United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

or

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

For the transition period from __________ to __________.

Commission file number 000-52258

PROPER POWER AND ENERGY, INC.

(Name of small business issuer in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

59-3681572

(I.R.S. Employer Identification No.)

405 South Dale Mabry Highway #360, Tampa, Florida 33609

 (Address of principal executive offices and Zip Code)

Registrant’s telephone number, including area code:  (904) 371-2445

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 preceding 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.  (x) Yes (__) No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   (__) Yes (__) 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.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer (__)    Accelerated filer (__)     Non-accelerated filer (__)   Smaller reporting company (_x_)                                                 (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes (__) No ( x ). The number of shares of the issuer’s common stock, par value $.0001 per share, outstanding as of November 4, 2009 was 67,500,000.

TABLE OF CONTENTS

	Page
Part I.  Financial Information	3
Item 1.  Financial Statements.	3
Balance Sheets for the periods ending September 30, 2009 (unaudited) and December 31, 2008 (audited).	3
Statements of Operations for the three and nine month periods ending September 30, 2009 and 2008 (unaudited).	4
Statements of Cash Flows for the nine month periods ending September 30, 2009 and 2008 (unaudited).	5
Notes to Financial Statements	6
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.	14
Item 3.  Quantitative and Qualitative Disclosures About Market Risk.	15
Item 4.  Controls and Procedures.	16
Item 4T.  Controls and Procedures.	16
Part II.  Other Information	16
Item 1.  Legal Proceedings.	16
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.	16
Item 3.  Defaults Upon Senior Securities.	17
Item 4.  Submission of Matters to a Vote of Security Holders.	17
Item 5.  Other Information.	17
Item 6.  Exhibits	17
Signatures	18

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Part I.  Financial Information

Item 1.  Financial Statements.

Proper Power and Energy, Inc.
Balance Sheet
					September 30,				December 31,
					2009				2008
					(unaudited)				(audited)
Assets
Current assets
	Cash			$	9,617			$	2,038
	Accounts receivable				-				500
	Prepaid expenses				-				129
Total current assets					9,617				2,667
Property & equipment, net of accumulated
	depreciation of  $900 and $0, respectively				36,886				-
Intangible property, net of accumulated
	amortization of  $1,667 and $0, respectively				198,333				-
Total Assets				$	244,836			$	2,667
Liabilities and Stockholders' Equity
Current liabilities
	Accounts payable and accrued expenses			$	16,397			$	2,600
	Demand notes payable				115,600				-
Total current liabilities					131,997				2,600
Notes payable, current					200,000				-
Notes payable to Shareholder					578,154				-
Total liabilities					910,151			#	2,600
Stockholders' Equity
	Common Stock, $.0001 par value,  500,000,000 shares
	authorized; 67,500,000 and 67,500,000 shares
	issued and outstanding, respectively				6,750				135
	Additional paid-in capital				96,193				48,966
	Accumulated Deficit				(768,258)				(49,034)
Total stockholders' equity					(665,315)				67
Total Liabilities and Stockholders' Equity				$	244,836			$	2,667
The accompanying notes are an integral part of these financial statements.

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Proper Power and Energy, Inc.
Statement of Operations
(unaudited)
						For the Three Months Ended																For the Nine Months Ended
						September 30,																September 30,
								2009								2008								2009								2008
Revenues						$		-						$		750						$		-						$		2,450
Operating expenses:
	Advertising							3,209								-								5,331								-
	Selling expenses							2,441								-								7,378								-
	Consulting							34,250								-								673,000								255
	Professional fees							9,605								2,000								19,175								5,000
	Office expenses							102								310								1,773								1,418
	Amortization and Depreciation							2,150								-								2,567								-
	Interest expenses							8,657								-								10,000								-
								60,414								2,310								719,224								6,673
Net income  (loss)						$		(60,414)						$		(1,560)						$		(719,224)						$		(4,223)
Earnings (loss) per share, primary
	and dilutive						$		(0.00)						$		(0.00)						$		(0.01)						$		(0.00)
Weighted average shares outstanding primary
	and dilutive							67,500,000								67,500,000								67,500,000								67,500,000
The accompanying notes are an integral part of these financial statements.

