -       230,000        230     114,770         -           -           -       115,000
Common stock issued
 for conversion of
 debt at $0.61
 per  share                  -           -       372,081        372     207,128         -           -           -       207,500
Common stock issued
 as pre payament of
 rent at $0.50
 per  share                  -           -        45,000         45      22,455         -           -           -        22,500
Common stock issued
 as interest and
 financing expense
 at $0.50 per share          -           -       240,419        240     122,010         -           -           -       122,250
Common stock issued
 as compensation at
 $0.50 per share             -           -       113,000        113      56,387         -           -           -        56,500
Common stock issued
 for payment of
 accounts payable at
 $0.75 per share             -           -        35,000         35      26,383         -           -           -        26,418
Common stock and
 options issued for
 acquisition of PSI
 at $2.16 per share          -           -        50,000         50     108,450         -        66,500         -       175,000
Common stock: 2,144,820
 shares issued with
 603,083 attached
 warrants for cash
 at $0.86 per share
 and 85,679 shares
 valued at $1.73 per
 share as issuing
 costs less total
 issuing costs of
 $296,142                    -           -     2,230,499      2,230   1,284,898         -       405,480         -     1,692,608
Other comprehensive
 income                      -           -           -          -           -           -           -       970,000     970,000
Net loss,
 December 31, 2001           -           -           -          -           -    (2,328,402)        -           -    (2,328,402)
                     ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance,
 December 31, 2001           -   $       -    16,027,882 $    16,027 $10,210,665 $(9,329,479)$  471,980  $  970,000  $2,341,443
Common stock issued
 for cash at $1.65
 per share                   -           -     1,224,930       1,225   2,014,482         -          -           -     2,015,707
Common stock issued
 as compensation at
 $1.00 per share             -           -        30,000          30      29,970         -          -           -        30,000
Common stock issued
 for services at
 $1.14 per share             -           -       156,955         157     178,593         -          -           -       178,750
Other comprehensive
 income (loss)               -           -           -           -            -          -          -      (485,000)   (485,000)
Net loss, March 31,
 2002 (unaudited)            -           -           -           -            -     (757,664)       -           -      (757,664)
                     ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance,
 March 31, 2002              -   $       -   17,439,767 $     17,439 $12,433,710 $(10,087,143)$ 471,980  $ 485,000   $ 3,323,236
                     =========== =========== =========== =========== =========== =========== =========== =========== ===========
</table>



See accompanying notes and accountants' review report.

<page>
POWERCOLD  CORPORATION
CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
<table>
                                                    Three  Months  Ended  March  31,
                                              -------------------------------------------
                                                   2002           2001           2000
                                                Unaudited      Unaudited      Unaudited
                                              -------------  -------------  -------------

                                           <c>            <c>            <c>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                    $   (757,664)  $   (327,890)  $   (343,109)
  Adjustments to reconcile net loss
  to net cash used in operating
  activities:
     Depreciation and amortization                  42,248         37,427         33,195
     Issuance of common stock for services         178,750         20,000        139,065
     Issunace of common stock for current debt         -           26,418            -
     Issuance of common stock for compensation      30,000            -              -
     Issuance of common stock for interest
       and financing                                   -           53,000            -
  (Increase) decrease in assets:
     Accounts  receivable                          (76,554)       (78,631)        24,899
     Receivable from related party                 (11,314)           -              -
     Inventories                                   (33,188)        23,409            -
     Prepaid  expenses                             (67,500)           -              -
  Increase (decrease) in liabilities:
    Accounts payable and accrued expenses           67,913         10,683         86,080
    Accounts payable, related party                    -            2,782            -
    Deferred  revenue                                  -           43,000            -
    Commissions  payable                               -            8,383            -
                                              -------------  -------------  -------------
Net cash used in operating activities             (627,309)      (181,419)       (59,870)
                                              -------------  -------------  -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Deposits                                          (8,201)        (1,265)           -
  Purchase  of  property  and  equipment           (61,661)        (6,625)           -
  Investment  in  Alturdyne                       (250,000)           -              -
  Payment  on  capital  lease                       (1,544)          (667)           -
  Proceeds  from  advances  from  affilate             -           15,000         32,944
                                              -------------  -------------  -------------
Net cash provided by (used in) investing
  Activities                                      (321,406)         6,443         32,944
                                              -------------  -------------  -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on long-term debt              (2,315)           -              -
  Proceeds  from  short-term  borrowings               -          140,000            -
  Repayment  of  short-term  borrowings                -             (826)           -
  Proceeds from issuance of shares under
    private  placement                           2,015,407            -          376,000
  Increase in deposits                                 -              -              -
  Repayment of short-term borrowings,
    Affiliate                                      (16,058)       (43,290)           -
                                              -------------  -------------  -------------
Net cash provided by financing activities        1,997,034         95,884        376,000
                                              -------------  -------------  -------------
Net increase (decrease) in cash                  1,048,319        (79,092)       349,074
Cash at beginning of year                          290,174        106,864         14,464
                                              -------------  -------------  -------------
Cash  at  end  of  year                       $  1,338,493   $     27,772   $    363,538
                                              =============  =============  =============
</table>
See accompanying notes and accountants' review report.
<page>
POWERCOLD  CORPORATION
CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS (Continued)

<table>
                                                    Three  Months  Ended  March  31,
                                              -------------------------------------------
                                                   2002           2001           2000
                                                Unaudited      Unaudited      Unaudited
                                              -------------  -------------  -------------

                                           <c>            <c>            <c>
Supplemental  cash  flow  information:
  Interest  paid                              $        -     $        810   $     11,317
                                              =============  =============  =============
  Income  taxes  paid                         $        -     $        -     $        -
                                              =============  =============  =============

NON-CASH  TRANSACTIONS:
  Unrealized gain (loss) on securities
    available  for  sale                      $   (485,000)  $        -     $        -
  Issuance of common stock as prepayment
    for  consulting  services                 $        -     $     45,000   $    139,065
  Issuance of common stock for services
    and  compensation                         $    208,750   $     45,000   $        -
  Issuance of common stock for payment
    of accounts payable                       $        -     $     26,418   $        -
  Issuance of common stock for payment
    of interest and financing expenses        $        -     $     53,000   $        -
  Issuance of common stock as stock
    offering costs                           $         -     $     50,000   $        -
</table>































See accompanying notes and accountants' review report.
<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  1  -  ORGANIZATION  AND  DESCRIPTION  OF  BUSINESS

PowerCold  Corporation,  formerly  International  Cryogenic Systems Corporation,
(the  Company)  was  incorporated  on  October  7,  1987 in the State of Nevada.
PowerCold  is  a  solution  provider  of  energy  efficient  products   for  the
refrigeration,  air  conditioning  and  power  industries.  The Company operates
across  many  market  sectors  from  large  industrial  food processors to small
commercial  air  conditioning  systems.  The  Company develops, manufactures and
markets proprietary equipment to achieve significant electric power cost savings
for  commercial  and   industrial  firms.   PowerCold's  energy   efficient  and
environmentally  safe  products  are  designed  to  reduce  power  costs for air
conditioning,  refrigeration and on-site building power. The Company derives its
revenues from three principal product lines.  The first is a line of evaporative
heat  exchange  systems for the HVAC and refrigeration industry. The second line
is  the design and production of unique products for the refrigeration industry.
The  third  is  consulting   engineering  services,  including   process  safety
management  compliance,  and  ammonia  refrigeration  and  carbon dioxide system
design.

On  December  28,  1992, the Company acquired the patent rights (U.S. Patent No.
5,501,269) and related engineering and technology to a process of quick freezing
food products, and cleaning and treating various nonfood products.  This process
was accomplished by using a circulating cryogenic liquid in a closed pressurized
vessel system.  The patent acquisition was made in exchange for 2,414,083 shares
of the Company's common stock.  Two directors of the Company were also directors
of  the  company  selling  the  patent  rights.

On  August  4,  1995, the Company acquired Nauticon, Inc., including its related
technology  and  assets for 900,000 shares and 300,000 options (expired July 31,
2000)  of  the  Company's  stock.  The  assets currently include U.S. Patent No.
5,501,269 issued on March 26, 1996, and entitled Condenser Unit, and U.S. Patent
No.  5,787,722  issued  August  4,  1998,  and  entitled  Heat  Exchange  Unit.

