SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D C 20549

                                    FORM 10-Q
                                 AMENDMENT NO. 2

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

                   FOR THE QUARTERLY PERIOD ENDED  JUNE 30, 2001

                        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.)

                               103 GUADALUPE DRIVE
                               CIBOLO, TEXAS 78108
                    (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 Section13
or  15(d)  of  the Securities Exchange Act of 1934 during the preceding 12months
(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  -  13,895,299  shares  outstanding  at  June  30,  2001

























<PAGE>
                              POWERCOLD CORPORATION
                                AND SUBSIDIARIES
                                  Form 10-Q/A
                        For the period ended June 30, 2001

                                      INDEX
                                      -----

          PAGE

PART  I.     FINANCIAL  INFORMATION

     ITEM  1:     CONSOLIDATED  FINANCIAL  STATEMENTS                   3

     TABLE  OF  CONTENTS:

     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.        28


PART  II.   OTHER  INFORMATION                                          34

     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                                                              35













<PAGE>  2
                              POWERCOLD CORPORATION
                                AND SUBSIDIARIES
                                  Form 10-Q/A
                        For the period ended June 30, 2001



PART I

Item 1.  Financial Statements








                              POWERCOLD CORPORATION

                        CONSOLIDATED FINANCIAL STATEMENTS

                                  JUNE 30, 2001






                              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

                                  June 30, 2001



ACCOUNTANTS  REVIEW  REPORT                                                   1

FINANCIAL  STATEMENTS

     Consolidated  Balance  Sheets                                            2
     Consolidated  Statements  of  Operations  -  Three  Months               3
     Consolidated  Statements  of  Operations  -  Six  Months                 4
     Consolidated  Statement  of  Stockholders'  Equity                       5
     Consolidated  Statements  of  Cash  Flows                                6


NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS                                7




<PAGE>  3




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  June  30,  2001, and the related consolidated statements of
operations,  stockholders' equity, and cash flows for the six months then ended.
All  information included in these financial statements is the representation of
the  management  of PowerCold Corporation. The consolidated financial statements
for  the  six  months  ended  June  30,  2000  and  1999  were reviewed by other
accountants.

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, 2000 were
audited  by  us  and  we  expressed an unqualified opinion on them in our report
dated  March  9, 2001.  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

August  7,  2001







<PAGE>  4
POWERCOLD CORPORATION
CONSOLIDATED BALANCE SHEETS

<table>
                                         June 30,        December 31,    December 31,
                                            2001            2000            1999
                                        (Unaudited)
                                       --------------  --------------  --------------

                                    <c>             <c>             <c>
ASSETS
CURRENT  ASSETS
  Cash                                  $     40,435   $     106,864   $      14,464
  Trade  accounts  receivable                 93,260          38,665         152,154
  Inventory                                  222,672         241,272          34,993
  Prepaid  expenses                          237,396         307,500          69,347
                                       --------------  --------------  --------------

    Total  current  assets                   593,763         694,301         270,958
                                       --------------  --------------  --------------

  Property  and  equipment,  net              78,160          73,570          29,229
  Patent rights and related
    technology, net                        1,128,876       1,195,627       1,166,554
  Goodwill,  net                              36,844          27,392         115,398
  Investments                              1,455,000             -               -
  Deposits                                     8,970           7,705             -
                                       --------------  --------------  --------------

    TOTAL  ASSETS                      $   3,301,613   $   1,998,595   $   1,582,139
                                       ==============  ==============  ==============
</table>





























See accompanying notes and accountants' review report.

<PAGE>  5
POWERCOLD CORPORATION
CONSOLIDATED BALANCE SHEETS (continued)

<table>
                                         June 30,        December 31,    December 31,
                                            2001            2000            1999
                                        (Unaudited)
                                       --------------  --------------  --------------

                                    <c>             <c>             <c>

LIABILITIES  AND  STOCKHOLDERS'  EQUITY
CURRENT  LIABILITIES
  Accounts payable and
    accrued expenses                   $     176,853   $     195,460   $     578,258
  Account payable - related party             12,272          10,567             -
  Customer  deposits                          80,900             -               -
  Commissions  payable                        62,603          42,240          42,240
  Advances from affiliate                     63,940          73,636         365,254
  Notes  payable                              40,545          43,328          21,378
  Notes payable, stockholders                165,000             -               -
  Acquisition-related  payable               200,000         200,000         200,000
  Capital  lease  payable                      2,887           3,419           3,564
                                       --------------  --------------  --------------
    Total  current  liabilities              805,000         568,650       1,210,694
LONG-TERM  LIABILITIES:
  Capital lease payable, net of
    current  portion                           6,007           6,826           9,609
                                       --------------  --------------  --------------
     Total  long-term  liabilities             6,007           6,826           9,609
                                       --------------  --------------  --------------
TOTAL  LIABILITIES                           811,007         575,476       1,220,303
COMMITMENTS  AND  CONTINGENCIES              168,300         168,300             -
                                       --------------  --------------  --------------
STOCKHOLDERS'  EQUITY
  Convertible, preferred stock,
    Series  A  $0.001  par  value,
    5,000,000  authorized, 0, 0,
    and 1,250,000 shares issued
    and outstanding, respectively                -               -            1,250

  Common stock, $0.001 par value,
    200,000,000 shares authorized,
    13,895,299, 12,669,383, and
    7,876,641 shares issued and
    outstanding,  respectively                13,896          12,669          7,876

  Additional  paid-in  capital             8,899,419       8,252,727      6,044,092
  Stock  subscriptions  receivable            (9,500)         (9,500)        (9,500)
  Accumulated  deficit                    (8,036,509)     (7,001,077)    (5,681,882)
  Accumulated other comprehensive
    income  (loss)                         1,455,000             -              -
                                       --------------  --------------  --------------

   TOTAL  STOCKHOLDERS'  EQUITY            2,322,306       1,254,819         361,836
                                       --------------  --------------  --------------
   TOTAL  LIABILITIES  AND
     STOCKHOLDERS'  EQUITY             $   3,301,613   $   1,998,595   $   1,582,139
                                       ==============  ==============  ==============
</table>

See accompanying notes and accountants' review report.

<PAGE>  6
POWERCOLD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
                                                   Three  Months  Ended
                                       ----------------------------------------------
                                                       June 30, 2000
                                        June 30, 2001    (Restated)    June 30, 1999
                                        (Unaudited)      (Unaudited)    (Unaudited)
                                       --------------  --------------  --------------

                                    <c>             <c>             <c>
REVENUES
  Product  sales                       $     109,241   $     63,818   $      72,829
  Services                                    24,747            -             5,220
                                       --------------  --------------  --------------
    Total  Revenue                           133,988          63,818          78,049
COST  OF  REVENUES                            92,110          40,754         110,269
                                       --------------  --------------  --------------
GROSS  PROFIT                                 41,878          23,064         (32,220)
                                       --------------  --------------  --------------

OPERATING  EXPENSES
  Sales  and  marketing                      499,785             -            83,280
  Research  and  development                     -               -            14,361
  General  and  administrative               213,108         150,098         108,678
  Depreciation  and  amortization             37,836          15,863          26,052
                                       --------------  --------------  --------------
    Total  Operating  Expenses               750,729         165,961         232,371
                                       --------------  --------------  --------------
LOSS  FROM  OPERATIONS                      (708,851)       (142,897)       (264,591)

