<PAGE>
================================================================================


                       SECURITIES AND EXCHANGE COMMISSION


                             Washington, D.C. 20549


                         FORM 10-QSB (AMENDMENT NO. 1)

[X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001

                                       OR

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 FROM ___________ TO _________________


                          POWER EFFICIENCY CORPORATION
       (Exact Name of Small Business Issuer as Specified in its Charter)

           Delaware                                   22-3337365
(State or Other Jurisdiction of          (I.R.S. Employer Identification No.)
Incorporation or Organization)


      4220 Varsity Drive, Suite E                       (734) 975-9111
          Ann Arbor, MI 48108                    (Issuer's Telephone Number,
(Address of Principal Executive Office)              Including Area Code)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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. Yes  X  No
             ----   -----

The number of shares outstanding of the Issuer's Common Stock, $.001 Par Value,
as of June 30, 2001 was 6,522,120.

Transitional Small Business Disclosure Format (check one): Yes       No   X
                                                               ----     -----



================================================================================



<PAGE>


                          POWER EFFICIENCY CORPORATION
                                FORM 10-QSB INDEX


<TABLE>
<CAPTION>
                                                                                                              Page
                                                                                                              ----
<S>             <C>                                                                                       <C>
PART I.          FINANCIAL INFORMATION

                 Item 1.    Financial Statements (Unaudited)

                            Condensed Balance Sheets as of September 30, 2001 and December 31,
                            2000                                                                                3

                            Condensed Statements of Operations for the three months ended
                            September 30, 2001 and 2000 and nine months ended September 30,
                            2001 and 2000                                                                       4

                            Condensed Statements of Cash Flows for the nine months ended
                            September 30, 2001 and 2000                                                         5

                            Notes to Consolidated Financial Statements                                         6/7

                 Item 2.    Management's Discussion and Analysis or Plan of Operation                          8/9

PART II.         OTHER INFORMATION

                 Item 1.    Legal Proceedings                                                                   10

                 Item 2.    Changes in Securities                                                               10

                 Item 3.    Default Upon Senior Securities                                                      10

                 Item 4.    Submission of Matters to a Vote of Security  Holders                                10

                 Item 5.    Other Information                                                                   10

                 Item 6.    Exhibits and Reports on Form 8-K                                                    10

SIGNATURES                                                                                                      11
</TABLE>




                                      -2-
<PAGE>


                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

                          Power Efficiency Corporation
                            Condensed Balance Sheets
                      June 30, 2001 and December 31, 2000

<TABLE>
<CAPTION>
                                                                (Unaudited)      December 31,
                                                               June 30, 2001         2000
                                                                -----------        -----------
                               Assets                           (Restated)        (Restated)

<S>                                                             <C>                <C>
Current Assets
  Cash and Equivalents                                          $    84,511        $     8,492
  Accounts Receivable - Trade Net of Reserve of $5,000              198,638            114,166
  Inventory                                                         505,951            526,454
  Prepaid Expenses                                                      443                443
                                                                -----------        -----------
          Total Current Assets                                      789,543            649,555
                                                                -----------        -----------

PROPERTY AND EQUIPMENT - Net                                        145,902            132,315
                                                                -----------        -----------

OTHER ASSETS
   Deposits                                                          15,500              6,000
   Patent Application Costs - Net                                    12,872             17,089
   Deferred Financing Costs                                          43,555             51,936
   Goodwill - Net                                                 2,001,000          2,072,043
   Customer Contracts and Literature                                175,888            197,426
   Website and Customer List - Net                                   96,177            119,260
                                                                -----------        -----------
          Total Other Assets                                      2,344,992          2,463,754
                                                                -----------        -----------

Total Assets                                                    $ 3,280,437        $ 3,245,624
                                                                ===========        ===========

           Liabilities and Stockholders' (Deficit) Equity

Current Liabilities
   Line of Credit Agreement                                     $   310,387        $   277,887
   Accounts Payable and Accrued Expenses                            152,104            485,695
   Accrued Salaries and Payroll Taxes                                49,922             51,611
   Stockholder Loan Payable                                              --            100,000
                                                                -----------        -----------
          Total Current Liabilities                                 512,413            915,193

Long Term Liabilities
   Stockholder Note Payable (Subordinated)                          300,000                 --
                                                                -----------        -----------
          Total Liabilities                                         812,413            915,193
                                                                -----------        -----------

