August 14 , 2006
Power Efficiency Corporation Reports Second Quarter Results and Summarizes Corporate Milestones Met and Future Plans
LAS VEGAS--(MARKETWIRE)---August 14, 2006—Power Efficiency Corporation (OTCBB: PEFF), a developer and manufacturer of advanced energy savings technologies for electric motors, today announced its second quarter results of operations, milestones and corporate focus over coming quarters.
“In the second quarter of this year, the Company made significant progress in numerous areas that are critical to the Company’s development into a highly valuable provider of energy saving technologies,” said Steven Strasser, Power Efficiency’s Chairman and CEO. “At the beginning of the year we outlined several key objectives for 2006, and the accomplishments this past quarter show that we are reaching many of those goals. For example, attaining several technical milestones, having extremely successful field trials of the technology with independent evaluators, and adding key personnel in management and on the board of directors were critical events in the second quarter.”
Highlights of the Quarter Included:
Technology and Product Development
• Provisional Patent – The Company has staked a claim to key intellectual property for energy savings on electric motors running at a constant speed by filing a provisional patent for its next generation product technology. Ownership of this intellectual property provides the Company leverage to license the technology to other manufacturers of motor-related products.
• Prototype Completion – The Company created a prototype of its next generation product based on the patent pending technology, software and microprocessors. Final design of the commercialized products has commenced.
• Successful Technology Review by Leading Motor and Electronics Consortium – The Wisconsin Electric Machines and Power Electronics Consortium (WEMPEC), leaders in motor control and efficiency technologies, proclaimed that the Company’s technology “has the potential to make a significant impact on energy consumption by electric motors in many applications.”
Sales and Marketing
• As part of the Company’s initiative targeting Las Vegas casinos, we completed four highly successful field tests with Nevada Power Company. Energy savings averaged approximately 35% across all tests. The Company is now pursuing sales to many of these casinos and others in Las Vegas.
• Continued Co-Marketing Initiative with KONE Inc., one of the leading elevator and escalator service companies in the world, resulted in a sale to Columbus International Airport.
Corporate Development
• Key Personnel Added – New board members include George Boyadjieff, former CEO of Varco International (now NYSE: NOV), Douglas Dunn, former dean of Carnegie Mellon University's Graduate School of Industrial Administration, now the Tepper School of Business, and Rob Murray, former President and Co-Owner of GoWireless and now the Company’s Chief Operating Officer.
• Majority Independent Board and Separately Standing Audit Committee Formed
Looking forward, the Company has several core goals for the next six-to-nine months:
Technology and Product Development
• Develop commercialized versions of the next generation products, based on new the patent-pending software, algorithm and microprocessors.
o The next generation products are expected to be available during the first quarter of 2007.
• Anticipated advantages of the new products include:
o Reduced cost of goods, resulting in improved gross margins
o Increased integration with factory automation systems
o Opportunities for licensing or microchip sales to other manufacturers of motor control devices
o Opportunities for sales or licensing to appliance manufacturers
Sales and Marketing
• Focus on closing sales to several notable customers for escalator applications
• Grow sales to industrial applications
• Continue to develop and grow an independent rep and distributor network capable of greatly increasing sales
• Add sales and business development personnel to ramp up sales efforts in anticipation of the new product release and commence strategic marketing discussions, such as licensing agreements
The financial results for the second quarter included sales of $44,000 with a gross margin of 19%. The net loss for the quarter ended June 30, 2006 was $1,693,631, including $979,177 in non-cash expenses.
Strasser continued, “In light of the Company’s recent accomplishments and progress, I have ever-increasing confidence that the Company can become a highly valuable provider of energy efficiency technology. Recently I committed an additional $750,000 in capital to the Company. Investing one’s personal capital is the strongest possible act of confidence from a CEO.”
About Power Efficiency Corporation
Power Efficiency Corporation designs and manufactures the Power Efficiency Motor Efficiency Controller™, a product that reduces the amount of energy used by electric motors in many constant speed/variable load applications. These motors are found in escalators, elevators, grinders, granulators, mixers, saw mills and many other applications. The Power Efficiency Motor Efficiency Controller™ allocates power in direct proportion to the motor's required workload, eliminating wasted electricity. The company's core technology is based on patented improvements to NASA technology. Energy savings from these controllers are typically 20-40%, but can be as high as 45%. The controllers also reduce the operating heat of the motor, enabling significant motor life extension and downtime reduction benefits. PEC products are UL compliant and CE and CSA certified. The Company also has a prototype unit applicable to single-phase electric motors that are found in applications such as clothes dryers, refrigerators, vending machines, mixers and coffee grinders.
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 product 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
B.J. Lackland, 702-697-0377
Chief Financial Officer
blackland@powerefficiencycorp.com
