U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 2002
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO ____________________
Commission File No. 0-31805
POWER EFFICIENCY CORPORATION
----------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 22-3337365
--------------------------------- ------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification NO.)
of incorporation or organization)
4220 Varsity Drive Suite E
Ann Arbor, MI 48108
(734-975-9111)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirement for the past 90 days.
Yes X No__
The number of shares outstanding of the Issuer's Common Stock, $.001 Par Value,
as of October 11, 2002 was 6,580,620.
Transitional Small Business Disclosure Format (check one):
Yes ___ No X
Table of Contents
POWER EFFICIENCY CORPORATION
FORM 10-QSB INDEX
Page
Index 2
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Balance Sheets as of September 30, 2002 and December 31, 2001 3
Condensed Statements of Operations for the three months ended September 30, and the nine 4
months ended September 30, 2002 and 2001
Condensed Statements of Cash Flows for the nine months ended September 30, 2002 and 2001 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis 8
Item 3 Controls and Procedures 9
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities and Use of Proceeds 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10-11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
2
Power Efficiency Corporation
Condensed Balance Sheets
September 30, 2002 and December 31, 2001
(Unaudited)
September 30, December 31,
2002 2001
------------ ------------
Assets
Current Assets
Cash and Equivalents $ 781,761 $ 35,245
Accounts Receivable - Trade - Net of reserve of $5,000 89,489 11,118
Inventory 609,122 609,545
Prepaid Expenses and other current assets 39,093 --
------------ ------------
Total Current Assets 1,519,465 655,908
------------ ------------
Property and Equipment, Net 127,971 148,565
------------ ------------
Other Assets
Deposits 15,500 15,500
Patent Application Costs (Net) 12,115 15,987
Goodwill 1,929,963 1,929,963
Customer Contacts, Manuals and Sales Literature (Net) 122,042 154,352
Website and Customer List (Net) 47,281 73,095
------------ ------------
Total Other Assets 2,126,901 2,188,897
------------ ------------
$ 3,774,337 $ 2,993,370
============ ============
Liabilities and Stockholders' Equity
Current Liabilities
Line of Credit Agreement $ 203,144 $ 445,386
Accrued Salaries and Payroll Taxes 157,920 83,433
Accounts Payable and Accrued Expenses 420,763 672,122
Stockholder and Officers' Loans Payable -- 105,500
------------ ------------
Total Current Liabilities 781,827 1,306,441
------------ ------------
Long - Term Liability:
Stockholder Note Payable 411,125 300,000
------------ ------------
Total Liabilities
1,192,952 1,606,441
------------ ------------
Stockholders' Equity
Preferred Stock, $.001 par Value, 10,000,000 shares
Authorized, 2,346,233 Series A-1 Convertible Preferred Stock issued
and outstanding in 2002 and none issued and outstanding in 2001 2,346 --
Common Stock, $.001 par Value, 50,000,000 shares
Authorized, 6,580,620 and 6,523,120 issued and outstanding
in 2002 and 2001, respectively 6,580 6,523
Additional paid-in capital 11,431,322 8,869,914
Accumulated Deficit (8,858,863) (7,489,508)
------------ ------------
Total Stockholders' Equity 2,581,385 1,386,929
------------ ------------
$ 3,774,337 $ 2,993,370
============ ============
See notes to condensed Financial Statements.
3
Power Efficiency Corporation
Condensed Statements of Operations - Unaudited
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
----------- ----------- ----------- -----------
2002 2001 2002 2001
----------- ----------- ----------- -----------
REVENUES $ 104,259 $ 309,122 $ 352,205 $ 676,580
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Cost of Sales 44,016 174,925 169,744 377,137
Research and Development 92,092 83,520 260,192 212,294
Manufacturing 61,561 60,969 159,349 128,658
Selling, general and administrative 373,121 321,867 1,044,070 925,412
Depreciation and Amortization 28,795 70,579 88,409 214,969
----------- ----------- ----------- -----------
Total Costs and Expenses 599,585 711,860 1,721,764 1,858,470
----------- ----------- ----------- -----------
LOSS BEFORE PROVISION FOR INCOME TAXES (495,326) (402,738) (1,369,559) (1,181,890)
PROVISION FOR INCOME TAXES -- 5,700 1,003 5,900
----------- ----------- ----------- -----------
NET LOSS $ (495,326) $ (408,438) $(1,370,562) $(1,187,790)
=========== =========== =========== ===========
BASIC LOSS PER COMMON SHARE $ (.08) $ (.06) $ (.21) $ (.18)
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 6,580,620 6,522,000 6,558,953 6,470,000
=========== =========== =========== ===========
See notes to condensed Financial Statements.