OTHER  INCOME  (EXPENSE)
  Equity  n loss of unconsolidated
    Affiliates                                   -               -           (31,399)
  Interest  income                             1,197             -            24,207
  Interest  expense                              108            (667)        (10,930)
                                       --------------  --------------  --------------
    Total  Other  Income  (Expense)            1,305            (667)        (18,122)
                                       --------------  --------------  --------------
LOSS  BEFORE  INCOME  TAX                   (707,546)       (143,564)       (282,713)

INCOME  TAX  EXPENSE                             -           (52,222)            -
                                       --------------  --------------  --------------
NET  LOSS                              $    (707,546)  $    (195,786)  $    (282,713)
                                       --------------  --------------  --------------
OTHER  COMPREHENSIVE  INCOME
  Unrealized gain on investment
    in  securities                         1,455,000             -               -
                                       --------------  --------------  --------------
COMPREHENSIVE  INCOME  (LOSS)          $     747,454   $    (195,786)  $    (282,713)
                                       ==============  ==============  ==============
NET  LOSS  PER  COMMON  SHARE,
     BASIC  AND  DILUTED               $       (0.05)  $       (0.02)  $       (0.04)
                                       ==============  ==============  ==============
WEIGHTED  AVERAGE  NUMBER
     OF  SHARES  OUTSTANDING              13,560,305      10,273,012       7,242,517
                                       ==============  ==============  ==============
</table>

See accompanying notes and accountants' review report.

<PAGE>  7
POWERCOLD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
                                                     Six  Months  Ended
                                       ----------------------------------------------
                                                       June 30, 2000
                                        June 30, 2001    (Restated)    June 30, 1999
                                        (Unaudited)      (Unaudited)    (Unaudited)
                                       --------------  --------------  --------------

                                    <c>             <c>             <c>
REVENUES
  Product  sales                       $     356,245   $      92,526   $     139,794
  Services                                    67,853          14,190          31,823
                                       --------------  --------------  --------------
    Total  Revenue                           424,098         106,716         171,617
COST  OF  REVENUES                           241,801          85,575         188,531
                                       --------------  --------------  --------------
GROSS  PROFIT                                182,297          21,141         (16,914)
                                       --------------  --------------  --------------

OPERATING  EXPENSES
  Sales  and  marketing                      630,501             -           173,498
  Research  and  development                     -               -            30,409
  General  and  administrative               504,221         445,450         212,360
  Depreciation  and  amortization            75,263           49,058          51,546
                                       --------------  --------------  --------------
    Total  Operating  Expenses             1,209,985         494,508         467,813
                                       --------------  --------------  --------------
LOSS  FROM  OPERATIONS                    (1,027,688)       (473,367)       (484,727)

OTHER  INCOME  (EXPENSE)
  Equity in loss of unconsolidated
    Affiliates                                   -               -           (66,966)
  Royalty  income                             44,785             -               -
  Interest  income                             3,193             -            34,250
  Interest  expense                          (15,726)        (11,984)        (25,412)
  Financing  expense                         (40,000)            -               -
  Other  expense                                 -            (1,322)            -
                                       --------------  --------------  --------------
    Total  Other  Income  (Expense)           (7,748)        (13,306)        (58,128)
                                       --------------  --------------  --------------
LOSS  BEFORE  INCOME  TAX                 (1,035,436)       (486,673)       (542,855)
INCOME  TAX  EXPENSE                             -           (52,222)            -
                                       --------------  --------------  --------------
NET  LOSS                                 (1,035,436)       (538,895)       (542,855)

OTHER  COMPREHENSIVE  INCOME
  Unrealized gain on investment in
    Securities                             1,455,000             -               -
                                       --------------  --------------  --------------
COMPREHENSIVE  INCOME  (LOSS)          $     419,564   $    (538,895)  $    (542,855)
                                       ==============  ==============  ==============
NET  LOSS  PER  COMMON  SHARE,
     BASIC  AND  DILUTED               $      (0.08)   $       (0.05)  $       (0.08)
                                       ==============  ==============  ==============
WEIGHTED  AVERAGE  NUMBER
     OF  SHARES  OUTSTANDING              13,259,614      10,186,853       7,039,946
                                       ==============  ==============  ==============
</table>
See accompanying notes and accountants' review report.

<PAGE>  8
POWERCOLD CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                        Preferred Stock        Common Stock                                  Retained      Accumulated
                    ---------------------- ---------------------   Additional   Stock        Earnings      Other Comp=
                    Number of               Number of              Paid-in      Subscription (Accumulated   rehensive
                    Shares       Amount     Shares        Amount   Capital      Receivable   Deficit)      Income(Loss)    Total
                    ----------- ---------- ----------- ----------- ------------ ------------ ------------  ------------ -----------
<S>                 <C>         <C>        <C>         <C>         <C>          <C>          <C>           <C>          <C>
Balance,
December 31, 1998     1,250,000  $   1,250   6,834,000 $     6,834 $  5,534,274 $    (8,500) $(4,428,487)  $       -    $ 1,105,371

Issuance of common
  stock  as  follows:
  for cash at an
  average of $0.62
  per share                 -           -      559,000        559      348,191          -            -             -        348,750

  for services at
  an average of
  $0.34 per share           -           -      483,641        483     161,627           -             -            -        162,110

Subscriptions due
  from stockholders         -           -          -          -           -          (1,000)          -            -        (1,000)

Net loss for the
  year ended December
  31, 1999                  -           -          -          -           -             -      (1,253,395)         -    (1,253,395)
                    ----------- ---------- ----------- ----------- ------------ ------------ ------------  ------------ -----------
Balances at
December 31, 1999    1,250,000  $    1,250   7,876,641 $    7,876  $ 6,044,092  $    (9,500) $ (5,681,882  $      -     $  361,836

Stock issued for
  cash at an average
   of $0.87 per share      -           -     1,329,602      1,330     1,156,670         -              -          -      1,158,000
Stock issued for
  prepaid consulting
  fees at $0.50 per share  -           -       615,000        615      306,885          -              -          -        307,500
Stock issued for
  services at an
  average of $0.58
  per share                -           -       593,355        593     296,085           -              -          -        296,678
Preferred stock
  converted to
  common stock
  at par            (1,250,000)     (1,250)  1,354,785      1,355        (105)          -              -          -            -
Stock issued and
  options exercised
  in exchange for
  technology
  license at $0.50
  per share               -            -       100,000        100       49,900          -              -          -         50,000

