10KSB 1 power10k123107.htm Power-Save Energy Company - Form 10-KSB

UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549

FORM 10-KSB



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

For the fiscal year ended December 31, 2007

Commission file number 0-30215

Name of small business issuer in its charter

Utah
Fed ID 87-9369569
(State or other jurisdiction of incorporation or Organization)
(IRS Employer Identification Number)

3940-7 Broad Street, #200, San Luis Obispo, CA
 
93401
 
(Address of principal executive offices)
(Zip Code)
 

Issuer's telephone number: (866) 297-7192

Securities registered under Section 12(b) of the Exchange Act:
None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $.001 par value
(Title of class)


               Indicate by check mark, whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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. Yes [X] No [ ]

                Indicate by check mark , if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained herein and will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB [X]

Revenue for the fiscal year ended December 31, 2007 is $2,309,908 the aggregate market value of the voting stock held by non-affiliates of the registrant based on the closing bid price of such stock as of December 31, 2007 amounted to $5,545,143.

The number of shares outstanding of each of the registrant's classes of common stock as of December 31, 2007 was 27,031,168 shares.




FORM 10-KSB
FISCAL YEAR ENDED DECEMBER 31, 2007
TABLE OF CONTENTS


  
Part I
 
 
    
Page
 
Item 1. Description of Business.
3
 
   
 
Item 2. Description of Property.
3
 
   
 
Item 3. Legal Proceedings.
3
 
   
 
Item 4. Submission of Matters to Vote of Security Holders.
3
 
   
 
 
Part ll
 
 
   
 
Item 5. Market for Common Equity and Related Stockholder Matters.
3-4
 
   
 
Item 6. Management's Discussion and Analysis or Plan of Operation.
5
 
   
 
Item 7. Financial Statements.
6
 
   
 
Item 8. Changes in and Disagreements With Accountants Accounting And Financial Disclosure.
6
 
   
 
Item 8A. Controls and Procedures.
7
 
   
 
Item 8B. Other Information.
7
 
   
 
Part lll
 
   
 
Item 9. Directors, Executive Officers, Promoters, and Control Persons; Compliance with Section 16(a) of the Exchange Act.
7-8
 
   
 
Item 10. Executive Compensation.
9
 
   
 
Item 11. Security Ownership of Certain Beneficial Owners and Management.
9-10
 
   
 
Item 12. Certain Relationships and Related Transactions.
10
 
   
 
Item 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
11
 
   
 
 
Signatures  
11
 



PART 1

Item 1. 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.

Power-Save Energy Co., manufactures, markets, and sells electricity saving devices for homeowners, Power-Save 1200, 3200 and 3400. Power-Save also now markets and sells renewable energy devices, photovoltaic electricity systems, Power-Save Solar and Power-Save Wind Turbine that produce electricity generated from wind energy. The product lines intended to reduce homeowner's electricity consumption, generate renewable energy and overall reduce the consumer's electric utility bill.

Power-Save Energy Co. intends to aggressively market the product lines using television as it main advertisement channel. Power-Save will market the Power-Save product lines utilizing Direct Response Television Commercials played on cable TV across America. Power-Save will retain the services of a full service Call Center to take incoming orders as a result of the TV commercials. Power-Save will utilize PayPal Merchant services to accept payment for items and FedEx to ship products. Power-Save Energy Co. or its contractors will be responsible for warehousing and shipping the product to customer.

The Company has one full time employee, its President, Michael Forster.

Item 2. Description of Property.

The Current principal office of the Company is located at 3940-7 Broad Street, #200, San Luis Obispo, CA 93401.

Item 3. Legal Proceedings.

On or about September 2007, the Company was served with lawsuit from former director/officer Stephen Steeneck in the United States District Court, Southern District of New York (Case No. 07CIV4770 (SCR)), for breach of contract, quantum meruit, and unjust enrichment. Between November 2000 and April 2006, Mr. Steeneck claims the company owes $113,400.00 from loans the defendant made and approximately $500,000.00 in compensation. The Company was unaware of Mr. Steeneck's allegations prior to the commencement of the lawsuit. The company's former Chief Executive Officer Zirk Engelbrecht, on behalf of the Company, has hired counsel to defend the lawsuit which is in the early stages of discovery.

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

                None.

PART II

Item 5. Market for Common Equity and Related Stockholder Matters.