Stockholders' Equity
   Preferred Stock, .001 par value, 1,000,000 shares
    authorized, none outstanding
   Common Stock, .001 par value, 9,000,000 authorized,
    6,522,120 and 6,043,370 issued and outstanding in
    2001 and 2000, respectively                                       6,523              6,043
   Additional Paid-in Capital                                     8,866,559          7,950,094
   Accumulated Deficit                                           (6,405,058)        (5,625,706)
                                                                -----------        -----------
          Total Stockholders' Equity                              2,468,024          2,330,431
                                                                -----------        -----------

Total Liabilities and Stockholders' Equity                      $ 3,280,437        $ 3,245,624
                                                                ===========        ===========
</TABLE>

See Notes to Condensed Financial Statements



                                      -3-
<PAGE>

                          Power Efficiency Corporation
                        Condensed Statement of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                           Three Months Ended          Six Months Ended
                                               June, 30,                   June, 30,
                                        -------------------------   -------------------------
                                          2001           2000            2001             2000
                                        -----------   -----------   -----------   -----------
                                                      (Restated)                  (Restated)

<S>                                     <C>           <C>           <C>           <C>
REVENUES                                $   212,408   $        --   $   367,458   $       782
                                        -----------   -----------   -----------   -----------

COSTS AND EXPENSES:
  Cost of Sales                             122,905            --       202,211            --
  Research and Development                   61,600            --       128,774           500
  Selling, General, Administrative and
    Manufacturing                           350,060        16,495       671,235        42,361
  Depreciation and Amortization              72,195         6,584       144,390        13,168
                                        -----------   -----------   -----------   -----------
          Total Costs and Expenses          606,760        23,079     1,146,610        56,029
                                        -----------   -----------   -----------   -----------

LOSS BEFORE PROVISION FOR INCOME TAXES     (394,352)      (23,079)     (779,152)      (55,247)

PROVISON FOR INCOME TAXES
                                                 --            --           200            --
                                        -----------   -----------   -----------   -----------
NET LOSS                                $  (394,352)  $   (23,079)  $  (779,352)      (55,247)
                                        -----------   -----------   -----------   -----------

BASIC LOSS PER COMMON SHARE             $     (0.06)  $    (0.005)  $     (0.12)  $     (0.01)

                                        ===========   ===========   ===========   ===========

WEIGHTED AVERAGE COMMON
  SHARES OUTSTANDING                      6,440,000     4,384,000     6,440,000     4,384,000
                                        ===========   ===========   ===========   ===========
</TABLE>

See Notes to Condensed Financial Statements




                                      -4-
<PAGE>


                          Power Efficiency Corporation
                 Condensed Statements of Cash Flows (Unaudited)

<TABLE>
<CAPTION>
                                                             Six Months Ended                  Six Months Ended
                                                               June 30, 2001                     June 30, 2000
                                                     ---------------------------------- --------------------------------
                                                        (Restated)
<S>                                                  <C>               <C>               <C>           <C>
Cash Flow from Operating Activities

   Net Loss                                                             $    (779,352)                  $       (55,447)
   Adjustments to reconcile Net Cash:
   used for operating activities:
     Depreciation and amortization                          144,390                           13,168
     Issuance of stock options                               47,300
    Debt Restructuring                                      130,000
  Changes in certain assets and liabilities:
  (Increase) decrease in:
   Accounts Receivable                                      (84,472)                         (43,916)
   Deposits                                                  (9,500)                           4,000
   Inventory - Raw Materials/Finished Goods                  20,503                           28,679
  Increase (decrease) in:
   Accounts Payable and Accrued Expenses                   (335,279)                        (106,727)
   Accrued salaries and payroll taxes                                                         14,930
                                                                                         ------------
Total Adjustments                                                              (87,058)                         (44,738)
                                                                        ---------------                  ---------------
Net Cash Used for Operating Activities                                        (866,410)                        (298,137)
                                                                        ---------------                  ---------------

Cash Flow From Investing Activities
   Equipment Purchases                                                         (29,716)                         --
                                                                        ---------------                  ---------------

Cash Flow From Financing Activities
   Notes Payable - stockholders                             200,000                               --
   Proceeds from issuance of equity securities              754,645                          350,152
   Expenses associated with issuance of
      equity securities                                     (15,000)                              --
Line of credit agreement                                     32,500                               --
                                                       -------------                     ------------

Net Cash Provided by Financing Activities                                      972,145                          350,152
                                                                        ---------------                 ----------------

Net Increase in Cash                                                            76,019                  $        18,155
                                                                        ===============                 ================

Summary:
   Cash Balance At End Of Period                                        $       84,511                  $        17,805
   Cash Balance At Beginning Of Period                                           8,492                            (350)
                                                                        ---------------                 ----------------
   Net Increase In Cash                                                 $       76,019                  $        18,155
                                                                        ---------------                  ---------------