On  May  18,  1998,  the Company incorporated a wholly owned subsidiary, Channel
Freeze  Technologies,  Inc.,  to acquire intellectual property rights of Channel
Ice  Technologies.  The Company has produced its first unit with this technology
(see  Note  17)  and  is  awaiting  its  sale.

The  Company  formed Alturdyne Energy Systems, Inc. in September 1999 to support
the  natural  gas  engine  driven  water  chiller  business.  Subsequent  to its
formation,  the  entity  has  been  essentially  dormant.

On  December  1,  2000, the Company acquired assets of Ultimate Comfort Systems,
Inc.,  including  its  technology   rights,  patent  rights   (U.S.  Patent  No.
5,183,102), and license agreement for integrated piping technology for a heating
and  air  conditioning  system.  This  acquisition  gave  the Company exclusive,
non-transferable  United States transfer rights to the aforementioned technology
and  all  related  assets.  This technology was then placed into a newly formed,
wholly-owned  subsidiary  of the Company, Ultimate Comfort Systems.  See Note 5.

On  December  1,  2001,  Powercold  acquired  all  of  the common stock of Power
Sources,  Inc.  (hereinafter  "PSI"),  a  newly  formed  entity  engaged  in the
development  and  marketing  of  cogeneration  systems  technology.  See Note 5.





<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

This  summary  of  significant  accounting  policies  is  presented to assist in
understanding  the financial statements.  The financial statements and notes are
representations  of  the  Company's  management,  which is responsible for their
integrity  and  objectivity.  These  accounting  policies  conform to accounting
principles  generally  accepted  in  the  United States of America and have been
consistently  applied  in  the  preparation  of  the  financial  statements.

Accounting  Methods
-------------------
The  Company's  financial  statements  are  prepared using the accrual method of
accounting.

Use  of  Estimates
------------------
The  process  of  preparing  financial  statements in conformity with accounting
principles  generally  accepted in the United States of America requires the use
of  estimates  and  assumptions  regarding certain types of assets, liabilities,
revenues,  and   expenses.   Such  estimates   primarily  relate  to   unsettled
transactions  and  events  as  of  the   date  of  the   financial   statements.
Accordingly,  upon settlement, actual results may differ from estimated amounts.

Principles  of  Consolidation
-----------------------------
The  consolidated  financial  statements include the accounts of the Company and
its  wholly  owned  subsidiaries, after elimination of the intercompany accounts
and  transactions.  Wholly  owned subsidiaries of the Company are listed in Note
13.

Reclassification
----------------
Certain  amounts  from  prior  periods  have been reclassified to conform to the
current  period  presentation.  This reclassification has resulted in no changes
to  the  Company's  accumulated  deficit  or  net  losses  presented.

Cash  and  Cash  Equivalents
----------------------------
For  purposes  of the statements of cash flows, the Company considers all highly
liquid  investments  with original maturities of three months or less to be cash
equivalents.

Inventories
-----------
Inventories  are  stated at the lower of cost or market on a first-in, first-out
basis.  See  Note  6.

Fair  Value  of  Financial  Instruments
---------------------------------------
The  Company's  financial  instruments  as defined by SFAS No. 107, "Disclosures
about  Fair  Value  of Financial Instruments," include cash, advances to related
party,  trade  accounts receivable, accounts payable, accrued expenses and notes
payable.  All instruments are accounted for on the historical cost basis, which,
due  to  the  short  maturity  of these financial instruments, approximates fair
value  at  March  31,  2002



<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES (Continued)

Derivative  Instruments
-----------------------
In  June  1998,  the  Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  No.  133  ("SFAS  No.  130"),  "Accounting for
Derivative  Instruments  and  Hedging  Activities,"  as amended by SFAS No. 137,
"Accounting  for Derivative Instruments and Hedging Activities - Deferral of the
Effective  Date  of  FASB  No.  133",  and SFAS No. 138, "Accounting for Certain
Derivative  Instruments  and Certain Hedging Activities", which is effective for
the  Company  as  of  January 1, 2001.  This standard establishes accounting and
reporting  standards  for  derivative  instruments, including certain derivative
instruments  embedded  in  other  contracts,  and  for  hedging  activities.  It
requires  that  an  entity  recognize  all  derivatives   as  either  assets  or
liabilities  in  the consolidated balance sheet and measure those instruments at
fair  value.

If  certain conditions are met, a derivative may be specifically designated as a
hedge, the objective of which is to match the timing of gain or loss recognition
on  the  hedging  derivative with the recognition of (i) the changes in the fair
value  of the hedged asset or liability that are attributable to the hedged risk
or  (ii)  the  earnings  effect  of  the  hedged  forecasted  transaction. For a
derivative  not  designated  as  a  hedging  instrument,  the  gain  or  loss is
recognized  in  income  in  the  period  of  change.

Historically,  the  Company  has not entered into derivatives contracts to hedge
existing  risks  or  for  speculative  purposes.

At March 31, 2002, the Company has not engaged in any transactions that would be
considered  derivative  instruments  or  hedging  activities.

Property  and  Equipment
------------------------
Property  and  equipment  are  stated  at  cost.  Depreciation  of  property and
equipment is calculated using the straight-line method over the estimated useful
lives  of  the  assets,  which  range  from  three  to  ten  years.  See Note 7.

Concentration  of  Credit  Risk
-------------------------------
The Company maintains its cash in several commercial accounts at major financial
institutions.  At  December  31,  2001,  the  Company's  cash  balance,  in  two
accounts,  exceeded  Federal  Deposit  Insurance  Corporation  (FDIC)  limits by
$24,824  and  $54,568.  At  March  31, 2002, the Company's cash balance exceeded
FDIC  limits  by  $1,231,628.

Goodwill
--------
Goodwill  represents  the  excess of the purchase price and related direct costs
over  the  fair  value of net assets acquired as of the date of the acquisition.
Goodwill  was  amortized on a straight-line basis over 10 years through December
31,  2001.  The  Company  periodically  reviews  its  goodwill  to  assess
recoverability  based  on  projected  undiscounted  cash  flows from operations.
Impairments  are  recognized in operating results when a permanent diminution in
value  occurs.




<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES (Continued)

Revenue  Recognition
--------------------
The Company recognizes revenue from product sales upon shipment to the customer.
Service  revenue  is  recognized  when  services  are  performed  and  billable.

Bad  Debts
----------
The  Company estimates bad debts utilizing the allowance method, based upon past
experience  and  current  market  conditions.

Product  Warranties
-------------------
The  Company  sold the majority of its products to consumers along with one-year
unconditional repair or replacement warranties.  Warranty expense is included in
cost  of  sales.

Research  and  Development
--------------------------
Research  and  development  expenses  are charged to operations as incurred. The
cost  of  intellectual  property  purchased  from  others  that  is  immediately
marketable or that has an alternative future use is capitalized and amortized as
intangible  assets.  Capitalized  costs  are  amortized  using the straight-line
method  over  the  estimated  economic  life, typically 10 years, of the related
asset.  The  Company periodically reviews its capitalized patent costs to assess
recoverability  based  on the projected undiscounted cash flows from operations.
Impairments  are  recognized in operating results when a permanent diminution in
value  occurs.

Advertising  Expenses
---------------------
Advertising  expenses  consist  primarily  of  costs  incurred  in  the  design,
development,  and  printing  of Company literature and marketing materials.  The
Company  expenses  all  advertising  expenditures  as  incurred.

Stock  Based  Compensation
--------------------------
The  Company  accounts  for stock issued for compensation in accordance with APB
25,   "Accounting  for   Stock  Issued  to  Employee."   Under  this   standard,
compensation cost is the difference between the exercise price of the option and
fair  market of the underlying stock on the grant date.  In accordance with SFAS
No. 123, "Accounting for Stock Based Compensation," the Company provides the pro
forma  effects  on net income and earnings per share as if compensation had been
measured  using  the  "fair  value  method"  described  therein.

