WESTERN POWER & EQUIPMENT CORP - PRE 14A - Preliminary Proxy Statement
Date Filed: 08/20/2001
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)

Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|

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|X| Preliminary Proxy Statement
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Western Power & Equipment Corp
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(Name of Registrant as Specified In Its Charter)

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WESTERN POWER & EQUIPMENT CORP - PRE 14A - Preliminary Proxy Statement
Date Filed: 08/20/2001
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WESTERN POWER & EQUIPMENT CORP - PRE 14A - Preliminary Proxy Statement
Date Filed: 08/20/2001
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WESTERN POWER & EQUIPMENT CORP.
4601 N.E. 77th Avenue, Suite 200
Vancouver, Washington 98662

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
October 10, 2001

To the Stockholders of Western Power & Equipment Corp.:

NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Annual Meeting") of
Stockholders of Western Power & Equipment Corp., a Delaware corporation (the
"Company"), will be held at 10:00 a.m on October 10, 2001, at the offices of
Mintz & Fraade, P.C., 488 Madison Avenue, Suite 1100, New York, NY, 10022, for
the following purposes:

(a) To elect a five member Board of Directors to serve until the next
Annual Meeting of Stockholders of the Company and until their successors are
duly elected and qualified;

(b) To consider and act upon the proposal to issue 600,000 shares of
common stock of the Company to the Robert Rubin Family Stock Trust.

(c) To consider and transact such other business as may properly come
before the Annual Meeting and any adjournments thereof.

In accordance with the provisions of the Company's By-laws, the Board of
Directors has fixed the close of business on August 27, 2001 as the date for
determining the stockholders of record entitled to receive notice of, and to
vote at, the Annual Meeting and any adjournments thereof.

Dated: August 31, 2001

By Order of the Board of Directors,

Mark J. Wright, Secretary

STOCKHOLDERS ARE URGED TO FILL IN, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING PREPAID ENVELOPE.

It is desirable that as many stockholders as possible be represented, in
person or by proxy, at the Annual Meeting. Consequently, whether or not you now
expect to be present, please execute and return the enclosed proxy. You have the
power to revoke your proxy at any time before it is voted, and the giving of a
proxy will not affect your right to vote in person if you attend the Annual
Meeting.

WESTERN POWER & EQUIPMENT CORP - PRE 14A - Preliminary Proxy Statement
Date Filed: 08/20/2001
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[THIS PAGE IS INTENTIONALLY LEFT BLANK]

WESTERN POWER & EQUIPMENT CORP.
4601 N.E. 77th Avenue, Suite 200
Vancouver, Washington 98662

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS
October 10, 2001

August 31, 2001

This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Western Power & Equipment Corp.
(the "Company") for use at the Company's Annual Meeting of Stockholders to be
held on October 10, 2001, and at any adjournment thereof (the "Annual Meeting").
Further, solicitation of proxies may be made personally, or by telephone or
telegraph, by regularly employed officers and other employees of the Company,
who will receive no additional compensation for such. The cost of soliciting
proxies will be borne by the Company which may enlist the assistance, and
reimburse the reasonable expenses, of banks and brokerage houses in the
additional solicitation of proxies and proxy authorizations, particularly from
their customers whose stock is not registered in the owner's name, but in the
name of such banks or brokerage houses.

All shares represented at the Annual Meeting by proxies will be voted
provided that such proxies are properly signed and dated. In cases where a
choice is indicated, the shares represented will be voted in accordance with the
specifications so made. In cases where no specifications are made, the shares
represented will be voted FOR the election as directors of the nominees listed
below and FOR the issuance of 600,000 shares of common stock of the Company to
the Robert Rubin Family Stock Trust.

Any stockholder executing and returning a proxy has the power to revoke
such proxy at any time prior to the voting thereof by: (a) written notice to the
Secretary of the Company at the Company's headquarters delivered prior to the
commencement of the Annual Meeting, (b) providing a signed proxy bearing a later
date, or (c) appearing in person and voting at the Annual Meeting.

A copy of the Annual Report on Form 10-K of the Company for the fiscal
year ended July 31, 2000 (the "2000 Fiscal Year"), as amended, including
financial statements, is being mailed concurrently herewith (on or about August
31, 2001) to all stockholders of record at the close of business on August 27,
2001. The Annual Report does not constitute a part of the proxy solicitation
material for the Annual Meeting.

VOTING SECURITIES

Only stockholders of record at the close of business on August 27, 2001
are entitled to vote at the Annual Meeting. The total number of shares of common
stock, par value $.001 per share (the "Common Stock"), of the Company, issued,
outstanding and entitled to be voted on the record date was 3,353,162 shares.
Each of such shares of Common Stock is entitled to one vote upon all matters to
be acted upon at the Annual Meeting. The holders of a majority of the
outstanding votes (i.e., 1,676,582 votes) shall constitute a quorum, which is
necessary for the transaction of business at the Annual Meeting. In accordance
with the Company's Certificate of Incorporation and By-laws, and applicable law,
the election of directors shall be by a plurality of the votes cast and the
ratification of the issuance of 600,000 shares of common stock of the Company to
the Robert Rubin Family Stock Trust shall be by a majority of the votes cast.

