NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 – DESCRIPTION OF BUSINESS
Premier Holding Corporation (“Premier”)
is devoting substantially all of its efforts to establishing energy services companies. These businesses, which were started during
2012, are primarily focused on providing small and large-scale commercial companies with energy solutions to reduce the costs of
utilities through consultations as well as product sales to complete those installations via shipment from inventory on hand to
the customer site. Premier’s principal operations of selling caskets through a commissioned sales force did not produce significant
revenue and was abandoned in 2011. Premier is organized with a holding company structure such that Premier provides financial and
management expertise, which includes access to capital, financing, legal, insurance, mergers, acquisitions, joint ventures and
management strategies.
Premier’s wholly owned subsidiary
WEPOWER Ecolutions, Inc offers renewable energy production and energy efficiency products and services to commercial middle market
companies. On February 26, 2013, WEPOWER Ecolutions, Inc. changed its name to “Energy Efficiency Experts, Inc. (E
3
)
in order to better communicate the business of the entity. E
3
is a U.S. energy service company based in the Los Angeles
area offering renewable energy production, energy efficiency products, and services to commercial middle market companies, Fortune
500 brands, developers and management companies of large scale residential developments as well as the general public so long as
the product and the solutions fit the market segment. E
3
’s business is focused as an integrator of clean technology
solutions in the U.S., with strategic expansion plans in Latin America, Asia and Europe. E
3
’s core business expects
to deliver green solutions, branded specifically as E
3
, which include best-of-class alternative energy technology portfolio
in smart lighting controls, LED lighting, battery storage power plants, energy and power control management systems, fuel reduction
solutions for transportation and other clean technologies specific to its market. Additional integrated business offerings will
include direct energy services as power purchase agreements (PPAs), energy financing and leasing of solar and wind-powered generation
programs in urban and rural real estate environments.
On February 28, 2013, Premier acquired
an 80% interest in The Power Company USA, LLC (“TPC”). TPC is based is a deregulated power broker which was originally
formed as an Illinois limited liability company on November 29, 2010. TPC brokers power to both residential and commercial users
in the 12 states that allow the distribution of deregulated power.
Premier was organized under the laws of
the State of Nevada on October 18, 1971 under the name of Mr. Nevada, Inc. On November 13, 2008, Premier filed a Certificate of
Amendment to Articles of Incorporation with the State of Nevada Secretary of State to change its name from OVM International Holding
Corporation to Premier Holding Corporation.
Interim Condensed Consolidated Financial
Statements
These unaudited condensed consolidated
financial statements as of and for the three and six months ended June 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 condensed consolidated financial
statements should be read in conjunction with the Company’s condensed consolidated 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 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 consolidated results of operations for the six month period
ended June 30, 2013 are not necessarily indicative of results for the entire year ending December 31, 2013.
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP").
Principles of Consolidation
The unaudited condensed consolidated financial
statements include the accounts of Energy Efficiency Experts, Inc. (formerly WEPOWER Ecolutions, Inc.) and the accounts of THE
POWER COMPANY USA, LLC as of and for the six months, ended June 30, 2013. All significant intercompany transactions have been eliminated
in consolidation.
Use of Estimates
The preparation of the unaudited condensed
consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include short-term
cash investments that have an initial maturity of 90 days or less. The Company had no cash equivalents as of June 30, 2013 and
December 31, 2012.
Revenue
Recognition
The Company’s wholly owned Energy
Efficiency Experts, Inc. and The Power Company USA, LLC. offer renewable energy production and energy efficiency products and services
to both commercial middle market companies as well as residential customers. In accordance with the requirements of ASC 605-10-599,
the Company recognizes revenue when (1) persuasive evidence of an arrangement exists (contracts); (2) delivery has occurred; (3)
the seller’s price is fixed or determinable (per the customer’s contract); and (4) collectability is reasonably assured
(based upon our credit policy). When consultations are provided to customers, the revenue is recognized at the completion of the
service when collectability is reasonably assured. For products sold to customers revenue is recognized when title has passed to
the customer and collectability is reasonably assured; and no further efforts are required. When contracts provide services over
long periods of time, the revenue is deferred and recognized over the service term of the contract
.
Accounts
Receivable
All accounts receivable
are due thirty (30) days from the date billed. If the funds are not received within thirty (30) days the customer is contacted
to arrange payment. The Company uses the allowance method to account for uncollectable accounts receivable. All accounts were considered
collectible as of June 30, 2013 and no allowance for bad debts was considered necessary.
Earnings/Loss Per Share
The Company has adopted the FASB ASC Topic
260 regarding earnings / loss per share, which provides for calculation of “basic” and “diluted” earnings
/ loss per share. Basic earnings / loss per share includes no dilution and is computed by dividing net income / loss available
to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings / loss per share reflect
the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings / loss per
share.
Income Tax
Deferred income tax is provided for differences
between the bases of assets and liabilities for financial and income tax reporting. A deferred tax asset, subject to a valuation
allowance, is recognized for estimated future tax benefits of tax-basis operating losses being carried forward. Income taxes are
provided based upon the liability method of accounting pursuant to the FASB ASC Topic 740-10-30 concerning Income Taxes. Under
this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax
basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against
the deferred tax asset if management does not believe the Company has met the “more likely than not” standard imposed
by the FASB ASC Topic 740-10-30 concerning Income Taxes to allow recognition of such an asset.
Stock-Based Compensation
Shares of the Company’s common stock
may be issued for services. These issuances are valued at the fair market value of the services provided and the number of shares
issued is determined based upon either (i) a recent sale by Premier for cash to an unrelated third party or (ii) the price of the
Company’s common stock is on the date of each respective transaction.
