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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q /A
(AMENDMENT NO. 1)

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarter period ended  July 31, 2011
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
 
For the transition period form________to________
 
Commission File number  000-52653
 
CLEANTECH TRANSIT, INC.
(Exact name of registrant as specified in its charter)

Nevada
 
98-0505768
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification No.)
 
5440 West Sahara  Las Vegas, NV 89146
(Address of principal executive offices)
 
(702) 448-1543
(Registrant’s telephone number)
 
NA
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x   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 small reporting company. See definition of “large accelerated filer,” “accelerated filer” and “small reporting company” Rule 12b-2 of the Exchange Act.

Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
¨
Small reporting company
x
(Do not check if a small 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

As of September 13, 2011, there were 109,905,074 shares of Common Stock of the issuer outstanding
 


 
 

 
 
EXPLANATORY NOTE
 
The sole purpose of this Amendment No. 1 to Cleantech Transit, Inc. Quarterly Report on Form 10-Q for the quarterly period ended July 31, 2011, filed with the Securities and Exchange Commission on September 14, 2011 (the “Form 10-Q”), is to furnish Exhibit 101 in accordance with Rule 405 of Regulation S-T.  Exhibit 101 to this report provides the consolidated financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language).
 
No other changes have been made to the Form 10-Q.  This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date and does not modify or update in any way disclosures made in the original Form 10-Q.
 
Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
 
 
2

 
 
INDEX

     
PAGE
 
PART I. FINANCIAL INFORMATION
         
ITEM 1.
Financial Statements (unaudited)
  5  
         
 
Consolidated Balance Sheet as at July 31, 2011 and October 31, 2010
  5  
         
 
Consolidated Statement of Operations for the three  and nine month period ended July 31, 2011 and 2010 and for the period from May 25, 2010 (Inception of Development Stage) to July 31, 2011
  6  
         
 
Consolidated Statements of Cash Flows for the nine month period ended July 31, 2011 and 2010 and for the period from May 25, 2010 (Inception of Development Stage) to July 31, 2011
  7  
         
 
Notes to the Financial Statements.
  8  
         
ITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  13  
         
ITEM 3.
Quantitative and Qualitative Disclosure About Market Risk
  15  
         
ITEM 4.
Controls and Procedures
  15  
         
PART II. OTHER INFORMATION
         
ITEM 1.
Legal Proceedings
  16  
         
ITEM 1A.
Risk Factors
  16  
         
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
  16  
         
ITEM 3.
Defaults Upon Senior Securities
  16  
         
ITEM 4.
(Removed and Reserved)
  16  
         
ITEM 5.
Other Information
  16  
         
ITEM 6.
Exhibits
  17  
         
SIGNATURES   18  
 
 
3

 
 
FORWARD-LOOKING STATEMENTS

This Report on Form 10-Q contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.  Reference is made in particular to the description of our plans and objectives for future operations, assumptions underlying such plans and objectives, and other forward-looking statements included in this report.  Such statements may be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue,” or similar terms, variations of such terms, or the negative of such terms.  Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements.  Such statements address future events and conditions concerning, among others, capital expenditures, earnings, litigation, regulatory matters, liquidity and capital resources, and accounting matters.  Actual results in each case could differ materially from those anticipated in such statements by reason of factors such as future economic conditions, changes in end-user demand, legislative, regulatory and competitive developments in markets in which we operate, results of litigation, and other circumstances affecting anticipated revenues and costs, and the risk factors set forth under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended October 31, 2010, filed on February 9, 2011.

As used in this Form 10-Q, “we,” “us,” and “our” refer to Cleantech Transit, Inc., which is also sometimes referred to as the “Company.”

YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING STATEMENTS

The forward-looking statements made in this report on Form 10-Q relate only to events or information as of the date on which the statements are made in this report on Form 10-Q.  Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.  You should read this report and the documents that we reference in this report, including documents referenced by incorporation, completely and with the understanding that our actual future results may be materially different from what we expect or hope.
 
 
4

 

PART I – FINANCIAL INFORMATION

ITEM 1:   FINANCIAL STATEMENTS

The accompanying interim financial statements have been prepared by our management in conformity with accounting principles generally accepted in the United States of America.  In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.

Operating results for the three and nine months ended July 31, 2011 are not necessarily indicative of the results that can be expected for the year ending October 31, 2011.
 
