8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 28, 2005

POWER EFFICIENCY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	0-31805	22-3337365
(State or other jurisdiction of incorporation)	Commission File Number	(IRS Employer Identification No.)
3900 Paradise Road, Suite 283, Las Vegas, NV		89109
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (702) 697-0377

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR 240.13e-4(c))

INFORMATION TO BE INCLUDED IN THE REPORT

Item 1.02  Termination of Material Definitive Agreement.

The Registrant reached an agreement with Commerce Energy Group (“CEG”), one of the Registrant’s largest shareholders, which became effective on April 28, 2005 to terminate a licensing agreement for the Registrant’s single phase technology (“License Agreement”). The License Agreement was entered into between the parties on October 11, 2004 and became effective 90 days thereafter and was included as exhibit 10.1 in the Registrant’s Form 10-QSB filed November 15, 2004.  The Licensing Agreement was for ten years with a three year extension (at which time our patent expires) and provided us a royalty equivalent to 5% of the net profits from CEG’s sales of products utilizing the single phase technology.  The termination of this licensing agreement means all sales and profits of the single phase product will accrue solely to the benefit of the Registrant. In exchange for canceling the Licensing Agreement, the Registrant issued 180,723 share of Series A-1 Preferred stock (presently convertible into 150,000 shares of common stock) and 75,000 common stock purchase warrants with an exercise price of $0.45 per share. These securities are exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 as transactions not including any public offering.

Item 3.02  Unregistered Sale of Equity Securities.

 On April 28,2005 Summit Energy Ventures LLC (“Summit”) invested $200,000 in the Registrant in exchange for the issuance of 1,204,819 shares of the Registrant’s Series A-1 Preferred Stock (presently convertible into 1,000,000 shares of common stock) and the issuance of 500,000 common stock purchase warrants with an exercise price of $0.45 per share. There were no fees or commissions associated with this offering. These securities are exempt from registration pursuant to pursuant to Section 4(2) of the Securities Act of 1933 as transactions not including any public offering.

Description of Document		Location
1.1	Subscription Agreement with Commerce Energy Group	Filed herewith.
1.2	Single Phase License Agreement with Commerce Energy Group	Incorporated herein by reference from the Company’s Form 10-QSB filed November 15, 2004.
3.1	Subscription Agreement with Summit Energy Ventures LLC	Filed herewith.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

POWER EFFICIENCY CORPORATION
(Registrant)
By:	/s/  Steven Strasser
	Steven Strasser, CEO
Date: May 4, 2005

2

EX-1.1

Exhibit 1.1

COMMERCE ENERGY GROUP

Power Efficiency Corporation

3900 Paradise Road, Suite 283
Las Vegas, NV 89109

Re:Offer to Purchase 180,723 Shares of Series A-1 Convertible

Preferred Stock and Warrants to Purchase Common Stock

Ladies and Gentlemen:

In accordance with our discussions with Power Efficiency Corporation (the “Company”), Commerce Energy Group, Inc., a Delaware corporation (“Commerce”), hereby offers to purchase 180,723 shares (the “Shares”) of Series A-1 Convertible Preferred Stock of the Company (the “Series A-1 Stock”) and Warrants to purchase 75,000 shares of Common Stock of the Company (the “Warrants”), on the following terms and conditions:

1.  Purchase Price.  The aggregate purchase price for the Shares and Warrants is the termination, effective the date the Shares and Warrants are issued (the “Closing Date”), of that certain Single Phase Technology License Agreement dated October 11, 2004, between Commerce and the Company (the “Agreement”), a copy of which is attached hereto as Exhibit A, so that as of the Closing Date the Agreement will be cancelled and of no further force or effect.

2.  Terms of Warrants.  The Warrants will allow Commerce to purchase, at any time prior to the fifth anniversary following the Closing Date, and at Commerce’s sole and absolute discretion, 75,000 shares of Common Stock of the Company at a price which is equal to two hundred percent (200%) of the 5-day average of the closing sales price of shares of Common Stock of the Company on the OTC Bulletin Board prior to the Closing Date (the “Average Sales Price”).

