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

FORM 10-Q

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarter period ended January 31, 2012

o
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 o

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 o

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   o Accelerated filer  o
Non-accelerated filer  o 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 o   No  x
 
As of March  6, 2012 there were 109,905,074 shares of Common Stock of the issuer outstanding.
 


 
 

 
 
INDEX

     
Page Number
 
PART I. FINANCIAL INFORMATION
         
ITEM 1.
Financial Statements (unaudited)
    4  
           
 
Consolidated Balance Sheet as at January 31, 2012 and October 31, 2011
    4  
           
 
Consolidated Statement of Operations for the three month period ended January 31, 2012 and 2011 and for the period from May 25, 2010 (Inception of Development Stage) to January 31, 2012
    5  
           
 
Consolidated Statements of Cash Flows for the three month period ended January 31, 2012 and 2011 and for the period from May 25, 2010 (Inception of Development Stage) to January 31, 2012
    6  
           
 
Notes to the Financial Statements.
    7  
           
ITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
    12  
           
ITEM 3.
Quantitative and Qualitative Disclosure About Market Risk
    14  
           
ITEM 4.
Controls and Procedures
    14  
           
PART II. OTHER INFORMATION
           
ITEM 1.
Legal Proceedings
    15  
           
ITEM 1A.
Risk Factors
    15  
           
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
    15  
           
ITEM 3.
Defaults Upon Senior Securities
    15  
           
ITEM 4.
(Removed and Reserved)
    15  
           
ITEM 5.
Other Information
    15  
           
ITEM 6.
Exhibits
    16  
           
SIGNATURES     17  

 
2

 
 
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.
 
 
3

 
 
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 months ended January 31, 2012 are not necessarily indicative of the results that can be expected for the year ending October 31, 2012.
 
CLEANTECH TRANSIT, INC.
(Development Stage Company)
CONSOLIDATED BALANCE SHEETS
 
   
January 31,
2012
(Unaudited)
   
October 31,
2011
(Audited)
 
             
ASSETS
             
CURRENT ASSETS
           
        Cash
  $ 11,045     $ 16,085  
                 
        Total Current Assets
    11,045       16,085  
                 
    Other assets
               
      Prepaid Management fee
    262,500       525,000  
      Investment
    451,412       470,362  
Total assets
  $ 724,957       1,011,447  
                 
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)
                 
CURRENT LIABILITIES
               
                 
Accounts payable and accrued expenses
  $ 40,404       34,685  
Convertible notes payable
    148,957       148,957  
Convertible notes payable-related party
    75,000       75,000  
Notes payable
    25,000       25,000  
Notes payable – related party
    200       200  
Total Current Liabilities
    289,561       283,842  
                 
STOCKHOLDERS’ EQUITY
               
                 
        Preferred stock; Series A Convertible; $0.001 par value;
               
          5,000,000 shares authorized; none issued and outstanding
    --       --  
        Preferred stock; $0.001 par value; 5,000,000 shares
               
          authorized; none issued and outstanding
    --       --  
        Preferred stock subscription
    641,000       641,000  
                 
Common stock
               
600,000,000 shares authorized, at $0.001 par value 109,905,074 shares issued and outstanding at January 31, 2012 and October 31, 2011, respectively
    109,905       109,905  
Paid in capital
    1,095,213       1,095,213  
Deficit accumulated during the pre-exploration stage
    (219,677 )     (219,677 )
Deficit accumulated during the development stage
    (1,191,045 )     (898,836 )
                 
Total Stockholders’ Equity
    435,396       727,605  
                 
 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  $ 724,957     $ 1,011,447  
 
The accompanying notes are an integral part of these unaudited financial statements.
 