                (a) Market Information

The common stock of this Issuer is now quoted Over the Counter on the Bulletin Board ("OTCBB") (Symbol PWSV). We have one class of securities, Common Voting Equity Shares ("Common Stock"). The Company's Securities may be quoted in the over-the-counter market, but there is presently, and historically, no substantial market for our common stock. Even so, quotations for, and transactions in, the Securities are capable of rapid fluctuations, resulting from the influence of supply and demand on relatively thin volume. There may be buyers at a time when there are no sellers, and sellers when there are no buyers, resulting in significant variations of bid and ask quotations by market-making dealers, attempting to adjust changes in demand and supply. A young



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market is also particularly vulnerable to short selling, sell orders by persons owning no shares of stock, but intending to drive down the market price so as to purchase the shares to be delivered at a price below the price at which the shares were sold short. Based upon standard reporting sources, the following information is provided during the fiscal years 2007 and 2006:

Fiscal 2007 High Low  
March 31, 2007 $2.60 $1.10  
June 30, 2007 $1.95 $.30  
September 30, 2007 $1.01 $.45  
December 31, 2007 $.90 $.35  

Fiscal 2006 High Low  
March 31, 2006 $1.60 $.60  
June 30, 2006 $3.20 $.60  
September 30, 2006 $2.30 $.50  
December 31, 2006 $3.00 $1.40  

The source of this information for fiscal year 2007 and 2006 is trading information as reported by the National Association of Securities Dealers Composite or other qualified inter-dealer Quotation Medium.

               (b) Holders
As of December 31, 2007, there were approximately 290 stockholders of record of the Company's Common Stock. The number does not include beneficial owners who held shares at broker/dealers in "street name"

               (c) Dividends
We have not paid any cash dividends on our Common Stock, and do not anticipate paying cash dividends on our Common Stock in the next year. We anticipate that any income generated in the foreseeable future will be retained for the development and expansion of our business. Future dividend policy is subject to the discretion of the Board of Directors and will depend upon a number of factors, including future earnings, debt service, capital requirements, business conditions, the financial condition of the Company and other factors that the Board of Directors may deem relevant.

               (d) Recent Sales of Unregistered Securities.
During the last two years, the Company sold restricted shares of its $0.001 par value Common Stock without registering the securities under the Securities Act of 1933, as amended.

On September 12, 2006, the Company entered into an Asset Purchase Agreement with Power-Save Energy Corp. (hereinafter "POWER-SAVE"), a Nevada Corporation pursuant to which the Company agreed to issue 75,000,000 shares of common stock (the "Shares") of the company for substantially all the assets of POWER-SAVE. There are no material relationships between the Company or its affiliates and any of the parties of the Asset Purchase Agreement. This transaction closed on September 13, 2006. The acquisition of these shares represented 75,000,000 common shares or approximately 96.7% of the total outstanding stock of the Issuer (the "Majority Shares"). The transaction has been accounted for as a reverse acquisition whereby POWER-SAVE is treated as the acquirer for accounting purposes.

DEBT and SERVICES

As of the date of the issuances set forth above, the average daily high and low bids were unavailable to the Issuer. The Company's Securities may be quoted in the over-the-counter market, but there is presently, and historically, no substantial market for our common stock. This Issuer has determined that, quotations for, and transactions in, the Securities are capable of rapid fluctuations, resulting from the influence of supply and demand on relatively thin volume. There may be buyers at a time when there are no sellers, and sellers when there are no buyers, resulting in significant variations of bid and ask quotations by market-making dealers, attempting to adjust changes in demand and supply. A young market is also particularly vulnerable to short selling, sell orders by persons owning no shares of stock, but intending to drive down the market price so as to purchase the shares to be delivered at a price below the price at which the shares were sold short.



4



Item 6. Management's Discussion and Analysis or Plan of Operation

(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 electricity systems, Power-Save Solar and Power-Save Wind Turbine that produce electricity generated from wind energy. The product lines intended to reduce homeowner's electricity consumption, generate renewable energy and overall reduce the consumer's electric utility bill. Power-Save Energy Co. intends to market quality, tested products and to continue to seek out and offer innovative new energy-saving 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 enhanced product line directly to the public and continue to add value to its brand through aggressive advertisement.

Our financial statements contain the following additional material notes:

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.

(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 we "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.

Revenue for the year ended December 31, 2007 was $2,309,908 compared to $650,692 for the year ended December 31, 2006. This is an increase of $1,265,216 or 255%. The increase was a result of increased sales of the Company's PS1200 energy-savings product for homeowners and the introduction of two new products, the PS 3200 and PS 3400 for light commercial and industrial use.

The cost of sales for the year ended December 31, 2007 was $439,875 compared to $279,984 for the year ended December 31, 2006, an increase of $159,891 or 57.1%. The gross margin for the year ended December 31, 2007 was $1,870,033 or 81% compared to a gross margin of $370,708 or 57% for the year ended December 31, 2006. In 2006, the Company purchased approximately $95,000 of inventory in an asset purchase agreement that was sold at a lower gross margin than products currently being sold which reduced the 2006 gross profit margins. The total gross margin increased by $1,499,325 in 2007, an increase of 404%.



5



Operating expenses comprised of advertising and promotion, sales commissions and other general and administrative expenses were $1,417,137 for the year ended December 31, 2007, an increase of $907,162 over the year ended December 31, 2006.