4
Power Efficiency Corporation
Condensed Statements of Cash Flow - Unaudited
Nine Months Ended September 30, 2002 and 2001
September 30, September 30,
2002 2001
----------- -----------
Cash Flow From Operating Activities
Net Loss $(1,370,562) $(1,187,790)
Adjustments to reconcile net loss to net cash:
Used for operating activities:
Depreciation and Amortization 88,409 214,969
Issuance of Stock for Services and Options 183,811 47,300
Debt Restructuring -- 130,000
Changes in Certain
Assets and Liabilities (Increase) Decrease
Accounts Receivable - Trade (78,370) (126,385)
Inventory - Raw Materials/Finished Goods 423 (24,657)
Prepaid Expenses and other current assets (39,093) (25,950)
Accounts Payable and Accrued Expenses (175,665) (67,550)
----------- -----------
Total Adjustments (20,395) 147,727
----------- -----------
Net Cash Used in Operating Activities (1,391,047) (1,040,063)
Investing Activities
Equipment Purchases (5,820) (51,025)
----------- -----------
Net cash from investing activities (5,820) (51,025)
Financing Activities
Proceeds from issuance of equity securities 2,500,000 754,645
Notes Payable - Bank (242,243) 107,500
Costs related to issuance of Equity Securities (120,000) (15,000)
Notes Payable - Stockholders (Net) 5,626 250,000
----------- -----------
Net Cash Provided by Financing Activities 2,143,382 1,097,145
----------- -----------
Net Increase in Cash $ 746,516 $ 6,057
=========== ===========
Summary:
Cash Balance At End Of Period $ 781,761 $ 14,549
Cash Balance At Beginning Of Period 35,245 8,492
----------- -----------
Net Increase in Cash $ 746,516 $ 6,057
=========== ===========
Non-cash Investing and Financing Activities
Common Stock issued in connection with the
Settlement of accounts payable/Conversion Stockholder
loan payable $ 7,500 $ 230,000
Common Stock issued for services rendered $ 167,500 $ 30,000
=========== ===========
See notes to condensed Financial Statements.
5
POWER EFFICIENCY CORPORATION NOTES
TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1, BASIS OF PRESENTATION
The accompanying unaudited financial statements, which are for interim
periods, do not include all disclosures required to be presented in the
annual financial statements. These unaudited financial statements
should be read in conjunction with the financial statements and the
footnotes thereto for the year ended December 31, 2001 contained in
Power Efficiency Corporation's (the "Company") Form 10-KSB Annual
Report and Form 10-SB Registration Statement, as amended from time to
time, as filed with the Securities and Exchange Commission. The
September 30, 2002 balance sheet was derived from unaudited financial
statements, and does not include all disclosures required by generally
accepted accounting principles.
NOTE 2, INTERIM PERIODS
In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments (which are of a normal recurring
nature) necessary for a fair presentation of the financial statements.
The results of operations for the nine months ended September 30, 2002
are not necessarily indicative of the results to be expected for the
full year.
NOTE 3, GOING CONCERN
The accompanying condensed interim financial statements have been
prepared assuming the Company is a going concern which assumption
contemplates the realization of assets and satisfaction of liabilities
in the normal course of business. The financial statements do not
include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amount of liabilities
that might be necessary should the Company be unable to continue in
existence. Continuation of the Company as a going concern is dependent
on achieving profitable operations. Management's plans to achieve
profitability include developing new products, obtaining new customers
and increasing sales to existing customers. Management has raised
additional capital through issuance of Series A-1 Convertible Preferred
stock in the amount of $2,500,000 to Summit Energy Ventures, LLC.
NOTE 4, PER SHARE DATA
Per share data was computed by dividing net loss by the weighted
average number of shares outstanding during the period.
NOTE 5, REVENUE
For financial reporting purposes, the Company reports revenues from
sales as product is shipped and invoiced.
6
NOTE 6, LINE OF CREDIT AGREEMENT
On April 30, 2002, the Company's line of credit with the bank expired.
The bank agreed to forbear from taking any collection activity
concerning the expired line of credit until June 17, 2002. During June,
2002, the Company received the proceeds from the investment of Summit
Energy Ventures, LLC and had paid the bank the amount of $220,000 thus,
reducing the line of credit to $225,387. On October 3, 2002, the
Company paid the remaining balance, in full, on the expired line of
credit out of its current available cash. At the present time, the
Company is in the process of negotiating a new bank line and believes
that it will shortly be successful in consummating a new line.