Stock issued and
  options exercised
  in  exchange  for
  debt at $0.50
  per share                -           -       800,000        800      399,200          -              -          -        400,000
Net loss for the
 year ended 12-31-00       -           -           -          -            -            -      (1,319,195)        -     (1,319,195)
                    ----------- ---------- ----------- ----------- ------------ ------------ ------------  ------------ -----------
Balances at
  December 31, 2000        -           -    12,669,383     12,669    8,252,727       (9,500)   (7,001,077)        -      1,254,819
Stock issued for cash
   at an average of
  $0.69 per share          -           -       491,666        492      337,008          -             -           -        337,500
Stock issued for
  consulting  services,
  private placement services
  and accrued compensation
  at $0.50 per share       -           -       546,250        547      272,579          -             -          -         273,126
Cost of private placement  -           -           -          -        (65,625)         -             -          -         (65,625)
Stock issued as interest
  and financing fees at
  $0.50 per share          -           -       108,000        108        53,892         -             -          -          54,000
Stock issued in
  payment of prepaid rent
  at $0.50 per share       -           -        45,000         45        22,455         -             -          -          22,500
Stock issued in payment
  of account payable at
  $0.75 per share         -            -        35,000         35        26,383         -             -          -          26,418
Net loss for the six month
  period ended 6-30-01    -            -           -          -             -           -      (1,035,432)       -      (1,035,432)
Unrealized gain on
  available for sal
 e securities             -            -           -          -             -           -             -    1,455,000     1,455,000
                    ----------- ---------- ----------- ----------- ------------ ------------ ------------  ------------ -----------
Balances at
 June 30, 2001
 (Unaudited)              -           -    13,895,299  $   13,896  $ 8,899,419  $   (9,500)  $(8,036,509)  $1,455,000   $ 2,322,306
                    =========== ========== =========== =========== ============ ============ ============= ============ ===========
</TABLE>



See accompanying notes and accountants' review report.
<PAGE>  9
POWERCOLD CORPORATION
CONSOLIDATED STATEMENT OF CASHFLOWS


<TABLE>
                                                     Six  Months  Ended
                                       ----------------------------------------------
                                                       June 30, 2000
                                        June 30, 2001    (Restated)    June 30, 1999
                                        (Unaudited)      (Unaudited)    (Unaudited)
                                       --------------  --------------  --------------

                                    <c>             <c>             <c>

CASH FLOW FROM OPERATING ACTIVITIES:
  Net  loss                            $  (1,035,436)  $    (538,895)  $    (542,855)
  Adjustments to reconcile net
    income (loss) to net cash
    provided by (used by) operating
    activities:
      Depreciation and amortization           75,263          49,058          51,546
      Equity loss on unconsolidated
       Affiliate                                 -               -            66,966
     Issuance of common stock for
       Services                              207,501         139,065             -
     Issuance of common stock for
       current  debt                          26,418             -               -
     Issuance of common stock for
       interest  on  debt                     14,000             -               -
     Issuance of common stock for
       operating  expenses                       -               -            98,930
     Issuance of common stock for
       financing  expense                     40,000             -               -
  (Increase) decrease in assets:
     Accounts  receivable                    (54,595)         69,932         (51,316)
     Inventories                              18,600             -             8,883
     Prepaid expenses and other
       current  assets                        77,888             -          (148,540)
     Deposits                                 (1,265)            -               -
     Refundable  income  taxes                   -           52,222              -
  Increase (decrease) in liabilities:
     Accounts payable and accrued
       Expenses                              (18,607)      (104,776)          56,769
     Accounts  payable-related party           1,705         (1,312)             -
     Deferred  revenue                        80,900            -                -
     Commissions  payable                     20,363            -                -
                                       --------------  --------------  --------------
Net cash provided by (used  by)
  operating  activities                     (547,261)       (334,706)       (459,617)
                                       --------------  --------------  --------------
</table>










See accompanying notes and accountants' review report.

<PAGE>  10
POWERCOLD CORPORATION
CONSOLIDATED STATEMENT OF CASHFLOWS (Continued)

<TABLE>
                                                     Six  Months  Ended
                                       ----------------------------------------------
                                                       June 30, 2000
                                        June 30, 2001    (Restated)    June 30, 1999
                                        (Unaudited)      (Unaudited)    (Unaudited)
                                       --------------  --------------  --------------

                                    <c>             <c>             <c>
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of investments              -               -            32,500
  Purchase of property and equipment          (7,838)            -           (15,638)
                                       --------------  --------------  --------------
Net cash provided by (used by)
  investing  activities                       (7,838)            -            16,862
                                       --------------  --------------  --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments  on  capital  lease                (1,351)            -               -
  Cash  payments  to  affiliate             (137,196)            -               -
  Proceeds from advance from affiliate       127,500          26,616         329,224
  Proceeds  from  borrowing                  165,000             -            49,404
  Repayment  of  borrowings                   (2,783)            -          (102,063)
  Proceeds from issuance of shares
    under  private  placement                337,500         451,000         200,100
                                       --------------  --------------  --------------
Net cash provided by (used by)
  financing  activities                      488,670         477,616         476,665
                                       --------------  --------------  --------------
Net increase (decrease) in cash
  and  cash  equivalents                     (66,429)        142,910          33,910

Cash and cash equivalents at
  beginning  of  period                      106,864          14,464          21,781
                                       --------------  --------------  --------------
Cash and cash equivalents at
  end  of period                       $      40,435   $     157,374   $      55,691
                                       ==============  ==============  ==============
Supplemental  cashflow  information
     Income  tax  paid                 $         -     $         -     $         -
                                       ==============  ==============  ==============
     Interest  paid                    $      15,726   $      11,984   $      26,600
                                       ==============  ==============  ==============
NON  CASH  OPERATING  ACTIVITIES
  Issuance of common stock as
   prepayment for consulting services  $      85,000   $     139,065   $         -
  Issuance of common stock for
    services                           $      97,500   $         -     $         -
  Issuance of stock for accrued wages  $      25,000   $         -     $         -
  Issuance of stock for financing
    and  interest  expense             $      54,000   $         -     $         -
  Issuance of stock for satisfaction
    of  accounts  payable              $      26,418   $         -     $         -
  Issuance of stock for prepaid rent   $      22,500   $         -     $         -
  Issuance of stock for private
    placement costs                    $      65,625   $         -     $         -
  Issuance of stoc  for operating
    expenses                           $         -     $         -     $       98,830
</table>
See accompanying notes and accountants' review report.

<PAGE>  11
                              POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

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.  Subsequently, the entity
has  not  been  in  operation  because  of  lack  of  operating  capital.


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-transferrable 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.








<PAGE> 12
                              POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

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.

Interim  Financial  Statements
------------------------------
The  interim  financial statements as of and for the period ended June 30, 2001,
included herein, have been prepared for the Company without audit.  They reflect
all  adjustments,  which are, in the opinion of management, necessary to present
fairly  the  results  of operations for these periods.  All such adjustments are
normal  recurring  adjustments.  The  results  of  operations  for  the  periods
presented  are  not necessarily indicative of the results to be expected for the
full  fiscal  year.

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.


<PAGE> 13
                              POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

NOTE  2  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES (Continued)

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 affiliate,
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
June  30,  2001

Derivative  Instruments
-----------------------
In  June  1998,  the  Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  ("SFAS")  No.  133, "Accounting for Derivative
Instruments  and  Hedging Activities."  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  balance sheet and measure those instruments at fair value.

At  June 30, 2001, 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 one commercial account at a major financial
institution.  At  June  30,  2001,  the  Company's cash balance exceeded Federal
Deposit  Insurance  Corporation  (FDIC)  limits  by  $6,864.

Impaired  Asset  Policy
-----------------------
In  March  1995,  the Financial Accounting Standards Board issued statement SFAS
No.  121  titled  "Accounting for Impairment of Long-lived Assets." In complying
with  this  standard,  the  Company  reviews  its long-lived assets quarterly to
determine  if  any  events  or  changes  in  circumstances have transpired which
indicate  that  the  carrying  value  of  its assets may not be recoverable. The
Company  determines  impairment  by comparing the undiscounted future cash flows
estimated  to  be  generated by its assets to their respective carrying amounts.

