PROPOSAL TO APPROVE A SHARE EXCHANGE
FOR OUR TWO
WHOLLY-OWNED SUBSIDIARIES
SUMMARY TERM SHEET
The following questions and answers are
presented for your convenience only and briefly address some questions you may have about the transfer by the Company to AOTS of
the Company’s membership interests of The Power Company, L.L.C., and American Illuminating Company, L.L.C. to AOTS in exchange
for 19,250,000 AOTS common shares (the “Share Exchange”). These questions and answers may not contain all of the information
that is important to you. We therefore urge you to read carefully the entire Information Statement.
Q: Why am I receiving this Information
Statement?
A: This Information Statement describes
the Business Combination and the approval of the Share Exchange by written consent. The Company’s Board of Directors is providing
this Information Statement to you pursuant to Section 14(c) of the Exchange Act, solely to inform you of, and provide you with
information about, the Sale before it is consummated.
Q: Who is entitled to receive this Information
Statement?
A: Stockholders of record as of March
15, 2018, the record date, are entitled to receive this Information Statement and the accompanying notice of stockholder action
by written consent, which describes the corporate action that has been approved by the written consent of stockholders who collectively
own approximately 55% of the Company's outstanding common stock.
Q: Am I being asked to vote on the Share
Exchange?
A: No, we are not asking you to vote for
approval of the Share Exchange or to provide your written consent to the Share Exchange. Your vote or written consent is not required
for approval of the Share Exchange because the Share Exchange has been approved by written consent of a majority of the holders
of the Company’s common stock. Under Nevada corporate law, all the activities requiring stockholder approval may be taken
by obtaining the written consent and approval of more than fifty percent (50%) of the holders of voting stock in lieu of a meeting
of the stockholders, which the Company has already obtained. We have received the affirmative vote of 55% of the holders of
common stock, which percentage includes both management and non-management shareholders of the Company. Therefore, no action
by the minority stockholders in connection with the Share Exchange is required.
Q: Will there be a stockholder meeting
to consider and approve the Share Exchange?
A: No, a stockholder meeting will not be
held to consider and approve the Share Exchange. The Share Exchange has already been approved by written consent.
Q: Will any Shares of AOTS be distributed
to me as a stockholder?
A: Yes. The shares the Company receives
from AOTS as part of the Share Exchange will be distributed to the common shareholders of the Company on a pro rata, proportional
basis. This may be done in one distribution. Company common shareholders will still own the Company’s stock in addition to
AOTS shares distributed by the Company to common This transaction is not a share exchange between AOTS and the common shareholders
of the Company, but rather a share exchange between the Company and AOTS, coupled with a subsequent pro rata distribution of AOTS
shares to the Company’s common shareholders.
Q: Is the Share Exchange subject to
the satisfaction of any conditions?
A: Yes. Before the Share Exchange can be
consummated, certain closing conditions must be satisfied or waived. These conditions are described in in this Information Statement.
If these conditions are not satisfied or waived, then the Share Exchange will not be consummated, even though it has already been
conditionally approved by written consent. The Company believes it has already satisfied the material conditions of the Share Exchange
Agreement, such that upon the expiration of twenty (20) days after days after the date on which this Information Statement has
been mailed to the stockholders pursuant to Rule 14c-2 under the Exchange Act (if any), the Transaction will automatically close.
Q: When do you expect the Share Exchange
to be consummated?
A: We expect to consummate the Share Exchange
on the later of (i) the date that is within five (5) business days after the satisfaction or waiver of the closing conditions
under the Business Combination agreements, including, without limitation, the receipt of all approvals; or (ii) twenty (20) days
after the date on which this Information Statement has been mailed to the stockholders pursuant to Rule 14c-2 under the Exchange
Act. It is important to note that under the Share Exchange Agreement, the AIC membership interests have been contributed to
AOTS, but the TPC membership interest contribution to AOTS still requires board of director and/or member approval by TPC. Such
approval is expected, but cannot be assured, by February 15, 2019.
Q: What are the U.S. federal income
tax consequences of the Share Exchange?
A: The Company believes it has available
federal net operating loss carry-forwards which will offset any gains recognized upon consummation of the Sale. While the Company
expects to pay federal alternative minimum taxes due to limitations on the utilization of net operating loss carry-forwards, such
taxes will be available as a credit against regular federal income taxes incurred in the future.
Q:
Am I entitled to any appraisal or dissenters’ rights?