 
4

 
 
CLEANTECH TRANSIT, INC.
(Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
               
From
May 25, 2010
(Inception of
Development
Stage)
to
 
    Three Months Ended January 31,     January 31,  
    2012     2011     2012  
                   
REVENUES
  $ --     $ --     $ --  
                         
EXPENSES
                       
General & administrative
    267,541       21,631       1,239,747  
Total Operating Expenses
    (267,541 )     (21,631 )     (1,239,747 )
                         
OTHER INCOME(EXPENSE)
                       
Gain from bargain purchase
    --        --       110,362  
Interest expense
    (5,718 )     --       (27,410 )
Investee losses
    (18,950 )     --       (18,950 )
Loss on conversion of debt to equity
    --       --       (15,300 )
TOTAL OTHER INCOME (EXPENSE)
    (24,668 )     --       48,702  
                         
NET LOSS
  $ (292,209 )   $ (21,631 )     (1,191,045 )
                         
NET LOSS PER SHARE                        
Basic and diluted
  $ (0.00 )   $ (0.00        
                         
WEIGHTED AVERAGE OUTSTANDING SHARES                        
            Basic and diluted
    109,905,074       104,905,074          
 
The accompanying notes are an integral part of these unaudited financial statements.
 
 
5

 
 
CLEANTECH TRANSIT, INC.
(Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
   
 
Three Months Ended January 31,
   
From
May 25, 2010
(Inception of
Development
Stage)
to
January 31,
 
   
2012
   
2011
   
2012
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Net loss
    (292,209 )     (21,631 )     (1,191,045 )
Adjustments to reconcile net loss to net cash used in operating activities:
                       
    Stock based compensation
    262,500       --       787,500  
     Notes issued for expenses
    --       5,538       88,395  
     Loss on conversion of debt
    --       --       15,300  
     Gain from bargain purchase
    --       --       (110,362 )
     Investee losses
    18,950       --       18,950  
Changes in operating assets and liabilities:
                       
     Accounts payable and accrued expenses
    5,719       16,093       4,068  
Net cash used in operating activities
    (5,040 )     --       (387,194 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES
    -       -          
  Investment in LLC
    --       --       (335,000 )
  Net cash used in investing activities
    --       --       (335,000 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Proceeds from issuance of convertible promissory notes
    --       75,000          
 Proceeds from preferred shares issued for cash
    --       --       590,000  
 Proceeds from issuance of notes
    --       --       143,239  
Net cash provided by financing activities
    --       75,000       733,239  
                         
Net Increase (Decrease) in Cash
    (5,040 )     75,000       11,045  
                         
Cash at Beginning of Period
    16,085       --          
                         
CASH AT END OF PERIOD
    11,045       75,000       11,045  
                         
Supplemental disclosure of noncash financing transactions
                       
Notes issued for expense
                  $ 88,395  
Issuance of note payable for investment in LLC
                  $ 25,000  
Conversion of debt to equity (preferred shares)
                  $ 51,000  
Common stock issued for prepaid management fees
                  $ 1,050,000  
 
The accompanying notes are an integral part of these financial statements
 
 
6

 
 
CLEANTECH TRANSIT, INC.
(Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
NOTE 1 – NATURE OF OPERATIONS
 
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.”

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, and commenced operations in 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.

On July 11, 2011 the Company formed Cleantech Energy, Inc. as a wholly owned subsidiary. There has been no activity in this entity, through January 31, 2012.

On July 14, 2011 the Company amended its articles of incorporation increasing its authorized capital stock to 610,000,000 consisting of 600,000,000 shares of common stock with a par value of $0.001 per shares and 10,000,000 shares of preferred stock with a par value of $0.001.

On July 25, 2011 the Company formed Cleantech Exploration Corp. as a wholly owned subsidiary. There has been no activity in this entity, through January 31, 2012.

On August 23, 2011 the Company designated 5,000,000 of the 10,000,000 preferred shares as Series A Convertible preferred. These share have a conversion right of 10 shares of common for each share of preferred, a voting right as a class, and liquidation preference valuation of $0.50 per share.

 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 $1,410,722 ($1,191,045 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 three months ended January 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 2011.
 
 
7

 
 
Accounting Method

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

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 January 31, 2012, the Company had a net operating loss carry forward of $1,410,722. The tax benefit of approximately $494,000 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 begin to expire in 2026.
 
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 the basic and diluted per share amounts are the same.

Revenue Recognition

Revenue is recognized on the sale and transfer of goods or completion of service. During the three month period ending January 31, 2012, 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.
 