The Company does not believe any adjustments are needed to the carrying value of
its  assets  at  June  30,  2001.

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  is  amortized  on  a  straight-line  basis over 10 years.  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> 14
                              POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

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.  At December 31, 2000, the allowance
for  doubtful  accounts  was  $6,478.

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> 15
                              POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

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  June  30,  2001, 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 were common stock equivalents outstanding at June 30,
2001,  they  were  not included in the calculation of earnings per share because
they  would  have  been  considered  anti-dilutive.

















<PAGE> 16
                              POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

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 June
30, 2001, intangible assets comprise a material portion of the Company's assets.
The  recovery  of these intangible assets is dependent upon achieving profitable
operations  and  favorable  resolution  of the matter discussed in Note 16.  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 Ultimate
Comfort  Systems  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  2000,  Simco converted $400,000 of its loans to the Company into 800,000
shares  of  the  Company's  common  stock.  See  Note  11.

The Company's directors receive an annual payment of $2,500 for directors' fees.
Two of the Company's officers are entitled to receive a minimum commission of 2%
but  not  to  exceed  5% on any direct sales of the Company.  A third officer is
entitled to receive the highest of 3% commission on the Company's gross revenues
or  5%  on  the  Company's gross operating profits, or $10,000 per month.  These
employees also have the option to purchase shares of common restrictive stock of
the  Company  at  50%  of  bid  price 30 days after receiving payments for these
services.  In  order  to  obtain  these  benefits,  the  employees  must perform
services for a period of three years effective on date of agreement or receive a
pro  rata  share  based  on  years  of  service.  No additional commissions were
accrued related to the agreements at June 30, 2001 or at December 31, 2000, 1999
and  1998.

See  Note  9  regarding  loans  from  shareholders.













<PAGE> 17
                              POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

NOTE  5  -  ACQUISITIONS

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-transferrable  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  9), forgave a payment of $28,571 from projects in
process,  issued  100,000  shares  of  its  common  stock (see Note 11), granted
150,000  of  stock  options  at $1.00 per share (see Note 12), 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.

NOTE  6  -  INVENTORY

Inventories  at  June  30,  2001,  December  31,  2000  and  1999 consist of the
following:

                            June 30, 2001  December 31, 2000   December 31, 1999
                            -------------  -----------------   -----------------

Materials inventory         $    114,251   $        132,851    $         34,993
Finished goods inventory         108,421            108,421                 -
                            -------------  -----------------   -----------------

                            $    222,672   $        241,272    $         34,993
                            =============  =================   =================

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















<PAGE> 18
                              POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

NOTE  7  -  PROPERTY,  EQUIPMENT  AND  INTANGIBLES

Property  and  equipment  is  summarized  as  follows:


                            June 30, 2001  December 31, 2000   December 31, 1999
                            -------------  -----------------   -----------------

Machinery and equipment     $     93,966   $         87,342    $         32,877
Prototypes and molds              71,030             71,030              73,420
Furniture and fixtures             7,614              7,614               8,804
                            -------------  -----------------   -----------------

Total Property and Equipment     172,610            165,986             115,101

Less: Accumulated
  Depreciation                    94,450             92,416              85,872
                            -------------  -----------------   -----------------

Net Property and Equipment  $     78,160   $        73,570     $         29,229
                            =============  =================   =================

Depreciation  expense  for  the  three months ended June 30, 2001 and year ended
December  31,  2000  and  1999  was  $2,034,  $7,616  and  $33,819 respectively.

The  Company's  intangible  assets  are  summarized  as  follows:


                            June 30, 2001  December 31, 2000   December 31, 1999
                            -------------  -----------------   -----------------
Patents and related
  technology                $  1,684,001   $      1,684,001    $      1,532,486
Goodwill                         105,269            105,269             168,033
                            -------------  -----------------   -----------------
Total Intangibles              1,789,270          1,789,270           1,700,519

Less: Accumulated
   Amortization                  623,550            566,251             418,567
                            -------------  -----------------   -----------------

Net Intangibles             $  1,165,720   $      1,223,019    $      1,281,952
                            =============  =================   =================
















<PAGE> 19
                              POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

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. (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 2000 and 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 June 30, 2001, the fair market value of these securities was
$1,455,000,  which  has  been  recognized  as  other  comprehensive  income  in
accordance  with  SFAS  No.  115.

NOTE  9  -  NOTES  PAYABLE

At  June  30,  2001,  notes  payable  consisted  of  the  following:

A  note  payable  to  Southtrust  Bank,  secured  by  G.  Briley,  the Company's
president,  for  $4,630  with  an  annual interest rate of 14.99%.  This note is
payable  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 was payable to Royal Bank of Canada for $34,014 U.S.,
and  the  second  to  T.  D.  Bank  for  $1,901  U.S.

In  the  six  months  ended June 30, 2001, the Company received $165,000 in loan
proceeds  from  its  shareholders.  The  loans,  which bear interest at 10%, are
unsecured  and have no stated maturity, are expected to be converted into common
stock  in  the  second  half  of  2001.

NOTE  10  -  PREFERRED  STOCK

The  Company  is  authorized  to  issue  5,000,000  shares  of  $0.001 par value
preferred stock, which contains 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  and 1998, 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.  This stock has
a  par  value  of  $0.001  per  share  and  a stated value of $0.80 per share in
liquidation  and  has  preference  over  common  stock  in  liquidation.

Each  issued and outstanding share of Series "A" Convertible Preferred Stock was
entitled to receive cumulative preferential dividends, payable in cash or common
stock  at  the  option  of  the Company, at the annual rate of $0.064 per share,
payable  quarterly.





<PAGE> 20
                              POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

NOTE  10  -  PREFERRED  STOCK (Continued)

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.  At  December  31, 2000 and at June 30, 2001, the Company did not
have  any  shares  of  preferred  stock  outstanding.

NOTE  11  -  COMMON  STOCK

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

During  the six months ended June 30, 2001, the Company issued 491,666 shares of
common  stock  at  $0.69  per  share  for cash.  In addition, the Company issued
546,250  shares  of  common  stock  at  $0.50 per share for consulting and other
services  and  as  compensation,  108,000  shares  of  common stock at $0.50 for
financing  fees  of $40,000 and interest of $14,000, and issued 35,000 shares of
common stock at $0.75 per share to satisfy outstanding debt and 45,000 shares of
common  stock  at  $0.50  per  share  as  prepayment  of  expenses.

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  9.

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.

During  the  year  ended December 31, 1998, the Company issued 839,000 shares of
its  common  stock  of  which  118,000  shares were issued for cash of $100,000,
621,000  shares  were issued for services valued at $294,068, and 100,000 shares
for  the  purchase  of  a  subsidiary  valued  at  $63,000.

NOTE  12  -  STOCK  BASED  COMPENSATION  AND  STOCK  OPTIONS

During  1998, the Company authorized and issued a total of 650,000 options at an
exercise  price  of $0.50 per share for employee compensation.  The Company also
issued a total of 400,000 options during 1998 as consideration for acquisitions.
During  1999,  the Company authorized and issued a total of 1,004,558 options at
an  exercise price of $0.50 for employee compensation.  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.