A:
Stockholders will be entitled to appraisal or dissenters’ rights as a result of the share exchange under Nevada law.
Q:
Will the business plan or operations of the Company change as a result of the share exchange?
A: The Company does not believe operations will materially change as a result of the Share Exchange.
While the Share Exchange will entail the sale of substantially all the assets of the Company, by selling its AIC and TPC membership
interests, it will continue to pursue its business model merger and acquisitions strategy which seeks mergers and acquisitions
in the Deregulated and Energy Efficiency Sector, while providing products, services and technology in the energy efficiency markets
to customers.
Q: Who can help answer my questions?
A: If you would like additional copies,
without charge, of this Information Statement, or if you have questions about the share exchange, then you should contact us as
follows:
PREMIER HOLDING CORPORATION
Attn: Corporate Secretary
1382 Valencia Ave., Unit F,
Tustin CA 92780
(949) 260-8070
DESCRIPTION OF
THE TRANSACTION
On March 12, 2018, the Company’s
Board of Directors (the “Board”) approved a Share Exchange Agreement by and among the Company, the Company’s
wholly-owned subsidiaries The Power Company, an Illinois Limited Liability Corporation (“TPC”) and American Illuminating
Company (“AIC”), a Connecticut Limited Liability Corporation, and AOTS 42 (“AOTS”), a Delaware corporation
(the “Share Exchange Agreement”). The Share Exchange Agreement was subsequently executed on March 23, 2018.
Under the terms of the Share Exchange
Agreement, among other things, the Company will contribute all of its membership interests of its wholly-owned subsidiaries TPC
and AIC, in exchange for 19,250,000 common stock shares of AOTS, $0.0001 par value per share, which represents 39.65% of the 48,550,000
issued and outstanding common shares on a fully-diluted basis after giving effect to such issuance (the “AOTS Shares” ).
Performance of the Share Exchange Agreement is subject to customary regulatory approvals for a transaction of this type, as well
as certain other closing conditions. Pursuant to the Share Exchange Agreement, the Company has already contributed the AIC
membership interests to AOTS. Contribution of the company’s TPC membership interests to AOTS has not yet been consummated,
pending approval by TPC’s board and/or members of such contribution of TPC membership interests. The Company believes, but
cannot assure, such approval by TPC will be obtained on or before February 15, 2019.
The Company believes that the transfer
to AOTS of all its membership interests in TPC and AIC may constitute the sale of “substantially all” of the Company’s
assets within the meaning of Nevada law. Such a sale of substantially all the assets requires the consent of the holders of a majority
of the outstanding shares of the Company’s common stock.
Accordingly, on or about May 17, 2018,
the Company received affirmative consent for the Share Exchange Agreement from approximately 55% of the total shares outstanding
as of the record date of March 15, 2018. Specifically, there were 489,579,847 shares of the Company’s common stock issued
and outstanding, and 250,000 shares of the Company’s Series B preferred stock issued and outstanding, with a voting ratio
of 1,000 to one. This creates an aggregate voting count of 739,579,847; of which 50% is 369,789,923.5. The affirmatives votes
amounted to 408,207,092, representing approximately 55% of the shares outstanding and eligible to vote, and this 55% included
both shares held my management and those held by non-management shareholders.
The Company will not be retaining ownership
of any of the 19,250,000 AOTS shares it receives as a result of the Share Exchange Agreement. Instead, the Company’s Board
of Directors has approved the distribution of these AOTS shares to the Company’s common shareholders upon consummation of
the Share Exchange Agreement. Accordingly, on March 27, 2018, the Board authorized the Company to make a pro rata stock
distribution to its common shareholders of the 19,250,000 AOTS common shares received by the Company pursuant to the Share Exchange
Agreement (the “AOTS Share Distribution”). Pursuant to the AOTS Share Distribution, holders of Company common stock
will receive a certain amount of shares of AOTS common stock for each share of Company Common Stock held at the close of business
on a record date to be determined by the Board as the record date for the AOTS Stock Dividend (the “Distribution
Record Date”), at a ratio to be determined by the Board (the “AOTS Share Distribution Ratio”). Consummation
of the Share Exchange Agreement is a condition to the AOTS Share Distribution.