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Proper Power and Energy, Inc.
Statement of Cash Flows
(unaudited)
				For the Nine Months Ended
				September 30,
					2009				2008
Cash Flows from Operating Activities:
	Net (loss) income			$	(719,224)			$	(4,223)
	Adjustment to reconcile Net Income to net
	cash provided by operations:
	Depreciation and amortization				2,567				-
	Changes in assets and liabilities:
	Accounts receivable				500
	Prepaid expenses				129
	Accounts payable and accrued expenses				13,797				(3,000)
	Net Cash (Used) Provided by Operating Activities				(702,231)				(7,223)
Cash Flows from Investing Activities:
	Purchase of property and equipment				(37,786)				-
	Net Cash (Used) by Operating Activities				(37,786)				-
Cash Flows from Financing Activities:
	Proceeds from issuance of options				53,842				-
	Proceeds from issuance of note payable				115,600				-
	Proceeds from stockholder advances				590,000
	Repayment of stockholder advances				(11,846)				7,698
	Net Cash (Used) Provided by Operating Activities				747,596				7,698
Net decrease in Cash					7,579				475
Cash at beginning of period					2,038				1,393
Cash at end of period				$	9,617			$	1,868
Supplemental cash flow information:
	Interest paid			$	1,695			$	-
	Taxes paid			$	-			$	-
The accompanying notes are an integral part of these financial statements.

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PROPER POWER AND ENERGY, INC.

Notes to Financial Statements

September 30, 2009 and 2008

(Unaudited)

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

Organization

Proper Power and Energy, Inc (“PPWE”, “The Company”) was incorporated January 1, 2000 in the State of Delaware.    Prior to the first quarter of 2009, the Company operated under the name Ivecon, Inc. (“IVEO”, “Ivecon”) as a developer of a secure (encrypted) instant messenger with integrated desktop search, media center, and commerce system. The Company also provided computer support for designing websites.

During the first quarter of 2009 the Company had a change in control.  On March 5, 2009 Ivecon entered into a material definitive agreement with Belmont Partners, LLC by which Belmont Partners LLC acquired one million (1,000,000), pre-forward split (50:1) restricted common stock shares of the Company in exchange for $157,500 in cash in a private equity transaction with the then majority shareholder.   Following the transaction, Belmont Partners, LLC became the majority shareholder with control of 74.07% of the Company’s outstanding capital stock.  At approximately this same time, the Company changed stock transfer agents to PacWest Transfer, LLC of Las Vegas, Nevada.

   

Additionally occurring on March 5, 2009, in a separate private equity transaction, Joseph Abdo acquired from Belmont Partners LLC the control block of stock in the Company consisting of one million (1,000,000) ), pre-forward split (50:1) restricted common stock shares of the Company for $250,000.  

In May 2009, the new management resulting from the change in control, changed the name from Ivecon, Inc. to Proper Power and Energy, Inc., and changed the operating direction to an oil and gas exploration and production company. The organization is committed to utilizing a very dynamic system of research and testing, and as a result of this extensive research and testing, have selected several sites with very good to excellent potential for productivity.

Nature of the Business

To further understand our strategy, it is important to know the difference between developmental and exploratory drilling. Exploratory wells are attempts to find new oil and gas fields, whereas development wells expand or more fully tap into a known oil or gas reservoirs.

We have procured a scientific engineer approach, termed radiometric.  All of our prospects are classified as exploratory in nature, but they are not "wildcat" (oil wells drilled in areas not known to be oil fields) since we use radiometric data advantage, a technology based methodology.  Our prospects are separated geographically from existing oil and gas production, but they are not always separated geologically or radiologically. Therein lays the difference from "wildcatting."

The economics of exploration with radiometrics are compelling. We are reducing the finding costs and everything associated with the actual drilling and the completion risks. While there is a higher drilling risk associated with an exploratory well than with a development well, the reward potential with a successful exploratory well far exceeds the upside of any developmental well.  In time, our technology may become the industry standard.

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NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

All adjustments consisting of normal recurring adjustments necessary for a fair statement of (a) the result of operations for the three and nine month periods ended September 30, 2009, 2008; (b) the financial position at September 30, 2009, and (c) cash flows for the nine month periods ended September 30, 2009 and 2009, have been made.

The Company prepares its financial statements in conformity with generally accepted accounting principles in the United States of America. These principals require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results could differ from those estimates.

The unaudited financial statement and notes are presented as permitted by Form 10-Q. Accordingly, certain information and note disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted. The accompanying unaudited financial statements should be read in conjunction with the financial statements for the years ended December 31, 2008 and 2007 and notes thereto in the Company’s 10-K annual report, filed with the Securities and Exchange Commission.  Operating results for the three and nine months ended September 30, 2009 and 2008 is not necessarily indicative of the results that may be expected for the entire year.