<PAGE>  21
                              POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

NOTE  12  -  STOCK  BASED  COMPENSATION  AND  STOCK  OPTIONS  (CONTINUED)

The  Company  applies  APB  Opinion  No.  25  in  accounting  for  options  and,
accordingly, recognized no compensation cost for its stock options in 1999, 2000
and  2001.  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:

                                            Number of       Weighted
                                            Shares          Average
                                            Under           Exercise
                                            Option          Price
                                         --------------  --------------
Outstanding, January 1, 1998                   300,000   $        2.00
    Granted                                  1,150,000            1.19
    Exercised                                      -              -
    Forfeited                                      -              -
    Expired                                        -              -
                                         --------------  --------------
Outstanding, December 31, 1998               1,450,000   $        1.36
                                         ==============  ==============
Exercisable, December 31, 1998               1,450,000   $        1.36
                                         ==============  ==============
Exercisable, December 31, 1999               2,454,558   $        1.01
                                         ==============  ==============

Outstanding, January 1, 2000                 2,454,558   $        1.01
    Granted                                  1,000,000            0.77
    Exercised                                 (450,000)           0.50
    Forfeited                                      -              -
    Expired                                   (700,000)           2.29
                                         --------------  --------------
Outstanding, December 31, 2000               2,304,558   $        0.74
                                         ==============  ==============
Exercisable, December 31, 2000               2,304,558   $        0.74
                                         ==============  ==============

Outstanding January 1, 2001                  2,304,558   $        0.74
    Granted                                        -              -
    Exercised                                      -              -
    Forfeited                                      -              -
    Expired                                        -              -
                                         --------------  --------------

Outstanding June 30, 2001                    2,304,558   $        0.74
                                         ==============  ==============
Exercisable June 30, 2001                    2,304,558   $        0.74
                                         ==============  ==============

At  June  30, 2001, exercise prices for outstanding options ranged from $0.50 to
$3.00.  The  weighted average contractual life remaining of such options was 2.3
years.





<PAGE>  22
                              POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

NOTE  12  -  STOCK  BASED  COMPENSATION  AND  STOCK  OPTIONS  (CONTINUED)

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:

                                            2000
                                          --------
         Risk-free Interest Rate             5.25%
         Expected Life                     3 years
         Expected Volatility                  105%

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  trade 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.

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:


                            June 30, 2001  December 31, 2000   December 31, 1999
                            -------------  -----------------   -----------------
Net loss as reported        $ (1,035,436)  $     (1,322,123)   $     (1,253,395)
Adjustment required
   by SFAS 123                  (287,273)          (287,273)           (524,890)
                            -------------  -----------------   -----------------

Pro forma net loss          $  1,322,709)  $     (1,609,396)   $     (1,778,285)
                            =============  =================   =================

Pro forma net loss per
  share, basic and diluted  $      (0.10)  $          (0.16)   $          (0.25)
                            =============  =================   =================



















<PAGE>  23
                              POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

NOTE  13  -  REPORTABLE  SEGMENTS

PowerCold  currently  has  six  reportable  segments:  Nauticon  Inc.,  RealCold
Products,  Inc.,  Technicold  Services,  Inc.,  Rotary  Power  Enterprise, Inc.,
Channel  Freeze Technologies, Inc., and Ultimate Comfort Systems, 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.

Segment  information  for  the  six months ended June 30, 2001 and for the years
ended  December  31,  2000  and  1999  are  as  follows:
<table>
                                    June 30, 2001  December 31, 2000   December 31, 1999
                                    -------------  -----------------   -----------------

                                 <c>            <c>                 <c>
Revenues:
Ultimate Comfort Systems, Inc.      $    217,190   $            -      $            -
Nauticon, Inc.                               -                3,754              91,006
RealCold Products, Inc.                  204,492            309,111             212,596
Technicold Services, Inc.                  2,416             82,175              50,611
Rotary Power Enterprises, Inc.               -                  -               187,025
Channel Freeze Technologies, Inc.            -                  -                   -
Corporate                                    -                  -                21,165
                                    -------------  -----------------   -----------------
TOTAL REVENUES                      $    424,098   $        395,040    $        562,403
                                    =============  =================   =================
Operating  income  (loss):
Ultimate Comfort Systems, Inc.     $     (76,066)  $            -      $            -
Nauticon, Inc.                           (37,963)           (33,331)           (290,569)
RealCold Products, Inc.                 (377,930)          (504,144)           (243,429)
Technicold Services, Inc.                 (3,628)          (109,771)              7,538
Rotary Power Enterprises, Inc.           (89,037)          (109,025)             (8,454)
Channel Freeze Technologies, Inc.        (51,259)          (215,808)           (313,801)
Corporate                               (399,283)          (439,575)           (351,227)
                                    -------------  -----------------   -----------------
TOTAL OPERATING LOSS                $ (1,035,436)  $     (1,411,654)   $     (1,199,942)
                                    =============  =================   =================
Identifiable  assets:
Ultimate Comfort Systems, Inc.      $    176,990   $        152,415     $           -
Nauticon, Inc.                           273,391            280,375             385,927
RealCold Products, Inc.                  184,775            132,371             144,650
Technicold Services, Inc.                 41,762            120,833             122,137
Rotary Power Enterprises, Inc.            68,413             75,386             129,992
Channel Freeze Technologies, Inc.        820,216            848,777             797,531
Corporate                              1,736,066            388,438               1,902
                                    -------------  -----------------   -----------------
TOTAL IDENTIFIABLE ASSETS           $  3,301,613   $      1,998,595    $      1,582,139
                                    =============  =================   =================
</table>
<PAGE>  24
                              POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

NOTE  13  -  REPORTABLE  SEGMENTS  (CONTINUED)

<table>
                                    June 30, 2001  December 31, 2000   December 31, 1999
                                    -------------  -----------------   -----------------

                                 <c>            <c>                 <c>
Depreciation  and  amortization:
Ultimate Comfort Systems, Inc.      $      5,297   $            -      $            -
Nauticon, Inc.                            33,537             83,046              96,761
RealCold Products, Inc.                    1,692                900               2,419
Technicold Services, Inc.                  6,045              12,090             12,090
Rotary Power Enterprises, Inc.               130                334                 365
Channel Freeze Technologies, Inc.         28,562             57,124              70,040
Corporate                                    -                  -                   -
                                    -------------  -----------------   -----------------
TOTAL DEPRECIATION AND
  AMORTIZATION                      $     75,263   $        153,494    $        181,675
                                    =============  =================   =================
</table>

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  14  -INCOME  TAXES

Provision  for  Taxes
---------------------
At  June  30,  2001,  the  Company  had  net  deferred tax assets of $1,090,000,
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  June  30,  2001.

The Company incurred accumulated net operating losses for income tax purposes of
approximately  $3,400,000  for  the year ended December 31, 2000.  The Company's
net  operating  loss  carryforwards  for  income  tax purposes are approximately
$4,300,000,  which  will expire on various dates through the year 2020.  At June
30,  2001,  the  Company's  net  operating  losses  increased  by  approximately
$967,000.

The  Company  recognized  approximately $68,000 for the issuance of common stock
for  services  in  the  six  months  ended  June  30,  2001.











