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): November 2, 2007 (October 29, 2007)

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.)
3960 Howard Hughes Pkwy, Suite 460, Las Vegas, NV		89169
(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:

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 1.01 Entry into a Material Definitive Agreement.

On October 29, 2007, Power Efficiency Corporation (the “Company”) issued and sold 113,500 units (the “Units”), each Unit consisting of one share of the Company’s Series B Preferred Stock, par value $.001 per share (“Series B Preferred Stock”), and a warrant to purchase 50 shares of the Company’s common stock, resulting in the sale and issuance of an aggregate of 113,500 shares of Series B Preferred Stock and warrants to purchase, initially, up to 5,675,000 shares of the Company’s common stock (the “Warrants”), in a private offering (the “Offering”) for $5,675,000 in cash and cancellation of indebtedness, all as described in Item 3.02 below. Many of the purchasers of Units were either officers, directors, affiliates or pre-existing stockholders or noteholders of the Company.

In connection with the Offering, the Company has agreed to use its reasonable best efforts to file a registration statement (the “Registration Statement”) to register the common stock issuable upon conversion of the Series B Preferred Stock issued, as well as the common stock issuable upon exercise of the Warrants, not later than 60 days from the termination date of the Offering (the “Termination Date”), and must use its reasonable best efforts to have the Registration Statement declared effective not later than 120 days from the Termination Date.

Item 1.02 Termination of a Material Definitive Agreement.

As set forth in Item 1.01 above, a portion of the purchase price for the Units was paid through the conversion of secured promissory notes held by various investors against the Company. Prior to the Offering, the Company had an aggregate of $2,000,000 of secured promissory notes outstanding, all of which were secured by a first priority security interest in all of the assets of the Company (the “Notes”). Certain of these Notes were held by certain of our officers, directors and shareholders. The total dollar amount of Notes converted into Units in the Offering was $1,850,000. The remaining $150,000 of Notes were paid off using a portion of the proceeds of the Offering and, as a result, the Company no longer has any promissory notes of any kind outstanding against it, nor are any Company assets encumbered by any security interest. All of the Notes were due and payable November 30, 2008 and there was no penalty or other consideration granted for conversion of the Notes into the Offering or with respect to pre-payment of the Notes.

Item 3.02 Unregistered Sale of Securities.

On October 29, 2007, the Company issued the Units, consisting of 113,500 shares of Series B Preferred Stock and the Warrants, in the Offering for $5,675,000, consisting of the cancellation of $1,850,000 of indebtedness held by various individuals against the Company and $3,825,000 in cash. The per Unit purchase price was $50.00. The Warrants have a per share exercise price of $0.60, are exercisable immediately and expire October 28, 2012.

Each share of Series B Preferred Stock is initially convertible into 100 shares of the Company’s common stock, subject to adjustment under certain circumstances. The Series B Preferred Stock is convertible at the option of the holder at any time. The Series B Preferred Stock is also subject to mandatory conversion in the event the average closing price of the Company’s common stock for any ten day period equals or exceeds $1.00 per share, such conversion to be effective on the trading day immediately following such ten day period. The Series B Preferred Stock has an 8% dividend, payable annually in cash or stock, at the discretion of the Company’s board of directors.

The Offering was conducted pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Regulation D, Section 4(2) and Rule 506 thereunder. No placement agent or underwriter was used in connection with the Offering and there is no commission, finder’s fee or other compensation due or owing to any party as a result of the transactions described herein.

Item 9.01. Exhibits

Description of Document
99.1	Press Release of Power Efficiency Corporation, dated November 2, 2007

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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
By:	/s/ John Lackland
	John Lackland, CFO
Date: November 2, 2007

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EX-99.1

Exhibit 99.1

Power Efficiency Corporation Announces Equity Financing of $5.675 Million

Chairman & CEO and Three Members of the Board of Directors Invest Over $1 Million

November 2, 2007 – Las Vegas, NV – Power Efficiency Corporation (OTCBB: PEFF.OB), a green energy company focused on efficiency technologies for electric motors, today announced it closed on a $5.675 million private placement of Units. Insiders, including Steven Strasser, Chairman and CEO, and three other directors, invested $1.15 million in the offering.

The Company issued 113,500 Units, each consisting of one share of Series B Preferred Stock and 50 warrants. Each Unit has a purchase price of $50. Each share of preferred stock is initially convertible into 100 shares of common stock, making the effective common stock purchase price $0.50. The warrants have a per share exercise price of $0.60. The Series B Preferred Stock has an 8% dividend, payable annually in cash or stock, at the discretion of the Company’s board of directors. The Series B Preferred Stock has a mandatory conversion clause if the closing price of the Company’s common stock averages $1 or greater over a 10 day period.

“I am extremely pleased to announce our current equity financing round,” said Steven Strasser, the Company’s Chairman and CEO. “I have personally invested an additional $800,000 in the Company. In addition, three non employee members of our board of directors have invested a total of $350,000. Many of the other investors participated in the Company’s previous round of financing and I am happy they have chosen to invest additional capital. I believe this demonstrates the confidence these investors, our board of directors, and I have in the future of Power Efficiency.”

“With this financing, the Company is well poised to execute on its business plan to become a global leader in providing energy efficiency technologies for electric motors in industrial, commercial and appliance applications. The financing enables the Company to focus on growing sales of our new products, pursuing agreements with OEMs, and expanding our line of products based on our    E-Save Technology™ platform. The financing also clears our balance sheet of all debt,” concluded Mr. Strasser.

The total financing amount of $5.675 million includes the conversion of $1.85 million in secured notes. In addition, the Company repaid $150,000 in secured notes, plus accrued interest. The notes carried no pre-payment penalty. One half of the warrants issued in connection with the notes vested monthly over the term of the notes, and early repayment results in cancellation of approximately 729,000 warrants. Furthermore, elimination of the debt will reduce the Company’s interest expenses by $51,000 per month, including $25,000 in cash interest payments and approximately $26,000 in non-cash interest expense. The Company will recognize in the fourth quarter of 2007 a one time, non-cash interest expense of approximately $183,000 associated with the debt discount that was being amortized over the term of the notes.

Upon the closing of the equity financing and repayment of the secured notes, the Company has approximately $4.5 million in cash and no outstanding debt securities.

About Power Efficiency Corporation

Power Efficiency Corporation is a green energy company focused on efficiency technologies for electric motors. Power Efficiency is incorporated in Delaware and is headquartered in Las Vegas, Nevada. The Company has developed a patented and patent-pending technology platform, called E-Save Technology™, which has been demonstrated in independent testing to improve the efficiency of electric motors by 15-35% in appropriate applications. Electric motors consume over 25% of the electricity in the U.S. and many operate inefficiently. E-Save Technology™ can be licensed to motor, controls and equipment manufacturers. Power Efficiency’s first product based on E-Save Technology ™ is a Motor Efficiency Controller for applications such as escalators, crushers, granulators, mixers, saws, and MG elevators. Power Efficiency is also developing a new product based on E-Save Technology™ for the tens of millions of small motors found in applications such as residential air conditioning, pool pumps, and clothes dryers. The company is working with manufacturers to incorporate this technology directly into new motors and appliances. For more information go to www.powerefficiency.com.

Contact:

Power Efficiency Corporation

B.J. Lackland, CFO, (702) 697-0377
Kenneth Munson, VP Sales and Marketing, (702) 697-0377

Andrew Barwicki, Investor Relations, (516) 662-9461

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 SEC Filing. Power Efficiency assumes no obligation to update the information in this release.