Goodwill
and Other Intangible Assets
The Company periodically
reviews the carrying value of intangible assets not subject to amortization, including goodwill, to determine whether impairment
may exist. Goodwill and certain intangible assets are assessed annually, or when certain triggering events occur, for impairment
using fair value measurement techniques. These events could include a significant change in the business climate, legal factors,
a decline in operating performance, competition, sale or disposition of a significant portion of the business, or other factors. Specifically,
goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is used to identify
potential impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill. Premier uses
level 3 inputs and a discounted cash flow methodology to estimate the fair value of a reporting unit. A discounted cash flow analysis
requires one to make various judgmental assumptions including assumptions about future cash flows, growth rates, and discount rates.
The assumptions about future cash flows and growth rates are based on the Company’s budget and long-term plans. Discount
rate assumptions are based on an assessment of the risk inherent in the respective reporting units. If the fair value of a reporting
unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment
test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment
test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares the
implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying amount
of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an
amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized
in a business combination. That is, the fair value of the reporting unit is allocated to all of the assets and liabilities of that
unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the
fair value of the reporting unit was the purchase price paid to acquire the reporting unit
.
As of June 30,
2013, amortizable intangible assets consist of patents, trade names, trademarks, domain names, website emails, and non-compete
agreements, and contracts with suppliers and customers. See Note 4 for further information regarding the acquisition
and amortization of these intangible assets. These intangibles are being amortized on a straight line basis over their estimated
useful lives, two to ten years. For the six months ended June 30, 2013 and 2012, the Company recorded amortization of
our intangible assets of $34,308 and $0, respectively.
Fair Value Measurements
On
January 1, 2011, Premier adopted guidance which defines fair value, establishes a framework for using fair value to measure
financial assets and liabilities on a recurring basis, and expands disclosures about fair value measurements. Beginning on January
1, 2011, Premier also applied the guidance to non-financial assets and liabilities measured at fair value on a non-recurring basis,
which includes goodwill and intangible assets. The guidance establishes a hierarchy for inputs used in measuring fair value that
maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs
be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed
based on market data obtained from sources independent of Premier. Unobservable inputs are inputs that reflect Premier’s
assumptions of what market participants would use in pricing the asset or liability developed based on the best information available
in the circumstances. The hierarchy is broken down into three levels based on the reliability of the inputs as follows:
Level 1 -
Valuation is based upon unadjusted quoted market prices for identical assets or liabilities in active markets that Premier has
the ability to access.
Level 2 -Valuation
is based upon quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets
or liabilities in inactive markets; or valuations based on models where the significant inputs are observable in the market.
Level 3 -
Valuation is based on models where significant inputs are not observable. The unobservable inputs reflect Premier's own assumptions
about the inputs that market participants would use.
Premier’s
financial instruments consist of cash, accounts receivable, note receivable, accounts payable, related party payable and accrued
liabilities. The estimated fair value of cash, accounts receivable, note receivable, accounts payable, related party payable and
accrued liabilities approximate their carrying amounts due to the short-term nature of these instruments.
Certain non-financial assets are measured
at fair value on a nonrecurring basis. Accordingly, these assets are not measured and adjusted to fair value on an ongoing basis
but are subject to periodic impairment tests. These items primarily include long-lived assets, goodwill and other intangible assets.
Concentration of Credit Risk
The Company maintains its cash in multiple
financial institutions. The Company limits the amount of credit exposure to each individual financial institution and places its
temporary cash into investments of high credit quality with a financial institution that exceeds federally insured limits. The
Company has not experienced any losses related to these balances and believes its credit risk to be minimal.
Gain From Discontinued Operations
Gain from discontinued operations of $985,138
for the six months ended June 30, 2013 consists of the sale of both intangible assets in the form of sales opportunities and leads,
and the assumption of liabilities from the discontinued operations to WEPOWER ECO Corp (an unrelated company). The gain is based
upon the estimated value of the $5,000,000 note received in the transaction. The provisional amounts are subject to revision until
the evaluations are completed to the extent that additional information is obtained about the facts and circumstances that existed
as of the acquisition date. The preliminary appraised value of the note is $869,000; $116,138 consists of liabilities which were
assumed by the acquirer in the transaction.
RECENTLY ISSUED AND ADOPTED ACCOUNTING
PRONOUNCEMENTS
Adopted
Effective January 2012, the Company
adopted ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP
and International Financial Reporting Standards (“IFRS”) of Fair Value Measurement – Topic 820 (ASU
2-11-04).” ASU 2011-04 represents the converged guidance of the Financial Accounting Standards Board
(“FASB”) and the International Accounting Standards Board (“IASB”) on fair value measurement. A
variety of measures are included in the update intended to either clarify existing fair value measurement requirements,
change particular principles requirements for measuring fair value or for disclosing information about fair value
measurements. For many of the requirements, the FASB does not intend to change the application of existing requirements under
Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements. ASU 2011-04 was effective for
interim and annual periods beginning after December 15, 2011. The adoption of this update did not have a material impact on
the condensed consolidated financial statements and related disclosures.
Effective January 2012, the Company adopted
ASU No. 2011-05, “Presentation of Comprehensive Income (ASU 2011-05)”. ASU 2011-05 is intended to increase the prominence
of items reported in other comprehensive income and to facilitate convergence of accounting guidance in this area with that of
the IASB. The amendments require that all non-owner changes in shareholders’ equity be presented in a single continuous statement
of comprehensive income or in two separate but consecutive statements. In December 2011, the FASB issued ASU No. 2011-12,
“Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications
of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 (ASU 2011-12).” ASU 2011-12
defers the provisions of ASU 2011-05 that require the presentation of reclassification adjustments on the face of both the statement
of income and statement of other comprehensive income. Amendments under ASU 2011-05 that were not deferred under ASU 2011-12 will
be applied retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption
of this update did not have a material impact on the condensed consolidated financial statements and related disclosures.
