ANN ARBOR, Mich., Nov. 25, 2003 (PRIMEZONE) -- Power Efficiency Corporation (OTCBB:PREF), a developer and international marketer of patented electric energy-saving devices, announced their financial results for the third quarter and nine month period ended September 30, 2003. The company also announced that it had settled a dispute with a former CEO, settled a contractual matter and retired debt in a stock transaction with the company's founder and the conversion of its $1 million credit line into equity by Summit Energy Ventures.
Revenues for the third quarter were $112,077, as compared to $104,259 for the same period last year, and revenues for the nine month period were $368,203 as compared to $352,205 for the same period last year. The company incurred a net loss in the third quarter of $1,044,469, as compared to a net loss of $495,326 for the same period last year, and a net loss for the nine month period of $2,135,041, as compared to a net loss of $1,370,562 for the same period last year. Much of the increased net loss is attributable to non-recurring expenses, such as the settlement with the former CEO, legal expenses and a settlement with the company's founder.
The company settled a dispute with a former CEO that had been scheduled for arbitration. The former CEO agreed to accept stock instead of the cash payment he claimed was owed to him pursuant to a change of control provision in his employment contract. The company also issued stock to its founder to retire outstanding debt obligations and to satisfy a contractual change of control clause in his employment contract. Although these events had a negative effect on the company's income statement, there was a positive effect on the company's balance sheet in that debt was converted in to equity and the possibility of a negative legal judgment was avoided. These transactions resulted in a one time $418,500 charge to earnings and the retirement of $465,000 in debt.
In November 2003, the company's largest shareholder, Summit Energy Ventures exercised its right to convert its $1.0 million note to Series A-1 Convertible Preferred Stock. In addition to strengthening the company's Balance Sheet, this transaction saves $12,500 in monthly interest and allows the company to apply new capital raised towards operational needs rather then retiring the debt that was due on December 31, 2003.
Mr. Koch, President & CEO, stated that he appreciated the confidence shown by Summit and the company's founder expressed by the conversion of their previous debt positions into equity. He was also pleased to have amicably resolved the dispute with the former CEO whose belief in the company's technology led him to accept stock in settlement of his claim.
About Power Efficiency
Power Efficiency is a world leader in providing proprietary energy management technology solutions. The Power Efficiency Performance Controller enables AC induction motors to perform at their optimum efficiency without affecting speed. Cost of operation in these motors can be reduced by 10% to 40%. www.powerefficiencycorp.com
Safe Harbor Statement under Private Securities Act of 1995: The statements contained in this release, which are not historical facts, may be deemed to contain forward-looking statements, including, but not limited to, deployment of new services, growth of customer base, and growth of service area, among other items. Actual results may differ materially from those anticipated in any forward-looking statement with regard to magnitude, timing or other factors. Deviation may result from risk and uncertainties, including, without limitation, the Company's dependence on third parties, market conditions for the sale of services, availability of capital, operational risks on contracts, and other risks and uncertainties. The Company disclaims any obligation to update information contained in any forward-looking statement.