Advertising and promotion expense was $296,483 for the year ended December 31, 2007 compared to $208,386 for the year ended December 31, 2006, an increase of $88,097 or 42%. Advertising included both television and internet advertising.

Sales commissions for the year ended December 31, 2007 were $655,558 or 28.3% of sales compared to $183,375 or 28.2% of sales for the year ended December 31, 2006.

General and administrative expenses for the year ended December 31, 2007 were $465,096 compared to $120,214 for the year ended December 31, 2006, an increase of $344,882. Professional fees including both legal and accounting fees for the year ended December 31, 2007 were $130,577, compared to $9,250 for the year ended December 31, 2006, an increase of $121,327.

In 2007, Michael Forster, a director and chief executive officer of the Company registered and transfer without consideration 2,859,640 shares of common stock to individuals and entities that were stockholders in PS Corp in which Mr. Forster was the principal executive officer and controlling shareholder. Legal fees for registration of these shares was approximately $25,000. The balance of the legal and accounting fees was related to the cost of being a reporting company for a full year since its reverse merger with Safari Associates. Shipping costs and bank transaction fees related to the sale of the products were $112,194 for the year ended December 31, 2007, compared to $34,324 for the year ended December 31, 2006, an increase of $77,870 or 227%, which is directly related to the increase in revenue. Michael Forster, chief executive officer of the Company received compensation of $60,000 during 2007 for the first time compared to no compensation in 2006. Travel expense in 2007 was $68,644 compared to $19,290 in 2006, an increase of $49,354. The travel was related to trips to manufacturing facilities in the far east and searching for new related products to the Power-Save line. All Other general and administrative expense increased by approximately $17,000 with no one category accounting for more than 2% of the total operating expenses.

In 2007, Federal and state income tax expense were $118,158 after taking into account a benefit of approximately $55,000 for operating losses incurred in previous periods.

Liquidity and Capital Resources
At of December 31, 2007, the current assets exceeded the current liabilities by $444,088. The Company has relied on the income from operations to fund current financing requirements. The Company is currently exploring different methods of raising additional equity capital through a private placement or other means to expand its product line. There is no assurance that the Company will be successful in its efforts to raise additional equity capital. Even if the Company is successful in raising additional capital, there is no assurance that it will be sufficient for the Company to be able to continue as a going concern.

Off Balance Sheet Arrangements

The Company does not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on its financial condition, revenues, and results of operations, liquidity or capital expenditures. Contractual Obligations.

Item 7. Financial Statements.

The information required by this item is incorporated by reference to pages F-1 through F-12 of this annual report on Form 10-KSB.

Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.



6



ITEM 8A. Controls and Procedures

               Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. As of the end of the period covered by this report, our management conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act).

               The Certifying Officers have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report and believe that our disclosure controls and procedures are effective based on the required evaluation. During the period covered by this report, there were no changes in internal controls that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 8B. Other Information

               None.

Part III

Item 9. Directors, Executive Officers, Promoters and Control Persons.


The following table sets forth the names and positions of the current officers and directors of the Company. The Company has not had standing audit, nominating or compensation committees of the Board of Directors or committees performing similar functions. All such applicable functions have been performed by the Board of Directors as a whole.

The directors and executive officers currently serving the Company are as follows:


Name   Age   Position With Company  
Year First Became
  Director or Officer
           
   
Michael Forster 42 Current CEO/President/Chairman
2006
Both
           
   
Adam M. Elmquist 23 Director
2007
Director
           
   
David J. Forster 38 Director
2007
Director

Directors will be elected for one-year terms at the annual stockholders' meeting. Officers will hold their positions at the pleasure of the board of directors, absent any employment agreement, of which none currently exists or is contemplated. There is no arrangement or understanding between any of the directors or officers of the Company and any other person pursuant to which any director or officer was or is to be selected as a director or officer, and there is no arrangement, plan or understanding as to whether non-management shareholders will exercise their voting rights to continue to elect the current directors to the Company's board. There are also no arrangements, agreements or understandings between non-management shareholders and management under which non-management shareholders may directly or indirectly participate in or influence the management of the Company's affairs.

Biographical Information

MICHAEL FORSTER- Current CEO/President/Chairman- Mr. Forster is an experienced entrepreneur in all facets of business. He has organized and executed the start-up of companies. He has worked under contract in both the private and public company sectors to affect corporate and financial restructuring. As well, Mr. Forster has held senior management level positions at a Fortune 500 company. Mr. Forster holds a Bachelor of Science Degree in Aeronautical Engineering from California Polytechnic State University.

ADAM M. ELMQUIST - Director- Adam Matthew Elmquist was born and raised in Central California in 1984. He attended California Polytechnic State University in 2007 where he received his Bachelor of Science Degree in



7



Psychology. He pursued a career in forestry working for the U.S. Forest Service where he worked on a fuels management crew in charge of protecting and managing the Sequoia National Forest.

