UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
October 22, 2014
PREMIER HOLDING CORP.
(Name of small business issuer specified in
its charter)
Nevada |
|
000-53824 |
|
88-0344135 |
(State or other jurisdiction |
|
(Commission File No.) |
|
(I.R.S. Employer |
of incorporation) |
|
|
|
Identification No.) |
1382 Valencia,
Unit F, Tustin, CA 92780
(Address of principal executive
offices)
(former name
or former address, if changed since last report)
(949) 260-8070
(Registrant’s telephone number)
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 (17 CFR 240.13e-4(c
Item 2.01 Completion
of Acquisition or Disposition of Assets
On October 22, 2014, PREMIER HOLDING CORPORATION, a Nevada
corporation (“Premier”) completed its acquisition of 85% of the membership interests of Lexington Power & Light,
LLC (“LP&L”) from its owners. See Form 8-K filed October 27, 2014.
Item 5.02 Departure
of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers
Despite his election on October 22, 2014 to fill one vacancy on
Premier’s board of directors, Larry Hutcher did not accept the position and Larry Hutcher is not a director of Premier.
Item 9.01 Financial
Statements and Exhibits
By this amendment, the financial statements required by this item
are filed.
No. |
Title |
10.1 |
Membership Purchase Agreement for Lexington Power & Light* |
99.1 |
Financial Statements of Lexington Power & Light for years ended December 31, 2013 and 2012 |
99.2 |
Financial Statements of Lexington Power & Light for periods ended September 30, 2014 and 2013 |
99.3 |
Pro Forma Consolidation as of the period ended September 30, 2014 |
|
|
* incorporated by reference from the Form 8-K Report of September
9, 2014 filed on September 15, 2014.
Investors are encouraged to read and understand the Company’s
filings with the Securities and Exchange Commission.
SIGNATURES
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.
|
PREMIER HOLDING CORP. |
|
|
|
|
|
By: |
/s/ Randall Letcavage |
|
|
|
Randall Letcavage |
|
|
|
Principal Executive Officer |
|
Date: January 13, 2015 |
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|
|
Exhibit 99.1
To the Board of Directors (Premier Holding Corporation)
and Members of
Lexington Power & Light, LLC.
We have audited the accompanying balance
sheets of Lexington Power & Light, LLC (“the Company”) as of December 31, 2013 and 2012, and the related statements
of operations, members’ equity (deficit), and cash flows for the years ended December 31, 2013 and 2012. These financial
statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with the
standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our
audit included consideration of internal control over financial reporting as a basis for designing audit procedures that we considered
appropriate under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audit provide a reasonable basis for our opinion.
In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012,
and the results of its operations and its cash flows for the years ended December 31, 2013 and 2012, in conformity with accounting
principles generally accepted in the United States of America.
/s/ Anton & Chia, LLP
Newport Beach, California
January 09, 2015
Lexington Power && Light, LLC
Balance Sheets
As of December 31, 2013 and 2012
| |
2013 | | |
2012 | |
ASSETS | |
| | |
| |
Current Assets | |
| | | |
| | |
Cash | |
$ | 53,786 | | |
$ | 107,083 | |
Accounts Receivable | |
| 907,482 | | |
| 557,310 | |
Accrued Revenue | |
| 486,320 | | |
| 116,815 | |
Inventory | |
| 23,590 | | |
| – | |
Collateral Postings | |
| 77,117 | | |
| 77,765 | |
Prepaid Expenses | |
| 81,427 | | |
| 25,143 | |
Other Current Assets | |
| – | | |
| 25,492 | |
Total Current Assets | |
| 1,629,722 | | |
| 909,608 | |
Fixed Assets, Net of Accumulated Depreciation |
|
|
2,220 |
|
|
|
3,701 |
|
Collateral Deposit | |
| 200,000 | | |
| 200,000 | |
TOTAL ASSETS | |
$ | 1,831,942 | | |
$ | 1,113,309 | |
LIABILITIES AND MEMBERS' DEFICIT | |
| | | |
| | |
Current Liabilities | |
| | | |
| | |
Accounts Payable and Accrued Expenses |
|
$ |
1,224,753 |
|
|
$ |
759,671 |
|
Deferred Supply Payable | |
| 551,037 | | |
| 362,724 | |
Notes Payable | |
| 789,347 | | |
| 78,290 | |
Notes Payable - Related Parties | |
| 271,397 | | |
| 115,113 | |
Taxes Payable | |
| 43,819 | | |
| 62,075 | |
Total Current Liabilities | |
| 2,880,353 | | |
| 1,377,873 | |
Long Term Note Payable | |
| 200,000 | | |
| 200,000 | |
Total Liabilities | |
| 3,080,353 | | |
| 1,577,873 | |
Commitments and Contingencies | |
| | | |
| | |
Members' Deficit | |
| (1,248,411 | ) | |
| (464,564 | ) |
TOTAL LIABILITIES AND MEMBERS' DEFICIT |
|
$ |
1,831,942 |
|
|
$ |
1,113,309 |
|
See accompanying notes to financial statements
Lexington Power && Light, LLC
Statements of Operations
For The Years Ended
December 31, 2013 and 2012
| |
2013 | | |
2012 | |
| |
| | | |
| | |
Sales | |
| 9,522,963 | | |
| 5,144,107 | |
| |
| | | |
| | |
Cost of Sales | |
| 8,296,610 | | |
| 4,515,286 | |
| |
| | | |
| | |
Gross Profit | |
| 1,226,353 | | |
| 628,821 | |
General and Administrative Expenses | |
| 1,693,178 | | |
| 1,054,914 | |
Loss From Operations | |
| (466,825 | ) | |
| (426,093 | ) |
Other Items | |
| | | |
| | |
Interest Expense | |
| (270,988 | ) | |
| (136,640 | ) |
Loss Contingency | |
| (40,000 | ) | |
| – | |
Other Expenses | |
