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PRHL > SEC Filings for PRHL > Form 10-Q on 18-Nov-2013All Recent SEC Filings

Show all filings for PREMIER HOLDING CORP.

Form 10-Q for PREMIER HOLDING CORP.


18-Nov-2013

Quarterly Report


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

INTRODUCTION

The following discussion and analysis summarizes the significant factors affecting:

Premier's plan of operations for the nine months ended September 30, 2013. This discussion and analysis should be read in conjunction with Premier's consolidated financial statements and notes included in its Annual Report on Form 10-K for the year ended December 31, 2012.

In this discussion and analysis, management will explain the general financial condition of and the results of operations for Premier Holding Corporation including:

factors which affect our businesses,

our earnings and costs in the periods presented,

sources of earnings,

expected sources of cash for future capital expenditures,

our net available liquidity and collateral requirements, and

expected future expenditures for capital projects.

Overview

Premier Holding Corporation, a Nevada corporation ("Premier" or "PRHL" or the "Company"), provides a large array of energy services through its subsidiary companies Energy Efficiency Experts Inc, a Delaware corporation ("E3"), and The Power Company USA, LLC, an Illinois limited liability company ("TPC" or "The Power Company").

Premier provides solutions that enable customers to reduce their energy consumption, lower their operating and maintenance costs, and realize environmental benefits. Our comprehensive set of services includes competitive electricity plans and upgrades to a facility's energy infrastructure.

In addition to organic growth, strategic acquisitions of complementary businesses and assets have been an important part of our historical development. Since inception, Premier has completed numerous acquisitions, which have enabled us to broaden our service offerings and expand our geographical reach.

In 2012, Premier acquired a unique marquee technology for energy efficient lighting, the E-Series controller developed by Active ES. This patented technology provides an upgrade for existing HID lamps for high-bay indoor and outdoor applications where the other current options for efficiency are few, expensive, and untested. This technology is being marketed by E3.

In the fourth quarter of 2012, Premier performed additional research and development to the products from Active ES adding two new products for mass production, the 480 volt version of the controller, suitable for ports and other large facilities, and a 240 volt version of the LiteOwl for Streetlights, vastly increasing the applicable market. Also in the fourth quarter, Premier formed a strategic alliance with Muni-Fed Energy who has strong relationships with municipalities, ports, and real estate investment trusts in the southern California and national market.

In the first quarter of 2013, Premier acquired an 80% stake in The Power Company, a deregulated power broker in Illinois. By the end of that quarter, The Power Company had over 12,000 clients, and has been adding between 1,000 and 3,000 clients per month (closing third quarter 2013 with 40,000 contracts) and expects to continue to do so for the foreseeable future. Over 1,000 of these clients have large commercial/industrial facilities such as warehouses and distribution center, which are candidates for E3.

The Power Company's business model is to acquire commercial and residential clients who benefit from the law passed allowing for competition in the energy markets, known as the deregulation of energy. In many cases TPC saves its clients 10-30% on their energy bills by simply switching suppliers, all while the enrollee remains a client of their local utility (local utility continues to read meter, bill and service any interruptions). TPC is different than several of its competitors in that is has agreements with multiple energy suppliers allowing TPC to leverage its standing in the marketplace to garner competitive pricing for its clients by having its suppliers compete for their client's business. Currently, TPC has access to over 30 different suppliers and most of the agreements in place allow for TPC to be paid for the life of the client's tenure with the supplier. TPC is garnering its clients through strategic partnerships, trained in-house commercial and door-to-door residential agents and call centers. TPC is launching its online client portal dubbed NEST (National Energy Service Transactor). This sophisticated portal enables rapid, efficient and secure sales transactions of deregulated power. NEST is designed to enable sales agents whether from a computer terminal, a smart phone, or any web browser to access the pertinent information on a particular prospect. Agents can view their clients' energy profiles and quickly access the energy options available to them. The transparency and ease of NEST allows TPC's agents to select the best power provider for their customers and process the paperwork online in real-time, which enables client acquisition in minutes. This sales portal enables large-scale, rapid sales of deregulated power, as yet unseen in the industry.

For its' competitive electricity services, Premier provides innovative and risk-mitigating energy products and solutions to North American wholesale and retail customers. Premier strives to serve its' customers with diverse products and solutions to meet their energy needs.

In executing this strategy, Premier leverages its' core strengths of maintaining and growing strong and diverse supply relationships with retail and wholesale customers, and integrating its' expertise in managing physical and financial risks.