In 2005, he went on to work in the restaurant industry where he managed daily operations and personnel for Longboards Grill in Pismo Beach, California. For almost two years he aided in the growth and expansion of the very successful business.

In 2007, he left the restaurant industry to work for Family Care Network, a non-profit organization that provides support for children and families with high needs, located in San Luis Obispo, California. He proved to be a valued employee as he fulfilled the difficult role of an In-Home Councilor as well as providing support for the organization by revising multiple Training Manuals. In August of 2007, Adam left Family Care Network and has begun his search for a new venture.

DAVID J. FORSTER - Director - David John Forster was born and raised in Northern California in 1970. He attended California Polytechnic State University in 1988 where he received his Bachelor of Arts Degree in Political Science with a minor in Business.

He pursued a career in politics working for the U.S. Congressional Office of Leon E. Panetta and The Sierra Club where he lobbied within the arena of consumer and environmental lawmaking. David took his experience in government further out into the private sector by working as a Political Analyst for Pacific Resources Engineering and Planning in Burlingame, California. There he proved to be a vital asset lobbying local, state, and federal agencies on public transportation projects and issues.

In 1997 he left politics for a corporate position with Kaiser Permanente Medical Group in Oakland, California. Hired into a 2 year contract he proved to be a valued high-level employee satisfying some diverse needs by demonstrating the ability to assist Labor-Management with reorganizing over 3000 union employees and at the same time resolving sensitive labor issues. In 1999 David was given the opportunity to become a senior level manager for the Kaiser Call Center Project. With this new challenge, David excelled, adding to the Call Centers success by evaluating statistics and making accurate recommendations on the efficiency and financial viability of the overall projects performance and livelihood.

David left Kaiser in 2002 to pursue a life long dream of owning his own restaurant. In April of the same year he opened the doors to Longboards Grill in Pismo Beach, California. For almost 4 years he organized and executed the start-up, creation, and design of the restaurant concept and operation. In October of 2006 David sold his profitable and well-known business.

Involvement in Legal Proceedings

During the past five years, none of the following occurred with respect to the Company's directors or executive officers: (1) no petition under the federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such persons; (2) there has been no petition under the federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer appointed by a court for the business or property of any partnership in which such persons were a general partner at or within two years before the time of such filing, or any corporation or business association of which such persons were executive officers at or within two years before the time of such filing; (3) no such persons were convicted in a criminal proceeding or are a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (4) no such persons were the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of any competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting their involvement in any type of business practice, or in securities or banking or other financial institution activities; and (5) no such persons were found by a court of competent jurisdiction in a civil action by the Securities and Exchange Commission or by the Commodity Futures Trading Commission to have violated any federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.


8



Audit Committee Financial Expert


The Company does not have an audit committee financial expert (as defined in Item 401 of Regulation S-K) serving on its Board of Directors. The Company has not yet employed an audit committee financial expert on its Board due to the inability to attract such a person.

Code of Ethics

The Company has adopted a Code of Ethics and Business Conduct that applies to all of its officers, directors and employees. The Code of Ethics was filed with the 2003 year's annual report as Exhibit 14.1. A copy of the Code of Ethics will be posted on our website at www.power-save.com. Upon request, the Company will provide to any person without charge a copy of its Code of Ethics. Any such request should be made to Attn: Mr. Michael Forster, 3940-7 Broad Street, San Luis Obispo, CA 93401. The Company's telephone number is (866) 297-7192.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers and persons who beneficially own more than ten percent of a registered class of the Company's equity securities to file with the SEC initial reports of ownership and reports of change in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on the review of copies of such reports furnished to the Company and written representations that no other reports were required, the Company believes that during the fiscal year ended December 31, 2007, its executive officers, directors and all persons who own more than ten percent of a registered class of the Company's equity securities complied with all Section 16(a) filing requirements.

Item 10. Executive Compensation

Shown on the table below is information on the annual and long-term compensation for services rendered to the Registrant in all capacities, for the 2007 and 2006 fiscal years, paid by the Registrant to all individuals serving as the Registrant's chief executive officer or acting in a similar capacity during the last three completed fiscal years, regardless of compensation level.


   
Annual Compensation
Long Term Compensation
 
         
Awards
Payouts
 
Name and Principal
Position
Yr.
Salary
($)
Bonus
($)
Other Annual
Compensation
($)
Restricted
Stock
Award(s)
($)
Securities
Underlying
Options/SARs
(#)
LTIP
Payouts
($)
All Other
Compensation
($)
Michael Forster
(CEO &
Chairman)
2006
2007
0
60,000
0
0
0
0
0
0
0
0
0
0
0
0
                 
David Forster
(Director)
2006
2007
N/A
0
N/A
0
N/A
0
N/A
0
N/A
0
N/A
0
N/A
0
                 
Adam Elmquist
(Director)
2006
2007
N/A
0
N/A
0
N/A
0
N/A
0
N/A
0
N/A
0
N/A
0

Director Compensation


The directors of the Registrant have voted on the compensation for their services as directors.

