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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2001

OR

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

For the transition period from ___________ to ___________

Commission File No.  0-31805

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

|Delaware
(State or Other Jurisdiction of
Incorporation or Organization)                 |  | 22-3337365
(I.R.S. Employer Identification No.)                
|--------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------
|                                                                                        |  |                                                                
|                                                                                        |  |                                                                
|4220 Varsity Drive, Suite E
Ann Arbor, MI 48108
(Address of Principal Executive Office) |  | (734) 975-9111
(Issuer's Telephone Number,
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  No  X

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

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

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POWER EFFICIENCY CORPORATION
FORM 10-QSB INDEX

|           |                       |                                                                                                                                            
|---------- | --------------------- | -------------------------------------------------------------------------------------------------------------------------------------------
|PART I.    | FINANCIAL INFORMATION | Page                                                                                                                                       
|           |                       |                                                                                                                                            
|           | Item 1.               | Financial Statements (Unaudited)                                                                                                           
|           |                       |                                                                                                                                            
|           |                       | Condensed Balance Sheets as of September 30, 2001 and December 31,
2000                                                                    
|           |                       |                                                                                                                                            
|           |                       | Condensed Statements of Operations for the three months ended
September 30, 2001 and 2000 and nine months ended September 30,
2001 and 2000
|           |                       |                                                                                                                                            
|           |                       | Condensed Statements of Cash Flows for the nine months ended
September 30, 2001 and 2000                                                   
|           |                       |                                                                                                                                            
|           |                       | Notes to Consolidated Financial Statements                                                                                                 
|           |                       |                                                                                                                                            
|           | Item 2.               | Management's Discussion and Analysis or Plan of Operation                                                                                  
|           |                       |                                                                                                                                            
|PART II.   | OTHER INFORMATION     |                                                                                                                                            
|           |                       |                                                                                                                                            
|           | Item 1.               | Legal Proceedings                                                                                                                          
|           |                       |                                                                                                                                            
|           | Item 5.               | Other Information                                                                                                                          
|           |                       |                                                                                                                                            
|           | Item 6.               | Exhibits and Reports on Form 8-K                                                                                                           
|           |                      
|SIGNATURES | 10                   

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PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

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

|                                                                                                                                          | (Unaudited)        |            |                   |  
|----------------------------------------------------------------------------------------------------------------------------------------- | ------------------ | ---------- | ----------------- | -
|                                                                                                                                          | September 30, 2001 |            | December 31, 2000 |  
|Assets                                                                                                                                    |                    |            |                   |  
|                                                                                                                                          |                    |            |                   |  
|Current Assets                                                                                                                            |                    |            |                   |  
|Cash and Equivalents                                                                                                                      | $                  | 14,549     |                   | $
|Accounts Receivable - Trade Net of Reserve of $5,000                                                                                      |                    | 240,551    |                   |  
|Inventory                                                                                                                                 |                    | 551,111    |                   |  
|Prepaid Expenses                                                                                                                          |                    | 16,893     |                   |  
|Total Current Assets                                                                                                                      |                    | 823,104    |                   |  
|                                                                                                                                          |                    |            |                   |  
|PROPERTY AND EQUIPMENT - Net                                                                                                              |                    | 159,590    |                   |  
|                                                                                                                                          |                    |            |                   |  
|OTHER ASSETS                                                                                                                              |                    |            |                   |  
|Deposits                                                                                                                                  |                    | 15,500     |                   |  
|Patent Application Costs - Net                                                                                                            |                    | 12,872     |                   |  
|Deferred Financing Costs                                                                                                                  |                    | 38,427     |                   |  
|Goodwill - Net                                                                                                                            |                    | 529,450    |                   |  
|Customer Contracts and Literature                                                                                                         |                    | 165,118    |                   |  
|Website and Customer List - Net                                                                                                           |                    | 84,636     |                   |  
|Total Other Assets                                                                                                                        |                    | 846,003    |                   |  
|                                                                                                                                          |                    |            |                   |  
|Total Assets                                                                                                                              | $                  | 1,828,697  |                   | $
|                                                                                                                                          |                    |            |                   |  
|Liabilities and Stockholders' (Deficit) Equity                                                                                            |                    |            |                   |  
|                                                                                                                                          |                    |            |                   |  
|Current Liabilities                                                                                                                       |                    |            |                   |  
|Line of Credit Agreement                                                                                                                  | $                  | 385,387    |                   | $
|Accounts Payable and Accrued Expenses                                                                                                     |                    | 418,492    |                   |  
|Accrued Salaries and Payroll Taxes                                                                                                        |                    | 51,263     |                   |  
|Stockholder Loan Payable                                                                                                                  |                    | --         |                   |  
|Total Current Liabilities                                                                                                                 |                    | 855,142    |                   |  
|                                                                                                                                          |                    |            |                   |  
|Long Term Liabilities                                                                                                                     |                    |            |                   |  
|Stockholder Note Payable (Subordinated)                                                                                                   |                    | 350,000    |                   |  
|Total Liabilities                                                                                                                         |                    | 1,205,142  |                   |  
|                                                                                                                                          |                    |            |                   |  
|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 |                    | 6,522      |                   |  
|Additional Paid-in Capital                                                                                                                |                    | 3,482,340  |                   |  
|Accumulated Deficit                                                                                                                       |                    | (2,865,307 | )                 |  
|Total Stockholders' Equity                                                                                                                |                    | 623,555    |                   |  
|                                                                                                                                          |                    |            |                   |  
|Total Liabilities and Stockholders' Equity                                                                                                | $                  | 1,828,697  |                   | $

