UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-Q
 
 (Mark
One
 
 
 [X]
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009
 
 
 [  
] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF
1934
 
 
 
 FOR THE
TRANSITION PERIOD FROM ___________ TO __________
 
 
 COMMISSION
FILE NUMBER:000–30215
 
 
 (Exact
name of small business issuer as specified in its charter)
 
 Utah
              87-9369569(State
      or other jurisdiction of incorporation or
              (IRS
      Employer Identification No.)organization)3940-7 Broad Street, #200, San
      Luis Obispo, CA 93401(address
      of principal executive offices)866-297-7192(Registrant's
      telephone number)N/A(Former
      name, former address and former fiscal year, if changed since last
      report)
 
 Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act 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.
 Yesx          No ̈
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.
 
 Large
      accelerated
      filer           ̈
              Accelerated
      filer                       ̈Non-accelerated
      filer             ̈
              Smaller
      reporting company  
  X
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes ̈          Nox
 
 
 State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date:  As of September 30, 2009, the issuer
had 28,956,884 shares of its common stock issued and outstanding.
 
 
 
 
  Page
- 1
 
 POWER
SAVE ENERGY COMPANY
 FORM
10-QSB
 QUARTER
ENDED SEPTEMBER 30, 2009
 
 TABLE
OF CONTENTS
 
 Part
I - Financial Information
 
 Item 1-
Financial Statements
 
 Balance Sheet at September 30, 2009
 
 Statement of Operations for the three and nine months ended
September 30, 2009 and 2008
 
 Statement of Cash Flows for the nine months ended September 30,
2009 and 2008
 
 Notes to Financial Statements
 
 Item 2 -
Management's Discussion and Analysis or Plan of Operations
 
 Item 3
Quantitative and Qualitative Disclosures about Market Risk
 
 Item 4-
Controls and Procedures
 
 Part
II - Other Information
 
 Item 1 -
Legal Proceedings
 
 Item
1A- Risk Factors
 
 Item 2 -
Changes in Securities and Use of Proceeds
 
 Item 3 -
Default upon Senior Securities
 
 Item 4 -
Submission of Matters to a Vote of Security Holders
 
 Item 5 -
Other Information
 
 Item 6 -
Exhibits and Reports on Form 8-K
 
 Signatures
 
 
  Page
- 2
 
 
 PART
1 - FINANCIAL INFORMATION
 
 POWER SAVE ENERGY COMPANY
 BALANCE SHEET
 AS
OF SEPTEMBER 30, 2009
 Unaudited
 September
      30, 2009
              
              
              December
      31,
                2008ASSETSCurrent
      AssetsCash
      and Cash Equivalents
              
              $
              447,209
              
              
              $
              513,249Accounts
      receivable
              
              
              376,682
              
              
              
              945,053Inventory
              
              
              428,284
              
              
              
              873,872Prepaid
      expenses
              
              
              164,065
              
              
              
              76,528Federal
      income taxes recoverable
              
              
              162,600Deferred
      tax asset
              
              
              46,000Other
      current assets
              
              
              9,597
              
              
              
              -Total current
      assets
              
              
              1,634,437
              
              
              
              2,408,702Equipment,
      net of accumulated depreciation
              
              
              55,235
              
              
              
              47,469Intangible
      assets, net of accumulated amortization
              
              
              9,661
              
              
              
              10,286Other
      assets
              
              
              28,705
              
              
              
              28,705Total
      assets
              
              $
              1,728,038
              
              
              $
              2,495,162LIABILITIES
      AND STOCKHOLDERS' EQUITYLiabilitiesCurrent
      liabilitiesAccounts
      payable
              
              $
              54,473
              
              
              $
              55,687Income
      taxes payable
              
              
              
              
              
              
              228,148Other
      Current Liabilities
              
              
              -
              
              
              
              125,520Total
      current liabilities
              
              
              54,473
              
              
              
              409,355Stockholders'
      equityPreferred
      stock, $.001 par value, 10,000,000 sharesAuthorized,
      none issued and outstandingCommon
      stock, $.001 par value, 100,000,000 shares
              
              
              28,957
              
              
              
              28,957Authorized, 28,956,884 issued and outstandingAdditional
      paid-in-capital
              
              
              1,292,914
              
              
              
              1,292,914Retained
      earnings
              
              
              351,694
              
              
              
              763,936Total
      stockholders' equity
              
              
              1,673,565
              
              
              
              2,085,807Total
      liabilities and stockholders' equity
              
              $
              1,728,038
              
              
              $
              2,495,162
 
 The
accompanying notes are an integral part of these financial
statements
 
 
  Page
- 3
 
 POWER-SAVE
ENERGY COMPANY
 STATEMENT OF OPERATIONS
 FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 and 2008
 Unaudited
 
 NINE
      MONTHS
              
              
              THREE
      MONTHS2009
              
              
              
              2008
              
              
              2009
              
              
              
              2008Revenue
              
              $
              4,014,046
              
              
              
              $
              4,628,772
              
              
              $
              1,117,239
              
              
              
              $
              2,513,496Cost
      of salesMerchandise
              
              
              1,743,279
              
              
              
              
              1,468,936
              
              
              
              548,845
              
              
              
              
              1,074,159Other
      costs
              
              
              174,855
              
              
              
              
              184,974
              
              
              
              58,997
              
              
              
              
              94,058Total
      cost of sales
              
              
              1,918,134
              
              
              
              
              1,653,910
              
              
              
              607,842
              
              
              
              
              1,168,217Gross
      margin
              
              
              2,095,912
              
              
              
              
              2,974,862
              
              
              
              509,397
              
              
              
              
              1,345,279Operating
      expensesAdvertising
      and promotion
              
              
              406,443
              
              
              
              
              361,496
              
              
              
              150,961
              
              
              
              
              231,816Sales
      commissions
              
              
              1,133,743
              
              
              
              
              883,888
              
              
              
              326,067
              
              
              
              
              337,724General
      and administrative
              
              
              1,125,743
              
              
              
              
              612,374
              
              
              
              603,781
              
              
              
              
              299,587Total
      operating costs and expenses
              
              
              2,665,929
              
              
              
              
              1,857,758
              
              
              
              1,080,809
              
              
              
              
              869,127Net
      income (loss) before provision for income taxes and other income
      (expenses)
              
              
              (570,017
              )
              
              
              
              1,117,104
              
              
              
              (571,412
              )
              
              
              
              476,152Investment
      (loss)
              
              
              (60,000
              )
              
              
              
              
              
              
              
              (60,000
              )Net
      income (loss) before provision for income taxes
              
              
              (630,017
              )
              
              
              
              1,117,104
              
              
              
              (631,412
              )
              
              
              
              476,152Provision
      for (recovery of) income taxes
              
              
              (217,774
              )
              
              
              
              359,689
              
              
              
              (211,999
              )
              
              
              
              165,700Net
      income (loss)
              
              $
              (412,243
              )
              
              
              $
              757,415
              
              
              $
              (419,413
              )
              
              
              $
              310,452Earnings
      per common share:Basic
              
              $
              (0.01
              )
              
              
              $
              0.03
              
              
              $
              (0.01
              )
              
              
              $
              0.01Diluted
              
              
              
              
              
              
              $
              0.03
              
              
              
              
              
              
              
              $
              0.01Shares
      used in computing earnings per shareBasic
              
              
              28,956,884
              
              
              
              
              28,207,994
              
              
              
              28,956,884
              
              
              
              
              28,956,884Diluted
              
              
              
              
              
              
              
              28,381,245
              
              
              
              
              
              
              
              
              29,303,386
 
 
 
 
 
 The
accompanying notes are an integral part of these financial
statements
 
 
  Page
- 4
 
 POWER
SAVE ENERGY COMPANY.
 STATEMENTS OF CASH FLOWS
 FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 (UNAUDITED)
 