CLEANTECH TRANSIT, INC.
(Development Stage Company)
CONSOLIDATED BALANCE SHEETS

   
July 31,
2011
   
October 31,
2010
 
    (Unaudited)     (Audited)  
ASSETS
             
CURRENT ASSETS
           
Cash
  $ 22,416     $  
                 
Total Current Assets
    22,416        
                 
Other assets
               
Prepaid Management fee
    787,500        
Investment
    335,000        
Total assets
  $ 1,144,916     $ -  
                 
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
                 
CURRENT LIABILITIES
               
                 
Accounts payable and accrued expenses
  $ 26,829     $ 9,252  
Notes payable
    278,084       131,918  
Total Current Liabilities
    304,913       141,170  
                 
STOCKHOLDERS’ EQUITY(DEFICIT)
               
                 
Preferred stock 10,000,000 shares authorized at $0.001 par value; none outstanding
           
Common stock 600,000,000 shares authorized, at $0.001 par value 109,905,074 and 104,905,074 shares issued and outstanding at July 31, 2011 and October 31, 2010, respectively
    109,905       104,905  
Paid in capital
    1,079,913       34,913  
Preferred stock Series A convertible to be issued
    590,000        
Deficit accumulated during the pre-exploration stage
    (219,677 )     (219,677 )
Deficit accumulated during the development stage
    (720,138 )     (61,311 )
                 
Total Stockholders’ Equity (Deficit)
    840,003       (141,170 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
  $ 1,144,916     $ -  

The accompanying notes are an integral part of these unaudited financial statements.

 
5

 

CLEANTECH TRANSIT, INC.
(Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

   
Three Months ended 
July 31,
   
Nine Months ended 
July 31,
   
From
May 25, 2010
(Inception of
Development
Stage)
to
 
   
2011
   
2010
   
2011
   
2010
   
July 31, 2011
 
                               
REVENUES
  $     $ -     $     $     $  
                                         
EXPENSES
                                       
General & administrative
    545,216       41,343       644,490       41,343       (702,874 )
Total Operating Expenses
    (545,216 )     (41,343 )     (644,490 )     (41,343 )     (702,874 )
                                         
OTHER INCOME(EXPENSE)
                                       
Interest
    (5,677 )     (1,376 )     (14,337 )     (1,376 )     (17,264 )
                                         
NET LOSS FROM CONTINUING OPERATIONS
    (550,893 )     (42,719 )     (658,827 )     (42,719 )     (718,263 )
                                         
DISCONTINUED OPERATIONS
          (17,707 )           (86,566 )      
                                         
NET LOSS
  $ (550,893 )   $ (60,426 )   $ (658,827 )   $ (129,285 )     (720,138 )
                                         
NET LOSS PER SHARE FROM CONTINUING OPERATIONS
                                       
Basic and diluted
  $ (0.01 )   $ (0.00 )   $ (0.01 )   $ (0.00 )        
                                         
NET LOSS PER SHARE FROM DISCONTINUED OPERATIONS
                                       
Basic and diluted
  $ 0.00     $ (0.00 )   $ (0.00 )   $ (0.00 )        
                                         
WEIGHTED AVERAGE OUTSTANDING SHARES
                                       
Basic and diluted
    108,655,074       89,968,358       106,136,692       89,968,358          

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 
6

 

CLEANTECH TRANSIT, INC.
(Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

   
For the Nine Months Ended
July 31,
   
From
May 25, 2010
(Inception of
Development
Stage)
to
 
   
2011
   
2010
   
July 31, 2011
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Net loss
    (658,827 )     (129,285 )     (720,138 )
Adjustments to reconcile net loss to net cash used in operating activities:
                       
Convertible notes payable
            25,840          
Stock based compensation
    262,500               262,500  
Notes issued for expenses
                88,395  
Contributed capital – expenses related to discontinued operations
    -       6,000        
Changes in operating assets and liabilities:
                       
Accounts payable and accrued expenses
    17,577       16,879       (9,507 )
Accounts payable related to discontinued operations
          27,757        
Convertible notes payable related to discontinued operations
          43,523        
Net cash used in operating activities
    (378,750 )     (9,286 )     (378,750 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES
    -             -  
Investment in LLC
    (335,000 )           (355,000 )
Net cash used in investing activities
    (335,000 )           (355,000 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Advances from related parties - discontinued operations
          3,000        
Proceeds from preferred shares issued for cash
    590,000             590,000  
Proceeds from issuance of notes
    146,166               146,166  
Net cash provided by financing activities
    736,166       3,000       736,166  
                         
Net Increase (Decrease) in Cash
    22,416       (6,286 )      
                         
Cash at Beginning of Period
          6,286        
                         
CASH AT END OF PERIOD
    22,416                  
                         
Supplemental disclosure of noncash financing transactions
                       
Common stock issued for prepaid fees
  $ 1,050,000             $ 1,050,000  
 
The accompanying notes are an integral part of these unaudited consolidated financial statements.
 