| (6,034 | ) | |
| (88 | ) |
Net Loss | |
| (783,847 | ) | |
| (562,821 | ) |
See accompanying notes to financial statements
Lexington Power & Light, LLC
Statement of
Members' Equity (Deficit)
For the Years
Ended December 31, 2013 and 2012
| |
| | |
| |
| | |
Balance, December 31, 2011 | |
$ | 98,257 | |
| |
| | |
Add: Contributions | |
| – | |
| |
| | |
Less: Distributions | |
| – | |
| |
| | |
Net Loss For The Year Ended December 31, 2012 |
|
|
(562,821 |
) |
| |
| | |
Balance, December 31, 2012 | |
$ | (464,564 | ) |
| |
| | |
Add: Contributions | |
| – | |
| |
| | |
Less: Distributions | |
| – | |
| |
| | |
Net Loss For The Year Ended | |
| | |
December 31, 2013 | |
| (783,847 | ) |
| |
| | |
Balance, December 31, 2013 | |
$ | (1,248,411 | ) |
| |
| | |
See accompanying notes to financial statements
Lexington Power & Light, LLC
Statement
of Cash Flows
| |
December 30, | |
| |
2013 | | |
2012 | |
Cash Flows from Operating Activities: | |
| | | |
| | |
Net Loss | |
$ | (783,847 | ) | |
$ | (562,821 | ) |
Adjustments to reconcile net loss to net cash provided (used) by operating
activities: |
|
|
|
|
|
|
|
|
Depreciation and Amortization | |
| 1,481 | | |
| 2,468 | |
Changes in Operating Assets and Liabilities: | |
| | | |
| | |
Accounts Receivable | |
| (350,172 | ) | |
| (281,386 | ) |
Accrued Revenue | |
| (369,505 | ) | |
| 12,993 | |
Inventory | |
| (23,590 | ) | |
| – | |
Collateral Postings | |
| 648 | | |
| (3,660 | ) |
Prepaid Expenses | |
| (56,284 | ) | |
| (851 | ) |
Other Current Assets | |
| 25,492 | | |
| 50,985 | |
Accounts Payable and Accrued Expenses |
|
|
465,082 |
|
|
|
528,125 |
|
Deferred Supply Payable | |
| 188,313 | | |
| 362,724 | |
Taxes Payable | |
| (18,256 | ) | |
| 37,292 | |
Total Adjustments | |
| (136,791 | ) | |
| 708,690 | |
Net cash provided by (used in) operating activities | |
| (920,638 | ) | |
| 145,869 | |
| |
| | | |
| | |
Cash Flows from Financing Activities: | |
| | | |
| | |
Advances (Repayment) of Notes Payable - Related Parties, Net |
|
|
156,284 |
|
|
|
(114,887 |
) |
Advances (Repayment) of Notes Payable, Net | |
| 711,057 | | |
| (61,987 | ) |
Net cash provided by (used in) financing activities | |
| 867,341 | | |
| (176,874 | ) |
| |
| | | |
| | |
Net decrease in cash | |
| (53,297 | ) | |
| (31,005 | ) |
Cash, Beginning of Period | |
| 107,083 | | |
| 138,088 | |
Cash, End of Period | |
$ | 53,786 | | |
$ | 107,083 | |
Supplemental disclosures: | |
| | | |
| | |
Interest and Taxes paid: | |
| | | |
| | |
Interest Expense | |
$ | 260,065 | | |
$ | 122,385 | |
Income Taxes | |
$ | – | | |
$ | – | |
See accompanying notes to financial statements
Lexington Power & Light, LLC
Notes to Financial Statements
For The Years Ended December 31, 2013 and
2012
(1) Organization and Business Description
Lexington
Power & Light, LLC (“LP&L” or “the Company”)
was incorporated under the laws of the State of New York on July 8, 2010 as a Limited Liability Company. LP&L markets and
sells electricity and natural gas to both commercial and residential customers located primarily in five boroughs of New York
City and on Long Island. The Company purchases electricity and natural gas on a wholesale basis pursuant to a combined supply
and credit facility agreement.
(2) Summary of Significant Accounting Policies
Basis
of Presentation
The accompanying
financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United
States of America (“U.S. GAAP”).
Cash
The Company maintains cash balances in interest
and non-interest bearing accounts, which do not currently exceed federally insured limits.
Allowance for Doubtful Accounts
The Company only markets to customers located
within the geography of those utilities that have a Purchase of Receivable (“POR”) program. Utilities that participate
in the POR program guarantee the collection of customer balances and remittances to the Company. The fee charged by each utility
for this service is approximately 2.5% of the gross amount collected each month. As such, an allowance for doubtful accounts as
of December 31, 2013 and 2012 is not considered necessary. POR fees for 2013 and 2012 were $233,183 and $121,161, respectively.
Property and Equipment
Property and equipment is stated at historical
cost less accumulated depreciation. Maintenance and repairs are expensed as incurred. Upon sale or disposition of assets, any gain
or loss is included in the statements of operations. The cost of property and equipment is depreciated using the straight line
method over the estimated useful lives of the assets. Amortization of leasehold improvements is computed using the straight-line
method over the shorter of the remaining lease term or the estimated useful lives of the improvements.
Lexington Power & Light, LLC
Notes to Financial Statements
For The Years Ended December 31, 2013 and
2012
Revenue Recognition and Cost of Sales
Revenues and costs of revenues are recognized
during the period in which the commodities are delivered to the customer. The Company applies the provisions of FASB Accounting
Standards Codification (“ASC”) 605-10, Revenue Recognition in Financial Statements ASC 605-10, which provides guidance
on the recognition, presentation, and disclosure of revenue in financial statements filed with the SEC. ASC 605-10 outlines the
basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies.