See Notes to Condensed Financial Statements

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Power Efficiency Corporation
Condensed Statement of Operations
(Unaudited)

|                                                  |   | Three Months Ended
September 30, |   |   | Nine Months Ended
September 30, |  
|------------------------------------------------- | - | -------------------------------- | - | - | ------------------------------- | -
|                                                  |   | 2001                             |   |   | 2000                            |  
|                                                  |   |                                  |   |   |                                 |  
|REVENUES                                          | $ | 309,122                          |   | $ | 40,284                          |  
|                                                  |   |                                  |   |   |                                 |  
|COSTS AND EXPENSES:                               |   |                                  |   |   |                                 |  
|Cost of Sales                                     |   | 174,925                          |   |   | 21,493                          |  
|Research and Development                          |   | 83,520                           |   |   | 75,164                          |  
|Selling, General, Administrative andManufacturing |   | 382,836                          |   |   | 96,651                          |  
|Depreciation and Amortization                     |   | 44,626                           |   |   | 27,826                          |  
|Total Costs and Expenses                          |   | 685,907                          |   |   | 221,134                         |  
|                                                  |   |                                  |   |   |                                 |  
|LOSS BEFORE PROVISION FOR
  INCOME TAXES          |   | (376,785                         | ) |   | (180,850                        | )
|                                                  |   |                                  |   |   |                                 |  
|PROVISION FOR INCOME TAXES                        |   | 5,700                            |   |   | 200                             |  
|                                                  |   |                                  |   |   |                                 |  
|NET LOSS                                          | $ | (382,485                         | ) | $ | (181,050                        | )
|                                                  |   |                                  |   |   |                                 |  
|LOSS PER COMMON SHARE                             | $ | (0.06                            | ) | $ | (0.04                           | )
|                                                  |   |                                  |   |   |                                 |  
|WEIGHTED AVERAGE COMMON 
  SHARES OUTSTANDING     |   | 6,522,000                        |   |   | 4,634,000                       |  

See Notes to Condensed Financial Statements

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Power Efficiency Corporation
Condensed Statements of Cash Flows (Unaudited)

|                                            |  | Nine Months Ended
September 30, 2001 |          | Nine Months Ended
September 30, 2000 |  
|------------------------------------------- |  | ------------------------------------ | -------- | ------------------------------------ | -
|                                            |  |                                      |          |                                      |  
|Cash Flow from Operating Activities         |  |                                      |          |                                      |  
|Net Loss                                    |  |                                      |          |                                      | $
|                                            |  |                                      |          |                                      |  
|Adjustments to reconcile Net Cash:          |  |                                      |          |                                      |  
|Depreciation and Amortization               |  |                                      | 137,111  |                                      |  
|Accounts Receivable - Trade                 |  |                                      | (126,385 | )                                    |  
|Inventory - Raw Materials/Finished Goods    |  |                                      | (24,658  | )                                    |  
|Prepaid Expenses                            |  |                                      | (16,450  | )                                    |  
|Accounts Payable and Accrued Expenses       |  |                                      | (67,550  | )                                    |  
|Total Adjustments                           |  |                                      |          |                                      |  
|Net Cash Used in Operations                 |  |                                      |          |                                      |  
|                                            |  |                                      |          |                                      |  
|Cash Flow From Investing Activities         |  |                                      |          |                                      |  
|Equipment Purchases                         |  |                                      | (51,025  | )                                    |  
|Prepaid Investment Expenses                 |  |                                      | (15,000  | )                                    |  
|Deposit                                     |  |                                      | (9,500   | )                                    |  
|Net Cash Used in Investing Activities       |  |                                      |          |                                      |  
|                                            |  |                                      |          |                                      |  
|Cash Flow From Financing Activities         |  |                                      |          |                                      |  
|Note Payable Stockholder                    |  |                                      | (100,000 | )                                    |  
|Proceeds from issuance of Equity Securities |  |                                      | 754,645  |                                      |  
|Notes Payable Bank                          |  |                                      | 107,500  |                                      |  
|Note Payable Stockholder - Long Term        |  |                                      | 350,000  |                                      |  
|Net Cash Provided by Financing Activities   |  |                                      |          |                                      |  
|                                            |  |                                      |          |                                      |  
|Net Increase in Cash                        |  |                                      |          |                                      | $
|                                            |  |                                      |          |                                      |  
|Summary:                                    |  |                                      |          |                                      |  
|Cash Balance At End Of Period               |  |                                      |          |                                      | $
|Cash Balance At Beginning Of Period         |  |                                      |          |                                      |  
|Net Increase In Cash                        |  |                                      |          |                                      | $