Fair Value Information

The Company’s balance sheets include the following financial instruments: cash, accounts receivable, accrued liabilities and amounts due to stockholder. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.

Cash

The majority of cash is maintained with a major financial institution in the United States.  Deposits with this bank may exceed the amount of insurance provided on such deposits.  Generally, these deposits may be redeemed on demand and, therefore, bear minimal risk.  The Company considers all highly liquid investments purchased with an original maturity of six months or less to be cash equivalents.

Property and Equipment

Equipment is stated at cost.  Depreciation is computed by the straight-line method over estimated useful lives (seven years for equipment).  The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation and amortization period or the unamortized balance is warranted. Based upon its most recent analysis, the Company believes that no impairment of equipment existed.

Intangibles and Long-Lived Assets

The Company has been in the exploration for oil and gas since March 2009 and has not yet realized any revenues from its planned operations.  It is primarily engaged in the acquisition and exploration of mining properties. Mineral property exploration costs are to be expensed as incurred. Mineral property (Land Leases) acquisition costs are initially capitalized when incurred.  We amortize intangibles on a straight-line basis over periods twenty years.

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Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable.  When required impairment losses on assets to be held and used are recognized based on the fair value of the asset.  The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required.  If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset.  When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets.  We did not recognize any impairment losses for any periods presented.

Revenue Recognition

The Company currently has not generated any revenue from the exploration or production from oil and gas drilling.  The Company will recognize revenue on the realization of determinable natural resource reserves, based on the production and recovery of such assets.

Income Taxes

The Company accounts for income taxes under the liability method.  Deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.

Advertising

The costs of advertising are expensed as incurred.  Advertising expense was $3,209, $0, $5,331 and $0 for the three and nine months ended September 30, 2009 and 2008, respectively.

Earnings (Loss) per Share

Basic earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares outstanding during the year. Diluted earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares. There are no share equivalents and, thus, anti-dilution issues are not applicable.

Subsequent Events

These interim condensed financial statements were approved by management and were issued on November 4, 2009.  Subsequent events have been evaluated through this date.

NOTE 3 –  GOING CONCERN

The Company’s business plan is to acquire, explore and develop potential oil and gas producing properties. The Company has not determined whether its land leases contain oil and gas reserves that are economically recoverable.

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business.  The Company has never generated revenues from oil and gas production since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future.  At September 30, 2009 the Company has limited cash resources and will likely require new financing, either through issuing shares or debt, to continue the development of its business.  Management intends to offer additional common stock; however, there can be no assurance that management will be successful in raising the funds necessary to maintain operations, or that a self-supporting level of operations will ever be achieved. The likely outcome of these future events is indeterminable.

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The continuation of the Company as a going concern is dependent upon the ability of the Company to determine the existence of economically recoverable reserves in its resource properties, confirmation of the Company’s interests in the underlying properties, obtain necessary financing and then profitable operations.  As of September 30, 2009, the Company has never generated any revenues from oil and gas exploration and has accumulated losses of $768,258 since inception.  These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

NOTE 4 – PROPERTY AND EQUIPMENT:

Property and equipment consist of the following at September 30, 2009 and December 31, 2008:

		September 30, 2009				December 31, 2008
Seismic Equipment		$	37,786			$	-
Less: Accumulated Depreciation			900				-
		$	36,886			$	-

 Depreciation expense on equipment for the three and nine month periods ending September 30, 2009 and 2008 was $900, $0, $900 and $0, respectively.

NOTE 5 – ACCOUNTING PRONOUNCEMENTS

We have reviewed accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. We believe that the following impending standards may have an impact on our future filings.  The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

In June 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-01, Topic 105 — Generally Accepted Accounting Principles — amendments based on Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. This ASU reflected the issuance of FASB Statement No. 168. This Accounting Standards Update amends the FASB Accounting Standards Codification for the issuance of FASB Statement No. 168, The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles. This Accounting Standards Update includes Statement 168 in its entirety, including the accounting standards update instructions contained in Appendix B of the Statement. The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. The Codification is effective for interim and annual periods ending after September 15, 2009, and as of the effective date, all existing accounting standard documents will be superseded. The Codification is effective for us in the third quarter of 2009, and accordingly, our Quarterly Report on Form 10-Q for the quarter ending September 30, 2009 and all subsequent public filings will reference the Codification as the sole source of authoritative literature.