Not Yet Adopted
In February 2013, the FASB issued ASU No.
2013-04, “Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total
Amount of the Obligation Is Fixed at the Reporting Date.”
The amendments
in ASU 2013-04 provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several
liability arrangements for which the total amount of the obligation within the scope of this Update is fixed at the reporting date,
except for obligations addressed within existing guidance in U.S. GAAP. The guidance requires an entity to measure those obligations
as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional
amount the reporting entity expects to pay on behalf of its co-obligors. The guidance in this Update also requires an entity to
disclose the nature and amount of the obligation as well as other information about those obligations.
The
amendments in this standard are effective retrospectively for fiscal years, and interim periods within those years, beginning after
December 15, 2013. We are evaluating the effect, if any, adoption of ASU No. 2013-04 will have on our condensed consolidated financial
statements
and related disclosures.
In March 2013, the FASB issued ASU No.
2013-05, “Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon
Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity.”
The amendments in ASU No. 2013-05 resolve the diversity in practice about whether
Subtopic 810-10, Consolidation—Overall, or Subtopic 830-30, Foreign Currency Matters—Translation of Financial Statements,
applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its
investment in
a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that
is a nonprofit activity or a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights)
within
a foreign entity. In addition, the amendments in this Update resolve the diversity in practice for the treatment
of business combinations achieved in stages (sometimes also referred to as step acquisitions) involving a foreign entity. The amendments
in this standard are effective prospectively for fiscal years, and interim reporting periods within those years, beginning December
15, 2013. We are evaluating the effect, if any, adoption of ASU No. 2013-05 will have on our condensed consolidated financial statements
and related disclosures
.
In April 2013, the FASB issued ASU No.
2013-07, “Presentation of Financial Statements (Top 205): Liquidation Basis of Accounting.”
The
objective of ASU No. 2013-07 is to clarify when an entity should apply the liquidation basis of accounting and to provide principles
for the measurement of assets and liabilities under the liquidation basis of accounting, as well as any required disclosures. The
amendments in this standard is effective prospectively for entities that determine liquidation is imminent during annual reporting
periods beginning after December 15, 2013, and interim reporting periods therein. We are evaluating the effect, if any, adoption
of ASU No. 2013-07 will have on our condensed consolidated financial statements
and related disclosures
.
Other
recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the United States Securities
and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or
future condensed consolidated financial statements.
NOTE 3 – GOING
CONCERN
The
Company has sustained operating losses of $9,061,072
since
inception. The Company’s
continuation as a going concern is dependent on management’s ability to develop profitable operations, and / or obtain additional
financing from its stockholders and / or other third parties.
The accompanying
condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern; however,
the above conditions raise substantial doubt about the Company’s ability to do so. The unaudited condensed consolidated financial
statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets
or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
Management plans for 2013 are to meet their
sales projections. If these projections are not met, the Company may have to reduce its operating expenses and to seek additional
funding through debt and/or equity offerings.
NOTE 4 – ACQUISITIONS & GOODWILL
Active ES Lighting Controls, Inc.
Acquisition
On July 25, 2012,
Premier acquired the assets of the Active ES Lighting Controls, Inc. (“AES”) business by completing the transactions
contemplated under an asset purchase agreement dated July 25, 2012 (the “Agreement”) with AES. In accordance
with the terms of the Agreement, the purchase price for the acquisition consisted of the following components: (i) 750,000 shares
of Premier’s common stock issued at closing; (ii) $30,000 in cash paid at closing; (iii) a payable, due December 31, 2012,
of Premier in the principal amount of $15,000; (v) contingent shares payable
(payable 12
months after closing of the transaction) of a number of shares of common stock of Premier equal to 875,000 shares based upon the
following contingencies:
|
A.
|
175,000 shares of common stock if the volume weighted average price (“VWAP”) is below $2.00 for 30 consecutive trading days during the 12 months following the contingent period (begins after stock received in transaction has had restricted legend (section 144) removed and continues for six months)
|
|
B.
|
175,000 shares of common stock if the VWAP is below $1.00 for 60 consecutive trading days during the contingent period;
|
|
C.
|
175,000 shares of common stock if the VWAP is below $0.80 for 60 consecutive trading days during the contingent period;
|
|
D.
|
175,000 shares of common stock if the VWAP is below $0.60 for 60 consecutive trading days during the contingent period;
|
|
E.
|
175,000 shares of common stock if the VWAP is below $0.40 for 60 consecutive trading days during the contingent period;
|
As of December
31, 2012, the dollar value of the contingent shares payable is $210,000, which is recorded as a common stock payable on the accompanying
balance sheet.
The acquisition
has been accounted for as a asset purchase and the Company valued all assets and liabilities acquired at their fair values on the
date of acquisition.