 2009
              
              
              2008Cash
      flows from operating activitiesNet
      income (loss)
              
              $
              (412,243
              )
              
              $
              757,415Adjustments
      to reconcile net income (loss) to net cashProvided
      by operating activities:Depreciation
      and amortization
              
              
              8,074
              
              
              
              2,582Stock
      based compensation expense
              
              
              
              
              
              
              134,600Changes
      in operating assets and liabilities( Increase)
      decrease in accounts receivable
              
              
              568,371
              
              
              
              (1,040,142
              )( Increase)
      decrease in inventory
              
              
              445,589
              
              
              
              (958,094
              )(
      Increase) in prepaid expenses
              
              
              (87,537
              )
              
              
              (109,444
              )(
      Increase) in other current assets
              
              
              (9,597
              )(
      Increase) in income taxes recoverable
              
              
              (162,600
              )(Increase)
      in deferred taxes
              
              
              (46,000
              )Increase
      (decrease)  in accounts payable and other
      liabilities
              
              
              (1,214
              )
              
              
              16,928Increase
      (decrease) in taxes payable
              
              
              (228,148
              )
              
              
              198,842Increase
      (decrease) in other liabilities
              
              
              (125,520
              )Net
      cash provided (used) by operating activities
              
              
              (50,825
              )
              
              
              (997,313
              )Cash
      flows from investing activitiesIncrease
      in equipment
              
              
              (15,215
              )
              
              
              (13,276
              )Increase
      in security deposit
              
              
              
              
              
              
              (28,705
              )Net
      cash provided (used) by investing activities
              
              
              (15,215
              )
              
              
              (41,981
              )Cash
      flows from financing activitiesIssuance
      of common stock
              
              
              
              
              
              
              1,033,871Net
      cash provided (used) by financing activities
              
              
              
              
              
              
              1,033,871Net
      increase (decrease) in cash and cash equivalents
              
              
              (66,040
              )
              
              
              (5,423
              )Cash
      and cash equivalents at beginning of period
              
              
              513,249
              
              
              
              441,989Cash
      and cash equivalents at end of period
              
              $
              447,209
              
              
              $
              436,566Supplemental
      disclosure of cash flow information:Income
      taxes paid
              
              $
              160,747
 
 The
accompanying notes are an integral part of these financial
statements
  Page
- 5
 
 POWER
SAVE ENERGY COMPANY.
 NOTES TO FINANCIAL STATEMENTS
 
 The
following financial information is submitted in response to the requirements of
Form 10-Q and does not purport to be financial statements prepared in accordance
with generally accepted accounting principles. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted,
although Power Save Energy Company (the "Company") believes the disclosures that
are made are adequate to make the information presented not misleading. Further,
in the opinion of the management, the interim financial statements reflect
fairly the financial position and results of operations for the periods
indicated.
 
 It is
suggested that these interim financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's Form 10K
containing the Company's audited financial statements as of and for the year
ended December 31, 2008 filed with the Securities and Exchange Commission. The
results of operations for the nine months ended September 30, 2009 are not
necessarily indicative of results to be expected for the entire fiscal year
ending December 31, 2009.
 
 Note
1 - Organization and Principal Activities
 
 Organization
and Description of Business
 
 Power-Save
Energy Company ("the Company") is the successor corporation of Mag Enterprises,
Inc., a Utah corporation incorporated on July 30, 1980. On September 10, 1993,
an Amendment to the Articles of Incorporation was filed to change its name from
Mag Enterprises, Inc. to Safari Associates, Inc. On September 12, 2006, an
amendment to the articles of incorporation was filed to change its name from
Safari Associates, Inc. to Power-Save Energy Company.
 
 The
Company manufactures, markets, and sells renewable energy and energy savings
products.
 
 The
Company has evaluated subsequent events through November 10, 2009. Form 10Q was
filed with the Securities and Exchange Commission on November 11, 2009, which is
the date the financial statements were issued. No events have occurred
subsequent to November 10, 2009 that requires disclosure or recognition in these
financial statements.
 
 Note
2 - Summary of Significant Accounting Policies
 
 Basis
of Presentation
 
 The
financial statements are prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of the
financial statements requires management to make estimates and assumptions that
affect the reported amounts in the financial statements, including the estimated
useful lives of tangible and intangible assets. Management believes the
estimates used in preparing the financial statements are reasonable and prudent.
Actual results could differ from these estimates.
 
 Financial
Instruments
 
 The
Company's financial instruments include cash and cash equivalents, accounts
receivable and accounts payable. As of September30, 2009, the carrying cost of
these instruments approximate their fair value.
 
 Cash
Equivalents
 
 Cash
equivalents include highly liquid investments with maturities of three months or
less.
 
 Accounts
Receivable
 
 Accounts
receivable are recorded at the invoiced amount and are not interest bearing. The
Company maintains an allowance for doubtful accounts to reserve for potentially
uncollectible receivables. The Company reviews its accounts receivable by aging
category to identify significant customers or invoices with known disputes or
collectibility issues. For those invoices not specifically reviewed, the Company
provides reserves based on the age of the receivable. In determining the amount
of the reserve, we make judgments about the creditworthiness of significant
customers based on ongoing credit evaluations. The Company also considers
historical levels of credit losses and current economic trends that might impact
the level of future credit losses. When the Company determines that amounts are
uncollectible they are written off against the allowance.
 
 Inventory
 
 Inventory
is stated at the lower of cost or market, with cost determined on a FIFO basis.
Inventory includes electric savings devices and renewable energy solar
systems.
 
 
  Page
- 6
 
 
 POWER
SAVE ENERGY COMPANY.
 NOTES
TO FINANCIAL STATEMENTS
 
 Intangible
Assets
 
 In
accordance with FASB ASC
Topic regarding"Goodwill and Other Intangible Assets," the Company
evaluates intangible assets and other long-lived assets for impairment, at least
on an annual basis and whenever events or changes in circumstances indicate that
the carrying value may not be recoverable from its estimated future cash flows.
Recoverability of intangible assets and other long-lived assets is measured by
comparing their net book value to the related projected undiscounted cash flows
from these assets, considering a number of factors including past operating
results, budgets, economic projections, market trends and product development
cycles. If the net book value of the asset exceeds the related undiscounted cash
flows, the asset is considered impaired, and a second test is performed to
measure the amount of impairment loss.
 
 Revenue
Recognition
 
 Revenue
is recognized in accordance with FASB ASC
Topic regarding"Revenue Recognition in Financial Statements". The
Company recognizes revenue when the significant risks and rewards of ownership
have been transferred to the customer pursuant to applicable laws and
regulations, including factors such as when there has been evidence of a sales
arrangement, delivery has occurred, or service have been rendered, the price to
the buyer is fixed or determinable, and collection is reasonably assured. The
Company is responsible for warehousing and shipping the
merchandise.
 
 Stock - Based
Compensation
 
 The
Company may periodically issue shares of common stock for services rendered or
for other costs and expenses. Such shares will be valued based on the market
price of the shares on the transaction date.
 
 The
Company may periodically issue stock options to employees and stock options or
warrants to non-employees in non-capital raising transactions for services and
for financing costs.
 
 The
Company accounts for its stock-based compensation in accordance with FASB ASC
Topic regarding, "Share-Based Payment.   The Company recognizes
in the statement of operations the grant-date fair value of stock options and
other equity-based compensation issued to employees and non-employees. There are
no stock options outstanding.
 Income
Taxes
 
 Income
taxes are accounted for in accordance with FASB Topic, Accounting for Income
Taxes, using the asset and liability method. Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and tax credit carry forwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
 
 Earnings
Per Common Share
 
 FASB ASC
Topic “Earnings Per Share”, requires presentation of basic earnings per
share (“Basic EPS”) and diluted earnings per share (“Diluted EPS”). Basic
earnings (loss) per share is computed by dividing earnings (loss) available to
common stockholders by the weighted average number of common shares outstanding
(including shares reserved for issuance) during the period. Diluted earnings per
share gives effect to all potentially dilutive common shares outstanding during
the period.
 