Non- Cash Investing and Financing Activities
   Common stock issued in connection with
   extinguishment of stockholders note payable                          $      230,000
                                                                        ---------------

   Common Stock issued in connection with
   professional services rendered                                       $       30,000
                                                                        ===============

</TABLE>

See Notes to Condensed Financial Statements




                                      -5-
<PAGE>


                       POWER EFFICIENCY CORPORATION NOTES
                        TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.        BASIS OF PRESENTATION

          The accompanying unaudited financial statements, which are for interim
          periods, do not include all disclosures required to be presented in
          the annual financial statements. These unaudited financial statements
          should be read in conjunction with the financial statements and the
          footnotes thereto for the year ended December 31, 2000 contained in
          Power Efficiency Corporation's (the "Company") Form 10-KSB Annual
          Report and Form 10-SB Registration Statement, as amended from time to
          time, as filed with the Securities and Exchange Commission. The June
          30, 2001 balance sheet was derived from unaudited financial
          statements, and does not include all disclosures required by generally
          accepted accounting principles.

2.        INTERIM PERIODS

          In the opinion of the Company, the accompanying unaudited financial
          statements contain all adjustments (which are of a normal recurring
          nature) necessary for a fair presentation of the financial statements.
          The results of operations for the three and six months ended June 30,
          2001 are not necessarily indicative of the results to be expected for
          the full year.

3.        GOING CONCERN

          The accompanying condensed interim financial statements have been
          prepared assuming the Company is a going concern, which assumption
          contemplates the realization of assets and satisfaction of liabilities
          in the normal course of business. The financial statements do not
          include any adjustments relating to the recoverability and
          classification of recorded asset amounts or the amount of liabilities
          that might be necessary should the Company be unable to continue in
          existence. Continuation of the Company as a going concern is dependent
          on achieving profitable operations. Management's plans to achieve
          profitability include developing new products, obtaining new customers
          and increasing sales to existing customers. Management also plans to
          raise additional capital through equity issuance or other types of
          financing.

4.        PER SHARE DATA

          Per share data was computed by dividing net loss by the weighted
          average number of shares outstanding during the period.

5.        LINE OF CREDIT AGREEMENT

          On October 31, 2001 the Company renegotiated its line of credit
          agreement with the bank to extend the expiration date of its line of
          up to $750,000 to January 31, 2002. All inventory, accounts
          receivable, equipment and instruments collateralize the line of credit
          agreement. The bank has a general lien on all corporate assets.

6.        STOCKHOLDER LOAN

          On May 24, 2001, the Company received a $300,000 loan from a
          stockholder. On August 30, 2001 and September 12, 2001, the Company
          received additional loans of $25,000 each from the same stockholder.
          These loans are due on June 1, 2003 and are subordinated to Bank One.


                                      -6-
<PAGE>

7.        DEBT RESTRUCTURING

          On March 15, 2001, the Company settled a loan payable to a Stockholder
          in the amount of $100,000, plus interest thereon, and the option to
          purchase 75,000 shares of common stock for 125,000 shares of common
          stock. The Company accounted for this transaction as a capital
          transaction between related parties during the first quarter of 2001.
          The difference of $130,000 between the fair value of the equity
          interest and the carrying amount of the payable was recognized as a
          loss by the Company and is included in selling, general and
          administrative expenses.

8.        ISSUANCE OF STOCK OPTIONS

          On May 23, 2001, the Company granted 10,000 stock options at an
          exercise price of $2.00. Because the weighted average price per share
          was $6.73 the Company recognized additional compensation expense of
          $47,300. This additional compensation expense is included in selling,
          general and administrative expenses.

9.        AGREEMENT WITH A STRATEGIC ADVISOR

          On May 23, 2001, the Company's board of directors ratified an
          agreement with a strategic advisor, owned by a director of the
          Company, to provide strategic direction and operational strategies to
          the Company. The initial term of this agreement is one year (January 1
          to December 31, 2001) and it shall automatically renew for successive
          thirty-six month periods. The agreement may be terminated by either
          party giving notice of termination at least 180 days prior to its
          conclusion. The strategic advisor receives $500 per month, plus
          expenses, until the Company raises $1.0 million or more in investments
          at which time the monthly compensation shall increase to $4,500 per
          month, plus expenses. The agreement also provides for the strategic
          advisor to receive non-qualified stock options to purchase 50,000
          shares of common stock at an exercise price of $2.00 per share each
          year. These non-qualified stock options are exercisable at any time
          during each year the agreement is in effect. The non-qualified stock
          options were issued to the strategic advisor in 2002. No options were
          issued to the strategic advisor under the agreement in 2001.

