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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

(Mark One)


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2003


or


[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period from _________ to _________


Commission File Number: 333-19584


POWERCOLD CORPORATION

(Exact name of registrant as specified in its charter)


NEVADA

23-2582701

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)


115 CANFIELD ROAD, LA VERNIA, TEXAS

78121

(Address of principal executive offices)

(Zip Code)


(830) 779-5213

(Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  [X] Yes    [  ] No


Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes  [  ]  No  [X]


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


Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  [  ]  Yes [  ] No


APPLICABLE ONLY TO CORPORATE ISSUERS:


Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, par value $0.001 – 21,233,180 shares outstanding at September 30, 2003.


SEC 2334 (3-03)

Potential persons who are to respond to the collection of information contained in this form are not

required  to  respond unless the  form displays a currently valid OMB control number.

POWERCOLD CORPORATION AND SUBSIDIARIES

FORM 10Q

SEPTEMBER 30, 2003


INDEX


Page

PART I.

FINANCIAL INFORMATION



Item 1:

Consolidated Financial Statements



Consolidated Balance Sheets

3


Consolidated Statements of Operations – Three Months

4


Consolidated Statements of Operations – Nine Months

5


Consolidated Statement of Stockholders' Equity

6


Consolidated Statements of Cash Flows

8


Condensed Notes to Consolidated Financial Statements

10


Item 2:

Management's Discussion and Analysis of

Financial Condition and Results of Operations.

13


Item 3:

Quantitative and Qualitative Disclosures About Market Risk.

17


Item 4.

Controls and Procedures.

17


PART II.   OTHER INFORMATION



Item 1.

Legal Proceedings.

20


Item 2.

Changes in Securities.

20


Item 3.

Defaults Upon Senior Securities.

20


Item 4.

Submission of Matters to a Vote of Security Holders.

20


Item 5.

Other Information.

20


Item 6.

Exhibits and Reports on Form 8-K.

20


Signature

21


Index to Exhibits

21




POWERCOLD CORPORATION AND SUBSIDIARIES

FORM 10Q

September 30, 2003


PART I - FINANCIAL INFORMATION


ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS


POWERCOLD CORPORATION

CONSOLIDATED BALANCE SHEETS

           
      

September

 

December 31,

      

2003

 

2002

 

2001

      

Unaudited

    

ASSETS

      
 

CURRENT ASSETS

      
  

Cash

 

$      805,804

 

$         93,372

 

$       290,174

  

Trade accounts receivable, net of allowance

 

3,809,014

 

296,179

 

173,769

  

Receivables from related parties

 

-

 

-

 

1,686

  

Inventory

 

161,578

 

180,433

 

241,853

  

Prepaid expenses

 

30,000

 

3,875

 

22,500

   

Total Current Assets

 

4,806,396

 

573,859

 

729,982

 

OTHER ASSETS

      
  

Property and equipment, net

 

125,411

 

132,622

 

41,113

  

Patent rights and related technology, net

 

466,040

 

526,716

 

382,108

  

Goodwill, net

 

-

 

16,866

 

16,866

  

Chiller technology

 

860,000

 

400,000

 

-

  

Securities available for sale

 

19,317

 

38,800

 

970,000

  

Deposits and prepaid rent

 

97,532

 

6,336

 

9,645

   

Total Other Assets

 

1,568,300

 

1,121,340

 

1,419,732

  

Net assets from discontinued operations

 

-

 

-

 

689,810

   

TOTAL ASSETS

 

$   6,374,696

 

$          1,695,199

 

$          2,839,524

           

LIABILITIES AND STOCKHOLDER' EQUITY

      
 

CURRENT  LIABILITIES

      
  

Accounts payable and accrued expenses

 

$   3,111,975

 

$             345,899

 

$             232,204

  

Commissions and royalty payable

 

21,007

 

55,067

 

55,067

  

Advance from shareholder

 

92,236

 

196,760

 

-

  

Note payable

 

34,014

 

34,014

 

36,329

  

Current portion of capital lease payable

 

2,726

 

3,321

 

3,018

   

Total Current Liabilities

 

3,261,958

 

635,061

 

326,618

           
 

CAPITAL LEASE PAYABLE, net of current portion

 

-

 

600

 

5,413

           
 

COMMITMENTS AND CONTINGENCIES

 

128,332

 

277,903

 

168,300

           
 

STOCKHOLDERS' EQUITY

      
  

Convertible preferred stock, Series A, $0.001

      
  

par value: 5,000,000 shars authorized, 0

      
  

shares issued and outstanding

 

-

 

-

 

-

  

Common stock, $0.001 par value:200,000,000

      
  

share authorized, 21,233,180, 18,442,066 and 16,027,882

      
  

share issued and outstanding, respectively

 

21,234

 

18,442

 

16,027

  

Additional paid-in capital

 

16,266,319

 

13,644,779

 

10,210,665

  

Stock options and warrants

 

504,998

 

504,998

 

471,980

  

Accumulated deficit

 

(13,827,462)

 

(13,425,384)

 

(9,329,479)

  

Accumulated other comprehensive income

 

19,317

 

38,800

 

970,000

   

Total Stockholder's Equity

 

2,984,406

 

781,635

 

2,339,193

   

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$   6,374,696

 

$      1,695,199

 

$      2,839,524


See accompanying condensed notes.


<

POWERCOLD CORPORATION

     

CONSOLIDATED STATEMENTS OF

OPERATIONS AND COMPREHENSIVE LOSS

     
          
     

For the Three Months Ended September 30,

     

2003

 

2002

 

2001

     

Unaudited

 

Unaudited

 

Unaudited

REVENUES

     
 

Product Sales

$   2,139,794

 

$          435,201

 

$          305,527

 

Services

-

 

25,258

 

67,478

  

Total Revenues

2,139,794

 

460,459

 

373,005

          

COST OF REVENUES

1,355,750

 

334,349

 

279,203

GROSS PROFIT

784,044

 

126,110

 

93,802

          

OPERATING EXPENSES

     
 

Sales, marketing and advertising

182,707

 

166,211

 

67,519

 

General and administrative

522,555

 

813,063

 

329,655

 

Depreciation and amortization

24,985

 

18,930

 

24,048

  

Total Operating Expenses

730,247

 

998,204

 

421,222

INCOME (LOSS) FROM OPERATIONS

53,797

 

(872,094)

 

(327,420)

          

OTHER INCOME (EXPENSES)

     
 

Royalty income

-

 

-

 

-

 

Interest income

944

 

-

 

1,367

 

Inventory impairment

-

 

(143,742)

 

-

 

Interest and financing expense

(1,121)

 

(2,764)

 

(2,124)

 

Gain on closure of segment

233,139

    
  

Total Other Income (Expense)

232,962

 

(146,506)

 

(757)

INCOME (LOSS) BEFORE INCOME TAX

286,759

 

(1,018,600)

 

(328,177)

          

INCOME TAX EXPENSES

-

 

-

 

-

          

INCOME (LOSS) FROM CONTINUING OPERATIONS

286,759

 

(1,018,600)

 

(328,177)