Power Efficiency Corp. announced that it closed on $3.2 million in equity and $2.0 million in debt financing. Investors in the financing included members of management and the board of directors, an energy-focused hedge fund, and a number of highly accomplished individuals. The equity financing included sales of units comprised of two shares of common stock and one warrant. The purchase price for each unit was $0.60. Each warrant has an exercise price of $0.40 per share.
The debt financing consisted of $2.0 million of two year, secured promissory notes. The company also issued 2.5 million warrants to the debt investors. Each warrant has an exercise price of $0.40 per share. Half the warrants vest upon issuance of the notes, while the other half vest evenly for the first 24 months after issuance. With the financing, the company retired two classes of existing notes originally issued in Spring 2006 and Winter 2004-2005, some of which was retired in exchange for the new notes.
“We are delighted to complete this new financing with an outstanding set of investors,” said Steven Strasser, Power Efficiency Corp.’s Chairman and CEO. “This financing is important for the company because it enables us to finalize development and commence selling the next generation of our digital products. The new product for industrial motors is expected to be launched in the first quarter of 2007. This product combines all the standard characteristics of a solid state electric motor soft start with timely and valuable energy savings technology. Ultimately, this product will incorporate additional value-added features, such as motor load monitoring and predictive maintenance. With this new product, the company is primarily targeting sales through established distribution channels, such as original equipment manufacturers, motor and drive distributors, and energy service companies. We believe the product and associated marketing strategy should lead to significantly increased sales with a healthy gross margin in 2007. Some of the proceeds from the financing will also be used to complete the company’s single phase product, which we are developing to reduce the electricity used by motors in appliances and light commercial equipment, such as refrigerators, residential air conditioning and shop tools.”