 Advertising
 
 Advertising,
promotion and marketing programs are charged to operations in the period
incurred.
 
 Segmented
Information
 
 Management
has determined that the Company operates in one dominant industry segment.
Additional segment disclosure requirements will be evaluated as it expands its
operations.
 
 
  Page
- 7
 
 
 POWER SAVE ENERGY
COMPANY.
 NOTES
TO FINANCIAL STATEMENTS
 
 Concentration
of Credit Risk
 
 Financial
instruments, which potentially subject the Company to concentrations of credit
risk, consist of cash and cash equivalents and accounts receivables. The Company
places its cash with high quality financial institutions and at times may exceed
the FDIC $100,000 insurance limit. The Company extends credit based on an
evaluation of the customer’s financial condition, generally without collateral.
Exposure to losses on receivables is principally dependent on each customer’s
financial condition. The Company monitors its exposure for credit losses and
maintains allowances for anticipated losses, as required. Accounts are
“written-off” when deemed uncollectible.
 
 Special
– purpose entities
 
 The
Company does not have any off-balance sheet financing activities.
 
 Use
of estimates
 
 The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles (GAAP) requires management to make estimates and
assumptions that affect the amounts reported in the financial statements. The
Company bases its estimates on historical experience, management expectations
for future performance, and other assumptions as appropriate. Key areas affected
by estimates include the assessment of the recoverability of long-lived assets,
which is based on such factors as estimated future cash flows. The Company
re-evaluates its estimates on an ongoing basis. Actual results may vary from
those estimates.
 
 Website
Development Costs
 
 The
Company accounts for website development costs in accordance with FASB ASC Topic
regarding “Website Development Costs”.   Accordingly, all costs
incurred in the planning stage are expensed as incurred, costs incurred in the
website application and infrastructure development stage are accounted for in
accordance with FASB ASC Topic regarding “Website Development Costs which
requires the capitalization of certain costs that meet specific criteria, and
costs incurred in the day to day operation of the website are expensed as
incurred.
 Note
3 – Recently issued accounting pronouncements
  The
adoption of these accounting standards had the following impact on the Company’s
statements of income and financial condition:
  ·FASB ASC Topic
      855, “Subsequent Events”. In May 2009, the FASB issued FASB ASC
      Topic 855, which establish general standards of accounting and disclosure
      of events that occur after the balance sheet date but before financial
      statements are issued or are available to be issued. In particular, this
      Statement sets forth : (i) the period after the balance sheet date during
      which management of a reporting entity should evaluate events or
      transactions that may occur for potential recognition or disclosure in the
      financial statements, (ii) the circumstances under which an entity should
      recognize events or transactions occurring after the balance sheet date in
      its financial statements, (iii) the disclosures that an entity should make
      about events or transactions that occurred after the balance sheet date.
      This FASB ASC Topic should be applied to the accounting and disclosure of
      subsequent events. This FASB ASC Topic does not apply to subsequent events
      or transactions that are within the scope of other applicable accounting
      standards that provide different guidance on the accounting treatment for
      subsequent events or transactions. This FASB ASC Topic was effective for
      interim and annual periods ending after June 15, 2009, which was June 30,
      2009 for the Corporation. The adoption of this Topic did not have a
      material impact on the Company’s financial statements and
      disclosures.
  ·FASB ASC Topic
      105, “The FASB Accounting Standard Codification and the Hierarchy of
      Generally Accepted Accounting Principles”.In June 2009, the FASB
      issued FASB ASC Topic 105, which became the source of authoritative GAAP
      recognized by the FASB to be applied by nongovernmental entities. Rules
      and interpretive releases of the SEC under authority of federal securities
      laws are also sources of authoritative GAAP for SEC registrants. On the
      effective date of this FASB ASC Topic, the Codification will supersede all
      then-existing non-SEC accounting and reporting standards. All other
      non-SEC accounting literature not included in the Codification will become
      non-authoritative. This FASB ASC Topic identify the sources of accounting
      principles and the framework for selecting the principles used in
      preparing the financial statements of nongovernmental entities that are
      presented in conformity with GAAP. Also, arranged these sources of GAAP in
      a hierarchy for users to apply accordingly. In other words, the GAAP
      hierarchy will be modified to include only two levels of GAAP:
      authoritative and non-authoritative. This FASB ASC Topic is effective for
      financial statements issued for interim and annual periods ending after
      September 15, 2009. The adoption of this topic did not have a material
      impact on the Company’s disclosure of the financial
    statements
  ·FASB ASC Topic
      320, “Recognition and Presentation of Other-Than-Temporary Impairments”.In April 2009, the FASB issued FASB ASC Topic 320 amends the
      other-than-temporary impairment guidance in GAAP for debt securities to
      make the guidance more operational and to improve the presentation and
      disclosure of other-than-temporary impairments on debt and equity
      securities in the financial statements. This FASB ASC Topic does not amend
      existing recognition and measurement guidance related to
      other-than-temporary impairments of equity securities. The FASB ASC Topic
      shall be effective for interim and annual reporting periods ending after
      June 15, 2009, with early adoption permitted for periods ending after
      March 15, 2009. Earlier adoption for periods ending before March 15, 2009,
      is not permitted. This FASB ASC Topic does not require disclosures for
      earlier periods presented for comparative purposes at initial adoption. In
      periods after initial adoption, this FASB ASC Topic requires comparative
      disclosures only for periods ending after initial adoption. The adoption
      of this Topic did not have a material impact on the Company’s financial
      statements and disclosures.
 
   The
Company is evaluating the impact that the following recently issued accounting
pronouncements may have on its financial statements and
disclosures.
   ·FASB ASC Topic
      860, “Accounting for Transfer of Financial Asset”.,In June 2009,
      the FASB issued additional guidance under FASB ASC Topic 860, “Accounting for Transfer and
      Servicing of Financial Assets and Extinguishment of Liabilities",
      which improves the relevance, representational faithfulness, and
      comparability of the information that a reporting entity provides in its
      financial statements about a transfer of financial assets; the effects of
      a transfer on its financial position, financial performance, and cash
      flows; and a transferor’s continuing involvement, if any, in transferred
      financial assets. The Board undertook this project to address (i)
      practices that have developed since the issuance of FASB ASC Topic 860,
      that are not consistent with the original intent and key requirements of
      that statement and (ii) concerns of financial statement users that many of
      the financial assets (and related obligations) that have been derecognized
      should continue to be reported in the financial statements of transferors.
      This additional guidance requires that a transferor recognize and
      initially measure at fair value all assets obtained (including a
      transferor’s beneficial interest) and liabilities incurred as a result of
      a transfer of financial assets accounted for as a sale. Enhanced
      disclosures are required to provide financial statement users with greater
      transparency about transfers of financial assets and a transferor’s
      continuing involvement with transferred financial assets. This additional
      guidance must be applied as of the beginning of each reporting entity’s
      first annual reporting period that begins after November 15, 2009, for
      interim periods within that first annual reporting period and for interim
      and annual reporting periods thereafter. Earlier application is
      prohibited. This additional guidance must be applied to transfers
      occurring on or after the effective
date.
 