In June 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-02, Omnibus Update—Amendments to Various Topics for Technical Corrections. This omnibus ASU detailed amendments to various topics for technical corrections. The adoption of ASU 2009-02 will not have a material impact on our condensed financial statements.

In August 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-03, SEC Update — Amendments to Various Topics Containing SEC Staff Accounting Bulletins. This ASU updated cross-references to Codification text. The adoption of ASU 2009-03 will not have a material impact on our condensed financial statements.

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In August 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-04, Accounting for Redeemable Equity Instruments — Amendment to Section 480-10-S99. This ASU represents an update to Section 480-10-S99, Distinguishing Liabilities from Equity, per Emerging Issues Task Force Topic D-98, “Classification and Measurement of Redeemable Securities.” The adoption of ASU 2009-04 will not have a material impact on our condensed financial statements.

In August 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-05, Fair Value Measurements and Disclosures (Topic 820) — Measuring Liabilities at Fair Value. This Accounting Standards Update amends Subtopic 820-10, Fair Value Measurements and Disclosures - Overall, to provide guidance on the fair value measurement of liabilities. The adoption of ASU 2009-05 is not expected to have a material impact on our condensed financial statements.

In September 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-06, Implementation Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Nonpublic Entities. This Accounting Standards Update provides additional implementation guidance on accounting for uncertainty in income taxes and eliminates the disclosures required by paragraph 740-10-50-15(a) through (b) for nonpublic entities. The adoption of ASU 2009-06 will not have material impact on our condensed financial statements.

In September 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-07, Technical Corrections to SEC Paragraphs. This Accounting Standards Update corrected SEC paragraphs in response to comment letters. The adoption of ASU 2009-07 will not have material impact on our condensed financial statements.

In September 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-08, Earnings Per Share Amendments to Section 260-10-S99. This Codification Update represents technical corrections to Topic 260-10-S99, Earnings per Share, based on EITF Topic D-53, Computation of Earnings Per Share for a Period that Includes a Redemption or an Induced Conversion of a Portion of a Class of Preferred Stock and EITF Topic D-42, The Effect of the Calculation of Earnings per Share for the Redemption or Induced Conversion of Preferred Stock. The adoption of ASU 2009-08 will not have material impact on our condensed financial statements.

In September 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-09, Accounting for Investments-Equity Method and Joint Ventures and Accounting for Equity-Based Payments to Non-Employees. This Accounting Standards Update represents a correction to Section 323-10-S99-4, Accounting by an Investor for Stock-Based Compensation Granted to Employees of an Equity Method Investee. Section 323-10-S99-4 was originally entered into the Codification incorrectly. The adoption of ASU 2009-09 will not have material impact on our condensed financial statements.

In September 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-10, Financial Services-Brokers and Dealers: Investments-Other, Amendment to Subtopic 940-325. This Accounting Standards Update codifies the Observer comment in paragraph 17 of EITF 02-3, Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management. The adoption of ASU 2009-10 will not have material impact on our condensed financial statements.

In September 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-11, Extractive Activities-Oil and Gas, Amendment to Section 932-10-S99. This Accounting Standards Update represents a technical correction to the SEC Observer comment in EITF 90-22, Accounting for Gas-Balancing Arrangements. The adoption of ASU 2009-11 will not have material impact on our condensed financial statements.

In September 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-12, Fair Value Measurements and Disclosures (Topic 820), Investments in Certain Entities that Calculate Net Asset Value per Share (or Its Equivalent). This Accounting Standards Update amends Subtopic 820-10, Fair Value Measurements and Disclosures Overall, to provide guidance on the fair value measurement of investments in certain entities that calculate net asset value per share (or its equivalent). The adoption of ASU 2009-12 will not have material impact on our condensed financial statements.

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NOTE 6 – INTANGIBLE ASSETS

The Company entered into a land lease, in the amount of $200,000, secured by a promissory note.   The land has been identified for future drilling.  The Company is currently amortizing the lease over 40 years, at an annual rate of $5,000.  The Company will re-assess the amortization and any impairment to the property upon further testing and production estimates.  Amortization expense for the three and nine months ended September 30, 2009 and 2008 was $1,250, $0, $1,667 and $0, respectively.