In general, the Company recognizes revenue from the sale of electricity and natural gas when (i) persuasive evidence of an arrangement
exists, (ii) delivery has occurred, (iii) the fee is fixed or determinable, and (iv) the collectability is reasonably assured.
Revenue is recognized upon delivery of the
commodity to the customer. Billed revenue is recognized when the customer’s meter is read, normally once in a thirty day
period. Accrued revenue is calculated for each electric and natural gas customer based on the average daily usage derived from
the most recent meter read bill times the number of days from the most recent meter read to the end of the month multiplied by
the current selling price. The difference between the accrual at the beginning of the month and the end of the month, up or down,
is recorded as an adjustment to Revenue.
Cost of Sales are recognized on a calendar
month basis as incurred, except for electric supply and related cost imbalance reconciliations with the Independent System Operators
(“ISO”). The imbalance is the difference between the electric supply and related costs scheduled by the Company through
its supplier (see Note 5) and the actual electric supply and related costs delivered by the ISO to the customers, which results
in four and nine month “true-up” balances on each monthly bill from the ISO. These additional balances are recorded
in the month they are billed, or credited, to the Company and not retroactively adjusted.
Customer Acquisition Costs
Customer acquisition costs related to outside
third party customer marketing programs are capitalized as prepaid expenses and amortized on a straight-line basis over a twenty-four
month period beginning the month after the month in which the costs are incurred.
Use of Estimates
The preparation of financial statements in
conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date
of the financial statements, and the reported amounts of revenues and expenses for the periods presented. Actual results could
differ from those estimates.
Lexington Power & Light, LLC
Notes to Financial Statements
For The Years Ended December 31, 2013 and
2012
Impairment of Long-Lived Assets
The long lived assets held and used by the
Company are reviewed for impairment no less frequently than annually or whenever events of changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. In the event that facts and circumstances indicate that the cost of any
long lived assets may be impaired, an evaluation of recoverability is performed. Management has determined that there was no impairment
in the value of long lived assets during the years ended December 31, 2013 and 2012.
Fair Value of Financial Instruments
Fair value is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Assets and liabilities measured at fair value are categorized based on whether or not inputs are observable in the market and the
degree that the inputs are observable. The categorization of financial assets and liabilities within the valuation hierarchy is
based upon the lowest level of input that is significant to the fair value measurement.
The Company’s financial instruments primarily
consist of cash, accounts receivable and accounts payable. As of the balance sheets, the estimated fair values of the financial
instruments were not materially different from their carrying values as presented on balance sheets. This is primarily attributed
to the short term maturities of these instruments. The Company did not identify any other non-recurring assets and liabilities
that are required to be presented in the balance sheets at fair value.
Income Taxes
LP&L is a Limited Liability Company (“LLC”)
and, as such, is not a tax paying entity for federal or state income tax purposes. In lieu of corporation income taxes, the
members of the LLC are taxed on their proportionate share of the Company's taxable income and included in their respective income
tax returns. Therefore, no provision or liability for federal or state income taxes has been included in these financial statements.
Inventory
Inventory, which consists of natural gas, is
a fungible commodity that is stated at the most recent cost, which is fair market value. The Inventory value at December 31, 2013
and 2012 was $23,590 and $0, respectively.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet
effective, accounting standards, if adopted would have a material effect on the accompanying financial statements.
Lexington Power & Light, LLC
Notes to Financial Statements
For The Years Ended December 31, 2013 and
2012
(3) Collateral Postings and Deposit
Collateral Postings and Deposit represent collateral
balances held by the ISO for electricity and by various pipeline transmission entities for natural gas. Collateral postings held
by the ISO as of December 31, 2013 and 2012 were $38,456 and $33,661, respectively. Natural gas collateral postings as of December
31. 2013 and 2012 were $38,661 and $44,104, respectively. The $200,000 collateral deposit held by the ISO as of December 31, 2013
and 2012 will be repaid by the ISO only when the Company ceases selling electricity to its customers and, as such, has been classified
as non-current. All collateral balances are financed pursuant to the current Loan Energy Services Agreement (“LESA”)
(see Note 5)
(4) Property and Equipment
Property and Equipment with estimated useful
lives of five years consisted of the following at December 31, 2013 and 2012;
| |
2013 | | |
2012 | |
Computer Equipment | |
$ | 7,711 | | |
$ | 7,711 | |
Less: Accumulated Depreciation | |
| (5,491 | ) | |
| (4,010 | ) |
Total | |
$ | 2,220 | | |
$ | 3,701 | |
Depreciation expense for 2013 and 2012 was $1,481
and $2,468, respectively.
(5) Loan Energy Services Agreement
In December 2011, LP&L entered into a three
year Loan Energy Services Agreement (“LESA”) with a private lender for a $5,000,000 line-of-credit to finance 90% of
POR
related Accounts Receivable and Accrued Revenue,
80% of Inventory and 80% of the present value of variable and fixed price contracts. The lender charges 10% per annum on the monthly
line utilization and the deferred supply balance, if any, plus 1% per annum as a commitment fee on unused portion of the line.
Utilization is defined as the largest balance outstanding on any given day during the month that is the total of all collateral
postings and deposits, the mark-to-market exposure and the current supply balance payable. The lender also advanced monies that
were used for a customer marketing program in 2013 and charges 15% per annum on the outstanding balance related thereto. Total
interest expense charged by the lender for 2013 and 2012 was $270,615 and $136,640, respectively.
Also pursuant to the LESA, the lender charges
monthly commodity fees based of the volume of electricity and natural gas purchases at a rate of $2.25 per MWh and $.13 per MMBtu,
respectively. The lender also charges 2% of the electric capacity purchased each month. The lender charged total commodity fees
of $250,586 and $155,485 for 2013 and 2012, respectively, which were included in Cost of Sales
Lexington Power & Light, LLC
Notes to Financial Statements
For The Years Ended December 31, 2013 and
2012
As required by the LESA, all utility payments
from customer collections have been assigned by the Company and are deposited into a bank account controlled by the lender. Disbursements
from the controlled account are subject to specific priority (“waterfall”) provisions.