10.       STOCKHOLDER'S EQUITY

          On May 14, 2001, the Company sold 118,750 shares of common stock to an
          accredited investor. The first 25,000 shares were sold for $100,000
          and the remaining 93,750 shares were sold for $300,000.

          On June 19, 2001, the Company issued 10,000 shares of common stock for
          payment of services. The total fees that were set aside in exchange
          for the stock were equal to $30,000.

11.       FILING OF FORM 10-KSB FOR FISCAL YEAR 2001-APRIL 2002

          In conjunction with the Company's filing of its Form 10-KSB for the
          year ended December 31, 2001 with the United States Securities and
          Exchange Commission (the "SEC") on or about April 1, 2002, certain
          modifications were made to previously filed financial statements for
          2000 and the first, second and third quarters of 2001. Such
          modifications related primarily to the valuation of the Performance
          Control acquisition, the valuation of the repriced options, the value
          of options issued during the periods and settlement of a loan payable
          for common stock.


                                      -7-
<PAGE>

          Item 2.  Management's Discussion and Analysis or Plan of Operation

          The following discussion is designed to provide a review of the
          financial condition and results of operations of Power Efficiency
          Corporation (the "Company"). This discussion should be read in
          conjunction with the financial statements and related notes.

          Forward-Looking Statements

          This discussion and analysis of financial condition and results of
          operations, and other sections of this report, contain forward-looking
          statements that are based on management's beliefs, assumptions,
          current expectations, estimates and projections about the industrial
          and commercial motor industry, the economy, and about the Company
          itself. Words such as "anticipates," "believes," "estimates,"
          "judgment," "expects," "forecasts," "intends," "is likely," "plans,"
          "predicts," "projects," variations of such words and similar
          expressions are intended to identify such forward-looking statements.
          These statements are not guarantees of future performance and involve
          certain risks, uncertainties and assumptions ("Risk Factors") that are
          difficult to predict with regard to timing, extent, likelihood and
          degree of occurrence. Therefore, actual results and outcomes may
          materially differ from what may be expressed, implied or forecasted in
          such forward-looking statements.

          Risk Factors include, but are not limited to, demand for products and
          services; the degree of competition by competitors; changes in tax
          laws; changes in prices, levies and assessments; the impact of
          technological advances and issues; governmental and regulatory policy
          changes; the outcomes of pending and future litigation and
          contingencies; trends in customer behavior; the ability to raise
          capital and maintain financing sources; development of the Company's
          products; and changes in the national economy. In addition, recent
          events relating to the terrorist attacks on September 11, 2001 and
          other terrorist activities have created significant global economic
          and political uncertainties that may have material and adverse effects
          on financial markets, the economy, and demand for the Company's
          services and products. These are representative of the Risk Factors
          that could cause a difference between an ultimate actual outcome and a
          preceding forward-looking statement. The Company undertakes no
          obligation to update, amend or clarify forward-looking statements,
          whether as a result of new information, future events or otherwise.

          Results of Operations

          Revenues: Revenues for the three months ended June 30, 2001 were
          $212,048 compared to none for the prior year comparable quarter, an
          increase of $212,048. Revenues for the six months ended June 30,2001
          were $367,458 compared to $782 for the six months ended June30, 2000,
          an increase of $366,676. The increase in revenues was principally
          attributable to the completion of performance testing by certain
          customers and the conversion of the test units into purchases.

          Cost of Revenues: Cost of revenues for the three months ended June 30,
          2001 was $122,905, or 57.9% of revenues. Cost of revenues for the six
          months ended June 30, 2001 was $202,211, or 55.0% of revenues.

          Research and Development: Research and development expenses were
          $61,600 or 29% of revenues, for the three months ended June 30, 2001,
          as compared to none for the three months ended June 30, 2000. Research
          and development expenses were $128,774, or 35.0% of revenues, as
          compared to $500, or 64.0% of revenues, for the six months ended June
          30, 2001 and June 30, 2000, respectively. The increase is due in part
          to additional research and development activity after the acquisition
          of Performance Control, L.L.C.



                                      -8-
<PAGE>

          Selling, General, Administrative and Manufacturing: Selling, general,
          administrative and manufacturing expenses increased to $350,060 or
          164.8% of revenues, for the three months ended June 30, 2001, from
          $16,495 for the three months ended June 30, 2000, and increased to
          $671,235, or 182.7% of revenues, for the six months ended June 30,
          2001 from $42,361, or 5,417% of revenues, for the six months ended
          June 30, 2000. The increase in expenses was primarily due to the to an
          increase in personnel required to adequately have sufficient sales and
          manufacturing help.