NOTE 7, GOODWILL
The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No.142, " Goodwill and Other Intangible Assets", for
the year ended December 31, 2002. SFAS No. 142 was applied at the
beginning of the fiscal year. SFAS No.142 requires that Goodwill shall
no longer be amortized. Goodwill shall be tested for impairment on an
annual basis and between annual tests in certain circumstances.
NOTE 8, RELATED PARTY TRANSACTIONS
During the nine months ended September 30, 2002, a stockholder lent the
Company $50,425 and officers lent the Company $120,000. During the nine
months ended September 30, 2002, the Company repaid the stockholder
$40,000 and repaid the officers $107,200.
NOTE 9, ISSUANCE OF SERIES A CONVERTIBLE PREFERRED STOCK
The Company received $2,500,000 from the sale of 2,346,233 shares of
Series A-1 Convertible Preferred Stock to Summit Energy Ventures, LLC,
which resulted in Summit owning a 28% fully diluted stake in the
Company. Summit also received a stock purchase warrant which is
exercisable after December 14, 2003, to purchase such number of
additional shares of Series A-2 Convertible Preferred Stock, $.001 par
value per share, of the Company enabling Summit to purchase up to 51%
of the Company's fully diluted Common Stock. The sale and issuance of
Series A-1 Convertible Preferred Stock to Summit is described in the
Company's Form 8-K filing on June 20, 2002.
NOTE 10, ISSUANCE OF COMMON STOCK FOR SERVICES
On April 15, 2002, the Company issued 50,000 shares of common stock to
a consultant, who subsequently became an officer of the Company and a
member of the Board of Directors of the Company for services rendered.
Since the per share market price of the Common Stock on the date of
grant was $3.35 per share, the Company recognized additional
compensation expenses of $167,500. This additional compensation expense
is included in selling, general and administrative expenses.
NOTE 11, TERMINATION OF EMPLOYMENT AGREEMENT
Following the Company's earlier termination of his employment
agreement, on October 10, 2002, Stephen Shulman, the former President
and Chief Executive Officer of the Company, filed a demand for
arbitration with the American Arbitration Association requesting
payments from the Company pursuant to the provisions of his employment
agreement with the Company. The Company believes that it has
meritorious defenses to these claims and as such, no amounts have been
accrued in these financial statements.
NOTE 12, FILING OF AMENDMENTS TO CERTAIN PREVIOUS EXCHANGE ACT REPORTS
In conjunction with the Company's filing of its Form 10-KSB for the
year ended December 31, 2001 with the United States Securities and
Exchange Commission (the "SEC") on or about April 1, 2002,amendments to
the Company's Form 10-KSB for Fiscal 2001 and Fiscal 2000 as well as
amendments to the Company's Form 10-QSBs for the three fiscal quarters
of 2001 were filed with the SEC on September 9, 2002. Such
modifications related primarily to the valuation of the Performance
Control acquisition, the valuation of the repriced options, the value
of options issued during the periods and settlement of a loan payable
for common stock.
7
NOTE 13, EMPLOYMENT AGREEMENT FOR RAYMOND J. SKIPTUNIS
On November 7, 2002, the Company entered into an employment agreement
(the "Agreement") with Raymond J. Skiptunis under terms of which Mr.
Skiptunis shall serve as President, Chief Executive Officer and Chief
Financial Officer of the Company. In connection with the Agreement, the
Company cancelled the 500,000 common stock options previously granted
to Mr. Skiptunis on June 26, 2002 and granted Mr. Skiptunis options to
purchase up to 700,000 shares of Common Stock of the Company. The
options were granted pursuant to the Company's 2000 Amended and
Restated Stock Option and Restricted Stock Plan and such options vest
in accordance with the vesting provisions set forth in the Agreement.
In connection with this option cancellation and new option award, the
Company will incur a compensation expense which shall be reflected in
the Company's operating results for the 4th Quarter of Fiscal Year
2002.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion is designed to provide a review of the financial
condition and results of operations of Power Efficiency Corporation (the
"Company"). This discussion should be read in conjunction with the financial
statements and related notes.
Forward-Looking Statements:
This discussion and analysis of financial condition and results of operations,
and other sections of this report, contain forward-looking statements that are
based on management's beliefs, assumptions, current expectations, estimates and
projections about the industrial and commercial motor industry, the economy, and
about the Company itself. Words such as "anticipates," "believes," "estimates,"
"judgment," "expects," "forecasts," "intends," "is likely," "plans," "predicts,"
"projects," variations of such words and similar expressions are intended to
identify such forward-looking statements. These statements are not guarantees of
future performance and involve certain risks, uncertainties and assumptions
("Risk Factors") that are difficult to predict with regard to timing, extent,
likelihood and degree of occurrence. Therefore, actual results and outcomes may
materially differ from what may be expressed, implied or forecasted in such
forward-looking statements.