On November 11, 2014 the LESA, which was due
to expire on December 21, 2014 was extended to February 28, 2015.
(6) Deferred Supply Payable
The deferred supply payable is the amount of
energy supply bills that are not able to be paid from current flow when due, are deferred and financed pursuant to the LESA (see
Note 5). The total interest charged by the lender related to the deferred supply balance for 2013 and 2012 was $54,965 and $16,298,
respectively.
(7) Notes Payable
Note Payable at December 31, 2013 includes
a $200,000 note dated December 11, 2013 due to an unrelated party that was personally guaranteed by the members of the Company.
Interest was accrued at a rate of 15% per annum for the initial ninety days and 18% per annum for the period thereafter until December
10, 2014, the maturity date, pursuant to the note agreement. This note, plus accrued interest of $30,844, was paid on October 22,
2014, the closing of the Membership Purchase Agreement (see Note 11)
As of December 31, 2013 notes payable in the
amount of $589,347 includes financed collateral postings and marketing program balances of $90,987 and $498,360, respectively,
and as of December 31, 2012 notes payable in the amount of $78,290 pertains to only financed collateral postings, pursuant to the
LESA (see Note 5). Interest charged by the lender related to the financed collateral postings for 2013 and 2012 was included in
the utilization charges of $133,038 and $78,132, respectively. Interest expense related to the financed marketing program for 2013
was $55,199.
(8) Notes Payable – Related Parties
Includes a balance of $75,626 at December 31,
2013 and 2012, which represents monies advanced to the Company by the majority member for working capital. The amount due is unsecured,
non-interest bearing and is payable upon demand.
Includes a balance at December 31, 2013 and 2012 of $195,771 and
$39,487, respectively, due to an entity that is owned by the members of the Company. This note is non-interest bearing, unsecured
and is payable on demand.
Lexington Power & Light, LLC
Notes to Financial Statements
For The Years Ended December 31, 2013 and
2012
(9) Long Term Note Payable
The Long Term Note Payable is related to the
collateral deposit held by the ISO of $200,000 as of December 31, 2013 and 2012 (see Note 7). Interest charged by the lender related
to the financed collateral deposit for 2013 and 2012 was included in the utilization charges of $133,038 and $78,132, respectively,
pursuant to the LESA (see Note 5).
(10) Commitments and Contingencies:
The Company rents office space under several
non-cancelable operating lease agreements in the same commercial building that commenced beginning in March 2014, all of which
expires February 28, 2016. The future annual
rental payments required under these operating lease agreements for 2014, 2015 and 2016 is $45,724, $46,867 and $7,849, respectively.
As of December 31, 2013, the Company has a
contingent liability related to a complaint filed by a single commercial customer with the New York Public Service Commission seeking
a reimbursement of $40,000. The Company has determined it appropriate under the circumstances to recognize and record this loss
contingency, which has been included in Accounts Payable and Accrued Expenses at December 31, 2013.
(11) Subsequent Events
On October 22, 2014, the closing of the Membership
Purchase Agreement, Premier Holding Corp. (“Premier”) acquired 85% of the membership interests of the Company from
its owners for 7,500,000 restricted shares of Premier common stock and $500,000 in Promissory Notes, plus earn out payments based
on earnings milestones during the twelve months following October 22, 2014. Premier has a contingent funding obligation of $1,000,000
of which $500,000 will be used as working capital for the Company. In addition, Premier has the option to acquire the remaining
15% membership interests from the owners until December 31, 2018 for $20,000,000 payable 50% in cash and 50% in restricted common
stock of Premier. Pursuant to the Membership Purchase Agreement, the Company exercised its right to nominate one board member to
Premier’s board of directors.
Also on October 22, 2014, the closing of the
Membership Purchase Agreement, the Note Payable due to unrelated party in the amount of $200,000, plus accrued interest of $30,844
related thereto, was paid in full (see Note 7).
