Power Efficiency Corporation Reports Second Quarter 2008 Financial Results

August 14, 2008 – Las Vegas, NV – Power Efficiency Corporation (OTCBB:PEFF.OB), a green energy company focused on efficiency technologies for electric motors, today announced its second quarter 2008 financial results.

Sales for the quarter ended June 30, 2008 were $164,644. Net loss for the quarter, including $182,341 in non-cash expenses relating to SFAS 123R, was $1,047,175, or $0.03 per share. The Company recorded a gross margin of $7,779, or 5%, including a charge of approximately $47,000 for two one time items. Excluding these two one time items, the gross margin would have been approximately $55,000, or 33%.

Sales for the six months ended June 30, 2008 were $298,339. Net loss for the first six months of 2008, including $389,342 in non-cash expenses relating to SFAS 123R, was $1,935,330, or $0.05 per share. The Company recorded a gross margin of $43,311, or 14%.  Excluding the one time items mentioned above, the gross margin would have been approximately $90,000, or 30%.

Steven Strasser, Chairman and CEO stated, “We are pleased with the progress of the business in many areas over the past several months. Sales of our three phase Motor Efficiency Controller (MEC), which is targeted at industrial and commercial applications, grew more than 20% over the first quarter of this year. However, I believe our progress toward securing acceptance of our technology by Original Equipment Manufacturers (OEMs) and other large potential resellers is of greater importance than this quarterly sales growth.

The target markets for our three phase MEC are escalators, plastics, and rock (mining, aggregate, cement, and concrete). Our strategy in each target market is to start by pursuing sales to end users, since they pay their energy bills and therefore benefit most directly from the energy savings features of our products. The purpose of these end-user direct sales efforts is to break into our target markets, establish the effectiveness of E-Save Technology™, and generate awareness and demand for MECs among end users. Once we have penetrated each market in this manner, our focus is to secure arrangements with OEMs and other large resellers so that we can leverage our intellectual property through existing distribution channels to rapidly grow sales.

We estimate E-Save Technology has the potential to save $1.7 billion a year in industrial applications in the U.S. alone. For an energy technology company like Power Efficiency, securing the acceptance and commitments of OEMs and other large resellers is critical to reach this potential and grow long term shareholder value.  We are presently in testing and evaluation with a number of OEMs and large resellers, and are working to secure volume commitments for ongoing purchases in the coming months.

Our strategy for the single phase Motor Efficiency Controller, which is targeted at the millions of home and light commercial appliances made each year, is to go directly to OEMs to include the technology in new appliances. We have completed several redesigns of this product, incorporating numerous innovations to improve the energy savings and reduce the costs. As a result, we believe this technology may be the most effective and economical way to improve the efficiency of the tens of millions of new washers, dryers and refrigerators made by OEMs each year. We are presently establishing evaluations with several OEMs and forming new relationships to promote the technology to additional OEMs.”

In addition to the activities mentioned above, other notable developments in the second quarter include:

• Completing a project to have MECs installed on escalators at the Las Vegas Convention Center, the busiest convention center in the U.S.
• Receiving Certification Europe (CE) certification for all digital units up to 80 amps (60 Horsepower at 460 volts)
• Commencing Underwriter’s Laboratory (UL) certification for units up to 380 amps (300 horsepower at 460 volts). UL Certification is expected for various units over the next several months, with all units up to 380 amps being UL certified before the end of the year.
• Successful testing of E-Save Technology on an industrial application in the plastics industry, resulting in approval for an energy efficiency rebate by a California utility
• Engaging the Gephardt Group, headed by Richard Gephardt, the former majority leader of the U.S. House of Representatives. The initial purpose of the engagement is to assist with the market development for the Company’s single phase MEC.

Looking forward, Strasser added, “Our main goals for the remainder of 2008 are releasing a full line of certified motor efficiency controllers, proving out numerous industrial applications, commencing testing of the single phase MEC with E-Save Technology by several appliance manufacturers, and gaining commitments from OEMs for the three phase MECs with E-Save Technology.”
 
About Power Efficiency Corporation

Power Efficiency Corporation is a green energy company focused on efficiency technologies for electric motors. Power Efficiency is incorporated in Delaware and is headquartered in Las Vegas, Nevada. The company has developed a patented and patent-pending technology platform, called E-Save Technology™, which has been demonstrated in independent testing to improve the efficiency of electric motors by up to 35% in appropriate applications. Electric motors consume over 25% of the electricity in the U.S. and many operate inefficiently. E-Save Technology™ can be licensed to motor, controls and equipment manufacturers. Power Efficiency’s first product based on E-Save Technology™ is a Motor Efficiency Controller for applications such as escalators, crushers, granulators, mixers, saws and MG elevators. Power Efficiency is also developing a new product based on E-Save Technology™ for the tens of millions of small motors found in applications such as residential air conditioning, pool pumps, and clothes dryers. The company is working with manufacturers to incorporate this technology directly into new motors and appliances.

For more information go to www.powerefficiency.com.

As a cautionary note to investors, certain matters discussed in this press release may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such matters involve risks and uncertainties that may cause actual results to differ materially, including the following: changes in economic conditions; general competitive factors; acceptance of the Company’s products in the market; the Company’s success in technology and product development; the Company’s ability to execute its business model and strategic plans; and all the risks and related information described from time to time in the Company’s SEC filings, including the financial statements and related information contained in the Company’s SEC filing. Power Efficiency assumes no obligation to update the information in this release.

Contact:
B.J. Lackland, CFO, 702-697-0377