NOTE 7 – NOTES PAYABLE

The Company entered into an agreement with an unrelated company for the purchase of a land lease, in the amount of $200,000.   The promissory note is interest bearing (6%) and payable in monthly installments based on a 240 month amortization of the debt.   Per the agreement, payments have been deferred for the first 24 months and the note has a balloon provision for payment in full on May 30, 2011, including any accrued and unpaid interest.

The company received advances from an unrelated party in the amount of $115,600.  The advances are a demand note and bear interest at 6%.  

NOTE 8 – INCOME TAXES

The Company has not recognized an income tax benefit for the current quarter and year to date, based on uncertainties concerning its ability to generate taxable income in future periods.  The tax benefit for the current period presented is offset by a valuation allowance (100%) established against deferred tax assets arising from operating losses and other temporary differences, the realization of which could not be considered more likely than not.  In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not.  As of December 31, 2008, the Company incurred losses of approximately $49,000. 

NOTE 9 – EQUITY

Forward Stock-Split

On April 21, 2009, the Company filed with the Delaware Secretary of State, a Certificate of Amendment to its Certificate of Incorporation which increase the number of authorized shares of common stock to 500,000,000 with a par value of $.0001 per share and which followers split all issued and outstanding shares of common stock on a 50-for-1 ratio.

The fifty for one forward stock split each shareholder received forty nine additional shares for every share they owned.  All periods presented have been adjusted for the forward stock-split, retroactive to the periods presented, for the purpose of comparability.  

The Company has entered into consulting agreements for the purposes of raising capital investments.  The consulting firms will make strategic introductions to funding groups, investment banking firms, and/or other sources interested in furthering the business of PPWE.  In the event that a private/public financing transaction is arranged and successfully implemented using a source first introduced to the Company by the consulting firm in the next 24 months, the consulting firm shall be entitled to receive an advisory fee at closing equal to 10% of the gross proceeds received by the Company.  

Options and Warrants

During the nine month period ended September 30, 2009, the Company issued 100,000 options, with an exercise price of $2, to a current shareholder for $26,658.

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The Company issued an additional 100,000, with exercise prices of $1.50 to $2.00 per share, to certain service providers for work performed.   Based on the fair market stock price at the date of the agreement compared to the exercise price, with consideration of the length of time and the stock price volatility, there was no recognition of compensation expense, since the option price exceeded the current valuation of the option.

						Weighted Average				Remaining
		Options		Options		Intrinsic		Exercise		Contract
		Outstanding		Vested		Value		Price		Term
Options, December 31, 2007		-		-		-		-
Granted		-		-
Exercised		-		-
Forfeited		-		-
Options, December 31, 2008		-		-
Granted		200,000		200,000		$           -		$       1.88		3 years
Exercised		-		-
Forfeited		-		-
Options, September 30, 2009		200,000		200,000
Assumptions
Weighted Average:
Dividend rate		0.0%
Risk-free interest rate		1.340%
Expected lives (years)		2.0
Expected price volatility		35.6%
Forfeiture Rate		0.0%

NOTE 10 – RELATED PARTY TRANSACTIONS

 

During 2009 the majority shareholder transferred ownership of common stock in settlement of amounts due to consultants, in the amount of $590,000, valued at the shares fair market trading value at the time of settlement.  As of September 30, 2009 the balance due to the majority shareholder is $578,154.  The use of shares was made for operating cash requirements.  The amount due to the shareholder’s interest bearing at 5% per annum with no repayment terms and the amount is payable upon demand.

The Company has limited needs for office space and is currently performing administrative tasks from offices provided by related parties as needed and at no charge.  The current arrangements are temporary and the Company is actively seeking a facility to occupy upon funding of their plan of operations.

The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.

NOTE 11 –  CONTINGENCIES

From time to time the Company may be a party to litigation matters involving claims against the Company.  Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.

NOTE 12 –  SUBSEQUENT EVENTS

In October 2009 the Company commenced negotiations with Energy Management Corporation (“EMC”), an unrelated entity, concerning the potential acquisition of producing shallow petroleum wells located near the Abilene

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basin in Central Texas. The company would acquire a 51% controlling interest in the projects covering two separate fields.

The fields contain a total of 14-20 potential producing and feeder wells. The fields have been in producing mode for the better part of 20 years, yielding low to moderate yields. The local operator and EMC believe that daily production can be increased by drilling one additional well. The fields are in minimal production mode at the present time and require moderate fit-up and piping to return to maximum production, according to EMC personnel.