Shares Held By Directors and Named Executive Officers

Set forth in the table below is information concerning the ownership, as
of the close of business on August 27, 2001, of the Common Stock by the
Company's directors and Named Executive Officers and all directors and present
executive officers as a group.

- ---------------------------------------------------------------------------------------------
Name and Address Amount and Nature of Percent (1)
- ---------------- Beneficial Ownership (1) -----------
------------------------
- ---------------------------------------------------------------------------------------------

C. Dean McLain (2) 529,485 15.8%

Mark J. Wright (3) 100,000 3.0%

Robert M. Rubin (4) 705,197 21.0%

Dr. Seymour Kessler(5) 25,000 0%

Allen Perres (6) 25,000 0%

Irwin Pearl 0 0%

- ---------------------------------------------------------------------------------------------
All directors and executive officers as a group (5
persons) 1,384,682 39.8%

- ---------------------------------------------------------------------------------------------

(1) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock beneficially owned by them. A person is deemed to be the
beneficial owner of securities which may be acquired by such person within
60 days from the date on which beneficial ownership is to be determined,
upon the exercise of options, warrants or convertible securities. Each
beneficial owner's percentage ownership is determined by assuming that
options, warrants and convertible securities that are held by such person
(but not those held by any other person) and which are exercisable within
such 60 day period, have been exercised.
(2) Excludes Mr. McLain's indirect ownership in the Company through his
beneficial ownership of options to purchase 300,000 shares of AUGI common
stock. Inclsdes Mr. McLain's direct beneficial ownership of 29,485 shares
of common stock of the Company and exercisable options to acquire 500,000
shares of Company Common Stock. Mr. McLain's beneficial ownership of AUGI
common stock represents 2.4 percent of AUGI voting stock as at June 15,
2001.
(3) Includes exercisable stock options to purchase 100,000 shares of common
stock of the Company issued to Mr. Wright for services rendered to the
Company.
(4) Excludes Mr. Rubin's indirect ownership in the Company through his
ownership of an aggregate of 2,087,798 voting shares of AUGI, the
Company's principal stockholder, including

- ----------

2,000 shares of AUGI common stock, options to purchase an additional
840,000 shares of AUGI common stock, and 1,245,798 held by the Rubin
Family Irrevocable Stock Trust, to which Mr. Rubin disclaims beneficial
ownership. Excludes the 600,000 shares of Common Stock issuable upon
shareholder approval to the Rubin Family Irrevocable Stock Trust, to which
Mr. Rubin will disclaim beneficial ownership. Includes Mr. Rubin's direct
beneficial ownership of Company Common Stock through 205,197 shares of
Company Common Stock and his ownership of exercisable options to acquire
500,000 shares of Company Common Stock. Mr. Rubin's beneficial ownership
of AUGI voting stock represents 16.8 percent of AUGI voting stock as at
June 15, 2001.

(5) Includes stock options to purchase 25,000 shares of common stock of the
Company issued to Dr. Kessler for services rendered to the Company.
(6) Includes stock options to purchase 25,000 shares of common stock of the
Company issued to Mr. Perres for services rendered to the Company.

Shares Held by Certain Other Stockholders

The following table sets forth, as of the close of business on August 27, 2001,
certain information with respect to each person who is known to the Company to
be the beneficial owner of more than five (5%) percent of the Common Stock,
other than the directors set forth in the Directors and Named Executive Officers
Ownership Table above.

- --------------------------------------------------------------------------------
Name and Address Amount and Nature of Percent (1)
- ---------------- Beneficial Ownership (1) -----------
------------------------
- --------------------------------------------------------------------------------
American United Global, Inc.
("AUGI")
2489 152nd Avenue NE
Richmond, WA, 98052 ..................... 1,222,586 36.5%

C. Dean McLain (2) 529,485 15.8%

Robert M. Rubin (3) 705,197 21.0%

- --------------------------------------------------------------------------------

day period, have been exercised.
(2) Excludes Mr. McLain's indirect ownership in the Company through his
beneficial ownership of options to purchase 300,000 shares of AUGI common
stock. Includes Mr. McLain's direct beneficial ownership of 29,485 shares
of common stock of the Company and exercisable options to acquire 500,000
shares of Company Common Stock. Mr. McLain's beneficial ownership of AUGI
common stock represents 2.4 percent of AUGI voting stock as at June 15,
2001.