 
7

 

CLEANTECH TRANSIT, INC.
(Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
NOTE 1 - DESCRIPTION OF BUSINESS
 
The Company was incorporated under the laws of the State of Nevada on June 28, 2006 under the name of Patterson Brooke Resources Inc. with the authorized common stock of 200,000,000 shares at $0.001 par value. On February 14, 2008, the shareholders approved the increase of the authorized share capital from 200,000,000 shares at $0.001 par value to 600,000,000 shares at $0.001 par value.

On April 7, 2010, the Company amended its Articles of Incorporation to change its corporate name from “Patterson Brooke Resources Inc.” to “Cleantech Transit, Inc.”.

In June, 2011 the Company authorized the creation of a Series A Convertible Preferred Stock of 5,000,000 shares with a par value of $0.001 per share. On July 26, 2001 the Company formed two 100% owned subsidiaries Cleantech Energy, Inc. and Cleantech Exploration Corp. There was no activity in either subsidiary during the quarter ended Jul 31, 2011.

Originally the Company was organized for the purpose of acquiring and developing mineral properties. The Company has decided to allow the Alice claim to lapse without renewing it on May 24, 2010. Therefore, the Company is no longer a pre-exploration stage company but is now considered a development stage company as defined under FASB ASC 915, formerly Statement on Financial Accounting Standards No. 7, Development Stage Enterprises (“SFAS No.7”), and commenced operations in both the public and private transportation bus and coach industries, providing high quality engineered modern eco-friendly vehicles in a cost conscious and environmentally sustainable manner.  For the period from inception of development stage on May 25, 2010 to July 31, 2011, the Company has generated $nil in revenues and has accumulated losses of $939,815.

 NOTE 2 - GOING CONCERN
 
The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The aggregate accumulated deficit and accumulated deficit during the development stage and pre-exploration stage of the Company is $939,815 ($720,138 and $219,677, respectively). The Company has not established revenues to cover its operating costs. This uncertainty raises substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company's plan. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
 
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation – The accompanying financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations under Regulation S-X of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented not misleading. In the opinion of management, all adjustments; (consisting solely of normal recurring adjustments) necessary for a fair presentation of the results for the interim periods have been made. The results for the nine months ended July 31, 2011 are not necessarily indicative of results to be expected for the full fiscal year. These financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended October 31. 2010.
 
Accounting Method

The Company recognizes income and expenses based on the accrual method of accounting.
 
 
8

 

Principles of Consolidation

The consolidated financial statements of the Company include the Company and its wholly-owned and majority-owned subsidiaries.  All material intercompany balances and transactions have been eliminated.
 
Income Taxes

The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.

As of July 31, 2011, the Company had a net operating loss carry forward of $939,815. The tax benefit of approximately $329,000 from the loss carry forward has been fully offset by a valuation reserve because the use of the future tax benefit is doubtful since the Company has no operations. The loss carry forward will expire starting in 2026 through 2032.

Statement of Cash Flows

For the purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.

Basic and Diluted Net Income (loss) Per Share

Basic net income (loss) per share amounts is computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common and common equivalent shares outstanding as if shares had been issued on the exercise of any common share rights unless the exercise becomes antidilutive and then only the basic per share amounts are shown in the report.

Revenue Recognition

Revenue is recognized on the sale and transfer of goods or completion of service. During the nine month period ending July 31, 2011, the Company did not have any revenue.

Advertising and Market Development

The company expenses advertising and market development costs as incurred.

Financial and Concentrations Risk

The Company does not have any concentration or related financial credit risk.
 
 
9

 

Environmental Requirements

At the report date environmental requirements related to the mineral claim acquired are unknown and therefore an estimate of any future cost cannot be made.

Estimates and Assumptions

Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles accepted in the United States of America. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.

Impairment of Long-lived Assets

The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under ASC 360-10-35-17 if events or circumstances indicate that their carrying amounts might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using rules of ASC 930-360-35, Asset Impairment, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets.