As of December
31, 2012 the marketing results of operations of AES products are included in the Company’s consolidated financial statements
from the date of acquisition. The allocation of the purchase price to assets and liabilities based upon fair value determinations
was as follows:
IP/Technology – patents
|
|
$
|
167,570
|
|
Non-compete agreement
|
|
|
76,000
|
|
Trademarks & Service Marks
|
|
|
55,000
|
|
Goodwill
|
|
|
138,000
|
|
Total purchase price
|
|
$
|
436,570
|
|
The purchase price consideration consisted
of the following:
Cash
|
|
$
|
31,570
|
|
Note Payable
|
|
|
15,000
|
|
Common Stock
|
|
|
180,000
|
|
Common Stock Payable
|
|
|
210,000
|
|
Total purchase price
|
|
$
|
436,570
|
|
Estimated Useful Lives of Acquired
Intangibles
The estimated useful lives (years)
of the acquired intangibles are as follows
|
|
LIFE
|
|
IP/Technology - Patents
|
|
|
5
|
|
Non-compete Agreement
|
|
|
10
|
|
Trademarks & Service Marks
|
|
|
2
|
|
Goodwill
|
|
|
N/A
|
|
On February 28, 2013 Premier acquired 80%
of the outstanding membership units of the The Power Company USA, LLC, an Illinois limited liability company (“TPC”
or “The Power Company”), a deregulated power broker in Illinois for thirty million 30,000,000 shares of Premier’s
common stock valued at $4,500,000. The Power Company has over 18,500 residential and commercial customers. The initial accounting
for the business combination is not complete because the evaluations necessary to assess the fair values of certain net assets
acquired and the amount of goodwill to be recognized are still in process. The provisional amounts are subject to revision until
the evaluations are completed to the extent that additional information is obtained about the facts and circumstances that existed
as of the acquisition date. Any changes to the fair value assessments will affect the acquisition-date fair value of goodwill.
The Company has evaluated goodwill as of June 30, 2013 and determined no impairment on goodwill for the six months ended June 30,
2013.
NOTE 5 – INTANGIBLES ASSETS, NET
The following table presents details
of the Company’s total purchased intangible assets as of June 30, 2013:
For the six months
ended June 30, 2013, the Company’s recorded amortization expense related to the purchased intangibles of $34,308 and $0 was
recorded for the six months ended June 30, 2012.
|
|
Balance 12/31/2012
|
|
|
Additions
|
|
|
Amortization
|
|
|
Impairment
|
|
|
Balance
06/30/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IP/Technology – Patents
|
|
$
|
153,607
|
|
|
$
|
–
|
|
|
$
|
(16,758
|
)
|
|
$
|
–
|
|
|
$
|
136,849
|
|
Non-compete Agreement
|
|
|
72,832
|
|
|
|
–
|
|
|
|
(3,800
|
)
|
|
|
–
|
|
|
|
69,032
|
|
Trademarks & Service Marks
|
|
|
43,542
|
|
|
|
–
|
|
|
|
(13,750
|
)
|
|
|
–
|
|
|
|
29,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
269,981
|
|
|
$
|
–
|
|
|
$
|
(34,308
|
)
|
|
$
|
–
|
|
|
$
|
235,673
|
|
NOTE 6 – NOTE PAYABLE
In conjunction with the acquisition of
the AES assets, the Company recorded a note payable to the seller in the amount of $15,000; $5,000 was paid during the year ended
December 31, 2012. The remaining outstanding balance of $10,000 was paid during the six months ending June 30, 2013.
NOTE 7 – RELATED PARTY TRANSACTIONS
On or about November 15, 2007, an officer
and director was issued 3,491,250 shares of common stock; $43,759 worth in exchange for company expenses paid and $40,030 worth
for services rendered, for a total of $83,790 worth of stock, pursuant to Section 4(2) of the Securities Act of 1933. The expenses
advanced were to pay for transfer agent fees, legal fees, independent accountant fees and the defaulted corporate charter.
On January 29, 2011, an officer and director
was issued 4,071,085 shares of restricted stock, valued at $0.024 per share based on the market price of the Company’s stock
for retirement of a debt of the Company owed to Jack Gregory for the amount of $97,706.
During the 2011, an officer and director
had advanced $70,636 to the Company for the payment of general and administrative expenses. The advance was recorded as an interest
free loan. The Company imputed interest of $6,344, charging income and increasing additional paid in capital. The debt for the
advance was retired with the issuance of 139,885 shares of restricted stock with a fair value of $12,590, valued at $0.09 per share,
based on the market price of the Company’s stock, and a cash payment of $21,676 resulting in an increase to additional paid-in-capital
of $48,957. No gain was recognized on this transaction due to the fact that it was between the Company and a related party.
In December 2011, an officer and director
made a capital contribution of $11,605 for operations.
Between May 18, 2007 and February 29, 2012,
all activities of the Company were conducted by corporate officers from either their homes or business offices. Currently, there
are no outstanding debts owed by the Company for the use of these facilities and there are no commitments for future use of the
facilities.
On December 29, 2011, the Company issued
16,497,695 shares of common stock valued at $1,649,770 based on the market price of Premier’s stock to WEPOWER, LLC to acquire
certain assets.
The acquisition of assets from WEPOWER,
LLC was accounted for as a related party transaction because on December 31, 2011, two days after the transaction date of December
29, 2011, WEPOWER, LLC owned approximately thirty-seven percent of the Company. Because the assets acquired were from a related
party, no value was assigned to the identified assets, other than the inventory which had a cost basis of $17,024. The assets were
brought into the Company at their cost of $17,024; with the difference between cost and the total value of stock issued recorded
as stock issuance expense.
See below for the purchase price allocation:
Inventory (at cost)
|
|
$
|
17,024
|
|
Stock issuance expense
|
|
|
1,632,746
|
|
Common stock, based on par value of $0.0001
|
|
|
(1,650
|
)
|
Additional paid-in-capital, based on December 29, 2011 price of $0.10 per share
|
|
$
|
(1,648,120
|
)
|
Immediately after the acquisition was recorded,
the inventory balance was tested and found to be impaired; therefore, at December 31, 2011, the inventory balance was stated at
fair value of $0.
On December 29, 2011, the Company issued
14,053,595 shares of common stock valued at $1,405,359 based on the market price of the Company’s stock to Green Central
Holdings, Inc. to acquire certain assets. The acquisition of assets from Green Central Holdings, Inc. was accounted for as a related
party transaction because on December 31, 2011, two days after the transaction date of December 29, 2011, Green Central Holdings,
Inc. owned approximately thirty-two percent of the Company. Because the assets acquired were from a related party, no value was
assigned to the assets. The assets were brought into the Company at their cost of $0; with the total value of stock issued recorded
as stock issuance expense.