Exhibit 99.2
Lexington Power & Light, LLC
Condensed Balance Sheets
| |
2014 | | |
2013 | |
| |
(Unaudited) | | |
| |
ASSETS | |
| | |
| |
Current Assets | |
| | | |
| | |
Cash | |
$ | 193,098 | | |
$ | 53,786 | |
Accounts Receivable | |
| 852,550 | | |
| 907,482 | |
Accrued Revenue | |
| 636,405 | | |
| 486,320 | |
Inventory | |
| 49,598 | | |
| 23,590 | |
Collateral Postings | |
| 265,900 | | |
| 77,117 | |
Prepaid Expenses | |
| – | | |
| 81,427 | |
Total Current Assets | |
| 1,997,551 | | |
| 1,629,722 | |
Fixed Assets, Net of Accumulated Depreciation |
|
|
35,341 |
|
|
|
2,220 |
|
Collateral Deposit | |
| 200,000 | | |
| 200,000 | |
TOTAL ASSETS | |
$ | 2,232,892 | | |
$ | 1,831,942 | |
LIABILITIES AND MEMBERS' DEFICIT | |
| | | |
| | |
Current Liabilities | |
| | | |
| | |
Accounts Payable and Accrued Expenses |
|
$ |
849,535 |
|
|
$ |
1,224,753 |
|
Deferred Supply Payable | |
| 704,679 | | |
| 551,037 | |
Notes Payable | |
| 977,903 | | |
| 789,347 | |
Notes Payable - Related Parties | |
| 152,379 | | |
| 271,397 | |
Taxes Payable | |
| – | | |
| 43,819 | |
Total Current Liabilities | |
| 2,684,496 | | |
| 2,880,353 | |
Long Term Note Payable | |
| 200,000 | | |
| 200,000 | |
Total Liabilities | |
| 2,884,496 | | |
| 3,080,353 | |
Commitments and Contingencies | |
| | | |
| | |
Members' Deficit | |
| (651,604 | ) | |
| (1,248,411 | ) |
TOTAL LIABILITIES AND MEMBERS' DEFICIT |
|
$ |
2,232,892 |
|
|
$ |
1,831,942 |
|
Lexington Power &
Light, LLC
Condensed Statements
of Operations
| |
September 30, | |
| |
2014 | | |
2013 | |
| |
(Unaudited) | | |
(Unaudited) | |
Sales | |
| 8,634,731 | | |
| 7,140,120 | |
Cost of Sales | |
| 6,548,083 | | |
| 5,887,324 | |
Gross Profit | |
| 2,086,648 | | |
| 1,252,796 | |
General and Administrative Expenses | |
| 1,249,229 | | |
| 1,286,122 | |
Income (Loss) From Operations | |
| 837,419 | | |
| (33,326 | ) |
Other Items | |
| | | |
| | |
Interest Expense | |
| (290,318 | ) | |
| (196,294 | ) |
Other Income (Expenses) | |
| 49,706 | | |
| (2,336 | ) |
Net Income (Loss) | |
| 596,807 | | |
| (231,956 | ) |
Lexington Power & Light, LLC
Condensed Statement of Members' Deficit
For the Nine Months Ended September 30, 2014
(Unaudited)
Balance, December 31, 2013 | |
$ | (1,248,411 | ) |
| |
| | |
Add: Contributions | |
| – | |
| |
| | |
Less: Distributions | |
| – | |
| |
| | |
Net Income For The Nine Months Ended | |
| | |
September 30, 2014 | |
| 596,807 | |
| |
| | |
Balance, September 30, 2014 | |
$ | (651,604 | ) |
Lexington Power & Light, LLC
Condensed
Statement of Cash Flows
| |
| | |
| |
| |
September 30, | |
| |
2014 | | |
2013 | |
| |
(Unaudited) | | |
(Unaudited) | |
Cash Flows from Operating Activities: | |
| | | |
| | |
| |
| | | |
| | |
Net Income (Loss) | |
$ | 596,807 | | |
$ | (231,956 | ) |
| |
| | | |
| | |
Adjustments to reconcile net loss to net cash provided (used) by operating
activities: |
|
|
|
|
|
|
|
|
| |
| | | |
| | |
Depreciation and Amortization | |
| 1,960 | | |
| 1,111 | |
Changes in Operating Assets and Liabilities: | |
| | | |
| | |
Accounts Receivable | |
| 54,932 | | |
| (380,594 | ) |
Accrued Revenue | |
| (150,085 | ) | |
| (489,411 | ) |
Inventory | |
| (26,008 | ) | |
| – | |
Prepaid Expenses | |
| 81,427 | | |
| (76,753 | ) |
Other Current Assets | |
| – | | |
| 25,492 | |
Deposits and Postings | |
| (188,783 | ) | |
| (76,495 | ) |
Accounts Payable and Accrued Expenses |
|
|
(375,216 |
) |
|
|
237,391 |
|
Deferred Supply Payable | |
| 153,641 | | |
| 344,680 | |
Taxes Payable | |
| (43,819 | ) | |
| (15,056 | ) |
| |
| | | |
| | |
Total Adjustments | |
| (491,951 | ) | |
| (429,635 | ) |
| |
| | | |
| | |
Net cash provided by (used in) operating activities | |
| 104,856 | | |
| (661,591 | ) |
| |
| | | |
| | |
Cash Flows from Investing Activities: | |
| | | |
| | |
| |
| | | |
| | |
Purchase of Property and Equipment | |
| (35,082 | ) | |
| – | |
| |
| | | |
| | |
Net cash (used in) investing activities | |
| (35,082 | ) | |
| – | |
| |
| | | |
| | |
Cash Flows from Financing Activities: | |
| | | |
| | |
| |
| | | |
| | |
Advances (Repayment) of Notes Payable - Related Parties, Net |
|
|
(119,018 |
) |
|
|
106,546 |
|
Advances (Repayment) of Notes Payable, Net | |
| 188,556 | | |
| 568,568 | |
| |
| | | |
| | |
Net cash provided by financing activities | |
| 69,538 | | |
| 675,114 | |
| |
| | | |
| | |
Net increase in cash | |
| 139,312 | | |
| 13,523 | |
| |
| | | |
| | |
Cash, Beginning of Period | |
| 53,786 | | |
| 107,083 | |
| |
| | | |
| | |
Cash, End of Period | |
$ | 193,098 | | |
$ | 120,606 | |
| |
| | | |
| | |
Supplemental disclosures: | |
| | | |
| | |
| |
| | | |
| | |
Interest and Taxes paid: | |
| | | |
| | |
| |
| | | |
| | |
Interest Expense | |
$ | 286,451 | | |
$ | 183,456 | |
Income Taxes | |
$ | – | | |
$ | – | |
Lexington Power & Light, LLC
Notes to Condensed Financial Statements
As of September 30, 2014 and December 31,
2013 and
For The Nine Months Ended September 30, 2014
and 2013
(1) Basis of Presentation
The accompanying unaudited interim condensed
financial statements of Lexington Power & Light, LLC (“LP&L” or the “Company”) have been prepared
by management in accordance with accounting principles generally accepted in the United States of America for interim financial
information and pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly,
they do not include all information and footnotes required by generally accepted accounting principles for annual audited financial
statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included.
The results of operations for the nine months
ended September 30, 2014 are not necessarily indicative of the results to be expected for the year ending December 31, 2014. The
accompanying unaudited interim condensed financial statements should be read in conjunction with the Company’s audited financial
statements and notes related thereto for the years ended December 31, 2013 and 2012.