Compensated  Absences
---------------------
Employees  of the Company are entitled to paid vacation, sick, and personal days
off, depending on job classification, length of service, and other factors.  The
Company  accrues  vacation  expense throughout the year and, if employees do not
utilize  their  allotment,  the Company will cash out all unused pay on the last
calendar  day  of  the  year.





<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES (Continued)

Income  Taxes
-------------
The  Company  accounts  for  income  taxes  in  accordance  with  SFAS  No. 109,
"Accounting  for  Income  Taxes,"  which  requires  recognition  of deferred tax
liabilities  and  assets for the expected future tax consequences of events that
have  been  included  in  the  financial  statements or tax returns.  Under this
method,  deferred  tax  liabilities  and  assets  are  determined  based  on the
difference  between  the  financial  statements  and  tax  basis  of  assets and
liabilities using statutory income tax rates in effect for the year in which the
differences  are  expected  to  reverse.

Investment  in  Securities
--------------------------
Investments  in debt and marketable equity securities are designated as trading,
held  to  maturity,  or  available  for  sale  in  accordance  with statement of
Financial  Accounting  Standards  (SFAS)   No.  115   "Accounting  for   Certain
Investments  in Debt and Equity Securities."  Trading securities are reported at
fair value, with changes in fair value included in earnings.  Available for sale
securities  are  reported  at  fair  value, with net unrealized gains and losses
included  as a component of equity.  Held-to-maturity securities are reported at
amortized cost.  Gains and losses on the sale of securities are determined using
the  specific  identification method.  For all investment securities, unrealized
gains  and losses that are other than temporary are recognized as a component of
earnings  in  the  period  incurred.  Market value is determined based on quoted
market  prices.  At  March  31, 2002, all of the Company's investment securities
were  classified  as  available  for  sale.  See  Note  8.

Earnings  Per  Share
--------------------
On  January  1,  1998,  the  Company  adopted  SFAS  No. 128, which provides for
calculation  of  "Basic"  and  "Diluted" earnings per share.  Basic earnings per
share  includes  no dilution and is computed by dividing net income available to
common  shareholders  by  the weighted average common shares outstanding for the
period.  Diluted earnings per share reflect the potential dilution of securities
that  could share in the earnings of an entity similar to fully diluted earnings
per  share.  Although  there are common stock equivalents outstanding, they were
not  included  in  the calculation of earnings per share because they would have
been  considered  anti-dilutive  for  the  periods  presented.

Accounting  Pronouncements
--------------------------
In  October  2001,  the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  No.  144,  "Accounting  for  the Impairment or
Disposal  of  Long-Lived  Assets"  (SFAS  No. 144).  SFAS 144 replaces SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be  Disposed  Of."  This  new standard establishes a single accounting model for
long-lived  assets to be disposed of by sale, including discontinued operations.
Statement  144 requires that these long-lived assets be measured at the lower of
carrying  amount or fair value less cost to sell, whether reported in continuing
operations  or  discontinued  operations.  This statement is effective beginning
for  fiscal  years after December 15, 2001, with earlier application encouraged.
The  Company  adopted  SFAS  144,  which  did  not have a material impact on the
financial  statements  of the Company at December 31, 2001 or at March 31, 2002.



<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES (Continued)

Accounting  Pronouncements  (continued)
---------------------------------------
In  October  2001,  the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  No.  143,  "Accounting  for  Asset  Retirement
Obligations" (SFAS No. 143).  SFAS No. 143 establishes guidelines related to the
retirement  of  tangible  long-lived  assets  of  the Company and the associated
retirement  costs.  This  statement  requires that the fair value of a liability
for  an  asset  retirement obligation be recognized in the period in which it is
incurred  if  a  reasonable  estimate of fair value can be made.  The associated
asset  retirement  costs  are  capitalized as part of the carrying amount of the
long-lived  assets.  This statement is effective for financial statements issued
for  the fiscal years beginning after June 15, 2002 and with earlier application
encouraged.  The  Company  adopted  SFAS  No. 143, which did not have a material
impact  on  the  financial  statements of the Company at December 31, 2001 or at
March  31,  2002.

In June 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS No.
142,  "Goodwill  and  Other  Intangible  Assets".  SFAS No. 141 provides for the
elimination  of  the  pooling-of-interests  method  of  accounting  for business
combinations  with  an  acquisition  date of July 1, 2001 or later. SFAS No. 142
prohibits  the  amortization  of  goodwill  and  other  intangible  assets  with
indefinite  lives  and requires periodic reassessment of the underlying value of
such assets for impairment. SFAS No. 142 is effective for fiscal years beginning
after  December  15, 2001. An early adoption provision exists for companies with
fiscal years beginning after March 15, 2001.  Application of the nonamortization
provision  of SFAS No. 142 is expected to result in an increase in net income of
approximately  $10,000  in  fiscal 2002. The Company is currently evaluating the
impact  of  the  transitional  provisions  of  the  statement.

In  September  2000,  the FASB issued SFAS No. 140 "Accounting for Transfers and
Servicing  of  Financial  Assets  and   Extinguishment  of  Liabilities."   This
statement  provides  accounting  and  reporting  standards  for   transfers  and
servicing  of  financial  assets  and  extinguishment  of  liabilities  and also
provides  consistent  standards for distinguishing transfers of financial assets
that  are  sales  from  transfers  that are secured borrowings.  SFAS No. 140 is
effective for recognition and reclassification of collateral and for disclosures
relating  to  securitization transactions and collateral for fiscal years ending
after  December  15,  2000,  and  is  effective  for  transfers and servicing of
financial  assets  and  extinguishments of liabilities occurring after March 31,
2001.  The  Company  believes that the adoption of this standard will not have a
material  effect  on  the Company's results of operations or financial position.

Shipping  and  Handling  Fees  and  Costs
-----------------------------------------
The  Emerging  Issues Task Force ("EITF") issued EITF No. 00-10, "Accounting for
Shipping and Handling Fees and Costs", which was adopted during fiscal 2001. The
impact  of adopting EITF No. 00-10 was to increase revenues and cost of sales by
approximately  $19,489  and  $16,955  in fiscal 2001 and 2000, respectively. All
amounts  in  the  accompanying  consolidated  statements  of  operations  and
comprehensive  loss  have  been  reclassified  to  reflect  this  adoption






<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  3  -  GOING  CONCERN

The   accompanying   consolidated  financial   statements,   which   contemplate
continuation of the Company as a going concern, have been prepared in conformity
with  accounting  principles generally accepted in the United States of America.
The Company has, however, sustained substantial operating losses in recent years
and has used substantial amounts of working capital in its operations.  At March
31, 2002, intangible assets comprise a material portion of the Company's assets.
The  recovery  of these intangible assets is dependent upon achieving profitable
operations.  The  ultimate  outcome  of  these uncertainties cannot presently be
determined.   Management  is  actively  seeking  additional  equity   financing.
Additionally, management believes that prior acquisitions and the acquisition of
Power  Sources,  Inc. technology will lead to the overall structure necessary to
fulfill  the  Company's  current  strategic  plans.

In  view  of  these matters, realization of a major portion of the assets in the
accompanying  balance  sheet  is  dependent  upon  continued  operations  of the
Company,  and  the  success  of its future operations.  Management believes that
actions presently being taken to obtain additional equity financing and increase
sales  provide  the  opportunity  to  continue  as  a  going  concern.

NOTE  4  -  RELATED  PARTY  TRANSACTIONS

The  Company  has  received  funding on several occasions from Simco Group, Inc,
("Simco"),  a  separate  legal entity wholly-owned by the Company's chairman and
chief  executive  officer.

During  2001,  Simco  was  issued  262,500 shares of common stock for payment of
loans,  interest  and  financing  fees  and  consulting  services.

During  2000,  Simco converted $400,000 of its loans to the Company into 800,000
shares  of  the  Company's  common  stock.  See  Note  11.

See  Note  10  regarding  loans  from  shareholders.

NOTE  5  -  ACQUISITIONS

Acquisition  of  Power  Sources,  Inc.
--------------------------------------
On  December 1, 2001, PowerCold acquired all of Power Sources, Inc. (hereinafter
"PSI"),  a  privately  held  firm  engaged  in  the  developing and marketing of
cogeneration  systems  technology.  PSI was a wholly owned subsidiary of Utility
Metal  Research  Corp. (UMRC).  The business activity of PSI had previously been
part  of  the  activities  of  UMRC.