Item 11. Security Ownership of Certain Beneficial Owners and Management.

The following table sets forth, as of the date of this report, the stock ownership of each person known by the Company to be the beneficial owner of five percent or more of the Company's Common Stock, and each



9



executive officer and director individually and all executive officers and directors of the Company as a group. No other class of voting securities is outstanding. Each person is believed to have sole voting and investment power over the shares except as noted.

Title of Class  
Name and Address of
    Beneficial Owner
Amount and Nature (1)
Of Beneficial Owner
Percent
of Class (2)
 
               
Common Michael Forster
3873 Sequoia Drive
San Luis Obispo, CA 93401
20,000,000
73.9%
               
Common Adam M. Elmquist (1)
3873 Sequoia Drive
San Luis Obispo, CA. 93401
0
0%
               
Common David J. Forster (2)
619 Camino Contento
Arroyo Grande, CA. 93420
0
0%
               
               
  Includes all Officers and
Directors of the Company
As a group (1 person)
20,000,000
73.9%

  1 Adam M. Elmquist is a director of the Company.
  2 David J. Forster is a director of the Company.

Item 12. Certain Relationships and Related Transactions

On September 15, 2006, pursuant to the Asset Purchase Agreement with Power-Save Energy Corp., former Chairman and Chief Executive Officer, Zirk Engelbrecht, received 5,000,000 shares of common stock of the company in exchange for relinquishing his control interest in the Company.

Except as set forth above, the Company has not entered into any transaction during the last two years and it has not proposed any transaction to which the Company was or is to be a party, in which any of the following persons had or is to have a direct or indirect material interest:


- Any director or executive officer of the Company;
- Any nominee for election as a director;
- Any security holder named in the "Security Ownership of Certain Beneficial Owners and "management" section above; and
- Any member of the immediate family (including spouse, parents, children, siblings, and in-laws) of any such person.



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Item 13. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) The following documents are filed as part of this report

     
  Index to Financial Statements Page
     
  Report of Independent Registered Public Accountant Accounting Firm F-1
     
  Consolidated Balance Sheet as of December 31, 2007. F-2
     
  Consolidated Statements of Operations for the Years ended December 31, 2007 and 2006. F-3
     
  Consolidated Statements of Stockholders' (Deficit) for the Years ended December 31, 2007 and 2006. F-4
     
  Consolidated Statements of Cash Flows for the Years Ended December 31, 2007 and 2006. F-5
     
  Notes to Financial Statements. F-6-12

(b) Exhibits

Exhibit
Number
Description
 

31.1 Certification by Michael Forster, Chief Executive Officer and Chief Financial Officer, pursuant to Section 302of the Sarbanes- Oxley Act of 2002
32.1 Certification by Michael Forster, Chief Executive Officer and Chief Financial Officer, pursuant to Section 906of the Sarbanes- Oxley Act of 2002



Signatures

Pursuant to the requirements of Section 13 and 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  Power-Save Energy Company  
     
     
  By s/ Michael Forster                                                  
        Michael Forster  
        Chief Executive Officer  
     
     
     
     


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Gruber & Company, LLC
   
Certified Public Accountant
Telephone (636)561-5639
121 Civic Center Drive, Suite 125
Fax (636)561-0735
Lake Saint Louis, Missouri 63367

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
POWER-SAVE ENERGY COMPANY

We have audited the accompanying balance sheets of Power-Save Energy Company as of December 31, 2007, and the related statements of operations, stockholders' equity and cash flows for the years ended December 31, 2007 and 2006 . These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of the Company's internal control over its financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Power-Save Energy Company as of December 31, 2007 and the results of its operations and cash flows for the years ended, December 31, 2007 and 2006 in conformity with accounting principles generally accepted in the United States of America.




Gruber & Company, LLC
Lake Saint Louis, Missouri

March 17, 2008



F-1




Power-Save Energy Company
Balance Sheet
December 31, 2007

     
Assets  
 
   
 
Current Assets  
 
Cash and cash equivalents $
441,989
 
Accounts receivable  
46,423
 
Inventory  
110,868
 
Prepaid expense  
10,000
 
 
 
                         Total current assets  
609,280
 
Equipment, net of accumulated depreciation  
5,689
 
Intangible assets, net of accumulated amortization  
11,120
 
   
 
                         Total assets $
626,089
 
   
 
 
Liabilities and stockholders' equity  
 
   
 
Liabilities  
 
   
 
Current Liabilities  
 
Accounts payable  
47,034
 
Income taxes payable  
118,158
 
   
 
                         Total current liabilities  
165,192
 
   
 