See below for the purchase price allocation:
Stock issuance expense
|
|
$
|
1,405,359
|
|
Common stock, based on par value of $0.0001
|
|
|
(1,405
|
)
|
Additional paid-in-capital, based on December 29, 2011 price of $0.10 per share
|
|
$
|
(1,403,954
|
)
|
As of June 30, 2013, several related parties
were owed funds pertaining to operating expenses incurred during the period. WePower, LLC was owed $42,000 and I Capital Advisory
LLC $58,824, and Randall Letcavage $23,529 totaling $124,353. All of these payables due on demand. As of December 31, 2012, Green
Central Holdings Inc. was owed $51,398 and WePower, LLC was owed $42,000 and I Capital Advisory LLC $26,700, totaling $120,098.
NOTE 8 – CAPITAL STOCK TRANSACTIONS
Preferred Stock
On June 3, 2013, the Company filed a Certificate
of Amendment of Articles of Incorporation with the State of Nevada Secretary of State giving it the authority to issue 50,000,000
shares of preferred stock with a par value of $0.0001 per share.
Common Stock
As of May 30, 2007, the Company had issued
and outstanding 1,508,750 common stock shares. On August 20, 2007 during a special meeting of the Company’s Board of Directors
the Chief Executive Officer and sole director of the Company presented invoices that he had paid to business consultants and professionals
for services required to resurrect, revive and reorganize the Corporation, to bring it back to its current active status, to initiate
and complete the Court Supervised Custodianship Process, to complete a fifty state search of litigation, claims and judgments,
to reconstitute the books and records of the Corporation, to initiate and complete several years of missing financial statements,
to reinstate the Corporation as an active Corporation under Nevada law, to create a new Board of Directors with a majority of independent
directors, to reconstitute and reestablish corporate books and records, and to complete other required tasks. Since the Company
had no cash or other assets at that date with which to reimburse the Chief Executive Officer the Board of Directors determined
that the only feasible way for the Company to reimburse the Chief Executive Officer was to issue restricted common shares.
On or about November 15, 2007, the Company
issued 3,491,250 shares of restricted common stock to its Chief Executive Officer to reimburse $43,759 of cash payments for the
expenses incurred and $40,030 for services performed by the Chief Executive Officer, calculated at 267 hours at a rate of $150
for a total of $83,790. Since the Company was insolvent and had no assets and no market, the Board of Directors determined that
the stock should be issued at a value of $.024 per share.
On November 13, 2008, the Company filed
a Certificate of Amendment of Articles of Incorporation with the State of Nevada Secretary of State to reverse its shares on a
1:40 basis. The financial statements have been adjusted for all periods presented to reflect this split.
On November 12, 2010, an 8K was filed disclosing
the Company’s Board of Directors adoption of a resolution to cancel 757,125 shares of common stock held by Hoi Wai Investments
Limited, and beneficially owned by former officer and director, Ching Lung Po and return to Premier. The shares represented approximately
15% of the outstanding common share capital of the Company. Upon cancellation the value of the shares were considered contributed
capital.
On January 29, 2011, the Company retired
a debt of $97,706 with the issuance of 4,071,085 shares of restricted stock to its Chief Executive Officer, Jack Gregory. The shares
were valued at $0.024 per share based on the market price of Premier’s stock, adjusted for the forward stock split. No gain
or loss was recognized in this transaction due to the fact that it was between the Company and a related party.
On September 12, 2011, the Company’s
S-1 Registration to sell 5,000,000 shares at $0.05 became effective. As of December 31, 2011, 5,000,000 shares were sold and the
Company increased its operating capital by $250,000.
On December 8, 2011, the Company retired
a debt of $70,636 owed to Jack Gregory by issuance of 139,885 shares of restricted stock of the Company valued at $12,590, based
on the market price of the Company’s stock of $0.45, divided by 5 to equal $0.09 due to the forward stock split described
in Note 9, and a payment of $21,676, resulting in an increase to additional paid-in-capital of $48,957. No gain or loss was recognized
in this transaction due to the fact that it was between the Company and a related party.
On December 29, 2011, the Company
issued 16,497,695 shares of common stock to WEPOWER, LLC, a related party, valued at $1,649,770 based on the market price of the
Company’s stock, to acquire the assets, of We Power, LLC.
On December 29, 2011, the Company
issued 14,053,595 shares of common stock to Green Central Holdings, Inc., a related party, valued at $1,405,359 based on the market
price of the Company’s stock, to acquire the assets of We Power LLC..
Based upon the record date of February
7, 2012 (the “Record Date”), the Company declared a 5:1 forward split payable as a stock dividend. On February, 10,
2012 (the “Payment Date”), the Company’s transfer agent mailed a certificate for 4 new shares of common stock
for each 1 share of common stock held by each stockholder on the Record Date. On February 13, 2012 (the “Ex Date”),
the trading of the common stock under symbol “PRHL” was adjusted by FINRA to reflect the forward split. The financial
statements have been adjusted for all periods presented to reflect the 5:1 forward split payable as a stock dividend.
On February 16, 2012, the Company entered
into a stock purchase agreement with an accredited investor for the sale of 1,000,000 shares of its common stock at a purchase
price of $0.25 per share. The sale closed and cash of $250,000 was received on February 16, 2012.
On February 28, 2012, the Company entered
into a stock purchase agreement with an accredited investor for the sale of 560,000 shares of its common stock at a purchase price
of $0.25 per share. The sale closed and cash of $140,000 was received on February 29, 2012.
Effective April 11, 2012, the Company granted
240,000 shares to its legal service provider Weed & Co. LLP as payment for services. The shares were valued per the agreement
for legal services at $0.25 per share for a total of $60,000.