In  the acquisition, PowerCold agreed to issue over a two-year period a total of
150,000  shares  of  PowerCold  common stock and 150,000 common stock options to
UMRC.  At  December 31, 2001, the Company had issued 50,000 shares of its common
stock  (valued  at  $108,500)  and 50,000 of its common stock options (valued at
$66,500)  to  PSI,  and  had  recorded  a  commitment of $227,000 for the future
issuance of the remaining stock and options.  This acquisition was accounted for
under  the  purchase  method  of  accounting.






<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  5  -  ACQUISITIONS (Continued)

Acquisition  of  Power  Sources,  Inc. (Continued)
--------------------------------------------------
Acquired  in  the  transaction  were  trade  receivables of $921,050, which were
December  31,  2001  revenues,  with  $721,392  accounts  payable  attached  and
contracts  in  place  of  $331,175 with $281,499 accounts payable attached.  The
Company  also  acquired  technology  rights  valued at $222,666.  The assets and
liabilities of PSI had been transferred to PSI by UMRC upon the creation of PSI.
PSI  had no substantial operations prior to PowerCold's acquisition in the month
of  December  2001.

Acquisition  of  Heating  and  Air  Conditioning  System  Technology
--------------------------------------------------------------------
On  December 1, 2000, the Company acquired the technology rights, patent rights,
and  license  agreement  for  integrated piping technology for a heating and air
conditioning   system.    This   acquisition   gave   the   Company   exclusive,
non-transferable United States transfer rights to the technology and all related
assets.  In  this  transaction, the Company paid $65,000 cash, assumed two lines
of  credit (see Note 10), forgave a payment of $28,571 from projects in process,
issued  100,000  shares  of  its  common stock (see Note 12), granted 150,000 of
stock  options  at  $1.00  per share (see Note 13), and agreed to the payment of
royalties  at  no  more  than  $3,000  per month for one year.  In addition, the
Company hired the seller of the technology for an annual salary of $70,000, with
annual  renewals,  based  upon  performance  as  defined   within  the  purchase
agreement.  This  technology  was  then placed into a newly formed, wholly-owned
subsidiary  of  the  Company,  Ultimate  Comfort  Systems.

Acquisition  of  Rotary  Power  Enterprise,  Inc.
-------------------------------------------------
Pursuant  to  the  terms  of  the  Rotary  Power  Enterprise,  Inc.  acquisition
agreement,  effective  October  1,  1998,  the  Company issued 100,000 shares of
common  stock  in  exchange  for  100%  of the outstanding stock of Rotary Power
Enterprise,  Inc.  Rotary  Power Enterprise, Inc. was formed during 1998 for the
purpose  of  developing  a  new  product  line  for  PowerCold.























<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  6  -  INVENTORY

Inventories  are  stated  at  the  lower  of average cost or market. The cost of
finished goods includes the cost of raw material, direct and indirect labor, and
other  indirect  manufacturing  costs.

Inventories  at  December  31,  2001,  December 31, 2000 and 1999 consist of the
following:

                          March 31, 2002    December 31, 2001  December 31, 2000
                         -----------------  -----------------  -----------------

Materials inventory      $        153,041   $        133,432   $        132,851
Finished goods inventory          108,421            108,421            108,421
Work in process                    13,579                -                  -
                         -----------------  -----------------  -----------------
                         $        275,041   $        241,853   $        241,272
                         =================  =================  =================

Finished  goods inventory consists of the specialized quick-freezing unit of the
Company's  Channel  Freeze  Technology,  Inc.  subsidiary.

NOTE  7  -  PROPERTY,  EQUIPMENT  AND  INTANGIBLES

Property  and  equipment  is  summarized  as  follows:

                          March 31, 2002    December 31, 2001  December 31, 2000
                         -----------------  -----------------  -----------------
Machinery and equipment  $        160,667   $         93,272   $         87,342
Prototypes and molds               71,030             71,030             71,030
Furniture and fixtures             30,480             30,480              7,614
                         -----------------  -----------------  -----------------
Total Property and
  Equipment                       262,177            194,782            165,986
Less:  Accumulated
Depreciation                      122,213            117,122             92,416
                         -----------------  -----------------  -----------------
Net Property and
  Equipment              $        139,964   $         77,660   $         73,570
                         =================  =================  =================

Depreciation  expense  for  the  three months ended March 31, 2002 and the years
Ended   December  31,  2001  and  2000  was  $3,422,  $24,706   and  $6,544  and
respectively.














<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  7  -  PROPERTY,  EQUIPMENT  AND  INTANGIBLES  (CONTINUED)

The  Company's  intangible  assets  are  summarized  as  follows:


                          March 31, 2002    December 31, 2001  December 31, 2000
                         -----------------  -----------------  -----------------
Patents and related
  technology             $      1,907,567   $      1,907,567   $      1,684,001
Goodwill                          105,269            105,269            105,269
                         -----------------  -----------------  -----------------
Total Intangibles               2,012,836          2,012,836          1,789,270
Less: Accumulated
  Amortization                    740,151            713,033            566,251
                         -----------------  -----------------  -----------------
Net Intangibles         $       1,272,685   $      1,299,803   $      1,223,019
                         =================  =================  =================

Amortization  expense  for the three months ended March 31, 2002 and years ended
December  31,  2001  and  2000 was $27,118, $146,782 and $147,684, respectively.

NOTE  8  -  INVESTMENTS

In  1996,  as  part  of  a  planned  merger, which never took place, the Company
invested  $1,000,000  in Rotary Power International, Inc. (hereinafter "RPI") in
exchange  for  2,000,000  shares  of  RPI's  common  stock.   As  the  Company's
investment  in  RPI  represented more than 20% but less than 50% of RPI's common
stock  outstanding,  the  equity  method  was  used to account for the Company's
interest.  Although  the  Company  advanced additional funds of $216,768 to RPI,
deteriorating  financial  conditions  and  increasing  losses  in RPI caused the
Company  to  write  off  its  entire  investment  in  RPI  by  the  end of 1997.

During 2001, the Company's investment in RPI decreased to less than 20% of RPI's
stock  outstanding.  In  view  of  the  changed  circumstances,   the  Company's
management  elected  to  recognize  its  investment in RPI as available-for-sale
securities.  As  of December 31, 2001, the fair market value of these securities
was  $970,000  at  March  31,  2002  the fair market value of the securities was
reduced  to $485,000, which has been recognized as other comprehensive income in
accordance  with  SFAS  No.  115.

NOTE  9  -  LOAN  RECEIVABLE

In  the  quarter  ended  March  31,  2000, the Company loaned Alturdyne, Inc., a
privately held firm, $250,000.  Subsequent to March 31, 2002, the Company signed
a  letter  of  intent  to  acquire  Alturdyne,  Inc.













<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  10  -  NOTES  PAYABLE

At  December  31,  2001,  notes  payable  consisted  of  the  following:

A  note  payable  to  Southtrust  Bank,  secured  by  G.  Briley,  the Company's
president,  for  $1,940  with an annual interest rate of 14.99%.  This unsecured
note  was  repaid  in  March  2002.

Two  lines  of credit were assumed as part of the consideration for the December
2000  acquisition  of  a technology license and intellectual property. (See Note
5.)  One line of credit is payable to Royal Bank of Canada for $34,014 U.S., and
the  second  to  T.  D.  Bank  for  $1,001 U.S. was repaid during the year ended
December  31,  2001.

In  2001,  the Company received $165,000 in loan proceeds from its shareholders.
The  unsecured  loans, bearing interest at 10% and with no stated maturity, were
repaid  before  year-end  with  a  combination  of  $140,000 of common stock and
$25,000  of  cash.

NOTE  11  -  PREFERRED  STOCK

The  Company  is  authorized  to  issue  5,000,000  shares  of  $0.001 par value
preferred  stock, which contain no voting privileges.  Shareholders are entitled
to cumulative dividends, and each share of preferred stock may be converted into
the  Company's  common  stock.