 
8

 
 
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

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

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: EQUITY METHOD INVESTMENT

On August 19, 2011 the Company entered into an agreement with Phoenix Biomass Energy, Inc. (and amendment dated September 28, 2011) whereby the Company obtained a 40% interest in Ortigalita Power Company, LLC. from Phoenix Biomass for $360,000. The Company is accounting for this investment under the equity method. Ortigalita is building a plant to produce electricity from waste and by-products. The Company has paid $335,000 in cash and has executed a no interest, demand note payable for the remaining balance of $25,000. The closing date of this purchase was October 31, 2011. As the Company paid less than the relative fair value of the net assets received, it has recorded a gain on bargain purchase in the amount of $110,362, in accordance with ASC 805-30.

During the three months ended January 31, 2012, the investee reported a net loss of $47,375. The Company has therefore recorded its share of these losses in the statement of operations ($18,950).
 
 
9

 
 
NOTE 6: NOTES PAYABLE

As of January 31, 2012, the Company had notes payable of $249,157 with accrued interest of $30,338. Certain notes totaling $223,957 contain conversion rights allowing the holder to convert each dollar of debt into 1 share of common stock, at the price the stock is being offered at time of conversion. The terms of the notes are as presented in the table below. As of January 31, 2012, no demand for payment has been made on these notes.

     
Interest
   
Conversion
     
Date
Name
 
Rate
 
Maturity
Rights
 
Amount
 
4/30/2010
Coach Capital, LLC
    10 %
Demand
Yes
  $ 37,120  
6/18/2010
Coach Capital, LLC
    10 %
Demand
Yes
    18,062  
6/23/2010
Coach Capital, LLC
    10 %
Demand
Yes
    6,402  
8/1/2010
Coach Capital, LLC
    10 %
Demand
Yes
    522  
8/1/2010
Coach Capital, LLC
    10 %
Demand
Yes
    705  
8/1/2010
Coach Capital, LLC
    10 %
Demand
Yes
    3,252  
9/30/2010
Coach Capital, LLC
    10 %
Demand
Yes
    600  
10/5/2010
Coach Capital, LLC
    10 %
Demand
Yes
    2,665  
10/22/2010
Coach Capital, LLC
    10 %
Demand
Yes
    1,525  
10/28/2010
Coach Capital, LLC
    10 %
Demand
Yes
    24,386  
10/31/2010
Coach Capital, LLC
    10 %
Demand
Yes
    33,753  
1/31/11
Coach Capital, LLC
    10 %
Demand
Yes
    1,958  
4/30/11
Coach Capital, LLC
    10 %
Demand
Yes
    18,007  
                       
1/15/11
Zaman & Co. (related party)
    10 %
Demand
Yes
    75,000  
 
Total Convertible Notes
                223,957  
                       
5/09/2011
Crown Equity (related party)
 
NA
 
Demand
None
    200  
9/30/2011
Phoenix Biomass
 
NA
 
Demand
None
    25,000  
 
Total Notes Payable
              $ 249,157  

 
10

 
 
NOTE 7: RELATED PARTY TRANSACTIONS

On March 10, 2010, the Company entered into a Letter of Intent with Greentech Holdings LLC, a limited liability company registered under the laws of Nevis, who owns certain intellectual property, know-how, trade secrets, data, materials, blue prints, drawings, copyrights, technology, brand names, logos, designs and manufacturing techniques for hybrid buses and motor coaches, including Hybrid Low Floor GTH40, Interurban GTI40 and Commuter Coach GTC45 which the Company wishes to acquire in order to develop, manufacture and distribute eco-friendly buses and luxury motor coaches in China. The Letter of Intent has not been finalized and no formal agreement has been signed. Two of the former directors of the Company are members of Greentech Holdings LLC.

On January 15, 2011, the Company received $75,000 from Zaman & Co. and issued a note payable with the conversion term.  Zaman & Co. is a related party through common Directors.

On May 9, 2011, the Company received $200 from Crown Equity Holdings, Inc., and issued a note payable. The officers and directors of the Company are also officers and directors of Crown Equity Holdings, Inc.

On May 23, 2011 the Company entered into an Agreement with Crown Equity Holdings, Inc. to manage the Company for one year. Under the terms of the agreement the Company issued 5,000,000 with a value of $1,050,000. The officers and directors of the Company are also officers and directors of Crown Equity Holdings, Inc.
 