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheets for cash, accounts payable, and convertible notes payable approximate fair values because of the immediate or short-term maturity of these financial instruments.

Reclassifications

Certain prior period amounts have been reclassified to conform to current period presentation.
 
Recent Accounting Pronouncements

In August 2010, the FASB issued Accounting Standard Updates No. 2010-21 (ASU No. 2010-21) “Accounting for Technical Amendments to Various SEC Rules and Schedules” and No. 2010-22 (ASU No. 2010-22) “Accounting for Various Topics – Technical Corrections to SEC Paragraphs”.  ASU No 2010-21 amends various SEC paragraphs pursuant to the issuance of Release no. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies.  ASU No. 2010-22 amends various SEC paragraphs based on external comments received and the issuance of SAB 112, which amends or rescinds portions of certain SAB topics.  Both ASU No. 2010-21 and ASU No. 2010-22 are effective upon issuance.  The amendments in ASU No. 2010-21 and No. 2010-22 will not have a material impact on the Company’s financial statements.

The Company does not expect the adoption of any other recent accounting pronouncements to have a material impact on the Company’s financial statements.
 
 
10

 

NOTE 4: PREPAID MANAGEMENT FEE

On May 23, 2011 the Company entered into a one year management agreement with Crown Equity Holdings, Inc. Under the terms of the agreement the Company issued 5,000,000 common shares at $0.21 per share with a value of $1,050,000.  The management agreement covers the period from May 1, 2011 to April 30, 2012.  The Company has amortized three months or $262,500 as expense during this quarter and carries the balance as prepaid.

Some of the officers and directors of the Company are also officers and directors of Crown Equity Holdings, Inc.

NOTE 5: INVESTMENT

On February 11, 2011, the Company signed a term sheet with Phoenix Biomass Energy, Inc. (Phoenix) to participate in the ½ megawatt project 100% owned by Phoenix. The initial investment required will be $100,000 in Phoenix Energy Series B shares. The Company amended the agreement on June 17, 2011 to earn up to 40% of the project for $ 360,000. As of July 31, 2011 the Company had invested a total of $335,000, of which $25,000 was paid in the previous quarter and $310,000 was paid in June, 2011 (see Note 11, Subsequent Events).

NOTE 6: NOTES PAYABLE

As at July 31, 2011, the Company had various notes payable of $278,084 plus interest payable relating to these notes of $26,829 for a total of $304,913.  The notes bear interest at a rate of 10% per annum, and are due on demand.

NOTE 7: DISCONTINUED OPERATIONS

On May 24, 2010 the Company changed its focus from exploration of mineral properties, to manufacturing, marketing and distributing in the urban mass transit sector. The Company had the following losses from discontinued operations.

Discontinued Operations

   
Nine months ended
July 31,
 
   
2011
   
2010
 
General and administrative
  $ -     $ 86,566  
Discontinued operations
  $ -     $ 86,566  

NOTE 8: RELATED PARTY TRANSACTIONS

During the nine months ended July 31, 2010, officers and directors of the Company made advances of $3,608 and contributions to capital of $6,000 by paying expenses of the Company.
 
 
11

 

NOTE 9: STOCKHOLDERS EQUITY

On October 13, 2010, the Company issued a 3 to 1 forward stock split which resulted in an increase in the number of outstanding shares of common stock from 89,968,358 to 269,905,074. All common stock references in these financial statements have been retroactively adjusted to account for this forward stock split.

On October 26, 2010, 165,000,000 shares were surrendered and cancelled.
 
On May 23, 2011 the Company issued 5,000,000 shares for one year management fees commencing May 1, 2011 with a value of $1,050,000 ($0.21 per share). The shares were issued to an entity with common officers and directors.

On July 15, 2011 the Company amended their articles of incorporation authorizing 10,000,000 shares of Preferred Stock with a par value of $0.001 per share.

NOTE 10: SUBSIDIARIES

On July 26, 2011 the Company formed two 100% owned subsidiaries Cleantech Energy, Inc. and Cleantech Exploration Corp.  Both entities have authorized shares of 75,000,000 with a par value of $0.001 per share.   There was no activity in either of the subsidiaries during the quarter ended July 31, 2011.