Stockholders' equity  
 
Common stock,$.001 par value, 100,000,000 shares authorized
  27,031,168 and 31,230,295issued and outstanding
 
27,031
 
Additional paid-in-capital  
260,969
 
Retained earnings (deficit)  
172,897
 
   
 
                         Total Stockholders' equity  
460,897
 
   
 
                         Total liabilities and stockholders' equity $
626,089
 
       


See accompanying notes to financial statements
F-2




Power-Save Energy Company
Statements of Operations
For the Years ended December 31, 2007 and 2006

 

2007
 

2006
 
   
   
 
Revenue, net $
2,309,908
  $
650,692
 
   
   
 
Cost of sales            
Merchandise  
400,092
   
255,103
 
Other costs  
39,783
   
24,881
 
   
   
 
Total cost of sales  
439,875
   
279,984
 
   
   
 
Gross margin  
1,870,033
   
370,708
 
   
   
 
Operating expenses  
   
 
Advertising and promotion  
296,483
   
208,386
 
Sales Commissions  
655,558
   
183,375
 
General and administrative  
465,096
   
120,214
 
   
   
 
Total operating costs and expenses  
1,417,137
   
511,975
 
             
Net income (loss) before provision for income taxes  
452,896
   
(141,267
)
             
Provision for income taxes  
118,158
       
   
   
 
Net income (loss) $
334,738
  $
(141,267
)
   
 
   
 
 
Weighted average number of shares outstanding  
27,031,168
   
25,603,702
 
   
 
   
 
 
Net income (loss) per share $
.012
  $
(.006
)
   
 
   
 
 


See accompanying notes to financial statements
F-3




Power-Save Energy Company
Statement of Stockholders' Equity

   
   
   
Additional
Retained
   
 
   
Common Stock
Paid-In
Earnings
   
 
   
Issued
Amount
Capital
(Deficit)
Total
 
                               
Balance January 1, 2006  
70,312,500
   
70,313
   
199,687
   
(20,574
)  
249,426
 
   
   
   
   
   
 
Common stock issued as partial payment
   For the Asset Purchase Agreement
   Between the Company and Advanced
   Builder Energy Technologies, LLC
 
4,687,500
   
4,687
   
13,313
   
--
   
18,000
 
   
   
   
   
   
 
Acquisition of Safari Associates Inc.  
2,537,384
   
2,537
   
2,726,593
   
(3,509,011
)  
(779,881
)
                               
Recapitalization  
--
   
--
   
(3,509,011
)  
3,509,011
   
--
 
                               
Reverse stock split  
(51,691,589
)  
(51,692
)  
51,692
   
--
   
--
 
                               
Conversion of Safari Associates Inc
   Debt to common stock
 
5,384,500
   
5,385
   
774,496
   
--
   
779,881
 
   
   
   
   
   
 
Net loss incurred for the year ended
   December 31, 2006
 
--
   
--
   
--
   
(141,267
)  
(141,267
)
   
   
   
   
   
 
Balance, December 31, 2006  
31,230,295
   
31,230
   
256,770
   
(161,841
)  
126,159
 
   
   
   
   
   
 
Common stock subsequently cancelled
   On conversion of debt
 
(4,199,127
)  
(4,199
)  
4,199
   
--
   
--
 
   
   
   
   
   
 
Net income for the year ended
   December 31, 2007
 
--
   
--
   
--
   
334,738
   
334,738
 
   
   
   
   
   
 
Balance, December 31, 2007  
27,031,168
  $
$27,031
  $
260,969
  $
172,897
  $
460,897
 
                               


See accompanying notes to financial statements
F-4



Power-Save Energy Company
Statements of Cash Flows
For The Years Ended December 31, 2007 and 2006


 

2007
 

2006
 
Cash flows from operating activities  
   
 
Net Income (loss) $
334,738
  $
(141,267
)
Adjustments to reconcile net income (loss) to net cash
  Provided by operating activities
 
   
 
               Depreciation and amortization  
1,830
   
714
 
       Change in operating assets and liabilities  
--
   
--
 
               Increase in accounts receivable  
(26,980
)  
(19,443
)
               Increase in inventory  
(59,906
)  
(13,889
)
               Increase in prepaid expenses  
(10,000
)  
--
 
               Increase (decrease) in accounts payable  
11,844
   
35,190
 
               Increase in income taxes payable  
118,158
   
--
 
 
   
 
Net cash used in operating activities  
369,684
   
(138,695
)
 
   
 
Cash flows from investing activities  
   
 
               Acquisition of equipment  
(4,468
)  
(2,376
)
                                 
Net cash used by investing activities  
(4,468
)  
(2,376
)
             
Cash flows from investing activities  
   
 
              Net Proceeds from line of credit, net  
(13,137
)  
13,137
 
 
   
 
Net cash provided by financing activities  
(13,137
)  
13,137
 
             
Net increase (decrease) in cash and cash equivalents  
352,079
   
(127,934
)
 