          The Company incurred a net loss of $394,352 during the three months
          ended June 30, 2001, compared to a net loss of $23,079 during the
          three months ended June 30, 2000. The Company incurred a net loss of
          $779,352 during the six months ended June 30, 2001, compared to a net
          loss of $55,247 during the six months ended June 30, 2000.

          Financial Condition, Liquidity, and Capital Resources

          Since inception, the Company has financed its operations primarily
          through the sale of equity securities and using bank borrowings. As of
          June 30, 2001, the Company has received a total of approximately
          $2,250,000 from public and private offerings of its equity securities
          and received approximately $310,387 under a bank line of credit. As of
          June 30, 2001, the Company had cash and cash equivalents of $84,511.

          Cash used in operating activities for the six months ended June 30,
          2001, was $866,410. Cash used in operating activities for the six
          months ended June 30, 2000 was $298,137. In addition, the Company
          borrowed $300,000 from a stockholder. Cash used in operating
          activities for the six months ended June 30, 2001 reflected a net loss
          of $779,352 for the six months ended June 30, 2000, cash used in
          operating activities reflected a net loss of $55,447.

          The Company expects to experience growth in its operating expenses,
          particularly in research and development and selling, general and
          administrative expenses, for the foreseeable future in order to
          execute its business strategy. As a result, the Company anticipates
          that operating expenses, as well as planned increases in inventory
          expenditures, will constitute a material use of any cash resources.

          Management believes that its existing cash and cash equivalents are
          insufficient to meet the Company's anticipated cash needs for the next
          6 months. Since capital resources are insufficient to satisfy the
          Company's liquidity requirements, management intends to seek to sell
          additional equity securities or debt securities or obtain debt
          financing. The Company has not made arrangements to obtain additional
          financing and there is no assurance that financing, if required, will
          be available in amounts or on terms acceptable to management.

          The Company was not required to and did not engage on independent
          accountant to review the quarterly financial statements for the year
          ended December 31, 2000. As such, the financial information for the
          quarter and six months ended June 30, 2000, which is included with
          this filing, were not reviewed by an independent accountant.



                                      -9-
<PAGE>


                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

         The Company is involved with certain claims and counterclaims related
to litigation for breach of contract arising out of the manufacture and assembly
of certain electronic component parts. The Company has accrued approximately
$21,300 through June 30, 2001 related to these claims. In the opinion of
management, after consultation with legal counsel, the outcome of such matter is
not expected to have a material adverse effect on the Company's financial
position or results of operations.

Item 2.   Changes in Securities

         On May 14, 2001, the Company sold 118,750 shares of common stock to an
accredited investor. The first 25,000 shares were sold for $100,000 and the
remaining 93,750 shares were sold for $300,000.

         On June 19, 2001, the Company issued 10,000 shares of common stock for
payment of services. The total fees that were set aside in exchange for the
stock were equal to $30,000.


Item 3.    Defaults Upon Senior securities

           Not Applicable

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

            Not Applicable

Item 5.  Other Information

         On July 1, 2001, the Company executed a three-year lease for office
space in New Hyde Park, New York. The annual payments under this lease are
approximately $61,000. The space is used by the Company to service the New York
metropolitan area, which contains the largest concentration of elevators in the
United States.

Item 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits. The following documents are filed as exhibits to this
report on Form 10-QSB:


         Exhibit No.       Document
         -----------       --------

           3.1             Certificate of Incorporation. Previously filed as an
                           exhibit to the Company's Form 10-SB filed on October
                           20, 2000. Here incorporated by reference.

           3.2             Bylaws. Previously filed as an exhibit to the
                           Company's Form 10-SB filed on October 20, 2000. Here
                           incorporated by reference.

         (b) Reports on Form 8-K. No reports on Form 8-K were filed during the
         quarter covered by this Form 10-QSB.




                                      -10-
<PAGE>


                                   SIGNATURES


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


                                      POWER EFFICIENCY CORPORATION
                                      (Registrant)


Date:  September 6, 2002              By: /s/ Raymond J. Skiptunis
                                      ----------------------------
                                      President, Chief Executive Officer and
                                      Chief Financial Officer








                                      -11-
<PAGE>



                                  EXHIBIT INDEX

Exhibit No.       Document
-----------       --------

 3.1              Certificate of Incorporation. Previously filed as an exhibit
                  to the Company's Form 10-SB filed on October 20, 2000. Here
                  incorporated by reference.

 3.2              Bylaws. Previously filed as an exhibit to the Company's Form
                  10-SB filed on October 20, 2000. Here incorporated by
                  reference.