NOTE 11: SUBSEQUENT EVENTS

On August 19, 2011 the Company signed an agreement confirming the 40% ownership and investment in Ortigalita Power Company that was 100% owned by Phoenix Biomass Energy, Inc.  In addition to the $335,000 that the Company invested as of July 31, 2011, under the terms of the agreement, the Company is required to invest an additional $25,000.

On August 23, 2011 the Company authorized 5,000,000 Series A convertible shares of preferred stock out of the 10,000,000 shares of preferred stock previously authorized. The series A are convertible at the rate of 10 shares of common stock for each share of convertible preferred. A majority of the outstanding series A preferred must vote in favor of certain actions of the Company including increased authorizing of increased equity, merger or acquisition by the Company, stock equity acquisition or disposition of assets greater than $5,000,000 and issuance of debt greater than $5,000,000.

Subsequent to the authorization of the authorization of the series A convertible preferred shares, the Company issued 1,432,000 shares at $0.50 per share for $590,000 in cash (which was received prior to July 31, 2011) and $126,000 for debt.
 
 
12

 

ITEM 2:   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the information contained in our financial statements and the notes thereto, which form an integral part of the financial statements, which are attached hereto.

The financial statements mentioned above have been prepared in conformity with accounting principles generally accepted in the United States of America and are stated in United States dollars.

Our Form 10-Q includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words such as: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this Form 10-Q. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

Financial Condition as of July 31, 2011

The Company has current assets of $22,416 consisting of cash on July 31, 2011. Total current liabilities reported of $304,913 consisted of $26,829 in accounts payable and accrued expenses and $278,084 in notes payable.

Deficit accumulated during the development stage increased from $61,311 as of October 31, 2010 to $720,138 as of July 31, 2011.
 
Background
 
The Company was incorporated under the laws of the State of Nevada on June 28, 2006 under the name Patterson Brooke Resources Inc. to identify and acquire a mineral property that held the potential to contain gold and/or silver mineralization.  In early 2010, due to the global economic crisis, a challenging environment for raising capital and the lack of suitable drill targets discovered on the Alice Claim, the Company decided to shift our business focus to begin to explore opportunities in the development and production of hybrid, electric, alternative fuel and diesel heavy duty transit buses, luxury motor coaches and tour buses. On April 7, 2010, the Company amended the Articles of Incorporation to change the name to Cleantech Transit, Inc.   Since then the Company has expanded the business focus to invest directly in specific green projects. Recognizing the many economic and operational advances of converting wood waste into renewable sources of energy, the Company negotiated an agreement to invest in Phoenix Energy, a manufacturer and distributor of biomass-generated power plants.

On February 14, 2008, the Company conducted a 25 to 1 forward stock split of all issued and outstanding shares.

On October 13, 2010, the Company effected a 3 to 1 forward stock split by way of stock dividend.  In accordance with the forward stock split, the Company issued a dividend of two shares of common stock of the Company for each share of common stock issued and outstanding as of the record date of October 13, 2010 (the “Stock Dividend”).  The payment date for the Stock Dividend was October 13, 2010.

On February 11, 2011 the Company  signed a term sheet with Phoenix Energy to participate in the ½ Megawatt project which is currently 100% owned by Phoenix Energy.  Under the terms of the agreement, the Company has an option to acquire a 25% interest in Phoenix Energy's asset base, which includes a fully constructed, one-half megawatt (500 kilowatt) biomass energy project located in California.  The amount required to earn up to 25% of the ½ Megawatt project will be based on the final cost of the completed project.  The Company amended the agreement on June 17, 2011 to earn up to 40% of the project for $ 360,000. As of July 31, 2011 the Company had invested a total of $335,000 of which $25,000 was paid in the previous quarter and $310,000 was paid in June, 2011. On August 19, 2011 the Company signed an agreement confirming the 40% ownership and investment in Ortigalita Power Company that was 100% owned by Phoenix Biomass Energy, Inc.  In addition to the $335,000 that the Company invested as of July 31, 2011, under the terms of the agreement, the Company is required to invest an additional $25,000.
 
 
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Critical Accounting Policies
 
The preparation of financial statements in conformity with United States generally accepted accounting principles (“GAAP”) requires management of our company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods.
 
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with GAAP.  We believe certain critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.  A description of our critical accounting policies is set forth in our Annual Report on Form 10-K for the year ended October 31, 2010.  For the nine month period ended July 31, 2011, there have been no material changes or updates to our critical accounting policies.
 