(3) Excludes Mr. Rubin's indirect ownership in the Company through his
ownership of an aggregate of 2,087,798 voting shares of AUGI, the
Company's principal stockholder, including 2,000 shares of AUGI common
stock, options to purchase an additional 840,000 shares of AUGI common
stock, and 1,245,798 held by the Rubin Family Irrevocable Stock Trust, to
which Mr. Rubin disclaims beneficial ownership. Excludes the 600,000
shares of Common Stock issuable upon shareholder approval to the Rubin
Family Irrevocable Stock Trust, to which Mr. Rubin will disclaim
beneficial ownership. Includes Mr. Rubin's direct beneficial ownership of
Company Common Stock through 205,197 shares of Company Common Stock and
his ownership of exercisable options to acquire 500,000 shares of Company
Common Stock. Mr. Rubin's beneficial ownership of AUGI voting stock
represents 16.8 percent of AUGI voting stock as at June 15, 2001.

Voting by Directors and Executive Officers

It is anticipated that the directors and the Named Executive Officers of
the Company will vote, FOR the election as directors of the nominees listed
below and FOR the issuance of 600,000 shares of common stock of the Company to
the Robert Rubin Family Stock Trust.

ELECTION OF DIRECTORS

The individuals named in the enclosed form of proxy will vote, if so
authorized, FOR the persons named below as directors of the Company, each of
whom has served as a director of the Company for the periods so indicated. Each
such person is to be elected to hold office until the next succeeding Annual
Meeting of Stockholders and until his successor is duly elected and qualified.
Management of the Company is not aware of any reason why any of the nominees
will not be able to serve. If a nominee should subsequently become unavailable
for election, the persons voting the accompanying proxy may, in their sole
discretion, vote FOR such substitute nominee the present Board of Directors may
recommend.

- -------------------------------------------------------------------------------------------
Name Age Principal Positions with the Company Director Since
- ---- --- ------------------------------------ --------------
- -------------------------------------------------------------------------------------------

C. Dean McLain 47 Chairman of the Board of Directors of the Company 1993

Robert M. Rubin 59 Director of the Company 1992

Dr. Seymour 69 Director of the Company 2000
Kessler

Allen Perres 53 Director of the Company 2000

Irwin Pearl 59 Director of the Company 2001

- -------------------------------------------------------------------------------------------

C. DEAN MCLAIN. Mr. McLain has served as President, Chief Executive Officer, and
a director of the Company since March 7, 1993. Mr. McLain was elected Chairman
of the Board of Directors effective August 1, 1998. From March 1, 1993 through
June 13, 1995, Mr. McLain served as Executive Vice President of AUGI. Mr. McLain
has served on the Board of Directors of AUGI since March 7, 1994. From January
1990 through January 1993, Mr. McLain served as Manager of Privatization of Case
Corporation.

ROBERT M. RUBIN. Mr. Rubin has been the Chief Executive Officer of American
United Global, Inc. ("AUGI"), an approximately 37% stockholder of the Company',
since October 1990, and also served as Chairman of AUGI from October 1990 to
present. Mr. Rubin served as the Chairman of the Board of Directors of the
Company from November 20, 1992 to August 1, 1998. Mr. Rubin is also a director
of Medimerge, Inc. Mr. Rubin was Chairman of the Board of ERD Waste Technology,
Inc., a diversified waste management public company specializing in the
management and disposal of municipal solid waste, industrial, and commercial
non-hazardous waste and hazardous waste. ERD Waste Technology filed for Chapter
11 bankruptcy reorganization in the year 2000. Mr. Rubin also served as Chairman
of IDF International Inc., which is no longer in business, and was a director of
Help at Home, Inc. through 2000.

DR. SEYMOUR KESSLER. Dr. Kessler was elected a Director of the Company in 2000.
He has also been a partner at RKP Capital Partners since 1996 and serves as a
Director of Magna Labs. Dr. Kessler served as

President & C.E.O. of Princeton Dental Management Corp. (one of the nation's
first home health care companies). He has also served as Vice Chairman of the
Board of Peterson Bank, Chairman of the Board of First National Bank of Wheaton
and Chairman of the Executive and Loan Committees for First National Bank in
Lincolnshire.

ALLEN PERRES. Mr. Perres was elected a Director of the Company in 2000. He has
also been a managing partner at RKP Capital Partners since 1996 and serves as a
Director of American United Global International. Mr. Perres was a co-founder
and principal of RealCorp., Inc. a commercial real estate investment company.

IRWIN PEARL. Mr. Pearl was appointed as a Director in July 2001. Mr. Pearl has
been the Chief Operating Officer of E-GlobalNet Inc. since 1997. He was
President and a Director of PhaseOut of America from 1993 to 1997. Mr. Pearl was
Executive Vice-President and a Director of Aqua Sciences International from 1985
to 1992.

Board Committees and Attendance Records

The Company's Audit and Compensation Committee currently consists of Allan
Perres, Seymour Kessler and Irwin Pearl. None of Messr. Perres, Kessler, or
Pearl are officers or employees of the Company and none have served in such
capacities with the Company in the past.

During the 2000 Fiscal Year, there was one formal meeting of the Board of
Directors of the Company. All of the then directors were in attendance.