Independent reserve reports confirm a minimum reserve of 270-300 thousand barrels of oil, with some geological reports revealing as high as 1 million barrels.  PPWE’s management believe this to be a great opportunity to enter into the producing wells aspect of the oil and gas exploration and production industry, before launching deeper well drilling projects in Utah.

The company will continue negotiating deal points for the acquisition, which may include the purchase of one or both of the two available fields.   As of November 4, 2009 the contract for the acquisition has not been finalized.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Note Regarding Forward Looking Statements.

This quarterly report on Form 10-Q of Proper Power and Energy, Inc. for the period ended September 30, 2009 contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby.  To the extent that such statements are not recitations of historical fact, such statements constitute forward-looking statements which, by definition, involve risks and uncertainties. In particular, statements under the Sections; Description of Business, Management's Discussion and Analysis of Financial Condition and Results of Operations contain forward-looking statements. Where, in any forward-looking statement, the Company expresses an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished.

The following are factors that could cause actual results or events to differ materially from those anticipated, and include but are not limited to: general economic, financial and business conditions; changes in and compliance with governmental regulations; changes in tax laws; and the costs and effects of legal proceedings.

You should not rely on forward-looking statements in this quarterly report. This quarterly report contains forward-looking statements that involve risks and uncertainties. We use words such as "anticipates," "believes," "plans," "expects," "future," "intends," and similar expressions to identify these forward-looking statements. Prospective investors should not place undue reliance on these forward-looking statements, which apply only as of the date of this annual report. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by Proper Power and Energy, Inc. For example, a few of the uncertainties that could affect the accuracy of forward-looking statements include:

 

(a)

an abrupt economic change resulting in an unexpected downturn in demand;

(b)

governmental restrictions or excessive taxes on our products;

(c)

over-abundance of companies supplying computer products and services;

(d)

economic resources to support the retail promotion of new products and services;

(e)

expansion plans, access to potential clients, and advances in technology; and

(f)

lack of working capital that could hinder the promotion and distribution of products and services to a broader based business and retail population.

Financial information provided in this Form 10-Q, for periods subsequent to December 31, 2008, is preliminary and remains subject to audit.. As such, this information is not final or complete, and remains subject to change, possibly materially.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following management's discussion, analysis of financial condition should be read in conjunction with our financial statements and notes thereto contained elsewhere in this report.

Results of Operations

The Company had $0, $750, $0, $2,450 in revenue for the three and nine month periods ended September 30, 2009 and 2008, respectively.   The Company has not generated any revenue from oil and gas exploration since changing the operating business.

Operating expenses were $60,414, $2,310, $719,224, and $6,673 for the three and nine month periods ended September 30, 2009 and 2008, respectively.  Consulting expenses increased approximately $673,000, due to costs incurred for engineering studies, marketing, and investor relations and public relations.  Additional increases to the operating expenses were related to the maintenance of the corporate entity, primarily accounting and legal fees. It is

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anticipated that future expenditure levels may increase as the Company intends to fully comply with its periodic reporting requirements.

  

The Company expenses all costs associated with the exploration of gas and oil.  The Company does not expect to generate any significant increases in revenue to cover the operating expenses.   The Company may incur significant operating expenses in the fulfillment of the obligations of a reporting company under the Securities Exchange Act of 1934 unless and until such time that the Company begins meaningful operations.

Liquidity and Capital Resources

As of September 30, 2009 our cash increased, due mostly to the loans the Company received by its majority shareholder.

Due to the change in control that occurred with the Company during the first quarter of 2009, management has effected a change in business operations commencing in the second calendar quarter 2009.  

Our Plan of Operation for the next twelve months is to raise capital to implement our strategy. We do not have the necessary cash and revenue to satisfy our cash requirements for the next twelve months. We anticipate that we will use the funds raised in this offering and revenues generated to fund the hiring of employees, equipment purchases, office improvements, and marketing activities and working capital. We cannot guarantee that additional funding will be available on favorable terms, if at all. If adequate funds are not available, then we may not be able to expand our operations. If adequate funds are not available, we believe that our officers and directors will contribute funds to pay for some of our expenses. However, we have not made any arrangements or agreements with our officers and directors regarding such advancement of funds. We do not know whether we will issue stock for the loans or whether we will merely prepare and sign promissory notes. If we are forced to seek funds from our officers or directors, we will negotiate the specific terms and conditions of such loan when made, if ever.