Results of Operations

The following discussion of the financial condition, results of operations, cash flows and changes in our financial position should be read in conjunction with our audited consolidated financial statements and notes thereto for the fiscal year ended October 31, 2010 included in our Annual Report on Form 10-K filed on February 9, 2011.  On May 24, 2010 the Company changed its focus from exploration of mineral properties, to manufacturing, marketing and distributing in the urban mass transit sector.

Results of Operations

During the three and nine month periods ended July 31, 2011 and 2010 the Company did not produce any revenue.

Operating expenses for the three months ended July 31, 2011 were $545,216 and $644,490 for the nine month period ended July 31, 2011 compared to $41,343 and $41,343 during the same periods in 2010. Discontinued operations accounted for losses of $17,707 and $86,566 for the three and nine months in the period ended April 31, 2010. Expenses during 2011 were due to increase legal and advertising expense. Interest expense was $5,677 and $14,337 for the three and nine month period ending July 31, 2011 compared to $1,376 and $1,376 for both the same periods in 2010.

Period from inception, June 28, 2006, to July 31, 2011

The Company has accumulated a total deficit of $939,815. Deficit accumulated during the pre-exploration stage was $219,677 and accumulated during the development stage was $720,138.

As a development stage company, the Company is currently have limited operations, principally directed at potential acquisition targets and revenue-generating opportunities.

 
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Liquidity and Capital Resources

As of July 31, 2011, the Company has current assets of $22,416 in cash.  As at July 31, 2011, the Company’s current liabilities were $304,913, resulting in negative working capital of $282,497. Cash used in operating activities was $378,750 for the nine month period ended July 31, 2011 compared to $9,286 during the same period in 2010. The increase in 2011 was due to a larger operating loss and lower accounts payable. Cash used in investing activities was $335,000 for the period ending July 31, 2011 compared to zero for the same period in 2010. Cash from financing activities was $736,166 for the period ending July 31, 2011 compared to $3,000 during the same period in 2010. Proceeds received were $590,000 in cash for preferred shares subscription and $146,166 from the issuance notes payable.

The Company continues to operate with very limited administrative support, and the current officers and directors continue to be responsible for many duties to preserve working capital.

Off-Balance Sheet Arrangements

The Company has not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

ITEM 3:   QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is not required to provide the information under this item.

ITEM 4:   CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures
 
The Company has carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer along with the Chief Financial Officer, of the effectiveness of the design of our disclosure controls and procedures (as defined by Exchange Act Rule 13a-15(e) and 15a-15(e)) as of April 30, 2011 pursuant to Exchange Act Rule 13a-15.  Based upon that evaluation, the Principal Executive Officer along with the Principal Financial Officer concluded that disclosure controls and procedures are not effective as of July 31, 2011 in ensuring that information required to be disclosed by us in reports that are file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  This conclusion is based on findings that constituted material weaknesses.  A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s interim financial statements will not be prevented or detected on a timely basis.  These material weaknesses include the following:

            the Company does not have an Audit Committee.

●             there are no written internal control procedurals manual which outlines the duties and reporting requirements of the officers.  This lack of a written internal control procedurals manual does not meet the requirements of the SEC or good internal control policies.

●             there are no effective controls instituted over financial disclosure and the reporting processes.

Changes in Internal Control over Financial Reporting
 
There were no changes in our internal controls over financial reporting that occurred during the nine months ended July 31, 2011 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
 
 
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PART II – OTHER INFORMATION
 
ITEM 1:   LEGAL PROCEEDINGS

None.

ITEM 1A:  RISK FACTORS

Not applicable.
 
ITEM 2:   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3:   DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4:   (REMOVED AND RESERVED)

ITEM 5:   OTHER INFORMATION

None.
 
 
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ITEM 6:   EXHIBITS

The following exhibits are included as part of this report:

 
31.1
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

 
31.2
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

 
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
 
 
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
 
101.INS **
XBRL Instance Document
   
101.SCH **
XBRL Taxonomy Extension Schema Document
   
101.CAL **
XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF **
XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB **
XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE **
XBRL Taxonomy Extension Presentation Linkbase Document
 
*    Filed herewith.
 
**  XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 
 
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
  CLEANTECH TRANSIT, INC.  
    (Registrant)  
       
Date: September 23, 2011
By:
/s/ Kenneth Bosket  
    Kenneth Bosket,  
    President, Chief Executive Officer  
   
(Principal Executive Officer)
 
 
 
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