On June 15, 2012,
the
Company
sold and issued 2,290,000 shares of common stock to six accredited investors for $572,500. There was no underwriter,
no underwriting discounts or commissions, no general solicitation, no advertisement, and resale restrictions were imposed by placing
a Rule 144 legend on the certificates. The persons who received securities have such knowledge in business and financial matters
that he/she/it is capable of evaluating the merits and risks of the transaction. This transaction was exempt from registration
under the Securities Act of 1933, based upon Section 4(2) for transactions by the issuer not involving any public offering.
On June 27, 2012, the Company sold and
issued 119,000 shares of common stock to five accredited investors for $29,750. There was no underwriter, no underwriting discounts
or commissions, no general solicitation, no advertisement, and resale restrictions were imposed by placing a Rule 144 legend on
the certificates. The persons who received securities have such knowledge in business and financial matters that he/she/it is capable
of evaluating the merits and risks of the transaction. This transaction was exempt from registration under the Securities Act of
1933, based upon Section 4(2) for transactions by the issuer not involving any public offering.
Between July
3, 2012 and August 9, 2012, the Company entered into a series of stock purchase agreements with accredited investors for the sale
of 133,100 shares of its common stock at a purchase price of $0.25 per share. The sales closed and cash of $33,025 was received.
There was no underwriter, no underwriting discounts or commissions, no general solicitation, no advertisement, and resale
restrictions were imposed by placing a Rule 144 legend on the certificates. The persons who received securities have such knowledge
in business and financial matters that he/she/it is capable of evaluating the merits and risks of the transaction. This transaction
was exempt from registration under the Securities Act of 1933, based upon Section 4(2) for transactions by the issuer not involving
any public offering.
On July 25, 2012, the Company entered into
an Asset Purchase Agreement (the “Agreement”) with Active ES Lighting Controls, Inc. (“AES”) whereby the
Company acquired AES's intellectual property including patents, trademarks and website. As partial consideration for the transaction;
750,000 shares were issued at closing, on July 25, 2012, as consideration for the acquisition. The shares were valued based on
the closing market price on the closing date of July 25, 2012 at $0.24 per share, totaling $180,000. In addition, 875,000 shares
were recorded as a common stock payable, due on July 24, 2013, which were also valued based on the closing market price on the
closing date of July 25, 2012 at $0.24 per share, totaling $210,000. See Note 4 for further discussion of the acquisition of the
AES assets.
On October 24, 2012, the Company granted
and issued 2,500,000 shares of common stock to four officers of the Company accredited investors for services
.
The shares were valued at $0.12 per share or $300,000. Resale restrictions
were imposed by placing a Rule 144 legend on
the certificates.
Between
October
25, 2012 and November 7, 2012, the Company entered into a series of stock purchase agreements with accredited investors for the
sale of 652,000 shares of its common stock .The sales closed and cash of $32,600. was received. There was no underwriter, no underwriting
discounts or commissions, no general solicitation, no advertisement, and resale restrictions were imposed by placing a Rule 144
legend on the certificates. The persons who received securities have such knowledge in business and financial matters that he/she/it
is capable of evaluating the merits and risks of the transaction. This transaction was exempt from registration under the Securities
Act of 1933, based upon Section 4(2) for transactions by the issuer not involving any public offering.
Between
November
9, 2012 and December 31, 2012, the Company entered into a series of stock purchase agreements with accredited investors for the
sale of 3,169,429 shares of its common stock. The sales closed and cash of $168,140.was received. There was no underwriter, no
underwriting discounts or commissions, no general solicitation, no advertisement, and resale restrictions were imposed by placing
a Rule 144 legend on the certificates. The persons who received securities have such knowledge in business and financial matters
that he/she/it is capable of evaluating the merits and risks of the transaction. This transaction was exempt from registration
under the Securities Act of 1933, based upon Section 4(2) for transactions by the issuer not involving any public offering.
Between
January
1, 2013 and March 31, 2013, the Company entered into a series of stock purchase agreements with accredited investors for the sale
of 10,629,745 shares of its common stock. The sales closed and cash of $700,085 was received. There was no underwriter, no underwriting
discounts or commissions, no general solicitation, no advertisement, and resale restrictions were imposed by placing a Rule 144
legend on the certificates. The persons who received securities have such knowledge in business and financial matters that he/she/it
is capable of evaluating the merits and risks of the transaction. This transaction was exempt from registration under the Securities
Act of 1933, based upon Section 4(2) for transactions by the issuer not involving any public offering.
Between
April
1, 2013 and June 30, 2013, the Company entered into a series of stock purchase agreements with accredited investors for the sale
of 15,912,906 shares of its common stock, 2,849,639 shares had warrants attached, (see note common stock warrants below). The sales
closed and cash of $650,583 was received. There was no underwriter, no underwriting discounts or commissions, no general solicitation,
no advertisement, and resale restrictions were imposed by placing a Rule 144 legend on the certificates. The persons who received
securities have such knowledge in business and financial matters that he/she/it is capable of evaluating the merits and risks of
the transaction. This transaction was exempt from registration under the Securities Act of 1933, based upon Section 4(2) for transactions
by the issuer not involving any public offering.
April 16, 2013, the Company granted 200,000
shares of common stock to Benchmark Advisory as payment for marketing services. The shares were valued per the agreement at $0.05
per share for a total of $10,000, the stock was expensed $10,000 for that date and the period ended June 30, 2013.
On June 3, 2013, the Company filed a Certificate
of Amendment of Articles of Incorporation with the State of Nevada Secretary of State giving it the authority to issue 450,000,000
shares of common stock with a par value of $0.0001 per share.