 
  Page
- 8
 
 POWER
SAVE ENERGY COMPANY.
 NOTES
TO FINANCIAL STATEMENTS
  ·FASB ASC Topic
      810, “Variables Interest Entities”. In June 2009, the FASB issued
      FASB ASC Topic 810, which requires an enterprise to perform an analysis to
      determine whether the enterprise’s variable interest or interests give it
      a controlling financial interest in a variable interest entity. This
      analysis identifies the primary beneficiary of a variable interest entity
      as the enterprise that has both of the following characteristics: (i)The
      power to direct the activities of a variable interest entity that most
      significantly impact the entity’s economic performance and (ii)The
      obligation to absorb losses of the entity that could potentially be
      significant to the variable interest entity or the right to receive
      benefits from the entity that could potentially be significant to the
      variable interest entity. Additionally, an enterprise is required to
      assess whether it has an implicit financial responsibility to ensure that
      a variable interest entity operates as designed when determining whether
      it has the power to direct the activities of the variable interest entity
      that most significantly impact the entity’s economic performance. This
      FASB Topic requires ongoing reassessments of whether an enterprise is the
      primary beneficiary of a variable interest entity and eliminate the
      quantitative approach previously required for determining the primary
      beneficiary of a variable interest entity, which was based on determining
      which enterprise absorbs the majority of the entity’s expected losses,
      receives a majority of the entity’s expected residual returns, or both.
      This FASB ASC Topic shall be effective as of the beginning of each
      reporting entity’s first annual reporting period that begins after
      November 15, 2009, for interim periods within that first annual reporting
      period, and for interim and annual reporting periods thereafter. Earlier
      application is prohibited.
  ·FASB ASC Topic
      820, “Fair Value
      measurement and Disclosures”, an Accounting Standard Update. In
      September 2009, the FASB issued this Update to amendments to Subtopic
      82010, “Fair Value
      Measurements and Disclosures”. Overall, for the fair value
      measurement of investments in certain entities that calculates net asset
      value per share (or its equivalent). The amendments in this Update permit,
      as a practical expedient, a reporting entity to measure the fair value of
      an investment that is within the scope of the amendments in this Update on
      the basis of the net asset value per share of the investment (or its
      equivalent) if the net asset value of the investment (or its equivalent)
      is calculated in a manner consistent with the measurement principles of
      Topic 946 as of the reporting entity’s measurement date, including
      measurement of all or substantially all of the underlying investments of
      the investee in accordance with Topic 820. The amendments in this Update
      also require disclosures by major category of investment about the
      attributes of investments within the scope of the amendments in this
      Update, such as the nature of any restrictions on the investor’s ability
      to redeem its investments at the measurement date, any unfunded
      commitments (for example, a contractual commitment by the investor to
      invest a specified amount of additional capital at a future date to fund
      investments that will be made by the investee), and the investment
      strategies of the investees. The major category of investment is required
      to be determined on the basis of the nature and risks of the investment in
      a manner consistent with the guidance for major security types in GAAP on
      investments in debt and equity securities in paragraph 320-10-50-lB. The
      disclosures are required for all investments within the scope of the
      amendments in this Update regardless of whether the fair value of the
      investment is measured using the practical expedient. The amendments in
      this Update apply to all reporting entities that hold an investment that
      is required or permitted to be measured or disclosed at fair value on a
      recurring or non recurring basis and, as of the reporting entity’s
      measurement date, if the investment meets certain criteria The amendments
      in this Update are effective for the interim and annual periods ending
      after December 15, 2009. Early application is permitted in financial
      statements for earlier interim and annual periods that have not been
      issued.
 
 FASB ASC Topic 740,
“Income Taxes”, an
Accounting Standard Update. In September 2009, the FASB issued this Update to
address the need for additional implementation guidance on accounting for
uncertainty in income taxes. The guidance answers the following questions: (i)
Is the income tax paid by the entity attributable to the entity or its owners?
(ii) What constitutes a tax position for a pass-through entity or a tax-exempt
not-for-profit entity? (iii) How should accounting for uncertainty in income
taxes be applied when a group of related entities comprise both taxable and
nontaxable entities? In addition, this Updated decided to eliminate the
disclosures required by paragraph 740-10-50-15(a) through (b) for nonpublic
entities. The implementation guidance will apply to financial statements of
nongovernmental entities that are presented in conformity with GAAP. The
disclosure amendments will apply only to nonpublic entities as defined in
Section 740-10-20. For entities that are currently applying the standards for
accounting for uncertainty in income taxes, the guidance and disclosure
amendments are effective for financial statements issued for interim and annual
periods ending after September 15, 2009.
  Note
4 - Commitments and Contingencies
 
 The
Company entered into a lease for showroom and warehouse space beginning on June
15, 2008 for a period of five years expiring on June 14, 2013.
 
 The
following is a schedule of minimum future rental payments:
 Year
      Ending
                  December
      31,2009
              
              $
              11,3502010
              
              
              46,4822011
              
              
              47,8772012
              
              
              49,3132013
              
              
              25,021Total
      minimum future rental payments
              
              $
              180,043
 
 The
Company has negotiated a line of credit with a bank in the amount of $71,000.
The line of credit bears interest at 12.00% as of September  30, 2009.
The balance due on the line of credit is $-0-.
 
 Note
5 - Income Taxes
  The
      provision for income taxes consists of the following:2009
              
              2008Federal
      income tax
              $
              (217,774)
              
              $
              261,710State
      income tax
              
              
              
              
              97,979Total
              $
              (217,774)
              
              $
              359,689Income
      taxes based on statutory tax rates are as followsFederal
      income taxes
              $
              (214,205)
              
              $
              379,800State
      income tax
              
              (55,441)
              
              
              94,000Other
              
              51,872
              
              
              (114,111)Total
              $
              (217,774)
              
              $
              359,689
 
 
  Page
- 9
 
 
 POWER
SAVE ENERGY COMPANY.
 NOTES
TO FINANCIAL STATEMENTS
 Note
6 - Intangible Assets
 
 Intangible
assets consist of those acquired in the asset purchase agreement with Advanced
Builder Energy Technologies LLC (ABET), and U.S. Energy Conservation Corp. which
includes ,logos, rights, licenses, designs and approvals, the customer lists. A
summary of intangible assets as of September 30, 2009 is as
follows:
 
 Intangible
      assets, at cost
              
              
              12,510Less
      - amortization allowed
              
              
              2,8499,661
 
 Note 7 - Subsequent Events Review
  The
Company has evaluated all subsequent events through November 12, 2009, the date
this Quarterly Report on Form 10-Q was filed with the SEC. No recognized or
unrecognized events require disclosure as significant subsequent
events.
 
  Page
- 10
 
 Item
2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 
 FORWARD-LOOKING
STATEMENTS
 
 This
quarterly report contains forward-looking statements as that term is defined in
Section 27A of the United States Securities Act of 1933 and section 21E of the
United States Securities Exchange Act of 1934.  These statements relate to
future events or our future financial performance.  In some cases, you can
identify forward-looking statements by terminology such as “may”, “should”,
“expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”,
“potential” or “continue” or the negative of these terms or other comparable
terminology.  These statements are only predictions and involve known and
unknown risks, uncertainties and other factors, including the risks in the
section entitled “Risk Factors” that may cause our or our industry’s actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking
statements.
 
 Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements.  Except as required by applicable law, including the
securities laws of the United States, we do not intend to update any of the
forward-looking statements to conform these statements to actual
results.
 
 Our
financial statements are stated in United States dollars and are prepared in
conformity with generally accepted accounting principles in the United States of
America for interim financial statements.  The following discussion should
be read in conjunction with our financial statements and the related notes that
appear elsewhere in this quarterly report.
 
 The
following discussion should be read in conjunction with the Company’s interim
consolidated financial statements and the notes related thereto included in item
1 above which have been prepared in accordance with the accounting principles
generally accepted in the United States of America. The discussion of results,
causes and trends should not be construed to imply any conclusion that such
results, causes or trend will necessarily continue in the future.
 
 (a)
Plan of Operation
 Power-Save
Energy Co. manufactures, markets, and sells electricity saving devices for
homeowners, Power-Save 1200, 3200, and 3400.Power-Save also markets and sells
renewable energy devices, photovoltaic electric electricity systems, Power-Save
Solar and Power-Save Wind Turbine that produce electricity generated from wind
energy. The product lines are intended to reduce the homeowner's electricity
consumption, generate renewable energy and overall reduce the consumer's
electric utility bill. Power-Save Energy Company intends to market quality,
tested products and continue to seek out and offer innovative new energy savings
products to the consumer.
 