At December 31, 1999, the Company had 1,250,000 shares of preferred stock issued
and  outstanding.  This stock was designated as Series "A" Convertible Preferred
Stock  and  was  issued  to  a  single  investor.

On  June  30,  2000,  100%  of  the Company's outstanding Series "A" Convertible
Preferred  Stock  was  converted  to the Company's common stock.  The conversion
resulted in the issuance of 1,354,785 shares of the Company's common stock at an
approximate  conversion  rate of one share of preferred stock for 1.08 shares of
common  stock.  Subsequent to the stock conversion, the Company did not have any
shares  of  preferred  stock  outstanding.

NOTE  12  -  COMMON  STOCK

Upon  incorporation,  the  Company was authorized to issue 200,000,000 shares of
its  $0.001  par  value  common  stock.

During the three months ended March 31, 2002 the Company issued 1,221,600 shares
of  common  stock  for  cash  of  $2,015,707; 30,000 shares of Company stock for
compensation  at  the  fair  market value of the stock of $1.00 per share and an
additional  165,955  shares of common stock were issued for services at the fair
market  value  of  the  stock  of  $1.14  per  share.











<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  12  -  COMMON  STOCK (Continued)

During  the  year ended December 31, 2001, the Company issued for cash 1,836,214
shares  of common stock with 603,083 warrants attached.  The stock was valued at
$1,284,020  and  the  warrants  were valued at $405,480.  These warrants have an
average  exercise price of $1.10 and expire between May 31, 2002 and December 6,
2003.  An  additional  308,603  shares  of  common stock were issued for cash of
$150,833.  The  Company  issued  85,679 shares of common stock as commissions to
various  promoters  for  selling  its  stock.  This stock was valued at the fair
market value of $148,503.  The Company issued 385,500 shares of common stock for
consulting  services  valued at $115,000, general services valued at $25,000 and
compensation  valued  at  $56,500.  The  Company issued 372,081 shares of common
stock  to  repay loans in the amount of $207,500 and 240,419 common stock shares
for  interest  and  financing  expenses of $122,250.  Additionally 45,000 common
stock  shares were issued for $22,500 in prepaid rent, 35,000 shares were issued
to  satisfy $26,418 of accounts payable and 50,000 common stock shares valued at
$108,500  to  acquire  Power  Sources,  Inc.  See  Note  5.

During  the year ended December 31, 2000, the Company issued 4,792,742 shares of
its  common  stock of which 1,329,602 shares were issued for cash of $1,158,000,
615,000  shares  for prepaid consulting valued at $307,500, 593,355 for services
valued  at $296,678, 100,000 shares for a technology license (see Note 5) valued
at  $50,000,  and  800,000  shares for debt valued at $400,000.  Included in the
aforementioned  issuances  is  a  total  of 1,480,000 shares issued to officers,
directors,  or  affiliates  of  the  Company  which   are  subject  to  transfer
restrictions as defined by Rule 144 of the Securities Act of 1933.  In addition,
1,354,785  shares were issued for the conversion of 100% of the Company's Series
"A"  Convertible  Preferred  Stock.  See  Note  11.

During  the year ended December 31, 1999, the Company issued 1,042,641 shares of
its  common  stock  of  which  483,641 shares were issued for services valued at
$162,110  and  559,000  shares  were  issued  for  cash  of  $348,750.

NOTE  13  -  STOCK-BASED  COMPENSATION  AND  STOCK  OPTIONS

During  the three months ended March 31, 2002 the Company has not had any option
activity.

During  2001,  the  Company  authorized and issued 895,000 options at an average
exercise  price  of $0.96 for services, compensation and the acquisition of PSI.
See  Note  5.

During  2000, the Company authorized and issued a total of 750,000 options at an
average  exercise  price of $1.20 for investment funding, and 250,000 options at
an  average  exercise  price  of  $0.50  as  compensation.

The  Company  applies  APB  Opinion  No.  25  in  accounting  for  options  and,
accordingly, recognized no compensation cost for its stock options in 2001, 2000
and  1999.  The following reflects the Company's pro forma net loss and net loss
per  share  had the Company determined compensation costs based upon fair market
values of options at the grant date, as well as the related disclosures required
by  SFAS  123:






<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  13  -  STOCK-BASED  COMPENSATION  AND  STOCK  OPTIONS (Continued)

Pro  forma  net  loss  and  earnings per share had the Company accounted for its
options  under  the  fair  value  method  of  SFAS  123  are  as  follows:

                                             Year ended December 31,
                                        ------------------------------------
                                               2001              2000
                                        -----------------  -----------------
Net loss as reported                    $     (2,328,402)  $     (1,319,195)
Adjustment  required  by  SFAS  123             (345,277)          (287,273)
                                        -----------------  -----------------
Pro forma net loss                      $     (2,673,679)  $     (1,606,468)
                                        =================  =================
Pro forma net loss per share,
  Basic and diluted                     $          (0.18)  $          (0.16)
                                        =================  =================


                                        Number of Shares   Weighted Average
                                        Under Option       Exercise Price
                                        -----------------  -----------------
Outstanding, January 1, 2000                   2,947,558   $           1.01
     Granted                                   1,000,000               0.77
     Exercised                                  (450,000)              0.50
     Forfeited                                       -                 -
     Expired                                    (700,000)              2.29
                                        -----------------  -----------------
Outstanding, December 31, 2000                 2,797,558   $           0.74
                                        =================  =================
Exercisable, December 31, 2000                 2,797,558   $           0.74
                                        =================  =================

Outstanding January 1, 2001                    2,797,558   $           0.74
     Granted                                     895,000               0.96
     Exercised                                       -                 -
     Forfeited                                       -                 -
     Expired                                         -                 -
                                        -----------------  -----------------
Outstanding March 31, 2002                     3,692,558   $           0.84
                                        =================  =================
Exercisable March 31, 2002                     3,692,558   $           0.84
                                        =================  =================
Weighted average fair value of
  options granted during 2001                              $           0.39
                                                           =================

At  December 31, 2001, exercise prices for outstanding options ranged from $0.50
to  $1.36.  The  weighted average contractual life remaining of such options was
2.7  years.

In  accordance with Statement on Financial Accounting Standard No. 123, the fair
value  of the options granted was estimated using the Black-Scholes Option Price
Calculation.  The  following  assumptions  were made to value the stock options:




<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  13  -  STOCK-BASED  COMPENSATION  AND  STOCK  OPTIONS (Continued)

                    Risk-free Interest Rate          5%
                    Expected Life               1 to 5 years
                    Expected Volatility             75%

The Black-Scholes option valuation model was developed for use in estimating the
fair  value  of traded options, which have no vesting restrictions and are fully
transferable.

 In  addition,  option  valuation  models require the input of highly subjective
assumptions  including  the  expected   stock  price  volatility.   Because  the
Company's  employee  stock  options have characteristics significantly different
from  those  of  traded  options,  and  because  changes in the subjective input
assumptions  can  materially  affect  the  fair  value estimate, in management's
opinion,  the  existing  models  do  not  necessarily  provide a reliable single
measure  of  the  fair  value  of  its  employee  stock  options.

NOTE  14  -  REPORTABLE  SEGMENTS

PowerCold  currently  has  seven  reportable  segments:  Nauticon Inc., RealCold
Products,  Inc.,  Technicold  Services,  Inc.,  Rotary  Power  Enterprise, Inc.,
Channel  Freeze  Technologies,  Inc.,  Ultimate  Comfort Systems, Inc. and Power
Sources,  Inc.  Nauticon Inc. offers a product line of evaporative heat exchange
systems  for  the  HVAC  and  refrigeration industry.  Technicold Services, Inc.
offers  consulting  engineering  services,  including  process safety management
compliance  and  ammonia  refrigeration  technicians  and  supervisors. RealCold
Products,  Inc.  designs  and  produces  unique  products  for the refrigeration
industry.  Rotary  Power  Enterprise, Inc. provides customized rotary engines to
power  a  variety  of  chiller  and   refrigeration  systems.   Channel   Freeze
Technologies,  Inc.  generates  revenue through the manufacture and sale of bulk
freezing  systems.  Ultimate  Comfort Systems, Inc. holds the technology rights,
patent  rights  and  license  agreement  for an integrated piping technology for
heating  and  air  conditioning  systems.  Ultimate  Comfort  Systems, Inc. also
provides  consulting  services  related to this technology.  Power Sources, Inc.
(PSI)  holds  the  technology rights to design and engineer cogeneration systems
that use engine driven generators to produce both electrical and thermal energy.
PSI  will  also  package  and  market  this  technology.