   
 
Cash and cash equivalents at beginning of year  
89,910
   
217,844
 
 
   
 
Cash and cash equivalents at end of year $
441,989
  $
89,910
 
 
 
   
 
 
Supplemental disclosure of cash flow information  
   
 
 
   
 
Income taxes paid  
--
   
--
 
 
   
 
Interest paid  
--
   
--
 
 
   
 
Stock issued to retire debt  
--
  $
779,881
 
 
   
 
Stock issued to acquire equipment and inventory  
--
  $
18,000
 


See accompanying notes to financial statements
F-5



Power-Save Energy Company
Notes to Financial Statements

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 electricity saving devices for homeowners. The product is intended to reduce homeowner's electricity consumption and reduce their electric utility bill monthly. The device may also help with surge protection.

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. At December 31, 2007 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.

Intangible Assets

In accordance with SFAS No. 142, "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 SEC Staff Accounting Bulletin No. 101, "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 collectability 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.



F-6



Power-Save Energy Company
Notes to Financial Statments


The Company has adopted Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"), which establishes a fair value method of accounting for stock-based compensation plans.

The provisions of SFAS No. 123 allow companies to either record an expense in the financial statements to reflect the estimated fair value of stock options to employees, or to continue to follow the intrinsic value method set forth in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees", but to disclose on an annual basis the pro-forma effect on net income (loss) and net income (loss) per share had the fair value of the stock options been recorded in the financial statements. SFAS No. 123 was amended by SFAS No., 148, which now requires companies to disclose in interim financial statements the pro-forma effect on net income (loss) and net income (loss) per common share of the estimated fair value of stock options issued to employees.

In accordance with SFAS No. 123, the cost of stock options and warrants issued to non-employees is measured at the grant date based on the fair value of the award. The fair value of the stock-based award is determined using the Black-Scholes option-pricing model. The resulting amount is charged to expenses on the straight-line basis over the period in which the Company expects to receive benefit, which is generally the vesting period.

Pro Forma Financial Disclosure - In accordance with SFAS No. 123, the Company will provide footnote disclosure with respect to stock-based employee compensation. The value of a stock-based award will be determined using the Black-Scholes option-pricing model, whereby compensation cost is the fair value of the award as determined by the pricing model at the grant date or other measurement date. The resulting amount will be charged to expense on the straight-line basis over the period in which the Company expects to receive benefit, which is generally the vesting period.

The Company did not have any stock options outstanding during the period January 1, 2006 through December 31, 2007, accordingly, no pro forma financial disclosure is provided herein.





F-7




Power-Save Energy Company
Notes to Financial Statments

Income Taxes


Income taxes are accounted for in accordance with SFAS 109, 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


Statement of Financial Accounting Standards No. 128, "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 dilutive potential common shares outstanding during the period. The Company did not have any potentially dilutive securities outstanding during the period January 1, 2006 through December 31, 2007. Accordingly, basic and diluted loss per common share is the same for the period January 1, 2006 through December 31, 2007.

On November 28, 2006, a reverse stock split of 3 to 1 was approved by the Company's Board of Directors. All common shares have been adjusted to reflect the 3 to 1 reverse stock split.

Advertising


The costs of advertising, promotion and marketing programs are charged to operations in the calendar year 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.

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.



F-8



Power-Save Energy Company
Notes to Financial Statments


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 Emerging Issues Task Force (EITF) No. 00-2. 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 Statement of Position (SOP) 98-1 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

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Liabilities, including an amendment of FASB Statement No. 115" ("SFAS No. 159"). SFAS No. 159 permits entities to choose, at specified election dates, to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Unrealized gains and losses shall be reported on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of SFAS No. 157 "Fair Value Measurements" ("SFAS No. 157"). The Company is currently assessing the impact that SFAS No. 159 will have on its financial statements.

In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements", which is an amendment of Accounting Research Bulletin ("ARB") No. 51. This statement clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This statement changes the way the consolidated income statement is presented, thus requiring consolidated net income to be reported at amounts that include the amounts attributable to both parent and the noncontrolling interest. This statement is effective for the fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Based on current conditions, the Company does not expect the adoption of SFAS 160 to have a significant impact on its results of operations or financial position.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combinations." This statement replaces FASB Statement No. 141, "Business Combinations." This statement retains the fundamental requirements in SFAS 141 that the acquisition method of accounting (which SFAS 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This statement defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control. This statement requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the statement. This statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company does not expect the adoption of SFAS 160 to have a significant impact on its results of operations or financial position.



F-9



Power-Save Energy Company
Notes to Financial Statments


Note 4 - Commitments and Contingencies

The Company entered into a Non-Exclusive Distributor Agreement, which allows the Company to purchase at preferred pricing and market a certain patented electricity saving device. The Agreement has an initial term of one year. At the end of the one year term, the Agreement will continue until terminated by either party with at least thirty days prior notice. The Agreement requires the Company to purchase $7,500 of product in every three month period during the first two years and then increasing to $15,000 in every three month period for the remaining term of the Agreement. As of December 31, 2006, this agreement is terminated.