(2) Collateral Postings and Deposit
Collateral postings and Deposit represent collateral
balances held by the ISO for electricity and by various pipeline transmission entities for natural gas. Collateral postings held
by the ISO as of September 30, 2014 and December 31, 2013 were $227,076 and $38,456, respectively. Natural gas collateral balances
as of September 30, 2014 and December 31, 2013 were $38,824 and $38,661, respectively. The $200,000 collateral deposit held by
the ISO as of September 30, 2014 and December 31, 2013 will be repaid by the ISO only when the Company ceases selling electricity
to its customers and, as such, has been classified as non-current. All collateral balances are financed pursuant to the current
Loan Energy Services Agreement (“LESA”) (see Note 3)
(3) Loan Energy Services Agreement
In December 2011, LP&L entered into a three
year Loan Energy Services Agreement (“LESA”) with a private lender for a $5,000,000 line-of-credit to finance 90% of
POR related Accounts Receivable and Accrued Revenue, 80% of Inventory and 80% of the present value of variable and fixed price
contracts. The lender charges 10% per annum on the monthly line utilization and the deferred supply balance, if any, plus 1% per
annum as a commitment fee on unused portion of the line. Utilization is defined as the largest balance outstanding on any given
day during the month that is the total of all collateral postings and deposits, the mark-to-market exposure and the current supply
balance payable. The lender also advanced monies that were used for a customer marketing program in 2013 and charges 15% per annum
on the outstanding balance related thereto. Total interest expense charged by the lender for the nine months ended September 30,
2014 and 2013 was $264,561 and $195,921, respectively.
Lexington Power & Light, LLC
Notes to Condensed Financial Statements
As of September 30, 2014 and December 31,
2013 and
For The Nine Months Ended September 30, 2014
and 2013
Also pursuant to the LESA, the lender charges
monthly commodity fees based of the volume of electricity and natural gas purchases at a rate of $2.25 per MWh and $.13 per MMBtu,
respectively. The lender also charges 2% of the electric capacity purchased each month. The lender charged total commodity fees
of $204,559 and $179,301 for the nine months ended September 30, 2014 and 2013, respectively, which were included in Cost of Sales.
As required by the LESA, all utility payments
from customer collections have been assigned by the Company and are deposited into a bank account controlled by the lender. Disbursements
from the controlled account are subject to specific priority (“waterfall”) provisions.
On November 11, 2014 the LESA, which was due
to expire on December 21, 2014 was extended to February 28, 2015.
(4) Deferred Supply Payable
The deferred supply payable is the amount of
invoiced energy supply that is not able to be paid from current cash flow when due, which is deferred and financed pursuant to
the LESA (see Note 3). The total interest charged by the lender related to the deferred supply balance for the nine months ended
September 30, 2014 and 2013 was $53,626 and $37,840, respectively.
(5) Notes Payable
Note Payable at December 31, 2013 includes
a $200,000 note dated December 11, 2013 due to an unrelated party that was personally guaranteed by the members of the Company.
Interest was accrued at a rate of 15% per annum for the initial ninety days and 18% per annum for the period thereafter until December
10, 2014, the maturity date, pursuant to the note agreement. This note, plus accrued interest of $30,844, was paid on October 22,
2014, the closing of the Membership Purchase Agreement (see Note 8).
Pursuant to the LESA (see Note 3), Notes Payable
includes financed collateral postings and marketing program balances of $279,543 and $498,360, respectively, as of September 30,
2014 and $90,987 and $498,360, respectively, as of December 31, 2013. Interest charged by the lender related to the financed collateral
balances for the nine months ended September 30, 2014 and 2013 was included in the utilization charges of $140,085 and $101,099,
respectively. Interest expense related to the financed marketing program was $56,688 and $36,095 for the nine months ended September
30, 2014 and 2013, respectively.
Lexington Power & Light, LLC
Notes to Condensed Financial Statements
As of September 30, 2014 and December 31,
2013 and
For The Nine Months Ended September 30, 2014
and 2013
(6) Notes Payable – Related Parties
Includes a balance of $75,626 at September
30, 2014 and December 31, 2013, which represents monies advanced to the Company by the majority member for working capital. The
amount due is unsecured, non-interest bearing and is payable upon demand.
Includes a balance at September 30, 2014 and December 31, 2013 of
$76,753 and $195,771, respectively, due to an entity that is owned by the members of the Company. This note is non-interest bearing,
unsecured and is payable on demand.
(7) Long Term Note Payable
The Long Term Note Payable is related to the
collateral deposit held by the ISO of $200,000 as of September 30, 2014 and December 31, 2013 (see Note 2). Interest charged by
the lender related to the financed collateral deposit for the nine months ended September 30, 2014 and 2013 was included in the
utilization charges of $140,085 and $101,099, respectively, pursuant to the LESA (see Note 3).
(8) Subsequent Events
On October 22, 2014, the closing of the Membership
Purchase Agreement, Premier Holding Corp. (“Premier”) acquired 85% of the membership interests of the Company from
its owners for 7,500,000 restricted shares of Premier common stock and $500,000 in Promissory Notes, plus earn out payments based
on earnings milestones during the twelve months following October 21, 2014. Premier has a contingent funding obligation of $1,000,000
of which $500,000 will be used as working capital for the Company. In addition, Premier has the option to acquire the remaining
15% membership interests from the owners until December 31, 2018 for $20,000,000 payable 50% in cash and 50% in restricted common
stock of Premier. Pursuant to the Membership Purchase Agreement, the Company exercised its right to nominate one board member to
Premier’s board of directors.
Also on October 22, 2014, the closing of the
Membership Purchase Agreement, the Note Payable due to an unrelated party in the amount of $200,000, plus accrued interest of $30,844
related thereto, was paid in full (see Note 5).
