Premier Holding Corporation CEO Update From Randall Letcavage April 30, 2014
April 30 2014 - 5:12PM
Marketwired
Premier Holding Corporation CEO Update From Randall Letcavage April
30, 2014
TUSTIN, CA--(Marketwired - Apr 30, 2014) - Premier Holding
Corporation (OTCQB: PRHL)
As we move forward I believe it is important to provide a short
history for current and prospective shareholders here is a recap of
our management history including commentary relating to the recent
annual filing:
Current Management took control of the public company Premier
Holding Corporation (PRHL) in the fourth quarter of 2012. At that
time new management believed it was crucial that we derive
immediate revenue to gain investor and shareholder interest and
support. We revamped our operating subsidiary WePower Ecolutions by
changing both its name and focus to Energy Efficiency Experts (or
E3). We were excited about E3's long-term prognosis and plans to
market our proprietary technology (The E-Series) along with other
innovative green solutions, but we would have to withstand the long
sales cycles associated with this business, we felt it was critical
to acquire a company with a corresponding customer base that could
affect sales quickly (daily/weekly) and also provide prospects for
E3 and its product array. The company needed a shot of adrenalin
that would not only jump start the business but also become the
catalyst and foundation for what management hopes will be a much
bigger build out of Premier. We believed we found a perfect company
-- The Power Company LLC (TPC).
We acquired 80% of The Power Company in February of 2013. TPC is
a reseller of energy (electricity and gas) that can operate in all
deregulated states -- One of the reasons that the acquisition of
TPC makes sense is that this potential deregulated market is
estimated to be 7 to 10 times larger than telecom deregulation. TPC
resells power from multiple suppliers in order to offer a "one stop
shopping" model. This model has resulted in the Company's first
ever substantial revenue, totaling $1,804,980 last year. Please
note that this is only 10 months of revenue and that these
contracts/sales generate renewals that are equal to the initial
commission payout. More importantly it has resulted in over 1500
commercial accounts
sold by TPC (the accounts now become additional prospects for E3).
TPC has over 40,000 residential accounts as well. These contracts
traditionally have high industry renewals beyond the contract
termination and we should continue to receive revenue for multiple
terms on these contracts. In the meantime we continue to grow our
sales, literally adding thousands more contracts each month. Again,
the stated revenue for 2013 represents approximately 10 months of
revenue. While we have not yet provided the market forecasts or
Market Guidance for our financial expectations from this operation,
we believe that the market conditions that led us to acquire this
business opportunity are only improving. The current position of
TPC, along with general market conditions and our position in the
marketplace, gives us the expectation that we will continue to grow
our business rapidly. Following are some of the salient items to
consider:
- TPC plans expansion of deregulation into more states, and at
the same time more states themselves are instituting deregulation
models. In Q1 of 2014 we opened an office in Maryland and have
streamlined the process allowing us to rapidly expand to new states
with a goal of 3-4 more offices by year end.
- Competitive advantage provided by our energy portal "National
Energy Services Transactor" or NEST (see press release of November
12, 2013 for more details). The further development of NEST, a
scalable web-based automated sales and compliance tool that reduces
the time to make a sale to a matter of minutes. NEST also records
sales calls and 3rd party verification, and provides accounting
modules for rapid expansion that will include channel partners,
affinity groups and even charities that can offer deregulated power
through TPC.
- We are also pleased with the growth of the underlying contracts
that provide The Power Company with an expanding base of recurring
revenue. While these contracts will eventually expire, our
experience and that of the industry is that they generally last
beyond the contract dates with renewal rates expected to be 70% or
more. This means that our cost of acquisition for a customer will
decrease, and the ultimate returns are potentially greater than the
original contract.
- More states will be opening up to deregulation as the federal
government would like each state to have a plan for deregulation by
2020.
- Industry acceptance -- the market is both expanding and
maturing and customers are beginning to realize they can change
their power provider to suit their needs and achieve lower cost
power and/or budget certainty.
Energy Efficiency
Experts: We have mentioned The Power Company's marketing
success and potential and this year we hope to use that to benefit
E3.
- We recruited a new President for E3, Mark Dunnett (Started in
Jan 2014) with over 35 years' experience. Not only is E3
approaching the 1,500 plus commercial accounts supplied by TPC as
planned, but he is bringing his own client list to E3 (and many of
these become leads for TPC as well). Mr. Dunnett is expected to
have success with E3 as he is approaching clients we have already
saved money for or created budget certainty. Now E3 can now offer
these price conscience customers energy efficiency strategies
through E3 by lowering their actual usage.
Plans to become a
Supplier: This is all in light of our recent announcement
regarding EB5 funding we expect to obtain and our strategy to
become a power provider/supplier. To be named "Kratos Power" would
immediately grow our current business in numerous ways and have
already started the process and believe that within the next few
months we can have FERC (Federal Energy Regulatory Commission)
approvals in place. While TPC operates as an energy broker or
reseller and as we garner accounts, only the sales commission is
booked as revenue. As a supplier we will book the customers entire
energy supply bill as revenue (estimated to be 8 to 12 times higher
than the commission). In addition to the current revenue to TPC, as
the supplier we would also gain the difference between the
wholesale and retail cost of energy (estimated to be 2 to 3 times
what we currently earn).
Financial
Information: This growth and execution on our strategy was
not without some cost. Our Operating Costs increased by $5.5
million, and while $2.0 million of our Operating Costs were based
on non-cash expenses (shares issued for services), much of the rest
of our spending was to build a software platform that positions us
as a leader and innovator in the deregulated power industry, pay
for prospecting and lead generation, and build out the
infrastructure for future growth.
- Our cash balance at the end of the year was approximately
$780,000, compared with $44,311 in 2012. We believe that without
expansion we could be profitable in the TPC subsidiary but we have
made an internal management decision that is supported throughout
the company that we need to build up marketing and get as many
contracts in place as fast as we can as we believe that customer
base will increase our enterprise value going forward. We also
expect that should we be successful in becoming a supplier there is
additional value in moving as many of those client to Kratos Power
(anticipated to become a subsidiary of PRHL).
- Our Company operates various subsidiaries which have different
operating metrics. For example, TPC receives revenue on a "net"
basis therefore it has no COGS, whereas E3 delivers products and
services and does report COGS.
- A list of the more relevant operating costs summarized in the
10K are:
- CONTRACT LABOR: $830,500.00 paid to over 30 contractors who
performed prospecting and lead generation services; $203,000 paid
to 7 individual contractors for direct costs of running and
reporting for a public company, not counting additional legal fees;
$288,000 for nine entities performing operational services. This is
important to note as there were virtually no employees in 2013, all
functions were performed by consultants and contract labor, much of
it lays the groundwork, both operationally, and in prospecting,
that will pay off over the next two to three years.
- Legal fees: $154,996.06; Accounting fees: $100,279.38
- G&A totaled $248,710.35 including some items listed
above.
All above items are taken from the audited financials summarized
in the 10K.
As you can see from our recently filed 10k, the company has made
substantial progress in the last year, and Q1 of this year
continues that growth. The investment we have made in the company
is starting to show results and 2014 ought to be an impressive year
of continued growth and accomplishments.
We appreciate the support we have had from our shareholders and
hope to add many more in the years to come!
Randall Letcavage, President and CEO Premier Holding
Corporation
Connie Absher 949-260-8070