The AOTS Share Distribution is conditioned,
among others, on the consummation of the Share Exchange Agreement. Pursuant to the Share Exchange Agreement, the AIC memberships
have already been contributed to AOTS. However, TPC board of director and/or member approval must be obtained prior to the TPC
membership interests being contributed to AOTS. Such TPC approval is expected to, but cannot be assured to occur, on or before
February 15, 2019. The AOTS consolidated financials for the period ended September 30, 2018, attached hereto as Exhibit C, accordingly
reflect the contribution of AIC memberships to AOTS, but do not the TPC membership interests.
The Share Exchange Agreement the Company
entered into with AOTS is part of a series of transactions by AOTS involving the acquisition of certain assets by AOTS
from various entities in exchange for AOTS common stock (the “AOTS Transactions”). The AOTS Transactions consist of
: (1) The Company’s contribution of its wholly-owned TPC and AIC subsidiaries pursuant to the Share Exchange Agreement,
(2) A Membership Interest Exchange and Contribution Agreement dated March 16, 2018 between AOTS and Rescom Energy, L.L.C., a Connecticut
limited liability company (“Rescom”), as amended, (the “Rescom Agreement”), whereby 100% of Rescom’s
membership interests were contributed to AOTS in exchange for 10,000,000 AOTS common shares; (3) A Share Exchange Agreement dated
March 23, 2018 between AOTS and Advanced E Lighting, L.L.C., a Connecticut limited liability company (“Advanced”),
as amended, (the “Advanced Agreement”) whereby 100% of Advanced’s membership interests were contributed to AOTS
in exchange for 6,000,000 AOTS common shares; and (4) A Membership Interest Exchange and Contribution Agreement dated March 23,
2018 between AOTS and TPC Management Co., L.L.C., an Illinois limited company (TPCM”), as amended, (the “TPCM Agreement”)
whereby TPC contributed certain intellectual property relating to an online client energy portal (the “Intellectual Property”)
to AOTS in exchange for 6,000,000 common shares of AOTS.
ABOUT AOTS
AOTS was incorporated in Delaware in 2016.
Prior to the AOTS Transactions described herein, AOTS has no history of material business operations, income, or assets
prior to the AOTS Transactions described herein. AOTS’s proposed business model is to implement a merger and acquisitions
strategy which seeks to consolidate businesses within the Deregulated and Energy Efficiency Sector, while providing products,
services and technology in the energy efficiency markets to customers.
As of March 31, 2018, the common stock
of AOTS was beneficially owned as follows:
|
Investor
|
Shares
(Basic)
|
Percentage
|
Shares
(Fully Diluted)
|
Percentage
|
|
Westpark Capital Financial Services, LLC (WPCFS)
|
2,900,000
|
34.94
|
2,900,000
|
18.84
|
|
Gerry Martin
|
5,400,000
|
65.06
|
5,400,000
|
35.07
|
|
Total (Basic)
|
8,300,000
|
100.00
|
8,300,000
|
|
|
Common stock Warrants held by WPCFS
|
|
|
7,096,390
|
46.09
|
|
Total (Fully Diluted)
|
|
|
15,396,390
|
100.00
|
As a result of AOTS’ acquisition
of 100% of the membership interests of Rescom and AER became wholly-owned subsidiaries of AOTS, and at September 30, 2018, Rescom
and AER constituted substantially all the assets of AOTS.
As of September 30, 2018, AOTS was beneficially
owned as follows:
|
Name
|
Shares
|
Percentage
|
|
WestPark Financial Services, LLC
|
4,739,660
|
20.2
|
|
Gerry Martin
|
2,560,340
|
10.9
|
|
Advanced E Lighting, LLC
|
6,000,000
|
25.5
|
|
PowerOne Corporation
|
10,000,000
|
42.6
|
|
Investors
|
200,000
|
0.9
|
|
Total
|
23,500,000
|
100.00
|
The AOTS shares distributed to the Company’s
shareholders as a result of the Share Exchange will be restricted stock, subject to Rule 144 of the Securities Act if 1933, as
amended, and accordingly may not be sold or transferred by holders without an exemption from registration or an opinion of counsel
of AOTS that such registration is not required.
The Company has set forth on Exhibit D
hereto, its estimated, forward-looking financial projections of AOTS, assuming the consummation of the AOTS Transactions.
ABOUT THE AOTS ACQUIRED COMPANIES
As a result of the AOTS Transactions, the
AOTS became the beneficial owner of 100% of Rescom, Advanced, and TPCM. The business of these companies is as follows:
|
|
·
|
Rescom is a Retail Energy Provider licensed in 6 states and 14 service territories focused in the
deregulated energy space.
|
|
|
·
|
Advanced is in the business of providing energy efficiency products and services with a strong
focus in the LED lighting space.
|
|
|
·
|
TPCM provides management services and expertise in the deregulated energy space and has developed
intellectual properties that will be utilized for the combined companies of AOTS, Rescom, Advanced and TPCM.
|
Certain Risk Factors Related to AOTS
No managerial control over AOTS.