Exhibit 99.3
PREMIER HOLDING CORPORTATION
Consolidated Balance Sheets
(Unaudited)
| |
September 30, | | |
September 30, | | |
| | |
September 30, | |
|
| |
2014 | | |
2014 | | |
| | |
2014 | |
|
Assets | |
PRHL | | |
LPL | | |
Adjustments | | |
Pro Forma | |
|
Current Assets | |
| | | |
| | | |
| | | |
| | |
|
Cash | |
$ | 578,039 | | |
$ | 193,098 | | |
$ | – | | |
$ | 771,137 | |
|
Accounts receivable | |
| 513,665 | | |
| 852,550 | | |
| – | | |
| 1,366,215 | |
|
Accrued Revenue | |
| – | | |
| 636,405 | | |
| – | | |
| 636,405 | |
|
Inventory | |
| – | | |
| 49,598 | | |
| – | | |
| 49,598 | |
|
Collateral Postings | |
| – | | |
| 265,900 | | |
| – | | |
| 265,900 | |
|
Prepaid expenses | |
| 12,524 | | |
| – | | |
| – | | |
| 12,524 | |
|
Total Current Assets | |
| 1,104,228 | | |
| 1,997,551 | | |
| – | | |
| 3,101,779 | |
|
Other Assets | |
| | | |
| | | |
| | | |
| | |
|
Notes receivable | |
| – | | |
| – | | |
| – | | |
| – | |
|
Equipment, Net | |
| 23,545 | | |
| 35,341 | | |
| – | | |
| 58,886 | |
|
Goodwill | |
| 4,555,750 | | |
| – | | |
| – | | |
| 4,555,750 | |
|
Intangible assets, net | |
| 149,905 | | |
| – | | |
| – | | |
| 149,905 | |
|
Collateral Deposit | |
| – | | |
| 200,000 | | |
| – | | |
| 200,000 | |
|
Total Assets | |
$ | 5,833,428 | | |
$ | 2,232,892 | | |
$ | – | | |
$ | 8,066,320 | |
|
| |
| | | |
| | | |
| | | |
| | |
|
Liabilities and Stockholders’ Equity | |
| | | |
| | | |
| | | |
| | |
|
Current Liabilities: | |
| | | |
| | | |
| | | |
| | |
|
Accounts payable and accrued liabilities | |
$ | 352,624 | | |
$ | 849,535 | | |
$ | – | | |
$ | 1,202,159 | |
|
Related party payable | |
| 149,620 | | |
| – | | |
| – | | |
| 149,620 | |
|
Deferred Supply Payable | |
| – | | |
| 704,679 | | |
| – | | |
| 704,679 | |
|
Convertible note, net | |
| 386,000 | | |
| – | | |
| – | | |
| 386,000 | |
|
Notes payable | |
| 20,000 | | |
| 977,903 | | |
| 500,000 | | |
| 1,497,903 | (1a) |
|
Notes payable, related parties | |
| ` | | |
| 152,379 | | |
| – | | |
| 152,379 | |
|
Taxes payable | |
| ` | | |
| – | | |
| – | | |
| – | |
|
Total Current Liabilities | |
| 908,244 | | |
| 2,684,496 | | |
| 500,000 | | |
| 4,092,741 | |
|
Long-Term Liabilities: | |
| | | |
| | | |
| | | |
| | |
|
Long-term debt | |
| – | | |
| 200,000 | | |
| – | | |
| 200,000 | |
|
Total Liabilities | |
| 908,244 | | |
| 2,884,496 | | |
| 500,000 | | |
| 4,292,741 | |
|
| |
| | | |
| | | |
| | | |
| | |
|
Commitments and Contingencies | |
| | | |
| | | |
| | | |
| | |
|
Lawsuit liability | |
| 86,000 | | |
| – | | |
| – | | |
| 86,000 | |
|
| |
| | | |
| | | |
| | | |
| | |
|
Stockholders’ Equity: | |
| | | |
| | | |
| | | |
| | |
|
Preferred Stock, 50,000,000 shares authorized, par value $.0001, 200,000, and null share issued or outstanding, respectively | |
| 20 | | |
| – | | |
| – | | |
| 20 | |
|
Common Stock, 450,000,000 shares authorized, par value $.0001, 157,319,610and 151,003,328 shares issued and outstanding, respectively | |
| 15,732 | | |
| – | | |
| | | |
| 16,482 | (1b),(2) |
|
Common stock to be issued | |
| 256,958 | | |
| – | | |
| – | | |
| 256,958 | |
|
Treasury stock | |
| (869,000 | ) | |
| – | | |
| – | | |
| (869,000 | ) |
|
Additional paid in capital | |
| 21,346,247 | | |
| – | | |
| (750 | ) | |
| 21,345,497 | (2) |
|
Accumulated deficit | |
| (15,633,976 | ) | |
| (651,604 | ) | |
| (500,000 | ) | |
| (16,785,580 | ) |
|
Total Premier Holding Corporation stockholders’ equity | |
| 5,115,981 | | |
| (651,604 | ) | |
| (500,000 | ) | |
| 3,964,377 | |
|
Non-controlling interest | |
| (276,797 | ) | |
| – | | |
| – | | |
| (276,797 | ) |
|
Total Stockholders’ Equity | |
| 4,839,184 | | |
| (651,604 | ) | |
| (500,000 | ) | |
| 3,687,579 | |
|
Total Liabilities and Stockholders’ Equity | |
$ | 5,833,428 | | |
$ | 2,232,892 | | |
$ | – | | |
$ | 8,066,320 | |
|
Notes
| (1) | Premier acquired 85% of LP&L for a) the issuance of $500,000 in Promissory Notes and b) 7,500,000 shares of common stock |
| (2) | The 7,500,000 sharesof Premier issued are in exchanged for 85% of the shares of LPL, this pro forma assumes full consolidation
of LPL's financial activities |
PREMIER HOLDING CORPORATION
Consolidated Statements of Operations
(Unaudited)
|