The implementation of our business strategy is estimated to take approximately twelve (12) months. Once we are able to secure funding, implementation will begin immediately.

Expected purchases or sale of plant and significant equipment

Expenditures are planned based upon our abilities to fully fund our plan of operations.

Off-Balance Sheet Arrangements

We have made no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Results of Operations and Critical Accounting Policies and Estimates

The results of operations are based on preparation of financial statements in conformity with accounting principles generally accepted in the United States.  The preparation of financial statements requires management to select accounting policies for critical accounting areas as well as estimates and assumptions that affect the amounts reported in the financial statements.  The Company’s accounting policies are more fully described in Note 2 to the Notes of Financial Statements and in the Company’s annual financial statements filed with Form 10-K.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

We are a Smaller Reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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Item 4.  Controls and Procedures.

Item 4T.  Controls and Procedures.

(a)   

Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

With respect to the period ending September 30, 2009, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934.  

Based upon our evaluation regarding the period ending September 30, 2009, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, has concluded that its disclosure controls and procedures were not effective due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review.  Through the use of external consultants and the review process, management believes that the financial statements and other information presented herewith are materially correct.  

The Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.  However, the Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that its disclosure controls and procedures will prevent all error and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

(b)

Changes in Internal Controls.

There have been no changes in the Company’s internal control over financial reporting during the period ended September 30, 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

Part II.  Other Information

Item 1.  Legal Proceedings.

None.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

During the three and nine month period ending September 30, 2009, the Company did not issue any unregistered shares of its common stock.

During the nine month period ended September 30, 2009, the Company issued 100,000 options, with an exercise price of $2, to a current shareholder for $26,658.

The Company issued an additional 100,000, with exercise prices of $1.50 to $2.00 per share, to certain service providers for work performed.   Based on the fair market stock price at the date of the agreement compared to the exercise price, with consideration of the length of time and the stock price volatility, there was no recognition of

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compensation expense, since the option price exceeded the current valuation of the option.  The proceeds from the sale of the options were used to fund general operating expenses of the Company.

 

Item 3.  Defaults Upon Senior Securities

None.

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

None.

Item 5.  Other Information.

In March 2009, the Company changed stock transfer agents to PacWest Transfer, LLC of Las Vegas, Nevada.

Item 6.  Exhibits

Exhibit Number and Description

Location Reference

(a)

Financial Statements

Filed Herewith

(b)

Exhibits required by Item 601, Regulation SB;

(3.0)

Articles of Incorporation

(3.1)

Initial Articles of Incorporation filed

See Exhibit Key

with SB-2 Registration Statement

on April 26, 2006

(3.2)

Amendment to Articles of Incorporation

See Exhibit Key

filed with SB-2 Registration Statement

on April 26, 2006

(3.3)

Bylaws filed with SB-2 Registration

See Exhibit Key

Statement on April 26, 2006

(11.0)

Statement re:  computation of per share

Note 2 to

Earnings

Financial Stmts.

(14.0)

Code of Ethics

See Exhibit Key

(31.1)

Certificate of Chief Executive Officer

Filed herewith

Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

(31.2)

Certificate of Chief Financial Officer

Filed herewith

Pursuant to Section 302 of the

Sarbanes-Oxley Act of 2002

(32.1)

Certification of Chief Executive Officer

Filed herewith

pursuant to 18 U.S.C. § 1350,

as adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

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(32.2)

Certification of Chief Executive Officer

Filed herewith

pursuant to 18 U.S.C. § 1350,

as adopted pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002

Exhibit Key

3.1

Incorporated by reference herein to the Company’s Form SB-2

Registration Statement filed with the Securities and Exchange

Commission on April 26, 2006.

3.2

Incorporated by reference herein to the Company’s Form SB-2

Registration Statement filed with the Securities and Exchange

Commission on April 26, 2006.

3.3

Incorporated by reference herein to the Company’s Form SB-2

Registration Statement filed with the Securities and Exchange

Commission on April 26, 2006.

14.0

Incorporated by reference herein to the Company’s Form SB-2

Registration Statement filed with the Securities and Exchange

Commission on April 26, 2006.

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

PROPER POWER AND ENERGY, INC.

Date: November 16, 2009

By:  /s/ Joseph E. Abdo

JOSEPH E. ABDO,

Chief Executive Officer

Date: November 16, 2009

By: /s/ Lior Segal

LIOR SEGAL,

Chief Financial Officer

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