 Power-Save
will continue to utilize the power of television and purchase national cable
commercial time to run its 60 second and 120 second DRTV spot. Power-Save will
continue to sell its residential unit directly to the public and continue to add
value to its brand through aggressive advertisement.
 
 Cash Requirements and of Need for
additional funds: twelve months. We continue to face certain minimal cash
requirements for corporate maintenance, legal and professional and auditing
expenses. Our cash requirements for these purposes are not in
issue.
 
 Cautionary Statement: There
can be no assurance that we will be successful in raising capital through
private placements or otherwise. Even if we are successful in raising capital
through the sources specified, there can be no assurances that any such
financing would be available in a timely manner or on terms acceptable to us and
our current shareholders. Additional equity financing could be dilutive to our
then existing shareholders, and any debt financing could involve restrictive
covenants with respect to future capital raising activities and other financial
and operational matters.
 
 Critical
Accounting Policies and Recent Accounting Pronouncements
 
 Management
believes the estimates, assumptions and judgments involved in the accounting
policies described below have the greatest potential impact on the Company’s
financial statements. Because of the uncertainty inherent in these matters,
actual results could differ from the estimates used in applying the critical
accounting policies. Within the context of these critical accounting policies,
management is not currently aware of any reasonably likely event that would
result in materially different amounts being reported.
 
 
  Page
- 11
 
 
 Recent accounting
pronouncements
 
 The
adoption of these accounting standards had the following impact on the Company’s
statements of income and financial condition:
  ·FASB ASC Topic
      855, “Subsequent Events”. In May 2009, the FASB issued FASB ASC
      Topic 855, which establish general standards of accounting and disclosure
      of events that occur after the balance sheet date but before financial
      statements are issued or are available to be issued. In particular, this
      Statement sets forth : (i) the period after the balance sheet date during
      which management of a reporting entity should evaluate events or
      transactions that may occur for potential recognition or disclosure in the
      financial statements, (ii) the circumstances under which an entity should
      recognize events or transactions occurring after the balance sheet date in
      its financial statements, (iii) the disclosures that an entity should make
      about events or transactions that occurred after the balance sheet date.
      This FASB ASC Topic should be applied to the accounting and disclosure of
      subsequent events. This FASB ASC Topic does not apply to subsequent events
      or transactions that are within the scope of other applicable accounting
      standards that provide different guidance on the accounting treatment for
      subsequent events or transactions. This FASB ASC Topic was effective for
      interim and annual periods ending after June 15, 2009, which was June 30,
      2009 for the Corporation. The adoption of this Topic did not have a
      material impact on the Company’s financial statements and
      disclosures.
  ·FASB ASC Topic
      105, “The FASB Accounting Standard Codification and the Hierarchy of
      Generally Accepted Accounting Principles”.In June 2009, the FASB
      issued FASB ASC Topic 105, which became the source of authoritative GAAP
      recognized by the FASB to be applied by nongovernmental entities. Rules
      and interpretive releases of the SEC under authority of federal securities
      laws are also sources of authoritative GAAP for SEC registrants. On the
      effective date of this FASB ASC Topic, the Codification will supersede all
      then-existing non-SEC accounting and reporting standards. All other
      non-SEC accounting literature not included in the Codification will become
      non-authoritative. This FASB ASC Topic identify the sources of accounting
      principles and the framework for selecting the principles used in
      preparing the financial statements of nongovernmental entities that are
      presented in conformity with GAAP. Also, arranged these sources of GAAP in
      a hierarchy for users to apply accordingly. In other words, the GAAP
      hierarchy will be modified to include only two levels of GAAP:
      authoritative and non-authoritative. This FASB ASC Topic is effective for
      financial statements issued for interim and annual periods ending after
      September 15, 2009. The adoption of this topic did not have a material
      impact on the Company’s disclosure of the financial
    statements
  ·FASB ASC Topic
      320, “Recognition and Presentation of Other-Than-Temporary Impairments”.In April 2009, the FASB issued FASB ASC Topic 320 amends the
      other-than-temporary impairment guidance in GAAP for debt securities to
      make the guidance more operational and to improve the presentation and
      disclosure of other-than-temporary impairments on debt and equity
      securities in the financial statements. This FASB ASC Topic does not amend
      existing recognition and measurement guidance related to
      other-than-temporary impairments of equity securities. The FASB ASC Topic
      shall be effective for interim and annual reporting periods ending after
      June 15, 2009, with early adoption permitted for periods ending after
      March 15, 2009. Earlier adoption for periods ending before March 15, 2009,
      is not permitted. This FASB ASC Topic does not require disclosures for
      earlier periods presented for comparative purposes at initial adoption. In
      periods after initial adoption, this FASB ASC Topic requires comparative
      disclosures only for periods ending after initial adoption. The adoption
      of this Topic did not have a material impact on the Company’s financial
      statements and disclosures.
  The
Company is evaluating the impact that the following recently issued accounting
pronouncements may have on its financial statements and
disclosures.
  ·FASB ASC Topic
      860, “Accounting for Transfer of Financial Asset”.,In June 2009,
      the FASB issued additional guidance under FASB ASC Topic 860, “Accounting for Transfer and
      Servicing of Financial Assets and Extinguishment of Liabilities",
      which improves the relevance, representational faithfulness, and
      comparability of the information that a reporting entity provides in its
      financial statements about a transfer of financial assets; the effects of
      a transfer on its financial position, financial performance, and cash
      flows; and a transferor’s continuing involvement, if any, in transferred
      financial assets. The Board undertook this project to address (i)
      practices that have developed since the issuance of FASB ASC Topic 860,
      that are not consistent with the original intent and key requirements of
      that statement and (ii) concerns of financial statement users that many of
      the financial assets (and related obligations) that have been derecognized
      should continue to be reported in the financial statements of transferors.
      This additional guidance requires that a transferor recognize and
      initially measure at fair value all assets obtained (including a
      transferor’s beneficial interest) and liabilities incurred as a result of
      a transfer of financial assets accounted for as a sale. Enhanced
      disclosures are required to provide financial statement users with greater
      transparency about transfers of financial assets and a transferor’s
      continuing involvement with transferred financial assets. This additional
      guidance must be applied as of the beginning of each reporting entity’s
      first annual reporting period that begins after November 15, 2009, for
      interim periods within that first annual reporting period and for interim
      and annual reporting periods thereafter. Earlier application is
      prohibited. This additional guidance must be applied to transfers
      occurring on or after the effective
date.
  ·FASB ASC Topic
      810, “Variables Interest Entities”. In June 2009, the FASB issued
      FASB ASC Topic 810, which requires an enterprise to perform an analysis to
      determine whether the enterprise’s variable interest or interests give it
      a controlling financial interest in a variable interest entity. This
      analysis identifies the primary beneficiary of a variable interest entity
      as the enterprise that has both of the following characteristics: (i)The
      power to direct the activities of a variable interest entity that most
      significantly impact the entity’s economic performance and (ii)The
      obligation to absorb losses of the entity that could potentially be
      significant to the variable interest entity or the right to receive
      benefits from the entity that could potentially be significant to the
      variable interest entity. Additionally, an enterprise is required to
      assess whether it has an implicit financial responsibility to ensure that
      a variable interest entity operates as designed when determining whether
      it has the power to direct the activities of the variable interest entity
      that most significantly impact the entity’s economic performance. This
      FASB Topic requires ongoing reassessments of whether an enterprise is the
      primary beneficiary of a variable interest entity and eliminate the
      quantitative approach previously required for determining the primary
      beneficiary of a variable interest entity, which was based on determining
      which enterprise absorbs the majority of the entity’s expected losses,
      receives a majority of the entity’s expected residual returns, or both.
      This FASB ASC Topic shall be effective as of the beginning of each
      reporting entity’s first annual reporting period that begins after
      November 15, 2009, for interim periods within that first annual reporting
      period, and for interim and annual reporting periods thereafter. Earlier
      application is prohibited.
  ·FASB ASC Topic
      820, “Fair Value
      measurement and Disclosures”, an Accounting Standard Update. In
      September 2009, the FASB issued this Update to amendments to Subtopic
      82010, “Fair Value
      Measurements and Disclosures”. Overall, for the fair value
      measurement of investments in certain entities that calculates net asset
      value per share (or its equivalent). The amendments in this Update permit,
      as a practical expedient, a reporting entity to measure the fair value of
      an investment that is within the scope of the amendments in this Update on
      the basis of the net asset value per share of the investment (or its
      equivalent) if the net asset value of the investment (or its equivalent)
      is calculated in a manner consistent with the measurement principles of
      Topic 946 as of the reporting entity’s measurement date, including
      measurement of all or substantially all of the underlying investments of
      the investee in accordance with Topic 820. The amendments in this Update
      also require disclosures by major category of investment about the
      attributes of investments within the scope of the amendments in this
      Update, such as the nature of any restrictions on the investor’s ability
      to redeem its investments at the measurement date, any unfunded
      commitments (for example, a contractual commitment by the investor to
      invest a specified amount of additional capital at a future date to fund
      investments that will be made by the investee), and the investment
      strategies of the investees. The major category of investment is required
      to be determined on the basis of the nature and risks of the investment in
      a manner consistent with the guidance for major security types in GAAP on
      investments in debt and equity securities in paragraph 320-10-50-lB. The
      disclosures are required for all investments within the scope of the
      amendments in this Update regardless of whether the fair value of the
      investment is measured using the practical expedient. The amendments in
      this Update apply to all reporting entities that hold an investment that
      is required or permitted to be measured or disclosed at fair value on a
      recurring or non recurring basis and, as of the reporting entity’s
      measurement date, if the investment meets certain criteria The amendments
      in this Update are effective for the interim and annual periods ending
      after December 15, 2009. Early application is permitted in financial
      statements for earlier interim and annual periods that have not been
      issued.
 