Common Stock Options
On April 30, 2012, the Company granted
924,140 stock options to a Director, Frank Schulte to purchase shares at $0.40 per share. The options expire June 30, 2015, 462,070
vested on the grant date and 462,070 vest on July 31, 2012. The total estimated value using the Black-Scholes Model, based on a
volatility rate of 102%, expected term of 2.08, risk free rate of 0.27 percent, and a call option value of $0.5082, was $469,659.
For the 462,070 stock options which were immediately vested, the stock expensed was $234,830 on that date; for the stock 462,070
stock options that were to vest on July 31, 2012, $156,553 was expensed during the six months ended June 30, 2012: for a total
amount of stock option expense of $391,383 for the period ended September 30, 2012. During October 2012 Mr. Schulte resigned his
position on the Board of Directors and agreed to release all claims which included these options. On April 9, 2013pursuant to his
release the Board of Directors terminated these options.
On May 15, 2012, the Company granted 75,000
stock options to a Director, Bobby Grisham to purchase shares at $0.40 per share. The options expire June 30, 2015 and vested on
the grant. The total estimated value using the Black-Scholes Model, based on a volatility rate of 112%, expected term of 2.08,
risk free rate of 0.29 percent, and a call option value of $0.7540, was $56,550. As the stock options were immediately vested,
the stock expensed was $56,550 on that date and for the period ended September 30, 2012.
On July 17, 2012, the Company granted 75,000
stock options to Director, Adm. Thomas C. Lynch, to purchase shares at $0.25 per share. The options expire June 30, 2015 and vested
on the grant date. The total estimated value using the Black-Scholes Model, based on a volatility rate of 135%, expected term of
2, risk free rate of 0.29 percent, and a call option value of $0.2077, was $15,581. As the stock options were immediately vested,
the stock expensed was $15,581 on that date and for the period ended September 30, 2012. During October 2012, Admiral Lynch resigned
his position on the Board of Directors and agreed to release all claims which included these options. On April 9, 2013pursuant
to his release the Board of Directors terminated these options.
On July 29, 2012, the Company granted 75,000
stock options to a Director, Woodrow W. Clark II, to purchase shares at $0.25 per share. The options expire June 30, 2015 and vested
on the grant date. The total estimated value using the Black-Scholes Model, based on a volatility rate of 136%, expected term of
2, risk free rate of 0.29 percent, and a call option value of $0.2512, was $18,838. As the stock options were immediately vested,
the stock expensed was $18,838 on that date and for the period ended September 30, 2012.
On February 20, 2013, the Company granted
75,000 stock options to a Director, Woodrow W. Clark II, to purchase shares at $0.25 per share. The options expire February 20,
2016 and vested on the grant date. The total estimated value using the Black-Scholes Model, based on a volatility rate of 468%,
expected term of 2 years, risk free rate of 0.42 percent, and a call option value of $0.17, was $12,749. As the stock options were
immediately vested, the stock expensed was $12,749 on that date and for the period ended March 31, 2013.
On February 20, 2013, the Company granted
75,000 stock options to a Director, Lane Harrison to purchase shares at $0.25 per share. The options expire February 20, 2016 and
vested on the grant date. The total estimated value using the Black-Scholes Model, based on a volatility rate of 468%, expected
term of 2 years, risk free rate of 0.42 percent, and a call option value of $0.17, was $12,749. As the stock options were immediately
vested, the stock expensed was $12,749 on that date and for the period ended March 31, 2013.
On April 9, 2013, the Company modified
the 75,000 stock options granted to a Director, Lane Harrison on February 20, 2013, to purchase shares at $0.25 per share, the
option was modified entitling Mr. Harrison to purchase 100,000 shares at $0.10, on or before April 30, 2015. The stock option provided
for cashless exercise term. The total estimated value using the Black-Scholes Model, based on a volatility rate of 470%, expected
term of 2 years, risk free rate of 0.42 percent, and a call option value of $0.0882, was $8,822. The stock expensed was $8,822
on that date and for the period ended June 30, 2013.
On April 9, 2013, the Company modified
the 75,000 stock options granted to a Director, Woodrow Clark on February 20, 2013, to purchase shares at $0.25 per share, the
option was modified entitling Mr. Clark to purchase 100,000 shares at $0.10, on or before April 30, 2015. The stock option provided
for cashless exercise term. The total estimated value using the Black-Scholes Model, based on a volatility rate of 470%, expected
term of 2 years, risk free rate of 0.42 percent, and a call option value of $0.0882, was $8,822. The stock expensed was $8,822
on that date and for the period ended June 30, 2013.
A summary of option activity as of
June 30, 2013 and changes during the six months ended is presented below:
|
|
Number Outstanding
|
|
|
Weighted-Average Exercise Price Per Share
|
|
|
Weighted-Average
Remaining Contractual Life (Years)
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at January 1, 2013
|
|
|
150,000
|
|
|
$
|
0.33
|
|
|
|
2.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
200,000
|
|
|
|
0.10
|
|
|
|
1.75
|
|
Exercised
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Canceled/forfeited/expired
|
|
|
|
|
|
|
|
|
|
|
–
|
|
Outstanding at June 30, 2013
|
|
|
350,000
|
|
|
$
|
0.20
|
|
|
|
1.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options vested and exercisable at June 30, 2013
|
|
|
350,000
|
|
|
$
|
0.20
|
|
|
|
1.86
|
|
Common Stock Warrants
On January 4, 2012, the Company granted
750,000 Common Stock Warrants (the “Warrants”) to its legal service provider Weed & Co. LLP to purchase shares
at $0.06 per share (forward split adjusted). The Warrants expire on December 31, 2012 and are vested upon the date of grant. The
total estimated value using the Black-Scholes Model, based on a volatility rate of 100%, expected term of 1 year, risk free rate
of 0.12 percent, and a call option value of $0.0541, was $40,542. As the Warrants were immediately vested, the stock expensed was
$40,542 on that date and for the period ended June 30, 2012. On October 10, 2012 Weed and Co LLP exercised these options on a cashless
basis. 375,000 shares were issued to Weed and Co.