3.  Consent; Waiver of Series A-1 Antidilution Provisions.  The requisite percentage of holders of the Series A-1 Stock shall have consented to the issuance of the Shares and shall have waived the applicability of the antidilution provisions of the Series A-1 Stock to this transaction.

4.  Securities Law Compliance.  Commerce confirms that it is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended (the “1933 Act”), and that in order  to comply with the requirements of Section 4(2) of the 1933 Act and any applicable state securities or blue sky laws Commerce represents and warrants that it is acquiring the Shares and the Warrants for investment purposes only and not with a view to the resale or distribution thereof.

5.  Company Action.  This transaction shall have been approved by the requisite vote of members of the Board of Directors of the Company who are independent of Commerce.

If the foregoing sets forth our understanding, please indicate your agreement by signing  and returning the enclosed copy of this letter.

		Very truly yours,
		COMMERCE ENERGY GROUP, INC.
		By:	/s/ Richard Boughrum
		Name:	Richard Boughrum
		Title:	Senior Vice President & Chief Financial Officer
		By:	/s/ Kenneth Robinson
		Name:	Kenneth Robinson
		Title:	Controller
AGREED TO AND ACCEPTED AS
OF THE 22nd DAY OFAPRIL, 2005:
POWER EFFICIENCY CORPORATION
By:	/s/ Steven Strasser
	Name: Steven Strasser
	Title:   CEO

EX-3.1

Exhibit 3.1

SUMMIT ENERGY VENTURES LLC

Power Efficiency Corporation

3900 Paradise Road, Suite 283
Las Vegas, NV 89109

Re:Offer to Purchase 1,204,819 Shares of Series A-1 Convertible

Preferred Stock and Warrants to Purchase Common Stock

Ladies and Gentlemen:

In accordance with our discussions with Power Efficiency Corporation (the “Company”), Summit Energy Ventures, LLC, a Delaware limited liability company (“Summit”), hereby offers to purchase 1,204,819 shares (the “Shares”) of Series A-1 Convertible Preferred Stock of the Company (the “Series A-1 Stock”) and Warrants to purchase 500,000 shares of Common Stock of the Company (the “Warrants”), on the following terms and conditions:

1.  Purchase Price.  The aggregate purchase price for the Shares and Warrants is $200,000 in cash.

2.  Terms of Warrants.  The Warrants will allow Summit to purchase, at any time prior to the fifth anniversary following the date on which the shares and Warrants are issued (the “Closing Date”), and at Summit’s sole and absolute discretion, 500,000 shares of Common Stock of the Company at a price which is equal to two hundred percent (200%) of the 5-day average of the closing sales price of shares of Common Stock of the Company on the OTC Bulletin Board prior to the Closing Date (the “Average Sales Price”).

3.  Consent; Waiver of Series A-1 Antidilution Provisions.  The requisite percentage of holders of the Series A-1 Stock shall have consented to the issuance of the Shares and shall have waived the applicability of the antidilution provisions of the Series A-1 Stock to this transaction.

4.  Securities Law Compliance.  Summit confirms that it is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended (the “1933 Act”), and that in order to comply with the requirements of Section 4(2) of the 1933 Act and any applicable state securities or blue sky laws Summit represents and warrants that it is acquiring the Shares and the Warrants for investment purposes only and not with a view to the resale or distribution thereof.

5.  Company Action.  This transaction shall have been approved by  the requisite vote of members of the Board of Directors of the Company who are independent of Summit.

If the foregoing sets forth our understanding, please indicate your agreement by signing  and returning the enclosed copy of this letter.

		Very truly yours,
		SUMMIT ENERGY VENTURES, LLC
		By:	/s/ Steven Strasser
			Name:  Steven Strasser
			Title:    CEO
AGREED TO AND ACCEPTED AS
OF THE 22nd DAY OFAPRIL, 2005:
POWER EFFICIENCY CORPORATION
By:	/s/ Steven Strasser
	Name:  Steven Strasser
	Title:    CEO