Audit Committee Report

The Board of Directors has maintained an Audit Committee comprised of two
of the Company's outside directors. With the addition of the third member, the
Board of Directors and the Audit Committee believe that the Audit Committee's
member composition will satisfy the rule of the National Association of
Securities Dealers, Inc. ("NASD") that governs audit committee composition, Rule
310(c)(26)(B)(i), including the requirement that audit committee members all be
"independent directors" as that term is defined by NASD Rule 4200(a)(15).

In accordance with its written charter adopted by the Board of Directors
(set forth in Appendix "A" to this proxy statement), the Audit Committee assists
the Board of Directors with fulfilling its oversight responsibility regarding
the quality and integrity of the accounting, auditing and financial reporting
practices of the Company. In discharging its oversight responsibilities
regarding the audit process, the Audit Committee:

(1) reviewed and discussed the audited financial statements with
management;

(2) discussed with the independent auditors the material required to be
discussed by Statement on Auditing Standards No. 61; and

(3) reviewed the written disclosures and the letter from the independent
auditors required by the Independence Standards Board's Standard No. 1, and
discussed with the independent auditors any relationships that may impact their
objectivity and independence.

Based upon the review and discussions referred to above, the Audit
Committee recommended to the

Board of Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the fiscal year ended July 31, 2000, as
amended and filed with the Securities and Exchange Commission.

Compensation Committee Report

Proxy disclosure rules require the Company to report certain relationships
involving the Company in which members of the Compensation Committee have a
direct or indirect material interest. Also required is disclosure of
interlocking relationships among Compensation Committee members and those
executive officers of the Company, if any, who also serve as members of
Compensation Committees or executive officers at other companies. The purpose of
these requirements is to allow shareholders to assess the independence of the
Company's Compensation Committee members in making executive compensation
decisions and recommendations.

Formation

The Company's Compensation Committee was formed on June 9, 2000 and its
mandate is to assist the Board in the discharge of its fiduciary
responsibilities relating to the fair and competitive compensation of the
employees of the Company, including: (i) the review and approval of the
Company's compensation philosophy; (ii) the review and approval of compensation
programs, plans and awards; (iii) administration of the Company's short- and
long-term incentive plans and other stock or stock-based plans, and; (iv) to
issue an annual report on executive compensation for inclusion in the Company's
proxy statement.

Insider Participation and Interlocks

While the Company has had transactions with companies and firms with which
certain members of the Compensation Committee are, or at some point during
fiscal year 2000 were, affiliated as an officer and/or director, there are no
such relationships in which members of the Committee have a direct or indirect
material interest. In addition, there are no interlocking relationships of the
nature described above involving members of the Compensation Committee.

Director and Executive Compensation

Existing executive compensation agreements were entered into on July 26,
2000. For information regarding these agreements, please see "Employment
Contracts with Named Executive Officers".

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
THE ABOVE-LISTED SLATE OF DIRECTOR-NOMINEES

RATIFICATION OF THE ISSUANCE OF 600,000 SHARES OF THE COMPANY'S
COMMON STOCK TO THE ROBERT RUBIN FAMILY STOCK TRUST

The Company's Board of Directors has unanimously approved the issuance of
600,000 shares of the Company's Common Stock to the Robert Rubin Family Stock
Trust.

As part of the merger transaction and for services rendered, the Board of
Directors has determined that it is in the best interest of the Company to issue
600,000 shares of the Company's Common Stock to the Robert Rubin Family Stock
Trust.

THE BOARD OF DIRECTORS RECOMMENDS RATIFICATION OF THE ISSUANCE OF 600,000
SHARES OF THE COMPANY'S COMMON STOCK TO THE ROBERT RUBIN FAMILY STOCK
TRUST

MANAGEMENT REMUNERATION

Summary Compensation Table

The following table sets forth the amount of all compensation paid during
each of the last three fiscal years to the Chief Executive Officer and to each
of the Company's other executive officers for services in all capacities to the
Company.

Long-Term
Compensation
Annual Compensation Awards
--------------------------------------------- ------------
Other Annual Number of All Other
Name and Principal Position Year Salary Bonus Compensation Options Compensation
- --------------------------- ---- -------- ------ ------------ ------------ ------------

Robert M. Rubin 2000 $150,000 500,000
Consultant; former Chairman(1) 1999 150,000 0 0 0 0
1998 150,000 0 0 100,000 0

C. Dean McLain 2000 $322,502 11,668 500,000 31,199
President, CEO, Chairman of the 1999 300,425 0 7,281 0 22,596
Board(2) 1998 280,000 68,935 40,000 425,000 22,596

Mark J. Wright 2000 $157,674 5,040 100,000 6,114
Vice President of Finance and CFO 1999 132,588 20,000 4,680 0 7,778
1998 98,958 15,000 0 98,500 0