<PAGE> 25
                              POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

NOTE  15  -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  December  31,  2000  are  as  follows:

                              Year         Amount
                              ----       ---------
                              2001       $  2,094
                              2002          3,018
                              2003          3,298
                              2004          1,166
                                         ---------
                             Total       $  9,576
                                         =========

Operating  Leases
-----------------
The  Company  leases  certain  sales  offices,  plant space, and equipment under
operating  lease  agreements,  which  expire  at  various times throughout 2002.
Total rent expense for the year ended December 31, 2000 was $100,231 and for the
six  months  ended  June  30,  2001  was  $56,957.

Future  minimum  rental  commitments  as  of  June  30,  2001  were  as follows:

Year  ending  December  31,
                2001     $     43,274
                2002           50,891
                         -------------
                         $    151,122
                         =============

NOTE  16  -  LITIGATION

Management of the Company is seeking to recoup damages from the former president
and  shareholder of Nauticon Inc. in connection with Nauticon Inc.'s acquisition
by  the  Company.  Related  to  this  matter is the ownership of certain patents
($441,078  carrying  value  at December 31, 1998) and the amount of compensation
owed  to  the  former Nauticon Inc. shareholder ($88,600 accrued and included in
accounts payable and accrued expenses at December 31, 1999 and 1998). The former
Nauticon  Inc.  shareholder  was  granted  options to purchase 133,763 shares of
common  stock  of  the Company at $1.50 per share (increasing to $2.00 per share
before expiring in July 2000).  Nauticon Inc. is a defendant in several lawsuits
filed by suppliers. Nauticon Inc. denies any liability. Counsel has advised that
it  is  not  possible  to project the outcome at this time. It is the opinion of
management  that  this  matter  will  not  have a material adverse effect on the
Company's  financial  position  or  results  of  operations.

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.




<PAGE> 26
                              POWERCOLD CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 2001

NOTE  17  -  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 was
$200,000  at  June  30,  2001.  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-third 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%.

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 June
30,  2001,  December  31,  2000 and 1999, 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.

NOTE  18  -  COMMITMENTS  AND  CONTINGENCIES

Officers  and  Directors  Compensation
--------------------------------------
See  Note  4  relating  to  contingent  compensation  to  Company  directors and
officers.

Accounts  Payable
-----------------
The  Company  has trade accounts payable that date back to 1996.  Management had
tried  to contact these vendors to arrange settlement agreements.  The amount in
commitments  and  contingencies  are the balances from vendors that could not be
contacted  or  did  not  respond  to  management's  correspondence.

Royalty  Agreement
------------------
See  Note  5  regarding  December  1,  2000  royalty  agreement.

Additional  Compensation
------------------------
See  Note  17  regarding  potential  payments  to  SIR.


<PAGE> 27
                              POWERCOLD CORPORATION
                                AND SUBSIDIARIES
                                  Form 10-Q/A
                        For the period ended June 30, 2001

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

POWERCOLD CORPORATION -  is a solution provider of energy efficient products for
users of industrial and commercial refrigeration systems world-wide. The Company
operates  across  many  market  sectors from large industrial food processors to
small commercial air conditioning systems. The firm's focus is to give customers
products  and  systems that allow them to benefit from current changes occurring
in the natural gas and electrical utility marketplace. Refrigeration is the most
energy  intensive  operation  most  business  operators  face. PowerCold has the
opportunity  to  provide  products  and  systems,  that customers require taking
advantage of these changes, to improve profitability by reducing their operating
costs.

Deregulation  of  the  gas  and  electric  utilities  will   provide  continuing
opportunities,  creating  new  markets for more efficient refrigeration systems.
PowerCold  has  the  products, experience and creative ability to package unique
refrigeration  systems  for  the  multi-billion dollar refrigeration market. The
Company  is  acquiring synergistic businesses, and marketing alliances are being
formed  with major utility companies and established refrigeration companies for
these  products  and  services.

The  Company's  business operations are supported by a management team with over
(150)  year's experience. The Company maintains administrative corporate offices
in  Cibolo, Texas, and Philadelphia, Pennsylvania. Engineering and manufacturing
facilities  are  located  in  Cibolo,  Texas.

The  Company's mission is to be a solution provider of energy efficient products
for  the  multi-billion  dollar refrigeration, air condition and power industry.
The  Company's  goal  is  to  achieve profitable growth and increase shareholder
value  -  providing  superior products and services through related acquisitions
and  joint  ventures.

POWERCOLD  COMPANIES:

REALCOLD  PRODUCTS,  INC.  -  designs  and  manufactures unique energy efficient
packaged  products  for  the  refrigeration  industry.  RealCold  Products  also
supports Rotary Power Enterprise and Alturdyne Energy Systems by engineering and
packaging  their  products.  RealCold  Products  also  supports  Channel  Freeze
Technologies  by  designing  and  packaging  their   accompanying  refrigeration
systems.  There  are  proposed  alliances  with  other  refrigeration companies,
whereas  RealCold  Products  will  package various components adding value for a
total  turnkey  industrial  refrigeration  system.

<PAGE> 28
                              POWERCOLD CORPORATION
                                AND SUBSIDIARIES
                                  Form 10-Q/A
                        For the period ended June 30, 2001

NAUTICON  INC. - manufactures and markets a product line of patented evaporative
heat  exchange  systems  for  the  HVAC  and  refrigeration  industry.  Nauticon
Evaporative Condenser Line of Products include new innovative configurations; EV
Cool  Air  Conditioners  up  to 80 tons, EV Chill Water Chillers 0.75kw per ton,
40-80  tons  with  chilled water pumps included and multiple compressors, and EV
Frig  medium  temperature  +18F up to 420,000 BTU/hr, low temperature -20F up to
360,000  BTU/hr, and low ambient temperature control standard.  The new patented
products  are  innovative  and unique in design, use new material technology, is
simple  to  manufacture,  and  have  a  low  operating  cost.  They are used for
condensers,  fluid  coolers,  subcoolers, and cooling towers.  Nauticon products
can  save  power  cost  in  the  refrigeration  industry  by 20% to 30%, and are
environmental  friendly, making these units contribute to the utilities needs to
reduce  power  demand  and  support the environment. There are some 200 customer
systems  installed.

TECHNICOLD  SERVICES,  INC.  - offers consulting engineering services, including
process  safety  management  compliance  and  ammonia  refrigeration  and carbon
dioxide  system  design.  TSI  also  provides  operation, maintenance and safety
seminars  for  ammonia  refrigeration  technicians  and  supervisors.

ULTIMATE  COMFORT  SYSTEMS,  INC.  -  was  formed as a new Power Cold subsidiary
effective  January  1,  2001,  to  design,  engineer,  package  and market a new
patented  technology  for  an  energy  efficient  heating,  ventilating  and air
conditioning  (HVAC)  system  for  commercial and office buildings.  The Company
licensed  the  technology  from  Energy   Engineering,  Inc.  on  an   exclusive
non-transferable  basis.  Steve Clark, president of Energy Engineering, Inc. was
named  president  of  Ultimate  Comfort  Systems,  Inc.

The  technology  was  developed  and  patented  by Steve Clark and Montana Power
Company  who  saw  the  need  to  reduce  peak  energy costs. The Wingate Inn in
Bozeman,  MT,  one  of  16  installed  and proven significant energy cost saving
commercial  customers  has  actually  experienced  a  44%  energy  savings.  The
technology  has received distinguished recognition in the energy field including
a  first  place  Commercial Buildings Award from the American Society of Heating
Refrigeration  and  Air  Conditioning  Engineers  (ASHRAE),  the  Department  of
Energy's  Tomorrow's  Energy  Today  Award  and  the 1999 Canadian Energy Award.