On or about September 2007, the Company was served with lawsuit from a former director/officer in the United States District Court, Southern District of New York (Case No. 07CIV4770 (SCR)), for breach of contract, quantum meruit, and unjust enrichment. Between November 2000 and April 2006, the former director / officer claims the company owes $113,400.00 from loans the defendant made and approximately $500,000.00 in compensation. The Company was unaware of the allegations prior to the commencement of the lawsuit. The company's former Chief Executive Officer, on behalf of the Company, has hired counsel to defend the lawsuit which is in the early stages of discovery.

Note 5 - Note Payable

The Company has negotiated a line of credit with a bank in the amount of $71,000 at December 31, 2007. The line of credit bears interest at 12.00%. The balance due on the line of credit at December 31, 2007 is $0.

Note 6 - Income Taxes

The provision for income taxes consists of the following


   
2007
   
2006
Federal income tax $
92,475
  $
-
State income tax  
25,683
   
-
   
   
Total $
118,158
  $
-
   
   
Income taxes based on statutory tax rates are as follows  
   
   
   
Federal income taxes $
153,338
  $
-
State income tax  
36,491
   
-
Benefit of Federal and State NOL carry forward  
(68,609
)  
-
Permanent timing differences  
(3,062
)  
-
   
   
Total $
118,158
  $
-



F-10



Power-Save Energy Company
Notes to Financial Statments


Note 7 - Intangible Assets


Intangible assets consist of those acquired in the asset purchase agreement with Advanced Builder Energy Technologies LLC (ABET), and include the ABET logo, the UL listing number, rights, licenses, designs and approvals, the customer lists, and any and all manufacturing agreements acquired. A summary of intangible assets as of December 31, 2007 is as follows:

  Intangible assets, at cost $
12,510
 
  Less - amortization allowed  
1,390
 
     
 
    $
11,120
 
         

Note 8 - Common Stock

On November 7, 2005, the Company issued 31,250,000 shares of common stock in a private placement offering that resulted in gross proceeds of $145,000.

On December 8, 2005, the Company issued 39,062,500 shares of common stock in a private placement offering that resulted in gross proceeds of $125,000.

On May 6, 2006, the Company issued 4,687,500 shares of common stock as partial payment for the Asset Purchase Agreement between the Company and Advanced Builder Energy Technologies, LLC. The value was determined using the average price of stock issued for cash in the same period.

On September 10, 2006, the Company issued 2,537.384 shares of Common stock in the reverse acquisition of Safari Associates, Inc.

On November 28, 2006, the Company completed a three for 1 split reverse split of outstanding common stock.

On December 31, 2006, the Company converted debt in the amount of $779,881 into 5,384,500 shares of common stock. Subsequently, 4,199,127 of those shares were cancelled.

Note 9 - Asset Purchase Agreement

On April 19, 2006, the Company entered into an asset purchase agreement with Advanced Builder Energy Technologies, LLC ("ABET") to purchase substantially all of the assets of ABET used in the manufacturing, sale and distribution of certain of its proprietary products. The purchase price for the tangible and intangible assets was $90,000 payable in cash, and the issuance of 150,000 shares of the Company's common stock.

The purchase was allocated as follows:

  Inventory
$
95,490
 
  Intangible assets  
12,510
 
     
 
    $
108,000
 
         

The inventory consists of power conditioning units built by a supplier in China for a competitor that is no longer in business. These units are labeled with a competitors name and UL information and will have to be relabeled in accordance with UL rules. 0170


F-11


Power-Save Energy Company
Notes to Financial Statments


Note 10 - Other Informative Disclosure

On October 1, 2005, the stockholders of the Company completed a share agreement transaction, whereby the stockholders exchanged 100% of the issued and outstanding shares of the Company's common stock for 10,000,000 shares of Tabatha V, Inc. The result would have been that the Company would become a wholly owned subsidiary of Tabatha V, Inc. with the transaction being accounted for as a reverse merger in which the Company would be the acquirer, and would adopt the capital structure of Tabitha V, Inc. The transaction was subsequently voided.

Note 11 - Acquisition

On September 12, 2006, the Company entered into an Asset Purchase Agreement with Power-Save Energy Corp., pursuant to which the Company agreed to issue 75,000,000 shares of common stock. This transaction has been accounted for as a recapitalization effected through a reverse merger, such that Power-Save Energy Corp. will be treated as the "acquiring" company for financial reporting purposes. In connection with the acquisition, The Company assumed liabilities in the amount of $779,881. On December 31, 2006, the Company issued 5,384,500 shares of common stock to convert these liabilities.






F-12