Third Quarter 2013 Activities

TPC launched its online energy portal NEST on schedule.. NEST is built for scalability so that it can be monetized on its own, meaning it can be offered to any deregulated power company as its sales tool. The technology also provides sales management, reporting, verification, and compliance tracking to a degree not seen in the industry to date.

E3 and its growing reseller base have prospected over 1000 qualified potential installations as well as over a dozen strategic partners including Energy Auditors, suppliers, installers, sales organizations and funding sources. These suppliers exponentially increased the number of the product offerings mostly in the LED and other lighting field. The installers not only bring a technical expertise in the implementation of solutions E3 provides its customers but they also bring their list of client's and an introduction, and the various funding sources can provide every sort of financing to meet any client's needs from short-term loans, leases to PACE funding.

Premier completed strategic alliances with Norcal Reps, a national sales rep organization and Western Glass, providing efficiency technology to its 8,000 customers and introducing E3 to these customers. In addition, Premier has acquired the resources of AEON Green Energy Solutions by means of an exclusive employment agreement with its founder, Lenard Tercenio, including its strategic alliances, sales agents, manufacturer, finance and auditor relationships, as well as its client base and pipeline estimated to be worth $2,000,000 in sales in the ensuing 12 months.

E3 is finding success in recruiting LED resellers whose clients have declined an LED sale (mostly on a performance or personal preference basis) and going back to those clients and offering the E-Series technology as a solution for their existing (and preferred) HID lighting. This includes auto dealerships, warehouses, and parking structures, etc.

The energy services business has contributed a very small amount of revenues to our overall financial performance as of the quarter ended September 30, 2013, as the sales cycles for these large projects can be very long, though Premier has seen closed sales with a municipality and very large proposals to large prospects such as ports, municipalities, big box stores, and fortune 500 companies.

Strategy and Outlook

Expanding activities in deregulated energy markets through strategic partners. Premier continues to focus on building sales channels through strategic partners that either have, or have access to significant customers to which Premier can offer competitive electricity rates.

Creating and leveraging sales leads from TPC's deregulated sales efforts to drive sales opportunities for the demand management business. As TPC continues to build its commercial and business customer base, it informs these customers that in addition to financial savings that they can achieve through the negotiation of more competitive electricity rates, Energy Efficiency Experts ("E3") can also provide energy savings through the installation of lighting, and other building envelope technologies.

Focusing on building channel sales partners for E3. Premier has established strategic partners in key growth markets that advocate and introduce our lighting and related demand management technologies to their customer base. Premier intends to continue to build and develop these channel partnerships both domestically and internationally.

Remaining technology and supplier independent. Premier believes that it can best serve our customers by maintaining independent in both our supplier and technology partnerships, which enables us to focus on providing the most appropriate and effective solution to meet our customers' needs and financial objectives.

Provide funding sources to enable our clients to adopt new technology. Premier believes it can offer a wide range of funding options which will allow its' clients to structure the finances to best suit their needs. From 100% no money down, to straight purchases, E3 has available to it a number of strategic financial partners and programs to facilitate a quick sale. In addition the company has resources to maximize tax credits and incentives for Premier's clients.

Known Trends and Uncertainties Affecting Our Business

Market Volatility. Management believes that the market for energy efficiency will continue to grow, and Premier will increase penetration in this market, and that revenue will continue to increase over time. Continued fiscal uncertainty has and may continue to contribute to a lengthening of our sales cycle for both municipal and commercial customers.

Long and Variable Selling Cycle for E3 Business. The sales, design and implementation process for energy efficiency projects can take from several months to 36 months. Existing and potential customers generally follow extended budgeting and procurement processes, and sometimes must engage in regulatory approval processes. This extended sales process requires the dedication of significant time by sales and management personnel and the use of significant financial resources, with no certainty of success or recovery of related expenses. All of these factors can contribute to fluctuations in quarterly financial performance and increase the likelihood that operating results in any particular quarter may fall below investor expectations.

Interim Financial Statements

The unaudited condensed consolidated financial statements as of and for the nine months ended September 30, 2013 reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows for the period presented in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.

These interim financial statements should be read in conjunction with the Company's financial statements and notes thereto for the years ended December 31, 2012 and 2011 included in the Company's Form 10-K filed with the United States Securities and Exchange Commission on April 22, 2013. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited consolidated financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the nine months ended September 30, 2013 are not necessarily indicative of results for the entire year ending December 31, 2013.

Results of Operations

The condensed financial information with respect to the nine months ended September 30, 2013 and 2012 that is discussed below is unaudited. In the opinion of management, such information contains all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the results for such periods. The results of operations for interim periods are not necessarily indicative of the results of operations for the full fiscal year.