Combined  with  the  company's current products, the new Ultimate Comfort System
technology  is  expected  to  consistently  reduce  heating and air conditioning
energy  costs  to  customers by up to 40%. The primary market initially targeted
for  this  technology is the hospitality industry, which includes hotels, motels
and managed care facilities that can realize significant power cost-savings with
PowerCold's  air  conditioning  and  heating  equipment.  PowerCold believes the
market  for  this  new HVAC technology includes over 1,000 new buildings planned
for  construction  by  major  motel/hotel  chains  in  the  next  three  years.

CHANNEL  FREEZE  TECHNOLOGIES,  INC.  -  was formed as a PowerCold subsidiary to
support  the  assets  of  a  proprietary  patented  and economical multi-purpose
freezing  system, suitable for virtually any liquid or semi-liquid product, that
is  inherently more efficient than prior technologies in a variety of industries
including;  block  ice  -  for ice plants, fish and produce industries; food and
food  byproducts  -  for food suppliers and their leftover byproducts, fruit and
juice  products.  The  most  notable  new  application  is  for highly efficient
management  of  liquid  and  semi-liquid industrial waste products for municipal
water,  pulp  and  paper plants and utilities. The freeze-thaw process; waste is


<PAGE> 29
                              POWERCOLD CORPORATION
                                AND SUBSIDIARIES
                                  Form 10-Q/A
                        For the period ended June 30, 2001

frozen,  the  water  in the frozen sludge drains almost immediately during thaw,
and  the  remaining  materials  are  than  disposed  of at greatly reduced cost,
recycled  or  sold.

ROTARY  POWER ENTERPRISE, INC. - was formed as a PowerCold entity to support the
Natural  Gas  Business  from  Rotary Power International. The business includes:
assets  including intellectual property, inventory and manufacturing capability;
a  marketing  agreement  for  marketing  the natural gas engine screw compressor
systems  to  supermarkets, subject to continuation; the North American rights to
the  small  65  series  Mazda  natural  gas  engine  block, subject to new Mazda
Agreement;  and a Distributor and Manufacturing License Agreement for the Rotary
Power  580 series engines form Rotary Power International, Inc.  The Company has
delivered  fourteen  65  HP  engines  and  one  500  HP  engine on a major sales
agreement  for  OEM applications for the oil and gas industry in Western Canada.

ALTURDYNE  ENERGY  SYSTEMS - A PowerCold Company formed to support the marketing
and  manufacturing of natural gas engine driven water chillers. The Company also
has  a  Strategic  Alliance with Alturdyne for manufacturing and marketing their
respective  products.  The added expertise of RealCold Products' engineering and
manufacturing  enhances  the  existing  chiller  business,  where there are some
Alturdyne  140  chiller  systems  installed.

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. Alturdyne's added expertise is in the
design  and  production  of  rotary  engines.

RESULTS  OF  OPERATIONS  -  SECOND  QUARTER  2001

THE COMPANY'S CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SECOND QUARTER ENDED
JUNE  30,  2001  COMPARED  TO  THE  SECOND  QUARTER  ENDED  JUNE  30,  2000:

Revenue  for  the  three  months  period  ended  June  30, 2001 increased 52% to
$133,988  from  $63,818  for  the  same  period  ended  June  30,  2000.

Revenue  for the six months period ended June 30, 2001 increased 75% to $424,098
from  $106,716  for  the  same  period  ended  June  30,  2000.

The  first  half of 2001 has brought rapidly increasing orders for the Company's
energy  saving  cooling systems and correspondingly an improved revenue picture.
The  Company's  revenue in the first half of 2001 exceeded the total revenue for
all  of the year 2000 as a result of growing sales of its patented energy saving
cooling  systems.  This year the Company has focused on the Nauticon Evaporative
Condenser,  which  is  the  heart  of  its  COLD product line, and the exclusive
Evaporative  Chiller Product Line, which provides chilled water (EV Chill ), air
conditioning  (EV  Cool ), and refrigeration (EV Frig ). The basic Nauticon unit
has  evolved  from  a  40-ton condenser into a multi-unit condenser product line
offering  up to 350-ton capacity.  These systems save up to 50% in energy costs.
Because  of  the  Company's  new  product  sales  strategy for these cooling and
chiller products, larger customer orders are being placed. Last year orders were
predominantly  for  basic  Nauticon cooling units with a base price of $6,000 to
$8,000.  This  year,  with the sales emphasis on larger tonnage cooling systems,
the majority of new sales have shifted to larger chilling units in the $30,000 -
$100,000  plus  range.  Some  of  the units exceed $100,000 each when heating is

<PAGE> 30
                              POWERCOLD CORPORATION
                                AND SUBSIDIARIES
                                  Form 10-Q/A
                        For the period ended June 30, 2001

added.  In  January  2001,  PowerCold added the new proprietary Ultimate Comfort
System  HVAC  piping  system for commercial buildings to its product line, which
sells  for  an  average  of  $235,000  per  installation.

Net  Loss  for  the  three  months  period ended June 30, 2001 increased 362% to
$707,596  from  $195,786 for the  same  period  ended  June  30,  2000.

Net  Loss  for  the  six  months  period  ended  June 30, 2001 increased 192% to
$1,035,436  from $538,895 for the same period ended June 30, 2000. (The Net Loss
for  the  six months period ended June 30, 2001 included some $349,625 in excess
corporate  expense,  as  referenced  below).

Net  Loss per share for the three months period ended June 30, 2001 increased to
$0.05  from  $0.02  for  the  same  period  ended  June  30,  2000.

Net  Loss  per  share for the six months period ended June 30, 2001 increased to
$0.08  from  $0.5  for  the  same  period  ended  June  30,  2000.

Net  loss per share was based on weighted average number of shares of 13,259,614
for  June 30, 2001 compared to 10,186,853 for the same six-month period in 2000.

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.  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  sales  and  marketing  and  general and administrative
operating  expense  for  the  first  six  months was primarily due to accounting
changes  in  the  cost  of  revenues  and added consulting services rendered and
prepaid  expenses. The cost of revenues are now stated as costs of materials and
costs  of  labor for product production only.  The cost of revenues decreased to
57%  for  the six months period ended June 30, 2001 compared to 80% for the same
period  ended  June  30,  2000. In addition, the Company issued common stock for
some  $295,625  in  added  consulting  services,  other  prepaid   expenses  and
compensation  accumulated  from  the  previous  year,  and common stock for some
$54,000  for  financing  fees  and  interest  expense.

Current revenue backlog pending some final purchase orders, as of July 31, 2001,
was  some  $1.1M.  Some  $500,000  of  the  Ultimate Comfort Systems hotel/motel
equipment  backlog  will  not  be  delivered until the fourth quarter due to new
building  construction.   Management  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.

The  Company  is  experiencing a unique sales momentum as customers aggressively
seek  ways  to  reduce  their  power  peak  demand  and  energy costs in today's
escalating  real time electricity world.  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 Chiller Products.  Nearly
$12M in new customer proposals have been quoted through July 2001. The Company's

<PAGE> 31
                              POWERCOLD CORPORATION
                                AND SUBSIDIARIES
                                  Form 10-Q/A
                        For the period ended June 30, 2001

manufacturing  capacity  was  virtually  doubled with the move earlier this year
into  a  new 47,000 sq. ft. plant in La Vernia, Texas.  New sales reps have been
added  in Phoenix and Southern California and more are expected during the year.