On June 29, 2012, the Company granted 150,000
Common Stock Purchase Warrants (the “Warrants”) to a Consultant, Gary Canter, Inc. that allows the purchase of shares
at $1.27 per share. The Warrants expire 3 years after vesting. The Warrants vest based upon certain milestones relating to cumulative
sales revenue from the Consultant’s efforts. 5,000 Warrants vest upon the receipt of the first sales from finder’s
sales sources; 20,000 Warrants vest after cumulative sales revenue of $1,000,000; 50,000 Warrants vest after cumulative sales revenue
of $6,000,000; and 75,000 Warrants vest after cumulative sales revenue of $11,000,000. As the 150,000 Warrants are contingent upon
events that are not probable, no expense was recognized for year ended December 31, 2012 and for the six months ended June 30,
2013. On April 9, the Board of Directors terminated these options.
On July 17, 2012, the Company granted 150,000
Common Stock Purchase Warrants (the “Warrants”) to Consultant, Adm. Thomas C. Lynch that allows the purchase of shares
at $0.30 per share. The Warrants expire 3 years after vesting. 5,000 of the Warrants vested on July 17, 2012 and the remaining
Warrants vest based upon certain milestones relating to cumulative sales revenue from the Consultant’s efforts. 45,000 Warrants
vest after cumulative sales revenue of $1,000,000; 50,000 Warrants vest after cumulative sales revenue of $6,000,000; and 50,000
Warrants vest after cumulative sales revenue of $11,000,000. As the 145,000 Warrants are contingent upon events that are not probable,
no expense was recognized for the year ended December 31, 2012 and for the six months ended June 30, 2013. On April 9, 2013 pursuant
to his release the Board of Directors terminated these options.
On September 25, 2012, the Company granted
150,000 Common Stock Purchase Warrants (the “Warrants”) to consultant, Matthew Borzello that allows the purchase of
shares at $0.15 per share. The Warrants expire 3 years after vesting. The Warrants vest based upon certain milestones relating
to cumulative sales revenue from the Consultant’s efforts. 50,000 Warrants vest after cumulative sales revenue of $1,000,000;
50,000 Warrants vest after cumulative sales revenue of $3,000,000; and 50,000 Warrants vest after cumulative sales revenue of $5,000,000.
As the 150,000 Warrants are contingent upon events that are not probable, no expense was recognized for the year ended December
31, 2012 and for the six months ended June 30, 2013, on April 9, 2013, the Board of Directors terminated these options.
Between May 24, 2013 and June 27, 2013,
2,849,639 shares of common stock were sold with warrants attached the terms of the subscription were:, for each 4 shares purchased
the purchaser received 2 warrants, one warrant with a future price of $0.15 and a second warrant with a future price of $0.20,
both warrants expire two years from the closing date of June 30, 2013, (1,424,819 warrants were issued 712,410 at $0.15, and 712,410
at $0.20) The total estimated value using the Black-Scholes Model, based on a volatility rate of 450%, expected term of 2 years,
risk free rate of 0.38 percent, and a warrant value of $0.0449, was $63,279.
A summary of non-employee warrant activity
during the six months ended as of June 30, 2013 is presented below:
|
|
Number Outstanding
|
|
|
Weighted-Average Exercise Price Per Share
|
|
|
Weighted-Average
Remaining Contractual Life (Years)
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at January 1, 2013
|
|
|
450,000
|
|
|
$
|
0.57
|
|
|
|
2.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
1,429,819
|
|
|
|
0.175
|
|
|
|
1.85
|
|
Exercised
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Canceled/forfeited/expired
|
|
|
450,000
|
|
|
|
.057
|
|
|
|
–
|
|
Outstanding at June 30, 2013
|
|
|
1,424,819
|
|
|
$
|
0.175
|
|
|
|
1.85
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options vested and exercisable at June 30, 2013
|
|
|
1,424,819
|
|
|
$
|
0.175
|
|
|
|
1.85
|
|
NOTE 9 – DISCONTINUED
OPERATIONS
The Company acquired assets from WEPOWER,
LLC during 2011. WEPOWER, Ecolutions Inc. was expected to offer clean energy products and services to commercial markets, developers,
and management companies of large scale residential developments. In 2012, WEPOWER Ecolutions Inc was classified as held for sale
under the requirements of ASC 360-10-45-9, and therefore, the result of its operations are reported in discontinued operations
in accordance with ASC 205-20-45-3. On January 7, 2013, Premier Holding Corporation (“PRHL”), acting through its wholly
owned subsidiary, WEPOWER Ecolutions, Inc., completed the sale of assets under an Asset Purchase Agreement with WEPOWER Eco Corp.,
a newly formed entity, controlled by Kevin B. Donovan, PRHL’s former CEO. PRHL sold certain assets related solar energy,
wind power projects, energy efficiency projects in real estate, and fuel efficiency for diesel and gasoline engines for a note
payable for $5,000,000, (preliminary valuation on the note is $869,000). WEPOWER Eco Corp. assumed $116,138 in liabilities, acquired
three patents, six trademarks, and twenty eight contracts. Further, PRHL and WEPOWER Eco Corp. agreed to certain exclusive business
opportunities, fifteen exclusive opportunities and nineteen exclusive for six months. A Mutual General Release between PRHL, WEPOWER
Ecolutions, Inc., WEPOWER Eco Corp., and the former directors and officers, Kevin Donovan, Frank Schulte, and Thomas C. Lynch was
signed, and executed on January 4, 2013 releasing all parties from all claims, from whatever source.