April 2, 2007
Power Efficiency Corporation Reports 2006 Results
CEO Discusses 2006 Accomplishments and 2007 Goals
LAS VEGAS--(BUSINESS WIRE)---Power Efficiency Corporation (OTCBB: PEFF.OB), a developer and manufacturer of advanced energy savings technologies for electric motors, today announced its 2006 financial results on Form 10-KSB. Power Efficiency’s Chairman and CEO, Steven Strasser, had the following comments on the results from 2006 and company objectives for 2007.
“In 2006, the Company made a number of accomplishments toward building a highly valuable green energy technology company. Although 2006 sales of less than $200,000 were not as high as I would have liked, great strides were made in areas we believe are important for developing long term shareholder value. These accomplishments are already beginning to bear fruit. For example, although Q1 2007 sales were roughly in line with past quarters, the Company is ending the quarter with purchase orders that exceed all of 2006 sales.”
Other accomplishments in 2006 and early 2007 which we believe are critical for developing a leading energy technology company include:
Sales:
- Increased purchase orders: Entering the second quarter, the Company’s has purchase orders that exceed all of 2006 sales, including the recently announced order from the Los Angeles Metropolitan Transit Authority
- Successful tests and utility incentive financing:
- The Southern California Edison “2007 Escalator Power Efficiency Motor Efficiency Controller Program” in which the utility purchases our equipment for owners of escalators
- A Prescriptive Rebate from the SureBet Program, covering Nevada Power Company and Sierra Pacific Company, for purchasers of our equipment for escalators in Nevada
- Successful industrial equipment tests showing energy savings on a stamping press and crushing machine
- Discussions commenced about licensing or making a private label product for original equipment manufacturers of products that would operate more efficiently by incorporating out technology.
Gross Margin:
- Even with limited sales in 2006, we achieved a gross margin of 28%. We believe the release of the new products and potential for increased sales volume will ultimately enable the Company to improve margins further.
Technology and Intellectual Property:
- Patent filings on new inventions to improve the efficiency of electric motors operating at constant speed.
Product Development:
- The first digital three phase product for motors in industrial and commercial buildings is in the final stages of UL and CSA certification. The first production run is presently being manufactured.
- Development of a single phase prototype for motors in residential and light commercial appliances. We are now building numerous units to further our discussions and tests with motor and appliance manufacturers.
Additions to personnel and advisors
- The company added several highly experienced sales and product development personnel.
- Technical advisor: Professor Yahia Baghzous, a professor of electrical engineering at UNLV, has a specialty in electric motors and energy technology
- Marketing and strategy advisor: Kenneth Dickey, a retired senior executive with decades of experience in motors and controls
Investment from highly accomplished investors and insiders
- The Company completed a debt financing of $2 million dollars and an equity financing totaling $4.2 million. The equity offering price was $0.30 per share with a warrant for every two shares and an exercise price of $0.40 per share. Financing came from accredited investors and over $1.2 million from the Company’s directors and officers.
Strasser continued: “The market for energy efficiency technologies has gotten better and better. I see it continuing to get better for years into the future because of a confluence of factors that are not going to change soon. First, many experts believe global warming is one of the greatest challenges our world faces in the twenty-first century. Electricity generation is a leading cause of greenhouse gas emissions, so we expect that any products which improve energy efficiency and reduce emissions will be warmly received in the marketplace. Second, energy prices continue to rise. Third, energy self-sufficiency has become a national security issue, as tensions rise between the U.S. and Venezuela, Iran and other energy exporting countries.
“I am very optimistic about the Company’s opportunities in 2007 and believe this is an important year for us. We believe we have assembled an excellent team of people, our products and technology continue to improve, and we have an increasing number of large opportunities in front of us.”
Summary 2006 Financial Results:
Total Sales: $$188,811
Total Gross Margin (and % of sales): $52,571 (28%)
Net Loss: $5,020,775
Net cash used for operating activities: $2,756,724
Pro forma (unaudited) sum of non-cash compensation and non-cash interest expense: $2,204,299
Pro forma (unaudited) net loss excluding non-cash compensation and non-cash interest: $2,816,476
About Power Efficiency Corporation
Power Efficiency Corporation develops and markets advanced energy saving technologies for electric motors. The Company’s first product is an energy saving soft start. The product gradually brings an electric motor from rest to full speed. Once at full speed, the Company’s patented technology works like cruise control for a car; it delivers the motor just enough electricity to maintain a constant operating speed, whether the motor is heavily or lightly loaded. The technology saves energy on motors found in applications such as escalators, elevators, grinders, granulators, mixers, saw mills and more. Energy savings from these controllers is typically 20-40% in appropriate applications. The controllers also reduce the operating heat of the motor, producing significant motor life extension and downtime reduction benefits. Power Efficiency’s products are CE Marked and CSA certified. The Company is also developing products to reduce the amount of electricity used by appliances and light commercial equipment, such as refrigerators, residential air conditioning and shop tools. For more information visit www.powerefficiencycorp.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 2005 Annual Report. Power Efficiency assumes no obligation to update the information in this release.
Contact:
Power Efficiency Corporation
Investor Relations:
B.J. Lackland, 702-697-0377
Chief Financial Officer
blackland(at)powerefficiencycorp.com
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