Segment information (after intercompany eliminations) for the three months ended
March  31,  2002 and the years ended December 31, 2001, and 2000 are as follows:

















<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  14  -  REPORTABLE  SEGMENTS (Continued)

                                  March 31, 2002  Dec. 31, 2001   Dec. 31, 2000
                                  --------------  --------------  --------------
Revenues:
  Ultimate Comfort Systems, Inc.  $       2,498   $     282,733   $         -
  Nauticon, Inc.                            -               -             3,754
  PowerCold Products, Inc.              325,089         531,605         309,111
  Technicold Services, Inc.              23,163          67,751          82,175
  Rotary Power Enterprise, Inc.             -               -               -
  Channel Freeze Technologies, Inc.         -               -               -
  Power Sources, Inc.                       -               -               -
  Corporate                                 -               -               -
                                  --------------  --------------  --------------
TOTAL REVENUES                    $     350,750   $     882,089   $     395,040
                                  ==============  ==============  ==============
Operating  income  (loss):
  Ultimate Comfort Systems, Inc.  $         -     $    (209,908)  $         -
  Nauticon, Inc.                        (67,486)        (71,676)        (33,331)
  PowerCold Products, Inc.              (15,380)       (944,997)       (504,144)
  Technicold Services, Inc.            (193,920)          7,295        (109,771)
  Rotary Power Enterprise, Inc.           1,344        (190,834)       (109,025)
  Channel Freeze Technologies, Inc.     (85,137)        (80,120)       (215,808)
  Power Sources, Inc.                   (14,281)            -               -
  Corporate                            (382,804)       (769,792)       (439,575)
                                  --------------  --------------  --------------
TOTAL OPERATING LOSS              $    (757,664)  $  (2,260,002)  $  (1,411,654)
                                  ==============  ==============  ==============
Identifiable  assets:
  Ultimate Comfort Systems, Inc.  $     144,781   $     150,429   $     152,415
  Nauticon, Inc.                        223,085         239,853         280,375
  PowerCold Products, Inc.              478,292         336,398         132,371
  Technicold Services, Inc.              24,819          26,318         120,833
  Rotary Power Enterprise, Inc.          37,537          74,642          75,386
  Channel Freeze Technologies, Inc.     777,373         683,232         848,777
  Power Sources, Inc.                   921,150         921,150             -
  Corporate                           2,490,299       1,625,894         388,438
                                  --------------  --------------  --------------
TOTAL IDENTIFIABLE ASSETS         $   5,097,336   $   4,057,916   $   1,998,595
                                  ==============  ==============  ==============
Depreciation  and  amortization:
  Ultimate Comfort Systems, Inc.     $     2,663  $      10,593   $         -
  Nauticon, Inc.                          16,769         67,075          83,046
  PowerCold Products, Inc.                   -            4,657             900
  Technicold Services, Inc.                2,861         26,804          12,090
  Rotary Power Enterprise, Inc.              223            530             334
  Channel Freeze Technologies, Inc.       14,067         57,124          57,124
  Power Sources, Inc.                      5,666          1,865             -
  Corporate                                  -           16,667             -
                                  --------------  --------------  --------------
TOTAL DEPRECIATION AND
  AMORTIZATION                    $      42,248   $     185,315   $     153,494
                                  ==============  ==============  ==============





<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  14  -  REPORTABLE  SEGMENTS (Continued)

All  of  the Company's assets are held within the United States and all material
revenue  was  generated  within  the  United  States.

PowerCold's  reportable  segments  are  strategic  business   units  that  offer
different  products  or  services.  They  are  managed  separately  because each
business  requires  different  technology  and  marketing  strategies.

NOTE  15  -INCOME  TAXES

Income taxes are provided based upon the liability method of accounting pursuant
to  SFAS  No.  109 "Accounting for Income Taxes."  Under this approach, deferred
income  taxes  are  recorded  to reflect the tax consequences in future years of
differences  between the tax basis of assets and liabilities and their financial
reporting  amounts  at each year-end.  A valuation allowance is recorded against
deferred tax assets if management does not believe the Company has met the "more
likely  than  not" standard imposed by SFAS No. 109 to allow recognition of such
an  asset.

At  December  31,  2001,  the Company had net deferred tax assets of $1,380,000,
principally  arising  from  net  operating  loss  carryforwards  for  income tax
purposes.  As  management of the Company cannot determine that it is more likely
than  not  that  the  Company  will  realize the benefit of the net deferred tax
asset,  a  valuation  allowance  equal  to  the  net deferred tax asset has been
established  at  March  31,  2002.

The Company incurred accumulated net operating losses for income tax purposes of
approximately  $3,400,000 for the year ended December 31, 2000.  At December 31,
2001,  the Company's net operating losses increased by approximately $2,200,000.
At March 31, 2002, the Company's net operating losses increased by approximately
$181,000.  The  Company's  net  operating  loss  carryforwards  for  income  tax
purposes  are  approximately  $5,700,000,  which  will  expire  on various dates
through  the  year  2021.

The Company recorded approximately $280,000 and $341,000 paid by the issuance of
common  stock for expenses in the three months ended March 31, 2002 and the year
ended  December  31,  2001,  respectively.

NOTE  16  -  LEASES

Capital  Lease
--------------
In  1999,  the Company acquired a forklift, which was financed through a capital
lease.  This  capital  lease  is  payable  in monthly installments of $297, with
interest  at  9.5%,  through  April  2004.  Aggregate  yearly maturities of this
capital  lease  for  the  years  after  March  31,  2002  are  as  follows:

                 Year Ending December 31,        Amount
                 ------------------------     ------------
                           2002               $     1,474
                           2003                     3,298
                           2004                     2,115
                                              ------------
                              Total           $     6,887
                                              ============


<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE  16  -  LEASES (Continued)

Operating  Leases
-----------------
The  Company  leases  sales  offices and plant space in LaVernia, Texas under an
operating lease agreement, which expires March 30, 2004.  Total rent expense for
the  year  ended  December  31,  2001  was  $89,999.

Future  minimum  rental  commitments  are  as  follows:


                 Year Ending December 31,        Amount
                 ------------------------     ------------
                           2002               $    36,000
                           2003                    36,000
                           2004                    12,000
                                              ------------
                              Total           $    80,000
                                              ============

The  Company's  subsidiary,  Technicold  Services, Inc. has a one year lease for
office  space  in  San Antonio, Texas.  The rent is $675 per month and the lease
expires  September  30,  2002.

NOTE  17  -  LITIGATION

On  August  31,  2000, Nauticon Inc. and its former president agreed upon a full
and  final  settlement of the lawsuit mentioned above.  This settlement resulted
in  a  gain  for  the  Company  of  $88,600  which was recorded as other income.

NOTE  18  -  SUBSIDIARY  -  CHANNEL  FREEZE  TECHNOLOGIES,  INC.

On  May  18,  1998,  Channel  Freeze  Technologies,  Inc. (CFTI) was formed as a
wholly-owned  subsidiary  of  the  Company  to  accommodate  the  acquisition of
intellectual  property  assets  related to Channel Ice Technology.  On September
15,  1998, the Company entered into an agreement to acquire eighty percent (80%)
of the assets (primarily patents) of Channel Ice Technologies from SIR Worldwide
LLC  (SIR)  for  $850,000  and  options  for  SIR  to purchase 400,000 shares of
PowerCold  stock  at  a price of $2.50 per share, for a period not to exceed two
years  from  the  date  of  closing.  After  the  Company  made cash payments of
$550,000  in  1998  and $100,000 in 1999, the remaining acquisition liability of
$200,000  is  recorded  in the accompanying financial statements as "acquisition
payable."  The  agreement  also  required the Company to issue two-thirds of the
stock  of  CFTI  to  SIR,  which  would  leave the Company with only a one-third
ownership  in  CFTI.  The  board of directors of the Company passed a resolution
approving  the  issuance  of  two-thirds  of the shares of stock of CFTI to SIR;
however,  the  shares were never issued.  The agreement provided the Company the
ability  to  increase (buy back) their ownership interest (up to 80%) in CFTI by
making  additional payments totaling $5,950,000.  For each $1 million dollars in
Channel  Ice  Technology  unit  sales,  PowerCold shall acquire an additional 1%
equity  interest  in CFTI for each payment of $85,000, up to a maximum ownership
interest  by  PowerCold  in  CFTI  of  80%.