Risk Factors include, but are not limited to, demand for products and services;
the degree of competition by competitors; changes in tax laws; changes in
prices; levies and assessments; the impact of technological advances and issues;
governmental and regulatory policy changes; the outcomes of pending and future
litigation and contingencies; trends in customer behavior; the ability to raise
capital and maintain financing sources; development of the Company's products;
and changes in the national economy. These are representative of the Risk
Factors that could cause a difference between an ultimate actual outcome and a
preceding forward-looking statement. The Company undertakes no obligation to
update, amend or clarify forward-looking statements, whether as a result of new
information, future events or otherwise.
Results of Operations:
Revenues. Revenues for the three months ended September 30, 2002 was $104,259
compared to $309,122 of revenues for the prior comparable quarter, a decrease of
$204,863. The decrease in revenue was principally attributable to the stagnation
of the economy which delayed purchase orders.
Cost of revenues. Cost of revenues for the three months ended September 30, 2002
was $44,016, or 42% of revenues compared to $174,925, or 57% of revenues for the
three months ended September 30, 2001. The decrease in cost of revenues was due
to purchases of inventory from new sources at lower prices and better
efficiencies in the manufacturing process.
8
Research and development. Research and development expenses were $92,092, or 88%
of revenues, for the three months ended September 30, 2002 as compared to
$83,520, or 27% of revenues, for the three months ended September 30, 2001. This
increase is due to increased R&D activity including independent testing.
Selling, general, manufacturing and administrative. Selling, general,
manufacturing and administrative expenses increased to $434,682 or 417% of
revenues, for the three months ended September 30, 2002 from $382,836 or 124% of
revenues, for the three months ended September 30, 2001. This increase in
expenses was primarily due to professional fees and expenses incurred by the
Company in connection with fund raising activities and the filing of the
Company's amended Exchange Act reports.
As a result, the Company incurred a net loss of $495,326 for the three months
ended September 30, 2002 compared to a loss of $408,438 during the three months
ended September 30, 2001.
Financial Condition, Liquidity, and Capital Resources
Since inception, the Registrant has financed its operations primarily through
the sale of equity securities and using bank borrowings. As of September 30,
2002, the Registrant has received a total of approximately $4,757,261 from
public and private offerings of its equity securities. As of September, 30,
2002, the Registrant had cash and cash equivalents of $781,761.
Cash used in operating activities for the nine months ended September 30, 2002,
was $1,391,047 in 2002, and $1,040,063 in 2001. Cash used in operating
activities in the nine months ended September 30, 2002 reflected a net loss of
$1,370,562. In 2001 for the same period, cash used in operating activities
reflected a net loss of $1,187,790.
The Registrant expects to experience growth in its operating expenses,
particularly in research and development and selling, general and administrative
expenses, for the foreseeable future in order to execute its business strategy.
As a result, the Registrant anticipates that operating expenses, as well as
planned increases in inventory expenditures, will constitute a material use of
any cash resources.
Management believes that its existing cash and cash equivalents are sufficient
to meet the Registrant's anticipated cash needs for the next 6 months. Even
though capital resources are sufficient to satisfy the Registrant's liquidity
requirements, management still intends to seek additional financing through a
line of credit.
Item 3. Control and Procedures
The Chief Executive Officer/Chief Financial Officer of the Company has
concluded, based on his evaluation as of a date within 90 days prior to the date
of the filing of this Report, that the Company's disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports filed or submitted by it under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms, and include controls and procedures designed to ensure that information
required to be disclosed by the Company in such reports is accumulated and
communicated to the Company's management, including the Chief Executive Officer/
Chief Financial Officer to allow timely decisions regarding required disclosure.
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
such evaluation.
9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Following the Company's earlier termination of his employment
agreement, on October 10, 2002, Stephen Shulman, the former President and Chief
Executive Officer of the Company (See Item 5), filed a demand for arbitration
with the American Arbitration Association ("AAA") requesting payments from the
Company aggregating approximately $528,653 pursuant to the provisions of his
employment agreement with the Company. The demand application was deemed
incomplete by the AAA for failure to enclose the appropriate filing fees with
the demand application. As of the date of this filing, the Company has not
received notification from the AAA that the filing fee requirements have been
satisfied by Mr. Shulman. The Company believes that it has meritorious defenses
to these claims.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
On August 12, 2002, the Board of Directors of the Company (the "Board")
replaced Stephen Shulman as President and Chief Executive Officer of the Company
and in his place, the Company appointed Raymond J. Skiptunis to serve as interim
President and Chief Executive Officer.