NOTE 8: 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 of common stock to a related party for management services with a value of $1,050,000. The Company and the entity receiving shares have common officers and directors.

On July 15, 2011 the Company amended its articles of incorporation increasing its authorized capital stock to 610,000,000 consisting to 600,000,000 shares of common stock with a par value of $0.001 per shares and 10,000,000 shares of preferred stock with a par value of $0.001.

On August 23, 2011 the Company designated 5,000,000 of the 10,000,000 preferred shares as Series A Convertible preferred.  These share have a conversion right of 10 shares of common for each share of preferred, a voting right as a class, and liquidation preference valuation of $0.50 per share.

As of January 31, 2012, the Company had one Series A Preferred shares stock subscription with a value of $641,000. The subscription is for 1,282,000 shares of Series A preferred stock at $0.50 per share. These shares carry a conversion privilege that allows the holder to convert each share of Series A Preferred Stock into 10 shares of common stock of the Company. This subscription was filled through $590,000 in cash and conversion of notes payable of $51,000. This conversion occurred on October 31, 2011. As the securities this note was converted into were valued at $66,300, the Company recorded a loss on conversion of $15,300.
 
 
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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 January 31, 2011
 
The Company has current assets of $11,045 consisting of cash on January 31, 2012. Total current liabilities reported of $289,561 consisted of $40,404 in accounts payable and accrued expenses and $249,157 in notes payable.
 
Deficit accumulated during the development stage increased from $898,836 as of October 31, 2011to $1,191,045 as of January 31, 2012.
 
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 August 19, 2011 the Company entered into an agreement with Phoenix Biomass Energy, Inc. (and amendment dated September 28, 2011) whereby the Company obtained a 40% interest in Ortigalita Power Company, LLC. from Phoenix Biomass for $360,000. The Company is accounting for this investment under the equity method. Ortigalita is building a plant to produce electricity from waste and by-products. The Company has paid $335,000 in cash and has executed a no interest, demand note payable for the remaining balance of $25,000. The closing date of this purchase was October 31, 2011. As the Company paid less than the relative fair value of the net assets received, it has recorded a gain on bargain purchase in the amount of $110,362, in accordance with ASC 805-30.

During the three months ended January 31, 2012, the investee reported a net loss of $47,375. The Company has therefore recorded its share of these losses in the statement of operations ($18,950).
 
 
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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, 2011.  For the three month period ended January 31, 2012, 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, 2011 included in our Annual Report on Form 10-K filed on February 14, 2012.  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 month periods ended January 31, 2012 and 2011 the Company did not produce any revenue.
 
Operating expenses for the three months ended January 31, 2012 were $267,541 and $21,631 during the same periods in 2011. Expenses during 2012 were due to the management fee for managing the Company. Interest expense was $5,718 for the three period ending January 31, 2012 compared to zero the same periods in 2011.
 
Period from inception, June 28, 2006, to January 31, 2012
 
The Company has accumulated a total deficit of $1,410,722. Deficit accumulated during the pre-exploration stage was $219,677 and accumulated during the development stage was $1,191,045.
 
As a development stage company, the Company is currently have limited operations, principally directed at potential acquisition targets and revenue-generating opportunities.
 
Liquidity and Capital Resources
 
As of January 31, 2012, the Company has current assets of $11,045 in cash.  As at January 31, 2012, the Company’s current liabilities were $289,561 resulting in negative working capital of $278,516. Cash used in operating activities was $5,040 for the three month period ended January 31, 2012, compared to zero during the same period in 2011. The increase in 2012 was due to a larger net loss. Cash used in investing activities was zero for the three month period ended January 31, 2012 and for the same period in 2011. Cash from financing activities was zero for the three month period ended January 31, 2012, compared to $75,000 during the same period in 2011. 
 
 
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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 January 31, 2012ursuant 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 January 31, 2012 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 January 31, 2012 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
 
 
15

 
 
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.
 
 
16

 
 
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:   March 7, 2012
By:
/s/ Kenneth Bosket
 
   
Kenneth Bosket,
President, Chief Executive Officer
(Principal Executive Officer)
 
 
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