<page>
                             POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002

NOTE 18 - SUBSIDIARY - CHANNEL FREEZE TECHNOLOGIES, INC. (Continued)

Also,  as  part  of  the  purchase  agreement,  CFTI  has  agreed  to additional
compensation  to  SIR  by  payment  of either a 10% net fee payment or a 13% net
sales  fee payment.  Ten percent net fee payments are payments of 10% of the net
gross  invoice  price  on all Channel Ice Technology Units sold to distributors.
Thirteen  percent  net fee payments are payments of 13% of the net gross invoice
price  on  all  Channel  Ice  Technology Units of direct sales to end users.  At
March 31, 2002 and at December 31, 2001 and 2000, no additional compensation was
paid  or  owed  to  SIR  in  connection  with  this  purchase  agreement.

Since  1999, the Company has maintained its investment in CFTI as a wholly owned
subsidiary.  The  patent  and  intellectual  property owned by the subsidiary is
consolidated  with  the  Company's  other  activities.

The  Company  is  currently  evaluating  its  continuation  of   Channel  Freeze
Technologies,  Inc.  as  an  operating  entity  and is also negotiating with the
previous  owners  of  the related technology.  Channel Freeze Technologies, Inc.
was  formed  in  September  1998,  as a PowerCold subsidiary, to acquire certain
assets  of  Channel  Ice  Technologies.  The  technology  includes a proprietary
patent  for  an  economical multi-purpose freezing system.  Since the Company is
allocating  all  its  resources  into  its  current product line, management has
decided there is limited synergy with the Channel Freeze technology and does not
envision  continuing  development  of  these  products.

NOTE  19  -  COMMITMENTS  AND  CONTINGENCIES

Accounts  Payable
-----------------
The  Company  has trade accounts payable that date back to 1996.  Management had
tried  to  contact  these vendors to arrange settlement agreements.  Included in
the caption Commitments and Contingencies on the Company's balance sheet are the
balances  in  the  aggregate  amount  of $168,300 from vendors that could not be
contacted  or  did  not  respond  to  management's  correspondence.

Royalty  Agreement
------------------
See  Note  5  regarding  December  1,  2001  royalty  agreement.

Additional  Compensation
------------------------
See  Note  18  regarding  potential  payments  to  SIR.

NOTE  20  -  SUBSEQUENT  EVENT

See  Note  9  regarding  acquisition.












<page>
                      POWERCOLD CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                        For the period ending March 31, 2002

ITEM  2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL
CONDITION  AND  RESULTS  OF  OPERATIONS.

Forward  looking statements made herein are based on current expectations of the
Company  that  involves  a  number  of risks and uncertainties and should not be
considered  as guarantees of future performance. These statements are made under
the  Safe  Harbor  Provisions of the Private Securities Litigation Reform Act of
1995.  The factors that could cause actual results to differ materially include;
interruptions  or  cancellation  of  existing  contracts,  impact of competitive
products  and  pricing, product demand and market acceptance risks, the presence
of  competitors  with  greater  financial  resources  than  the Company, product
development  and  commercialization risks and an inability to arrange additional
debt  or  equity  financing.

GENERAL  FINANCIAL  ACTIVITY

The company has reorganized into four subsidiary companies, effective January 1,
2002:  PowerCold  Products,  Inc., supporting all "Cold" related products, Power
Sources,  Inc.,  supporting  all  "Power"  related  products,  Ultimate  Comfort
Systems,  Inc., supporting proprietary applications for heating, ventilating and
air  conditioning  systems  (HVAC),  and  Technicold  Services,  Inc.   provides
engineering  consulting  services  to the air condition, refrigeration and power
industries.

PowerCold  Products,  Inc.  -  designs,  manufactures  and markets a proprietary
product  line  of  patented evaporative condensers and heat exchange systems for
the  heating,  ventilation  and air condition (HVAC) and refrigeration industry.
PowerCold Products supports the Company's Nauticon and EV Chill product lines by
engineering design, manufacturing and packaging its products. PowerCold Products
also  support  custom  refrigeration  systems  by  engineering,   designing  and
packaging  special  customer  orders.  There  are  proposed alliances with other
refrigeration  companies,  whereas  PowerCold   Products  will  package  various
components  adding  value  for  a  total  turnkey air condition or refrigeration
system.

The  Nauticon  patented  products  are  innovative  in  design, use new material
technology,  are  simple to manufacture, and have a low operating cost. They are
used  for  evaporative  condensers,  fluid  coolers,  sub-coolers commercial and
industrial  refrigeration  system  components, liquid recalculating packages and
custom  refrigeration  products  for  commercial  and  industrial  use. Nauticon
products  can  reduce power cost in the air condition and refrigeration industry
by  up  to  40%  making these units contribute to the utilities' needs to reduce
power  demand.  PowerCold  has  invested  over $1M in operating capital into the
Nauticon  product  over the last few years.  Initially major operating and legal
expenses  due  to  previous   inept  Nauticon  management   hindered  sales  and
production.  Therefore  Nauticon  did not meet its sales and revenue projections
over  the  past  few  years.  Subsequently  during  2001  the  Nauticon  product
technology  was greatly enhance from a single 40-ton evaporative condenser up to
five  multi  configured  units  producing  up  to 1,000 ton of air conditioning.
Management  believes that Nauticon evaporative condenser will more than meet its
sales  objectives  in  2002.  There  are  over  200  units  installed in various
commercial  buildings.






<page>
                      POWERCOLD CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                        For the period ending March 31, 2002

The  Chiller  line of products includes: EV-Chill: water chillers, namely, water
chilling  and  refrigeration  systems utilizing water evaporative condensers for
commercial  and  industrial  use;  EV-Cool:  air  conditioning  units  utilizing
evaporative  condensers  for  commercial  and  industrial  use;  EV-Dry:
dehumidification system utilizing evaporative fluid coolers to cool warm dry air
for  commercial  and  industrial  use;  EV-Frig:  refrigeration condensing units
utilizing  evaporative  condensers  for  commercial  and  industrial  use.

Power  Sources,  Inc.  -  The  Company  acquired  100% of Power Sources, Inc. in
December  1, 2001, Power Sources designs and markets cogeneration systems, which
use  engine-driven generators to produce both electricity and thermal power as a
way  of  cutting  power  costs.  Cogeneration systems, also known as distributed
generation;  use  engine  driven  generators  to produce both electric power and
thermal  energy. As a result of the acquisition, PowerCold will be able to offer
customers  complete  self-contained  heating/chilling units to reduce peak power
requirements  as well as the ability to self-generate all the power needed for a
commercial  building.  Units  range  in  size from 100 kilowatts to 2 megawatts.
Customers  can  expect  to  reduce  power  or  energy  costs  by  40%  or  more.

During  2002,  Rotary  Power  Enterprise, Inc. will be dissolved as an operating
entity.  The assets of Rotary Power Enterprise were transfer into Power Sources,
Inc.  a new corporation formed in December 2001 to support the Company's "Power"
business  operations.

The  Company  has  a  Strategic  Alliance  with  Alturdyne for manufacturing and
marketing  of  its respective products.  Alturdyne is an innovative manufacturer
of  standby  diesel generator sets, turbine and rotary generator sets, pumps and
natural  gas  engine-driven  chillers.  Alturdyne's  strength  lies in its power
engineering  personnel,  who  are  knowledgeable  in the generator set business,
telephone  company  applications,  small  turbines, rotaries and chillers. Their
capabilities and experience in developing low cost, customer power packages that
meet  specific  needs  have  established Alturdyne's excellent reputation in the
industry.  Alturdyne's added expertise is in the design and production of rotary
engines.