On September 12, 2002, the Board appointed Steven Strasser, John
Lackland and Anthony Acone to fill the current vacancies on the Board and such
appointments were made effective immediately. In addition, the Board appointed
Mr. Strasser to the office of the Chairman of the Board.
On November 7, 2002, the Company entered into an employment agreement
(the "Agreement") with Raymond J. Skiptunis under terms of which Mr. Skiptunis
shall serve as President, Chief Executive Officer and Chief Financial Officer of
the Company (a copy of the Agreement is attached as Exhibit 10.1). The Agreement
is for a base term of three (3) years (the "Term") and is thereafter renewable
for additional periods of one (1) year unless the Company gives notice to the
contrary not less than ninety (90) days prior the expiration of the Term or any
extension. In accordance with the terms of the Agreement, Mr. Skiptunis' base
salary for 2002 is $240,000 (the "Base Salary"), increasing annually thereafter
in $18,000 increments (the "Salary Increments"). During the first year of the
Agreement, an amount equal to $80,000 of the Base Salary shall be accrued and
paid to Mr. Skiptunis at such time as the net cash provided by operating
activities of the Company is greater than zero for a period of three (3)
consecutive months. Upon satisfying this requirement, Mr. Skiptunis shall be
paid his accrued salary in monthly installments of $10,000 until such time as
Mr. Skiptunis' accrued salary has been paid in full. In the event the Company is
unable to pay a Salary Increment, the Board of Directors of the Company may
elect to defer such payment. In the event of deferment, the Salary Increment
shall continue to be accrued until such time as the Company is financially able
to make such payments. Base Salary is subject to withholding and other
applicable taxes, payable during the term of this Agreement in accordance with
the Company's customary payment practices, but not less frequently than monthly.
10
In addition to Mr. Skiptunis' Base Salary set forth above, the Company
cancelled the 500,000 common stock options previously granted to Mr. Skiptunis
on June 26, 2002 and granted Mr. Skiptunis options to purchase up to 700,000
shares of Common Stock of the Company. The options were granted pursuant to the
Company's 2000 Amended and Restated Stock Option and Restricted Stock Plan and
such options vest in accordance with the vesting provisions set forth in the
Agreement.
Mr. Skiptunis is entitled to such bonus amounts as shall from time to
time be determined by the Company's compensation committee in its sole
discretion, and shall also be entitled to receive a bonus upon the occurrence of
certain triggering events (as set forth in the Agreement) in an amount based
upon the valuation of the Company as of the date of the triggering event, as
calculated in accordance with the Agreement. The Agreement also provides for
certain non-competition and nondisclosure covenants from Mr. Skiptunis..
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following document is filed as an exhibit to this
report on form 10-QSB:
Exhibit No. Document
----------- --------
10.1 Employment by and between Raymond J. Skiptunis
and the Company dated November 7, 2002
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter covered by
this Form 10-QSB.
11
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
POWER EFFICIENCY CORPORATION
Date: November 11, 2002 /s/ Raymond J. Skiptunis
-----------------------------------
Raymond J. Skiptunis
President, Chief Executive Officer
and Chief Financial Officer
12
CERTIFICATION
I, Raymond J. Skiptunis, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Power Efficiency
Corporation.
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 quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly 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-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures 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 quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
(a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 11, 2002
/s/ Raymond J. Skiptunis
------------------------------
Name: Raymond J. Skiptunis
Title: Chief Executive Officer and Chief Financial Officer
Certification
Pursuant to 18 U.S.C.ss.1350, the undersigned officer of Power Efficiency
Corporation (the "Corporation"), hereby certifies, to the best of his knowledge,
that the Corporation's Quarterly Report on Form 10-QSB for the quarter ended
September 30, 2002 (the "Report") fully complies with the requirements of
Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934
and that the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Corporation.
Dated: November 11, 2002
/s/ Raymond J. Skiptunis
-------------------------------
Name: Raymond J. Skiptunis
Title: Chief Executive Officer and Chief Financial Officer
This certification is being furnished solely pursuant to 18 U.S.C ss.1350 and is
not being filed as part of the Report or as a separate disclosure document.
EXHIBIT INDEX
-------------
Exhibit No. Document Location
----------- -------- --------
10.1 Employment Agreement by and between Raymond J. Skiptunis Filed Herewith
and the Company dated November 7, 2002.