 FASB ASC Topic 740, “Income Taxes”, an Accounting
Standard Update. In September 2009, the FASB issued this Update to address the
need for additional implementation guidance on accounting for uncertainty in
income taxes. The guidance answers the following questions: (i) Is the income
tax paid by the entity attributable to the entity or its owners? (ii) What
constitutes a tax position for a pass-through entity or a tax-exempt
not-for-profit entity? (iii) How should accounting for uncertainty in income
taxes be applied when a group of related entities comprise both taxable and
nontaxable entities? In addition, this Updated decided to eliminate the
disclosures required by paragraph 740-10-50-15(a) through (b) for nonpublic
entities. The implementation guidance will apply to financial statements of
nongovernmental entities that are presented in conformity with GAAP. The
disclosure amendments will apply only to nonpublic entities as defined in
Section 740-10-20. For entities that are currently applying the standards for
accounting for uncertainty in income taxes, the guidance and disclosure
amendments are effective for financial statements issued for interim and annual
periods ending after September 15, 2009.
 
 (b)
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
 
 This
discussion and analysis of our financial condition and results of operations
includes "forward-looking" statements that reflect our current views with
respect to future events and financial performance. We use words such as
"expect," "anticipate," "believe," and "intend" and similar expressions to
identify forward-looking statements. You should be aware that actual results may
differ materially from our expressed expectations because of risks and
uncertainties inherent in future events and you should not rely unduly on these
forward looking statements. We will not necessarily update the information in
this discussion if any forward-looking statement later turns out to be
inaccurate. Reference in the following discussion to "our", "us" and "we" refer
to our operations and the operations of our subsidiaries, except where the
context otherwise indicates or requires.
 
 This
discussion and analysis of financial condition and results of operations should
be read in conjunction with our audited Financial Statements included in this
filing. Our consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States, and reflect
our historical financial position, results of operations, and cash flows. The
financial information included in this filing, is not necessarily indicative of
our future performance.
 
 
 
  Page
- 12
 
 Three Months Ended September
30, 2009 compared to 2008
 
 Revenue
for the three months ended September 30, 2009 was $1,117,239 compared to
$2,513,496 for the three months ended September 30, 2008. This was a decrease of
$1,396,257 or 55%. Sale of solar and solar related products for the quarter
ended September 30, 2008, were approximately $1,000,000. During the three months
ended September 30, 2009 sales from solar and related products were negligent.
The decrease was due to lack of new construction and home improvements as a
result of the recession, particularly in California. Sales to electricians and
wholesale clients were also weak. In prior quarters, they would purchase
multiple units, but during the current period they reduced their inventories and
purchased products only when needed for installation. Retail sales of the
Company’s power savings devices have remained steady at levels with the
preceding quarter.
 
 Gross
profit for the three months ended September 30, 2009 was $509,397 compared to
$1,345,279 for the three months ended September 30, 2008. This was a decrease of
$835,885 or 62 %. The gross profit margin for the three months ended September
30, 2009 was 46% compared to a gross profit margin for the three months ended
September 30, 2008 of 53%. There are several factors that have caused the
overall gross profit and gross profit margin to decline. Solar products are sold
in a competitive market and are a material cost when renovating residences and
commercial buildings. Solar products typically have a lower gross profit margin
than the retail and wholesale gross profit on power savings devices. There has
also more competition in the wholesale market reducing the gross profit on power
savings devices. The cost of sales includes the cost of the power savings
products manufactured for the Company and solar products purchased from outside
vendors. Other costs included in costs of goods sold are warehouse costs and
shipping expenses.
 
 Advertising
and marketing expense for the three months ended September 30, 2009 was $150,961
compared to $231,816 for the three months ended September 30, 2008. This is a
decrease of $80,855. The Company reduced its television advertising during the
three months ended September 30, 2009 as the sale of solar products declined. In
the three months ended September 30, 2008, the Company introduced its solar
products and advertised heavily during the period. The Company continues to
advertise it energy savings devices.
 
 Sales
commissions for the three months ended September 30, 2009 were $326,067 compared
to $337,724 for the three months ended September 30, 2008. This was a decrease
of $11,657 (3%). Commissions are based primarily on retail rates and wholesale
rates without discounts. During the period ended September 30, 2009, the
decrease in retail sales was minor.
 
 General
and administrative expenses for the three months ended September 30, 2009 were
$603,781 compared to $299,587 for the three months ended September 30, 2008.
This is an increase of $304,194 (101%). The major increases in general and
administrative expenses included officer’s compensation of $135,000. There was
no officer compensation in 2008. During the three months ended September 30,
2009 the Company recorded bad debt expense of $154,528 where previously no
provision was required. The provision was directly related to contractors
installing solar products. The Company has since tightened its credit
requirements for the purchase of solar units. Other general and administrative
expenses including consulting, printing and production expenses decreased by
$68,106 in the three months ended September 30, 2009 compared to 2008. In 2008,
the Company issued stock options that were subsequently cancelled. The expense
for the three months ended September 30, 2008 was $47,506. Occupancy expense for
the three months ended September 30, 2009 increased by $15,815. Travel expense
for the three months ended September 30, 2009approximately $160,000. The
president of the Company traveled extensively meeting with manufacturers, and
clients.
 
 In
January 2009, the Company made an investment of $60,000 in a contractor involved
with the installation of solar energy products, primarily for residential
customers. In September, the Company determined that the value of its investment
should be written off.
 
 Due to
the losses during the period the Company has recorded a recovery of Federal
income taxes in the amount of $210,700. The Company will carry back any net
operating loss to recover taxes paid in prior periods.
 