Subsequent Event: Effective April 2, 2002, PowerCold Corporation signed a letter
of  intent  to acquire Alturdyne, Inc. a San Diego based manufacturer of diesel,
natural  gas,  turbine and rotary generator sets.  PowerCold expects to complete
the acquisition by May 31, 2002 after a further detailed audit. The transaction,
which  would be non-dilutive for present shareholders, involves a combination of
cash and stock. Specific terms were not disclosed. Under the proposed agreement,
PowerCold  would  acquire  all  of Alturdyne's assets and intellectual property.
Alturdyne  would  then   operate  as  an  independent  wholly   owned  PowerCold
subsidiary.  Alturdyne  sales  during  the  past  10 years have been in the $6.5
million to $11 million range with seven profitable sales years including each of
the  last two years.  Alturdyne has developed, packaged and installed over 4,000
engine  power  units  around  the  world.

During  2002, Channel Freeze Technologies, Inc. may be dissolved as an operating
entity.  The  Company is negotiating with the previous owners of the technology.
Channel  Freeze  Technologies, Inc. was formed in September 1998, as a PowerCold
subsidiary,  to  acquire  certain  assets  of  Channel  Ice  Technologies.   The
technology  includes  a  proprietary  patented  for  an economical multi-purpose
freezing  system.  Because  the company is allocating all its resources into its
current  product  line,  management  decided  there  is limited synergy with the
Channel  Freeze  technology  and does not envision the continuing development of
these  products.

<page>
                      POWERCOLD CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                        For the period ending March 31, 2002

Ultimate  Comfort  Systems, Inc. - On December 1, 2000, the Company acquired the
technology  rights,  patent  rights, and license agreement for integrated piping
technology  for  a heating and air conditioning system. This technology was then
placed  into  a  newly  formed  wholly owned subsidiary of the Company, Ultimate
Comfort   Systems,   Inc.   This  acquisition   gave  the   Company   exclusive,
non-transferable United States transfer rights to the technology and all related
assets. There are 15 installations in hotel/motels and extended care facilities.
Some  of  the  installations  are  saving over 40% energy costs. During 2001 the
Company invested some $300,000 supporting engineering and marketing programs for
major hotel projects. The company anticipates that Ultimate Comfort Systems will
have major growth in revenue and profits for this unique proprietary application
over  the  next  few  years.

RESULTS  OF  OPERATIONS  -  FIRST  QUARTER  2002

The  Company's Consolidated Statements of Operations for the first quarter ended
March  31,  2002  compared  to  the  first  quarter  ended  March  31,  2001:

Total  Revenue for the three months period ended March 31, 2002 increased 17% to
$350,750  from  $290,110  for  the  same  period  ended  March  31,  2001.

Current  revenue backlog pending some final purchase orders was some $2,661,046.
The Company's sales and revenue should continue to increase due to the increased
volume  of  customer  proposals  for  the  newly  designed  Nauticon Evaporative
Condenser  Line  of Products, which include EV Cool, air conditioning, EV Chill,
chilled  water,  and  EV  Frig,  refrigeration  systems.  The outcome is a newly
evolved  Nauticon  unit  with  nearly  double  its  capacity - a patent has been
applied  for  on  the  new  more  efficient  unit. Management also believes that
product sales and revenues will continue to improve because of new marketing and
sales  support, and new sales programs being implemented. Numerous proposals are
continually  being  quoted to prospective customers for all product lines. Gross
margins  will  continue to improve as the Company begins to capture economies of
scale;  sales  volume  increases and manufacturing production cycles shorten and
overall  production  methods  improve.

Operating Loss for the three months period ended March 31, 2002 increased 58% to
$756,092  from  $318,837  for  the  same  period  ended  March  31,  2001.

Net  Loss  for  the  three  months  period ended March 31, 2002 increased 57% to
$757,664  from  $327,890  for  the  same  period  ended  March  31,  2001.

Net  Loss  per share for the three months period ended March 31, 2002 stayed the
same  at  $0.02  as  for  the  period  ended  March  31,  2001.

Net  loss per share was based on weighted average number of shares of 16,256,567
for  March 31, 2002 compared to 15,005,371 for the same three-month period ended
March  31,  2001.

The  current quarter loss for sales and marketing and general and administrative
operating  expense  was  due  to  increased  sales  and  marketing activity, and
maintaining  general  Company  operating  overhead including additional specific
engineering  and  marketing  costs  for  the  various  product  lines.






<page>
                      POWERCOLD CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                        For the period ending March 31, 2002

The  Company  has  restructured  its  operations  to  comply  with  its  current
productive  product  line of evaporative condensers and new chiller systems. The
large increase in operating expense for the first three months of operations was
primarily  due  to the Company's major focus on sales and marketing, and a sharp
increase  in  research  and  development  (new Nauticon units and new EV chiller
product line).  Increased operating expenses were also due to setting up the new
manufacturing  plant  in  La  Vernia,  Texas, and establishing new facilities in
Tampa,  Florida  for  Ultimate  Comfort  Systems,  Inc.

The Company's Consolidated Balance Sheet as of the first quarter ended March 31,
2002  compared  to  year  ending  December  31,  2001

Total  current  assets increased to $3,417,043 for the first quarter ended March
31,  2002  compared  to  $2,670,808 for the year ending December 31, 2001. Total
assets  increased  to  $5,097,336  for  the  first  quarter ended March 31, 2002
compared  to $4,057,916 for the year ending December 31, 2001. Total liabilities
increased  to  $1,381,753 for the first quarter ended March 31, 2002 compared to
$1,318,010  for  the  year  ending December 31, 2001. Total stockholders' equity
increased  to  $3,320,986 for the first quarter ended March 31, 2002 compared to
$2,339,193  for  the  year  ending  December  31,  2001.

The  increase  in  assets was mainly due to raising over $2,000,000. Commitments
and  contingencies  of  some  $389,184 are from old outstanding accounts payable
from the previous RealCold products and Nauticon operations. Management believes
that  these  contingency  debts  will  be  written  off  over  time.

During the three months ended March 31, 2002 the Company issued 1,221,600 shares
of  common  stock  for  cash  of  $2,015,707; 30,000 shares of Company stock for
compensation  at  the  fair  market value of the stock of $1.00 per share and an
additional  165,955  shares of common stock were issued for services at the fair
market  value  of  the  stock  of $1.14 per share. During the three months ended
March  31,  2002  the  Company  has  not  had  any  option  activity

Liquidity  and  Capital  Resources:  At  March  31,  2002, the Company's working
capital increased to $2,035,290 compared to $1,352,798 at December 31, 2001. The
increase  in cash was primarily attributable to equity capital from the sale the
Company's  stock.

Status of Operations:  Management intends to continue to utilize and develop the
intangible assets of the Company.  At March 31, 2002, intangible assets comprise
one  third  of the Company's assets.  The recovery of these intangible assets is
dependent  upon achieving profitable operations. It is Management's opinion that
the  Company's  cash  flow  generated  from  current  intangible  assets  is not
impaired,  and  that  recovery  of  its intangible assets, upon which profitable
operations  will  be  based,  will  occur.  Management believes that its working
capital  is  sufficient  to  support its current operations and growth plans for
2002.











<page>
                      POWERCOLD CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                        For the period ending March 31, 2002

PART  11.  OTHER  INFORMATION

ITEM  1.     LEGAL  PROCEEDINGS.

          None

ITEM  2.     CHANGES  IN  SECURITIES

          None.

ITEM  3.     DEFAULTS  UPON  SENIOR  SECURITIES.

          None.
ITEM  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

          None.

ITEM  5.     OTHER  INFORMATION.

          None.

ITEM  6     EXHIBITS  AND  REPORTS  ON  FORM  8-K.

          8-K  filed  April  5,  2002  - Subsequent event, Alturdyne acquisition


































<page>
                      POWERCOLD CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                        For the period ending March 31, 2002


SIGNATURES

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



POWERCOLD  CORPORATION




/s/ FRANCIS  L.  SIMOLA
-------------------------------------
FRANCIS L. SIMOLA, PRESIDENT AND CEO

DATE:  MAY  13,  2002