(1) The Company's employment agreement with Mr. Rubin, pursuant to which Mr.
Rubin was paid a base salary of $150,000 plus an annual bonus, expired
July 31, 1998. See "Employment, Consulting and Incentive Compensation
Agreements" below. Mr. Rubin resigned as Chairman effective August 1,
1998. The Company entered into a consulting agreement with Mr. Rubin,
effective August 1, 1998 and expiring August 1, 2000, pursuant to which
Mr. Rubin was paid a salary of $150,000 plus all authorized business
expenses. The Company entered into a new seven (7) year consulting
agreement with Mr. Rubin effective August 1, 2000 which pays Mr. Rubin a
base salary of $200,000

plus all authorized business expenses in the first year, followed by a 3%
raise in each successive year of the contract. See "Employment, Consulting
and Incentive Compensation Agreements," below.

(2) Mr. McLain joined the Company in March 1993, when he became its Chief
Executive Officer. On July 31, 1995, Mr. McLain was permitted to and did
purchase from AUGI 6,000 shares of AUGI's common stock at a price of
$.01per share. On August 1, 1995, the closing price for a share of AUGI's
common stock as reported by NASDAQ was $4.875. Effective as of August 1,
1995, Mr. McLain's employment agreement with the Company was terminated
and he entered into an amended employment agreement expiring July 31,
2005. The base salary under this employment agreement commenced at
$250,000 for fiscal 1996, and rises to $300,000 for fiscal 2000. His
employment agreement also calls for Incentive Bonuses under certain
circumstances. Effective as of August 1, 2000 Mr. McLain's employment
agreement with the Company was terminated and he entered into a new
employment agreement expiring July 31, 2007. The base salary under this
employment agreement commences at $390,000 and increases yearly based upon
the average percentage increase in salary for all employees of Employer
for the current fiscal year over the previous fiscal year. His employment
agreement also calls for Incentive Bonuses under certain circumstances.
See "Employment, Consulting and Incentive Compensation Agreements" below.
Mr. McLain became Chairman effective August 1, 1998.

During the three year period ended July 31, 2000, the Company did not grant any
restricted stock awards or stock appreciation rights. Additionally, all of the
Company's group life, health, hospitalization, medical reimbursement or
relocation plans, if any, do not discriminate in scope, terms or operation, in
favor of the Named Executive Officers and are generally available to all
salaried employees. Further, no Named Executive Officer received, in any of the
periods specified in the Summary Compensation Table, perquisites and other
personal benefits, securities or property in an aggregate amount in excess of
the lesser of $50,000 or 10% of the total salary and bonus reported for the
Named Executive Officer in the fiscal year in which such benefits were received,
and no single type of perquisite or other personal benefits exceeded 25% of the
total perquisites and other benefits reported for the Named Executive Officer in
the applicable fiscal year.

Option Grants Table

The following table sets forth (a) the number of shares underlying options
granted to each Named Executive Officer during the 2000 Fiscal Year, (b) the
percentage the grant represents of the total number of options granted to all
Company employees during the 2000 Fiscal Year, (c) the per share exercise price
of each option, (d) the expiration date of each option, and (e) the potential
realized value of each option based on: (i) the assumption of a five (5%)
percent annualized compounded appreciation of the market price of the Common
Stock from the date of the grant of the subject option to the end of the option
term, and (ii) the assumption of a ten (10%) percent annualized compounded
appreciation of the market price of the Common Stock from the date of the grant
of the subject option to the end of the option term.

Option Grants in Last Fiscal Year

The following table provides information regarding individual grants of
stock options to each executive officer in fiscal 2000.

Potential Realizable
Individual Grants Value at Assumed
- --------------------------------------------------------------------------------- Annual Rates of Stock
Price Appreciation for % of Total Options
Granted to Option Term Employees
Exercise
Options in Fiscal of Base Expiration
Name Granted Year Price Date 5% 10%
- --------------- ------- ---------- ------- ---------- ---- ----

C. Dean McLain 0

Robert M. Rubin 0

Mark J. Wright 0

Seymour Kessler 0

Allen Perres 0

Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

The following table provides information concerning the exercise of stock
options during the fiscal 2000 by each executive officer and the fiscal year-end
value of unexercised options held by that officer.

Number of Unexercised Value of Unexercised
Options at In-the-Money Options at
Shares Fiscal Year-End Fiscal Year-End
Acquired on Value ------------------------- -------------------------
Name Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- --------------- ----------- -------- ------------------------- -------------------------

C. Dean McLain 0 0 500,000 N/A

Robert M. Rubin 0 0 500,000 N/A

Mark J. Wright 0 0 100,000 N/A

Seymour Kessler 0 0 0 N/A

Allen Perres 0 0 0 N/A

The following line graph compares the yearly percentage change in the
Company's cumulative total stockholder return on its common stock since July 31,
1995 as compared to the Nasdaq Stock Market and the S&P Machinery (Diversified)
Index.