 
 Nine Months Ended September
30, 2009 compared to 2008
 
 Revenue
for the nine months ended September 30, 2009 was $4,014,046 compared to
$4,628,772 for the nine months ended September 30, 2008. This was a decrease of
$614,726 or 13%. Sale of solar and solar related products for the nine months
ended September 30, 2008, were approximately $1,000,000. During the nine months
ended September 30, 2009 sales from solar and related products were
approximately $400,000. The decrease was due to lack of new construction and
home improvements as a result of the recession, particularly in California.
Sales to electricians and wholesale clients were also weak. In prior periods,
they would purchase multiple units, but during the current period they reduced
their inventories and purchased products only when needed for installation.
Retail sales of the Company’s power savings devices have remained
steady.
 
 Gross
profit for the nine months ended September 30, 2009 was $2,095,912 compared to
$2,974,864 for the nine months ended September 30, 2008. This was a decrease of
$878,952 or 29 %. The gross profit margin for the nine months ended September
30, 2009 was 52% compared to a gross profit margin for the nine months ended
September 30, 2008 of 64%. There are several factors that have caused the
overall gross profit and gross profit margin to decline. Solar products are sold
in a competitive market and are a material cost when renovating residences and
commercial buildings. Solar products typically have a lower gross profit margin
than the retail and wholesale gross profit on power savings devices. There has
also more competition in the wholesale market reducing the gross profit on power
savings devices. The cost of sales includes the cost of the power savings
products manufactured for the Company and solar products purchased from outside
vendors. Other costs included in costs of goods sold are warehouse costs and
shipping expenses. In addition, during the first quarter of 2009, the Company
wrote down the value of its solar inventory by approximately $70,000 to net
realizable value decreasing gross profit margins by approximately
2%
 
  Page
- 13
 Advertising
and marketing expense for the nine months ended September 30, 2009 was $406,443
compared to $361,496 for the nine months ended September 30, 2008. This is an
increase of $44,947. The Company reduced its television advertising during the
three months ended September 30, 2009 as the sale of solar products declined. In
the three months ended September 30, 2008, the Company introduced its solar
products and advertised heavily during the period. The Company continues to
advertise it energy savings devices. . During the first quarter of 2009, the
company completed the installation of a demonstration model of a solar paneled
roof incorporating the solar panels as a component of the roof tile as an
alternating to using a rack system and solar panels. Power-Save Energy
incorporated Open Energy solar tiles in this demonstration installation.
Power-Save intends to begin marketing solar tiles in 2009.The cost of the model
was $41,000.
 
 Sales
commissions for the nine months ended September 30, 2009 were $1,133,743
compared to $883,888 for the nine months ended September 30, 2008. This was an
increase of $249,855 (28%). Commissions are based primarily on retail rates and
wholesale rates without discounts.
 
 General
and administrative expenses for the nine months ended September 30, 2009 were
$1,125,743 compared to $612,374 for the nine months ended September 30, 2008.
This is an increase of $513,369 (84%). The major increases in general and
administrative expenses included officer’s compensation of $280,000. There was
no officer compensation in 2008. During the nine months ended September 30, 2009
the Company recorded bad debt expense of $154,528 where previously no provision
was required. The provision was directly related to contractors installing solar
products. The Company has since tightened its credit requirements for the
purchase of solar units. Other general and administrative expenses including
consulting, printing and production expenses decreased by $96,460 in the =nine
months ended September 30, 2009 compared to 2008. In 2008, the Company issued
stock options that were subsequently cancelled. The expense for the nine months
ended September 30, 2008 was $91,053. Occupancy expense for the three months
ended September 30, 2009 increased by $41,610. Travel expense for the nine
months ended September 30, 2009 increased by approximately $207,000. The
president of the Company traveled extensively meeting with manufacturers, and
clients.
 
 In
January 2009, the Company made an investment of $60,000 in a contractor involved
with the installation of solar energy products, primarily for residential
customers. In September, the Company determined that the value of its investment
should be written off.
 
 Due to
the losses during the period the Company has recorded a recovery of Federal
income taxes in the amount of $217,000. The Company will carry back any net
operating loss to recover taxes paid in prior periods. A recovery of state
income taxes will be carried forward due to a change in the California tax
laws.
 
 
 Liquidity
and Capital Resources.
 As of
September 30, 2009 the current assets exceeded the current liabilities by
$1,579,964. Excluding one time non recurring items, the Company has been able to
generate sufficient funds from its current operations to fund its current level
of activity.
 
 
 
 
  Page
- 14
 
 
 ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
 Investors
should consider each of the following risk factors and the other information in
this Quarterly Report, including Power-Save’s financial statements and the
related notes, in evaluating the Company’s business and prospects. The risks and
uncertainties described below are not the only ones that impact on Power-Save’s
business. Additional risks and uncertainties not presently known to the Company
or which the Company currently considers to be immaterial may also impair its
business operations. If any of the following risks actually occur, the Company’s
business and financial results could be harmed. In that case, the trading price
of Power-Save’s Common Stock could decline.
 
 1.
Power-Save’s stock price is volatile with wide fluctuations in the past that are
likely to continue in the future. The Company’s common stock trades domestically
on the OTC-BB, a relatively illiquid and extremely volatile market. In order to
maintain its listing status on the OTC-BB, the Company must file periodic
reports with the SEC in a timely manner. If the Company does not maintain its
reporting status it may have its securities delisted from the
OTC-BB.
 
 2. A
small number of Power-Save’s stockholders own a substantial amount of the
Company's Common Stock, and if such stockholders were to sell those shares in
the public market within a short period of time, the price of Power-Save’s
Common Stock could drop significantly.
 
 3.
Power-Save may not be able to attract and retain qualified personnel necessary
for the implementation of its business strategy. If the Company is not able to
attract or retain qualified personnel, it is likely that the Company would be
unable to remain competitive in its business resulting in a material adverse
effect on Power-Save’s operations.
 
 4.
Power-Save does not expect to pay dividends in the foreseeable future. Because
the Company does not intend to pay dividends in the foreseeable future, the
potential return on an investor’s investment in the Company’s common stock
cannot include any dividend income.
 
 5. “Penny
Stock” rules may make buying or selling Power-Save’s Common Stock difficult, and
severely limit market liquidity. The Company’s common stock is defined as a
“penny stock” under applicable federal securities laws. As such, the Company’s
shares are more difficult to purchase and sell than other securities not subject
to the “penny stock” rules.
 
 6. Future
Equity Financings May Dilute Your Ownership Interests. The Company relies upon
the availability of equity capital to fund its growth, which financing may or
may not be available on favorable terms or at all. We cannot guarantee that
additional financing, refinancing or other capital will be available in the
amounts we desire or on favorable terms.
 
 7. As of
the date of this Report, we have raised equity capital through the issuance of
shares of our restricted common stock and will continue to do so for the
foreseeable future. Subject to the implementation of our ongoing plan of
operations and any revenues generated in relation thereto, we anticipate
continuing to rely on equity sales of our common stock in order to fund our
business operations. Issuances of additional shares will result in dilution to
our existing stockholders. There is no assurance that we will achieve any
additional sales of our equity securities or arrange for debt or other financing
to fund our planned business activities.
 
 8. The
Company does not carry Officer and Director Liability Insurance coverage which
would reduce the ability of investors to recover damages in the case of a claim
against the Company and or its officers and directors for breach of duties or
other liability claims.
 
 ITEM
4. CONTROLS AND PROCEDURES
 
 Evaluation
of Disclosure Controls and Procedures
  The
Securities and Exchange Commission defines the term “disclosure controls and
procedures” to mean the company's controls and other procedures of an issuer
that are designed to ensure that information required to be disclosed in the
reports that it files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission’s rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Securities Exchange Act of 1934 is
accumulated and communicated to the issuer’s management, including its principal
executive and principal financial officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.  The Company maintains such a system of controls and procedures
in an effort to ensure that all information which it is required to disclose in
the reports it files under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified under the
SEC's rules and forms and that information required to be disclosed is
accumulated and communicated to principal executive and principal financial
officers to allow  timely decisions regarding disclosure.
 