See Notes to Condensed Financial Statements

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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-SB Registration Statement, as amended from time to time, as filed with the Securities and Exchange Commission.  The September 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 nine months ended September 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 issuances 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

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| | 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 of 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 September 30, 2001 were $309,122 compared to $40,284 for the prior year comparable quarter, an increase of $268,838.  Revenues for the nine months ended September 30, 2001 were $676,580 compared to $41,066 for the nine months ended September 30, 2000, an increase of $635,514.  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 September 30, 2001 was $174,925, or 56.6% of revenues. Cost of revenues for the nine months ended September 30, 2001 was $377,137, or 55.7% of revenues.

Research and Development:  Research and development expenses were $83,520, or 27% of revenues, for the three months ended September 30, 2001, as compared to $75,164, or 186.6% of revenues, for the three months ended September 30, 2000.  Research and development expenses were $212,294, or 31.4% of revenues, as compared to $75,664, or 184.3% of revenues, for the nine months ended September 30, 2001 and September 30, 2000, respectively.  The increase is due in part to additional research and development activity after the acquisition of Performance Control, L.L.C.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | Selling, General, Administrative and Manufacturing:  Selling, general, administrative and manufacturing expenses increased to $382,836, or 123.9% of revenues, for the three months ended September 30, 2001, from $96,651, or 240% of revenues, for the three months ended September 30, 2000, and increased to $876,969, or 129.6% of revenues, for the nine months ended September 30, 2001 from $139,012, or 338.5% of revenues, for the nine months ended September 30, 2000.  The increase in expenses was primarily due to increases in sales, marketing and administrative personnel from two to ten.  Additional travel due to new customers in the Asia-Pacific region and substantial professional services fees incurred in connection with the filing of the Form 10-SB/A contributed to the increase.

The Company incurred a net loss of $382,485 during the three months ended September 30, 2001, compared to a net loss of $181,050 during the three months ended September 30, 2000.  The Company incurred a net loss of $932,631 during the nine months ended September 30, 2001, compared to a net loss of $236,297 during the nine months ended September 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 September 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 $385,387 under a bank line of credit. As of September 30, 2001, the Company  had cash and cash equivalents of $14,549.

Cash used in operating activities for the nine months ended September 30, 2001, was $1,030,563. Cash used in operating activities for the nine months ended September 30, 2000 was $345,679. In addition, the Company borrowed $350,000 from a stockholder.  Cash used in operating activities for the nine months ended September 30, 2001 reflected a net loss of $932,631.  For the nine months ended September 30, 2000, cash used in operating activities reflected a net loss of $236,297.

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.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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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 September 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 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.                                                                                                      
| |                                                                                                                  
| | 3.1                                                                                                              
| |                                                                                                                  
| | 3.2                                                                                                              
| |                                                                                                                  
| | (b)       Reports on Form 8-K.  No reports on Form 8-K were filed during the quarter covered by this Form 10-QSB.

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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

|Date:  November 14, 2001 | POWER EFFICIENCY CORPORATION
(Registrant)
By:s/Stephen L. Shulman                             
|------------------------ | ----------------------------------------------------------------------------------------------
|                         | Stephen L. Shulman
     President and Chief Executive Officer                                 
|                         |                                                                                               
|Date:  November 14, 2001 | By:s/Arthur N. Smith                                                                          
|                         | Arthur N. Smith
     Chief Financial Officer (Principal Financial
     and Accounting Officer)

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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.                       

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