Cumulative Total Return
--------------------------------------------------------------------
7/95 7/96 7/97 7/98 7/99 7/00

WESTERN POWER & EQUIPMENT CORP. 100.00 67.31 73.08 88.46 37.50 76.92
NASDAQ STOCK MARKET (U.S.) 100.00 108.96 160.79 189.28 270.71 385.48
S & P MACHINERY (DIVERSIFIED) 100.00 101.93 165.57 136.90 160.38 127.44

* Assumes $100 invested on July 31, 1995 in the Company's common stock or on
July 31, 1995 in the Nasdaq Stock Market and S&P Machinery (Diversified) Index,
including reinvestment of dividends. Fiscal year ending July 31.

The corporations comprising the S&P Machinery (Diversified) Index are as
follows: Case Corporation, Caterpillar, Inc., Cincinnati Milicron, Cooper
Industries, Deere & Co., Dover Corporation, Harnischfeger, Ingersoll Rand
Corporation, NACCO Industries, Inc. (class A), and Timken.

Beginning
Transaction Closing No. Of Dividend Dividend Shares Ending Cum. Tot.
Date* Type Price** Shares*** per Share Paid Reinvested Shares Return
- ----- ---- ------- --------- --------- ---- ---------- ------ ------

31-Jul-95 Begin 6.500 15.38 15.385 100.00

31-Jul-96 Year End 4.375 15.38 15.385 67.31

31-Jul-97 Year End 4.750 15.38 15.385 73.08

31-Jul-98 Year End 5.750 15.38 15.385 88.46

31-Jul-99 Year End 2.438 15.38 15.385 37.50

31-Jul-00 End 5.000 15.38 15.385 76.92

* Specified ending dates or ex-dividends dates.
** All Closing Prices and Dividends are adjusted for stock splits and stock
dividends.
***'Begin Shares' based on $100 investment.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG WESTERN POWER & EQUIPMENT CORP.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE S & P MACHINERY (DIVERSIFIED) INDEX

[LINE CHART OMITTED]

* $100 INVESTED ON 7/31/95 IN STOCK OR INDEX- INCLUDING REINVESTMENT OF
DIVIDENDS.

FISCAL YEAR ENDING JULY 31.

Graph produced by Research Data Group, Inc. 9/1/00

Director's Remuneration

Each director, not otherwise a full time employee of the Company, is
eligible to receive $5,000 per quarter, along with the reimbursement of their
reasonable expenses incurred on the Company's behalf.

Employment, Consulting and Incentive Compensation Agreements

Upon completion of the Company's 1995 initial public offering, the Company
entered into an employment agreement with Mr. Rubin, effective as of June 13,
1995, that expired July 31, 1998. Pursuant to this agreement, Mr. Rubin served
as Chairman of the Board of the Company and received an annual base salary of
$150,000 plus bonuses if certain conditions were met. Effective August 1, 1998,
the Company entered into a new two-year agreement with Mr. Rubin. Under the
terms of this agreement, Mr. Rubin no longer served as Chairman, but provided
consulting services to the Company. He received an annual fee of $200,000 plus
all authorized business expenses. The Company then entered into a new seven (7)
year consulting agreement with Mr. Rubin effective August 1, 2000 paying him
$200,000 plus all authorized business expenses in the first year, followed by a
3% raise in each successive year of the contract.

On March 5, 1996, Mr. Rubin received options to acquire 150,000 shares of
Common Stock exercisable at $4.50 per share and vesting 33.3 percent on March 5,
1997 and 33.3 percent on each succeeding March 5 until all were vested. In
August 1996, Mr. Rubin received options to acquire 50,000 shares of Common
Stock, exercisable at $4.375 per share and vesting 50 percent on each of the
first and second anniversaries of the date of grant. In November 1997, Mr. Rubin
received options to acquire 100,000 shares of Common Stock, exercisable at
$4.5625 per share which were all vested immediately.

On August 1, 1996, Mr. McLain entered into an amended employment agreement
with the Company that was to expire July 31, 2005. Pursuant to that agreement,
Mr. McLain agreed to serve as President and Chief Executive Officer of the
Company, and was to receive an annual base salary of $250,000 through the end of
fiscal 1996 and $265,000 in fiscal 1997. The Company and Mr. McLain mutually
agreed to terminate the existing agreement and entered into a new 10-year
employment agreement, effective January 1, 1998. The 1998 agreement provides for
an annual base salary, payable monthly, of $280,000 through July 31, 1998 and
$290,000 through December 31, 1998. Under the terms of this new agreement, Mr.
McLain's salary was to be increased each January 1st by the average percentage
increase in pay for all employees during the preceding calendar year. In
addition, Mr. McLain is entitled to receive a bonus payment equal to 5 percent
of the consolidated pre-tax income in excess of $1,750,000 in each fiscal year
covered under the employment agreement (the "Incentive Bonus"). The maximum
amount of the Incentive Bonus payable under the new agreement were not to exceed
$150,000 in any year through 2002, inclusive, and shall not exceed $200,000 in
fiscal years 2003 through 2007, inclusive. Mr. McLain did not receive a bonus
for the Company's 1999 fiscal year under the terms of his employment agreement.
As used in Mr. McLain's employment agreement, the term "consolidated pre-tax
income" is defined as consolidated net income of the Company and any
subsidiaries of the Company subsequently created or acquired, before the
Incentive

Bonus, income taxes and gains or losses from disposition or purchases of assets
or other extraordinary items.