Nine months ended | |
Nine months ended | |
| |
Nine months ended | |
Nine months ended | |
Nine months ended | |
| |
Nine months ended | |
|
September 30, | |
September 30, | |
| |
September 30, | |
September 30, | |
September 30, | |
| |
September 30, | |
|
2014 | |
2014 | |
Adjust- | |
2014 | |
2013 | |
2013 | |
Adjust- | |
2013 | |
|
PRHL | |
LPL | |
ments | |
Pro Forma | |
PRHL | |
LPL | |
ments | |
Pro Forma | |
Revenue |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
TPC Commission Revenue |
$ | 2,223,789 | |
$ | – | |
$ | – | |
$ | 2,223,789 | |
$ | 1,437,746 | |
$ | – | |
$ | – | |
$ | 1,437,746 | |
Lighting Product Selling Revenue |
| 59,420 | |
| – | |
| – | |
| 59,420 | |
| – | |
| – | |
| – | |
| – | |
LPL Sales |
| – | |
| 8,634,731 | |
| – | |
| 8,634,731 | |
| – | |
| 7,140,120 | |
| – | |
| 7,140,120 | |
Total Revenue |
| 2,283,209 | |
| 8,634,731 | |
| – | |
| 10,917,940 | |
| 1,437,746 | |
| 7,140,120 | |
| – | |
| 8,577,866 | |
Cost of Sales |
| 69,389 | |
| 6,548,083 | |
| – | |
| 6,617,472 | |
| 33,786 | |
| 5,887,324 | |
| – | |
| 5,921,110 | |
|
| | |
| | |
| | |
| | |
| – | |
| – | |
| – | |
| – | |
Gross Profit |
| 2,213,820 | |
| 2,086,648 | |
| – | |
| 4,300,468 | |
| 1,403,960 | |
| 1,252,796 | |
| – | |
| 2,656,756 | |
Operating expenses: |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Selling, general and administrative |
| 4,681,150 | |
| 1,249,229 | |
| – | |
| 5,930,379 | |
| 4,934,351 | |
| 1,286,122 | |
| – | |
| 6,220,473 | |
Total operating expenses |
| 4,681,150 | |
| 1,249,229 | |
| – | |
| 5,930,379 | |
| 4,934,351 | |
| 1,286,122 | |
| – | |
| 6,220,473 | |
Loss from operations |
| (2,467,330 | ) |
| 837,419 | |
| – | |
| (1,629,911 | ) |
| (3,530,391 | ) |
| (33,326 | ) |
| – | |
| (3,563,717 | ) |
|
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Other income (expenses): | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Interest expense |
| (7,202 | ) |
| (290,318 | ) |
| – | |
| (297,520 | ) |
| – | |
| (196,294 | ) |
| – | |
| (196,294 | ) |
Loss on settlement of lawsuit |
| (110,000 | ) |
| – | |
| – | |
| (110,000 | ) |
| – | |
| – | |
| – | |
| – | |
Other income (expense) |
| – | |
| 49,706 | |
| – | |
| 49,706 | |
| – | |
| (2,336 | ) |
| – | |
| (2,336 | ) |
Total non-operating expenses |
| (117,202 | ) |
| (240,612 | ) |
| – | |
| (357,814 | ) |
| – | |
| (198,630 | ) |
| – | |
| (198,630 | ) |
Loss from operations before income taxes, non-controlling interest, and discontinued operations |
| (2,584,533 | ) |
| 596,807 | |
| – | |
| (1,987,726 | ) |
| (3,530,391 | ) |
| (231,956 | ) |
| – | |
| (3,762,347 | ) |
Income taxes |
| – | |
| – | |
| – | |
| – | |
| – | |
| – | |
| – | |
| | |
Loss before non-controlling interest and discontinued operations |
| (2,584,533 | ) |
| 596,807 | |
| – | |
| (1,987,726 | ) |
| (3,530,391 | ) |
| (231,956 | ) |
| – | |
| (3,762,347 | ) |
Net Loss attributable to non-controlling interest |
| 97,441 | |
| – | |
| – | |
| 97,441 | |
| 123,011 | |
| – | |
| – | |
| 123,011 | |
Income/ Loss from discontinued operations |
| – | |
| – | |
| – | |
| – | |
| 985,138 | |
| – | |
| – | |
| 985,138 | |
Net Profit (Loss) attributable to Premier Holding
Corporation |
$ | (2,487,091 | ) |
$ | 596,807 | |
$ | (89,521 | ) |
$ | (1,979,805 | ) |
$ | (2,422,241 | ) |
$ | (231,956 | ) |
$ | 34,793 | |
$ | (2,619,405 | ) |
Net loss from continuing operations |
| (2,487,091 | ) |
| 596,807 | |
| (89,521 | ) |
| (1,979,805 | ) |
| (3,407,379 | ) |
| (231,956 | ) |
| 34,793 | |
| (3,604,543 | ) |
Net income (Loss) per common share — basic and diluted |
$ | 0.02 | |
| | |
| | |
| | |
$ | 0.02 | |
| | |
| | |
| | |
Net income (Loss) attributable to Premier Holding Corporation per share - basic and diluted |
$ | 0.02 | |
| | |
| | |
| | |
$ | 0.02 | |
| | |
| | |
| | |
Net income from discontinued operations |
| – | |
| | |
| | |
| | |
| – | |
| | |
| | |
| | |
Net income (Loss) per common share from discontinued operations — basic and diluted |
| – | |
| | |
| | |
| | |
| – | |
| | |
| | |
| | |
Weighted average common shares – basic and diluted |
| 146,423,036 | |
| | |
| | |
| | |
| 103,449,884 | |
| | |
| | |
| | |
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