Management believes that the new added subsidiary, Ultimate Comfort Systems will
eventually  become  the  largest  major  revenue  producer for the Company.  The
initial  target sales market is the hospitality industry: hotels/motels, nursing
homes  and  extended  care  facilities.  The hotel/motel industry is planning to
build  some  1,000  new  buildings  over  the  next three years.  Management has
recently  demonstrated  some  of  the  new  hotel  installations  to  a  major
international  hotel  chain.

THE COMPANY'S CONSOLIDATED BALANCE SHEET AS OF THE SECOND QUARTER ENDED JUNE 30,
2001  COMPARED  TO  YEAR  END  DECEMBER  31,  2000:

The  Company's  Consolidated Balance Sheets as of June 30, 2001 and December 31,
2000  respectively:   Total  current assets decreased to $593,763 as of June 30,
2001  from $694,301 for December 31, 2000;  Total assets increased to $3,301,613
as  of  June  30,  2001  from  $1,998,595  for  December 31, 2000; total current
liabilities  increased  to  $805,000  from $568,650;  total stockholders' equity
increased  to  $2,322,306  as  of June 30, 2001 from $1,254,819 for December 31,
2000.

The  major  increase  in  assets  was  due  to  the restatement of the Company's
investment of 1,940,000 shares in Rotary Power International, Inc. (RPIN:OTCBB).
In  1996,  as  part  of  a  planned  merger, which never took place, the Company
invested  $1,000,000  in  Rotary Power International, Inc. (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 2000 and 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  June 30, 2001 the fair market value of these securities was
$1,455,000,  which  has  been  recognized  as  other  comprehensive  income  in
accordance  with  SFAS  No.  115.

Commitments and contingencies of some $168,300 are from old outstanding accounts
payable  from  the  previous Nauticon operations. Management believes that these
contingency  debts  will  be  written  off  over  time.

Channel  Freeze  sales  and revenue continues to be slow, because of the limited
marketing  experience  and  lack  of product credibility in the marketplace. The
Company  has  enhanced  and  built  its  new Channel Freeze system design, which
includes  new  features  that  simplifies standard product manufacture costs and
provides  the  customer  greater  production  capacity.  The Company envisions a
greater  market  opportunity  with its newly designed product for freezing block
ice and various food products. Management believes that the product is now ready
for  customer  delivery and acceptance and foresees an increase in new business.




<PAGE> 32
                              POWERCOLD CORPORATION
                                AND SUBSIDIARIES
                                  Form 10-Q/A
                        For the period ended June 30, 2001

Effective  as of January  1,  2001,  the  Company  was  granted   the  exclusive
nontransferable  United States license for all Technology developed and patented
as  a  heating and air conditioning system, (U.S. Patent No. 5,183,102) known as
the  Integrated  Piping  System  Technology.  Ultimate Comfort Systems, Inc. was
formed  as  a  new  Power  Cold subsidiary effective January 1, 2001, to design,
engineer,  package  and  market the new patented technology for energy efficient
heating,  ventilating  and  air  conditioning  (HVAC) systems for commercial and
office  buildings.

During  the six months ended June 30, 2001, the Company issued 491,666 shares of
common stock at $0.69 per share.  In addition, the Company issued 546,250 shares
of  common  stock  at  $0.50  per share for consulting and other services and as
compensation,  108,000  shares  of  common  stock at $0.50 for financing fees of
$50,000  and  interest  of  $14,000, and issued 35,000 shares of common stock at
$0.75 per share to satisfy outstanding debt and 45,000 shares of common stock at
$0.50  per  share  as  prepayment  of  expenses.

The  Company  issues restricted common shares for private placement funding on a
negotiated  basis.  The  Company  also  issues  restricted   common  shares  for
expenses,  payables and service rendered based on a discount off the share price
according  to  the  value  of  the  service.

Management  believes  that  its working capital may not be totally sufficient to
support both its current operations and growth plans for additional acquisitions
and  joint  ventures  for  the  near  future.  Management  has implemented a new
operating  plan  providing  guidance  for  cash  management  and revenue growth.
During  the  past  few  months  the Company has raised limited private placement
capital  for current cash requirements, and foresees continued private placement
funding  to meet production needs for the remainder of the year.  The Company is
also  seeking additional major financing for working capital to fill the growing
number  of  orders  and  to  support  its  future  growth  plans.

Management  intends  to continue to utilize and develop the intangible assets of
the  Company.  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.

Effective on March 30, 2001, for a twelve month period, the company engaged Legg
Mason  Wood  Walker,  Incorporated,  Corporate  Finance,  to  serve as financial
advisor  to  the  Company  for  related  investment  banking  services.  In such
capacity, Legg Mason shall be available for advice, and shall advise the Company
with  respect  to  such financial matters as the Company shall from time to time
request,  including  matters  relating  to  (a)  capital  raising,  whether from
institutional  and  other  investors or lenders or from the private placement of
debt  instruments  or  equity securities, (b) public offerings of debt or equity
securities, (c) the structure of debt or equity financings, (d) acquisitions and
other business ventures, (e) stockholder and securities dealer relations, and(f)
commercial  banking  relations.

Effective  as  of  May  1,  2001,  the  Company  Board of Directors approved the
nomination  Joseph  A.  Lopez as its Chief Financial Officer and Director of the
Company.





<PAGE> 33
                              POWERCOLD CORPORATION
                                AND SUBSIDIARIES
                                  Form 10-Q/A
                        For the period ended June 30, 2001

Joseph  Lopez  currently  provides  merger,  acquisition  and  leveraged  buyout
services  to  corporations  and  senior management teams as managing director of
Rhoades  &  Associates,  a  company  he  formed  in  1986.  Lopez was previously
managing  director  of  AMEV  Capital  where  he was responsible for generating,
structuring and negotiating leveraged buyouts. Prior to his service with AMEV he
was  a  partner  and  international  coordinator of mergers and acquisitions for
Deloitte Haskins & Sells (now Deloitte & Touche). Lopez also served as president
of  a  $100  million transportation and warehousing company where he reorganized
the  administrative  and  financial functions and developed long range strategic
objectives for the company. J Joseph Lopez received his BBA from Pace University
and  MBA  from  New  York  University.

PART  11.  OTHER  INFORMATION

ITEM  1.     LEGAL  PROCEEDINGS.

Management  of  the Company filed legal action against Sir WorldWide relating to
the  acquisition  of  the  Channel  Ice  product  and  related patents.  After a
prolonged debate referencing the virtues of the Channel Ice product, the Company
is  seeking  damages for product misrepresentation and breaches of the contract.
The  Company  has  incurred  financial  losses,  since  the asset acquisition in
September  1998,  because  of  product  design  and  product  credibility in the
marketplace.

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  2,  2001  -  Investment  Banker
          8-K  Filed  April  20,  2001  -  Chief  Financial  Officer














<PAGE> 34
                              POWERCOLD CORPORATION
                                AND SUBSIDIARIES
                                  Form 10-Q/A
                        For the period ended June 30, 2001

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:  AUGUST  30,  2001