Under the terms of the employment agreement, in any year that Mr. McLain
received the maximum bonus, he was entitled to receive options to purchase
25,000 additional shares of the Company's Common Stock at the market price per
share on the date the options were issued that would vest one year from such
date. Mr. McLain's employment agreement also provided for fringe benefits
customary for senior executive officers in the industry in which the Company
operates, including medical coverage, excess life and disability insurance
benefits, and the use of an automobile supplied by the Company in addition to an
$800 per month auto allowance. The aggregate value of all of the fringe benefits
was approximately $40,000 per year. Mr. McLain did not receive a bonus for the
Company's 2000 fiscal year.

Effective as of August 1, 2000 Mr. McLain's employment agreement with the
Company was terminated and he entered into a new employment agreement expiring
July 31, 2007. The base salary under this employment agreement commences at
$390,000 and increases yearly based upon the average percentage increase in
salary for all employees of Employer for the current fiscal year over the
previous fiscal year. His employment agreement also calls for Incentive Bonuses
under certain circumstances.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee consists of Dr. Kessler, Mr. Perres and Mr.
Pearl. There are no interlocking relationships, as described by the Securities
and Exchange Commission, between the Compensation Committee members. Mr. McLain,
the Chairman of the Board of Directors since August 1998, as well as its
President and CEO, and Mr. Rubin, the Chairman of the Board of Directors before
Mr. McLain, and currently a director and consultant for the Company,
participated in all discussions and decisions regarding salaries and incentive
compensation for all employees and consultants to the Company, except that they
were each excluded from discussions regarding their own salary.

CERTAIN TRANSACTIONS

Set forth below is a description of certain transactions between the
Company and its directors, executive officers and beneficial owners of five
percent or more of the outstanding Common Stock, or member of the immediate
family of any of the foregoing persons, as well as certain business
relationships between the Company and its directors, which occurred or existed
in the 2000 Fiscal Year.

Effective February 17, 1996, the Company acquired substantially all of the
operating assets used by Case in connection with its business of servicing and
distributing Case construction equipment at a facility located in Sacramento,
California (the "Sacramento Operation"). The real property and improvements used
in connection with the Sacramento Operation, and upon which the Sacramento
Operation is located, were sold by Case for $1,500,000 to the McLain-Rubin
Realty Company, LLC ("MRR"), a Delaware limited liability company, the owners of
which are Messrs. C. Dean McLain, the Chairman of the Company's Board of
Directors since August 1998, as well as its President and CEO, and Robert M.
Rubin, the Company's Chairman of the Board of Directors before Mr. McLain, and
still one of its directors. At the same time that it acquired the Sacramento
Operation real property and improvements, MRR leased such real property and

improvements to the Company under a 20-year commercial lease agreement dated
March 1, 1996 with the Company paying an initial annual rate of $168,000. Under
the lease, the annual rate increases to $192,000 after five years and is subject
to fair market adjustments at the end of ten years. In addition to base rent,
the Company is also responsible for the payment of all related taxes and other
assessments, utilities, insurance and repairs (both structural and regular
maintenance) with respect to the leased real property during the term of the
lease.

Effective January 17, 1997, the Company acquired substantially all of the
operating assets of Sahlberg Equipment, Inc. (the "Sahlberg Operation"), a
four-store distributor of equipment lines that are not in competition with Case.
On June 1, 1997, the real property and improvements used in connection with the
Sahlberg Operation located in Kent, Washington, were purchased by McLain-Rubin
Realty Company II, LLC ("MRR II"), a Delaware limited liability company, the
owners of which are Messrs. C. Dean McLain and Robert M. Rubin. Simultaneously,
MRR II leased such real property and improvements to the Company under the terms
of a 20-year commercial lease agreement dated June 1, 1997 with the Company
paying an initial annual rate of $205,000. The lease's annual rate is scheduled
to increase to $231,000 after five years and is subject to additional
adjustments at the end of ten and fifteen years. In addition to the base rent,
the Company is responsible for the payment of all related taxes and other
assessments, utilities, insurance and repairs (both structural and regular
maintenance) with respect to the leased real property during the term of the
lease.