Company Overview for the nine months ended September 30, 2013 and 2012

Consolidated Sales. During the nine months ended September 30, 2013 and 2012 sales of products amounted to $1,437,746 and $81,019, respectively. During the nine months ended September 30, 2013 and 2012, cost of sales amounted to $33,786 and $44,789, respectively. The increase in sales is primarily due to the acquisition of The Power Company USA, LLC.

Consolidated Selling, general and administrative. During the nine months ended September 30, 2013 and 2012, selling, general and administrative expenses amounted to $4,934,351 and $2,150,443, respectively. The increase in selling, general and administrative expenses in the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012 can be attributed increase operational expense related to the acquisition of The Power Company USA, LLC and increased stock compensation expense.

Consolidated Other income (expense). During the nine months ended September 30, 2013 and 2012, other expense amounted to $0 and $2,008, respectively.

Consolidated Net Income (Loss). During the nine months ended September 30, 2013 and 2012, net loss amounted to $2,422,241 and $2,116,221, respectively. The loss in 2012 was primarily due to the failure of the strategy used by Ecolutions, while the loss in 2013 was generated by the sale of the non-performing intangible assets, as well as reduced costs and increased revenues during that same period offset by an increase in stock compensation expense and operational expenses.

Company Overview for the three months ended September 30, 2013 and 2012

Consolidated Sales. During the three months ended September 30, 2013 and 2012 sales of products amounted to $651,740 and $0, respectively. During the three months ended September 30, 2013 and 2012, cost of sales amounted to $32,295 and $4,373, respectively. The increase in sales is primarily due to the acquisition of The Power Company USA, LLC.

Consolidated Selling, general and administrative. During the three months ended September 30, 2013 and 2012, selling, general and administrative expenses amounted to $3,291,797 and $476,402, respectively. The increase in selling, general and administrative expenses in the three months ended September 30, 2013 as compared to the three months ended September 30, 2012 can be attributed increase operational expense related to the acquisition of The Power Company USA, LLC and increased stock compensation expense.

Consolidated Other expense. During the three months ended September 30, 2013 and 2012, other expense amounted to $0 and $654, respectively.

Consolidated Net Income (Loss). During the three months ended September 30, 2013 and 2012, net loss amounted to $2,503,097 and $481,429, respectively. The loss in 2012 was primarily due to the failure of the strategy used by Ecolutions, while the loss in 2013 was generated by increased revenues during that same period offset by an increase in stock compensation expense and operational expenses.

Going Concern

The Company has sustained operating losses of $11,564,169 since inception additional funding may be required to sustain operations and satisfy contractual obligations for planned operations. The ability to establish the Company as a going concern may be dependent upon obtaining additional funding in order to finance planned operations.

Plan of Operation

For the remainder of fiscal 2013, Premier will focus on attempting to continue to increase revenues through the sale of products and services by offering renewable energy production and energy efficiency products and services.

Liquidity and Capital Resources

During Premier's most recent quarter ended September 30, 2013, cash flows from operations were not sufficient to meet operating commitments. Cash flows from operations continue to be, and are expected to continue to be, insufficient to meet operating commitments throughout the remainder of the fiscal year ending December 31, 2013.

Working Capital. As of September 30, 2013 working capital was $319,316 and cash was $350,218 while at December 31, 2012 working capital was $(219,204) and cash was $44,311. The increase in working capital is primarily attributable to the on-going sale of common stock. Working capital is not expected to increase through revenues generated by Premier's subsidiaries during the balance of this year.

Cash Flow. Net cash used in or provided by operating, investing and financing activities for the nine months ended September 30, 2013 and 2012 were as follows:

                                                  Nine months Ended
                                                    September 30,
                                                2013             2012

Net cash (used) in operating activities     $ (2,099,278 )     (1,336,076 )
Net cash (used) in investing activities     $    (19,935 )        (30,000 )
Net cash provided by financing activities   $  2,425,120        1,108,822

Net Cash Used in Operating Activities. The changes in net cash used in operating activities are attributable to net income adjusted for non-cash charges as presented in the statements of cash flows and changes in working capital as discussed above.

Net Cash Provided by Financing Activities. Net cash provided by financing activities relates primarily to cash received from sales of common stock.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

The consolidated financial statements have been prepared by management in accordance with U.S. GAAP. Please read the corresponding section in Part II Item 7 and the notes to the consolidated financial statements of the Annual Report on Form 10-K for the year ended December 31, 2012 for the description of critical accounting policies and estimates.

Recently Issued Accounting Pronouncements

The Company has evaluated recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA and the SEC and we have not identified any that would have a material impact on the Company's financial position, or statements.

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