  Page
- 15
 As of the
end of the period covered by this report, we carried out an evaluation, under
the supervision and with the participation of our chief executive officer and
chief financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures.  Based on this evaluation, our chief
executive officer and chief financial officer concluded that our disclosure
controls and procedures are designed to provide reasonable assurance of
achieving the objectives of timely alerting them to material information
required to be included in our periodic SEC reports and of ensuring that such
information is recorded, processed, summarized and reported within the time
periods specified.  Our chief executive officer and chief financial officer
also concluded that our disclosure controls and procedures were effective as of
the end of the period covered by this report to provide reasonable assurance of
the achievement of these objectives.
 
 
 Item
4(T). CONTROLS AND PROCEDURES
 
 Evaluation
of and Report on Internal Control over Financial Reporting
  The
management of Power-Save Energy Company is responsible for establishing and
maintaining adequate internal control over financial reporting. Internal control
over financial reporting is defined in Rule 13a-15(f) or 15d-15(f)
promulgated under the Securities Exchange Act of 1934 as a process designed by,
or under the supervision of, the company’s principal executive and principal
financial officers and effected by the company’s board of directors, management
and other personnel, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States of America and includes those policies and procedures that:
 
 −
              Pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect the transactions and dispositions of the assets of the
      company;−
              Provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with accounting
      principles generally accepted in the United States of America and that
      receipts and expenditures of the company are being made only in accordance
      with authorizations of management and directors of the
      company; and−
              Provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of the company’s assets that
      could have a material effect on the financial
  statements.
 
 Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Because of the inherent
limitations of internal control, there is a risk that material misstatements may
not be prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known features of
the financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.
 
 Management
assessed the effectiveness of the Company’s internal control over financial
reporting as of September 30, 2009. In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control-Integrated Framework.
 
 Based on
its assessment, management concluded that, as of September 30, 2009, the
Company’s internal control over financial reporting is effective based on those
criteria.
 
 
 Page
- 16
 
 Changes
in Internal Control over Financial Reporting
 
 There was
no change in our internal controls over financial reporting identified in
connection with the requisite evaluation that occurred during our last fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
 
 
 
 PART
II - OTHER INFORMATION
 
 ITEM
1 Legal Proceeding.
 
 On
October 27, 2009, the Company filed a lawsuit against Ray Baxter, Daniel Acosta,
Scott Francis and Arizona Power-Save L.C. for breach of contract.  The
Company alleges the Defendants owe the Company $296,750.00 from renewable energy
products sold to Defendants. As of the date of this filing, the Defendants have
not yet been served.
 
 ITEM
1A. Risk Factors.
 None.
 
 ITEM 2 Unregistered Sales of Equity
Securities and Use of Proceeds.
 None.
 
 ITEM
3 Defaults upon Senior Securities.
 None.
 
 ITEM
4 Submissions of Matters to a Vote of Security Holders.
 None.
 
 ITEM
5 Other Information.
 None.
 
 ITEM
6 Exhibits.
 Exhibit
      No.
              Description
              Location31.1
              Certification of Chief Executive Officer pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002
              Filed
      herewith31.2
              Certification of Chief Financial Officer pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002
              Filed
      herewith32.1
              Certification of Chief Executive Officer pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002
              Filed
      herewith32.2
              Certification of Chief Financial Officer pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002
              Filed
      herewith
 
 
 
  Page
- 17
 
 
 SIGNATURES
 
 In
accordance with the requirements of the Exchange Act, the Registrant has caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 POWER
      SAVE ENERGY COMPANY
 
 
 
 
 Date:
      November 11, 2009
              By /s/ Michael
      ForsterMichael
      ForsterChief
      Executive Officer
 
 
 
 Date:
      November 11, 2009
              By/s/ Louis
    FoxLouis
      FoxChief
      Financial Officer
 
 
 
 
  Page
- 18
 
 
 
 
 EXHIBIT
31.1
 
 POWER-SAVE
ENERGY
 CERTIFICATIONS
PURSUANT TO
 SECTION
302 OF THE SARBANES-OXLEY ACT OF 2002
 
 CERTIFICATION
 
 I, Michael
Forster, certify that:
 
 1. I have
reviewed this quarterly report on Form 10-Q for the quarter
ending September 30, 2009 of Power-Save Energy Company;
 
 2. Based
on my knowledge, this quarterly report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this
report;
 
 3. Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
 
 4. The
registrant’s other certifying officers and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
 
 (a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
 
 (b)
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
 
 (c)
Evaluated the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
 
 (d)
Disclosed in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
 
 5. The
registrant’s other certifying officers and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
 
 (a) All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
 
 (b) Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial
reporting.
 
 Dated:
      November 11, 2009
              By:/s/
      Michael
      ForsterMichael
      ForsterChief
      Executive Officer
  Page
- 19
 
 
 EXHIBIT
31.2
 
 POWER-SAVE
ENERGY
 CERTIFICATIONS
PURSUANT TO
 SECTION
302 OF THE SARBANES-OXLEY ACT OF 2002
 
 CERTIFICATION
 
 I, Louis Fox, certify
that:
 
 
 1. I have
reviewed this quarterly report on Form 10-Q for the quarter
ending September 30, 2009 of Power-Save Energy Company;
 
 2. Based
on my knowledge, this quarterly report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this
report;
 
 3. Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
 
 4. The
registrant’s other certifying officers and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
 
 (a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
 
 (b)
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
 
 (c)
Evaluated the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
 
 (d)
Disclosed in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
 
 5. The
registrant’s other certifying officers and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
 
 (a) All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
 
 (b) Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial
reporting.
 
 
 Dated:
      November 11, 2009
              By:/s/
      Louis
      FoxLouis
      FoxChief
      Financial Officer
 
  Page
- 20
 EXHIBIT
32.1
 CERTIFICATION
PURSUANT TO
 18
U.S.C. SECTION 1350,
 AS
ADOPTED PURSUANT TO
 SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
 
 
 In
connection with the Quarterly Report of Power-Save Energy Company,
(the “Company”) on Form 10-Q for the period ending September 30,
2009 as filed with the Securities and Exchange Commission on the date
hereof (the “Report”), I, Michael Forster, President, Chief Executive Officer of
the Company and a member of the Board of Directors, certify, pursuant to 18
U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
 
 (1)
      The Report fully complies with the requirements of section 13(a) or 15(d)
      of the Securities Exchange Act of 1934;
and
 
 (2)
      The information contained in the Report fairly presents, in all material
      respects, the financial condition and results of operations of the
      Company.
 
 Dated:
      November 11, 2009
              By:/s/
      Michael
      ForsterMichael
      ForsterChief
      Executive Officer
 
  Page
- 21
 
 
 
 
 
 EXHIBIT
32.2
 
 CERTIFICATION
PURSUANT TO
 18
U.S.C. SECTION 1350,
 AS
ADOPTED PURSUANT TO
 SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
 
 
 In
connection with the Quarterly Report of Power-Save Energy Company,
(the “Company”) on Form 10-Q for the period ending September 30,
2009 as filed with the Securities and Exchange Commission on the date
hereof (the “Report”), I, Louis Fox, Chief Financial Officer of
the Company and a member of the Board of Directors, certify, pursuant to 18
U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
 
 (1)
      The Report fully complies with the requirements of section 13(a) or 15(d)
      of the Securities Exchange Act of 1934;
and
 
 (2)
      The information contained in the Report fairly presents, in all material
      respects, the financial condition and results of operations of the
      Company.
 
 Dated:
      November 11, 2009
              By:/s/ Louis
      FoxLouis
      FoxChief Financial
      Officer
 
 
 
 
 Page
- 22