Effective December 11, 1997, the Company acquired substantially all of the
operating assets used by Case in connection with its business of servicing and
distributing Case agricultural equipment at a facility located in Yuba City,
California (the "Yuba City Operation"). The real property and improvements used
in connection with the Yuba City Operation, and upon which it is located, were
sold by Case for $450,000 to the McLain-Rubin Realty Company III, LLC ("MRR
III"), a Delaware limited liability company, the owners of which are Messrs. C.
Dean McLain and Robert M. Rubin. MRR III leased the real property and
improvements to the Company under the terms of a 20-year commercial lease
agreement dated December 11, 1997 with the Company paying an initial annual rate
of $54,000. The annual rate will increase to $59,400 after five years and is
subject to additional adjustments at the end of ten and fifteen years. The
Company is also responsible for the payment of all related taxes and other
assessments, utilities, insurance, and repairs (both structural and regular
maintenance) with respect to the leased real property during the term of the
lease.

In February, 1999, the real property and improvements used in connection
with the Company's Sparks, Nevada operation and upon which such operation is
located, were sold to MRR under the terms of a real property purchase and sale
agreement. The sale price was $2,210,000 in cash at closing. Subsequent to the
closing of the sale, the Company entered into a 20-year commercial lease
agreement with MRR for the Sparks, Nevada facility at an initial rental rate of
$252,000 per year with increases at five, ten, and fifteen years resulting in a
maximum annual rental rate of $374,000. The present value of the minimum lease
payments at the commencement of the lease-back transaction aggregated
$3,052,000. The lease is a net lease with payment of insurance, property taxes
and maintenance costs paid by the Company.

In April 2001, the Company entered into a five-year real property lease
for its corporate office with MRR at a monthly rate of $82,000.

OTHER BUSINESS

As of the date of this Proxy Statement, the Board of Directors is not
aware of any other matter, which is to be presented for action at the Annual
Meeting. If any matter other than those described above (i.e., election of
directors and the issuance of 600,000 shares of common stock of the Company to
the Robert Rubin Family Stock Trust) does properly come before the Annual
Meeting, the individuals named in the enclosed Proxy will, unless indicated
otherwise, vote the shares represented thereby in accordance with their best
judgment.

ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION

Upon the written request of any stockholder of the Company, as record or
beneficial owner, the Company will provide to such stockholder a copy of the
Company's Annual Report on Form 10-K for its fiscal year ended July 31, 2000,
including the financial statements and the schedules thereto, filed with the
Securities and Exchange Commission. Any request should be directed to the
Corporate Secretary, at the Company's place of business listed above. There will
be no charge for the Form 10-K, unless one or more exhibits thereto are
requested, in which event the Company's reasonable expenses of furnishing such
exhibits may be charged.

FUTURE STOCKHOLDER PROPOSALS

From time to time, stockholders present proposals, which may be the proper
subject for inclusion in the Company's Proxy Statement and for consideration at
its annual meetings of stockholders. To be considered, proposals must be
submitted on a timely basis. Proposals for the next Annual Meeting of
Stockholders of the Company must be received by the Company no later than May
15, 2001, for inclusion, if proper, in next year's proxy solicitation materials.

GENERAL

The Company will pay all of the costs of preparing, assembling and mailing
the form of Proxy, Proxy Statement and other materials which may be sent to the
stockholders in connection with this solicitation, as well as any costs of
soliciting proxies in the accompanying form. Solicitation will be made by mail,
and officers and regular employees of the Company may also solicit proxies by
telephone, telegraph or personal interview for which they will receive no
additional remuneration. The Company expects to request brokers and nominees who
hold stock in their names to furnish this proxy material to their customers and
to solicit proxies from them. The Company will reimburse such brokers and
nominees for their out-of-pocket and reasonable clerical expenses in connection
therewith.

WHILE YOU HAVE THE MATTER IN MIND, PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED
PROXY CARD.

BY ORDER OF THE BOARD OF DIRECTORS,

Mark Wright, Secretary

PROXY PROXY

Western Power & Equipment Corp.
4601 N.E. 77th Avenue, Suite 200, Vancouver, Washington 98662

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

KNOW ALL MEN BY THESE PRESENT, that the undersigned stockholder of Western Power
& Equipment Corp. (the "Company") hereby constitutes and appoints C. Dean McLain
and Mark Wright and each of them, the true and lawful attorneys, agents and
proxies of the undersigned, each with full power of substitution to vote all of
the shares of stock of the Company that the undersigned would be entitled, if
personally present, to vote at the meeting of stockholders of the Corporation to
be held on October 10, 2001 at 10:00 a.m. at the offices of Mintz & Fraade, P.C,
488 Madison Avenue, Suite 1100, New York, NY 10022, and at any adjournment
thereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:

1. Election of Directors:

For all nominees listed below (except as marked to the contrary below)

NOMINEES: C. Dean McLain, Robert M. Rubin, Dr. Seymour Kessler, Allen
Perres, Irwin Pearl

WITHHOLD AUTHORITY
to vote for all nominees listed above ___

INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.

--------------------

2. To approve the issuance of 600,000 shares of common stock of the Company
to the Robert Rubin Family Stock Trust.

For ___ Against ___ Abstain ___

Dated:____________, 2001