In the event that the AOTS Transactions
are consummated, holders of AOTS shares will collectively have less than a majority of the issued and outstanding shares of AOTS.
As a result, such holders of AOTS shares will not be able to exert any material management control over AOTS and will therefore
be dependent on AOTS management to make the material business decisions of AOTS. Additionally, individuals holding AOTS shares
will also not have any material managerial control of Rescom and Advanced, AOTS’ wholly-owned subsidiaries.
Lack of Liquid Market for AOTS Shares.
AOTS is a privately-held company, the AOTS
shares are not registered with the Securities and Exchange Commission and are not publicly-traded on any stock exchange. As such
there is currently no liquid market for the AOTS shares.
Restricted nature of AOTS shares.
The AOTS shares have not been registered
with the Securities and Exchange Commission. Accordingly, they may not be sold or transferred under the federal securities laws
without registration or an exemption from registration.
Need for additional
Capital.
AOTS may need to raise
additional capital to meet our future business requirements and such capital raising may be costly or difficult to obtain and could
dilute AOTS shareholder’s ownership interest.
Privately-held Company Risk.
Small privately held companies like
AOTS are inherently risky and may be exposed to market factors beyond their control. If such events were to occur, it may result
in a loss of investment for AOTS shareholders.
Dividends.
AOTS does not anticipate
dividends to paid on AOTS common stock and investors holding AOTS shares may lose the entire amount of their investment.
A dividend has never been declared
or paid in cash on our common stock and we do not anticipate such a declaration or payment for the foreseeable future. We expect
to use future earnings, if any, to fund business growth. Therefore, stockholders will not receive any funds absent a sale of their
shares. We cannot assure stockholders of a positive return on their investment when they sell their shares, nor can we assure
that stockholders will not lose the entire amount of their investment.
Speculative Nature of AOTS Shares/Dilution
The AOTS shares are highly speculative,
involve a high degree of risk, including risk of substantial, immediate dilution in the future.
Business of Premier Holding Corp.
We are an energy services holding company.
We provide an array of energy services through our subsidiary companies, E3 and TPC. We provide solutions that enable customers
to reduce their energy consumption, lower their operating and maintenance costs, and realize environmental benefits. Our comprehensive
set of services includes competitive electricity plans and upgrades to a facility’s energy infrastructure.
We were incorporated in Nevada on October
18, 1971 under the name of Mr. Nevada, Inc., and following the completion of a limited public offering in April 1972, we commenced
limited operations which were discontinued in 1990. Thereafter and through 2012, we reorganized and, on several occasions, sought
to merge with or acquire certain active private companies or operations, all of which were terminated or resulted in discontinued
negotiations. We have been organized as a holding company that provides financial and management expertise, which includes access
to capital, financing, legal, insurance, mergers, acquisitions, joint ventures and management strategies to our subsidiaries. Our
common stock is quoted on the OTC Markets Group Inc. QB tier (“OTCQB”), under the symbol “PRHL”.
Significant Corporate Events
In August of 2012, we acquired a unique
marquee technology for energy efficient lighting, the E-Series controller developed by Active ES. This patented technology provides
an upgrade for existing HID lamps for high-bay indoor and outdoor applications. In the fourth quarter of 2012, the Company performed
additional research and development to the products from Active ES adding two new products for mass production, the 480- volt version
of the controller, suitable for ports and other large facilities, and a 240-volt version of the LiteOwl for Streetlights, vastly
increasing the applicable market.
In the first quarter of 2013, we acquired
an 80% stake in TPC, a deregulated power broker in Illinois. The clients of TPC have commercial/industrial facilities such as small
businesses, warehouses and distribution centers, which are candidates for E3’s products and services.
Presently, we provide an array of energy
services through E3 and TPC. The Company provides solutions that enable customers to reduce their energy consumption, lower their
operating and maintenance costs, and realize environmental benefits. Our comprehensive set of services includes competitive electricity
plans and upgrades to a facility’s energy infrastructure.
In addition to organic growth, we expect
that strategic acquisitions of complementary businesses and assets will remain an important part of our growth plan to enable us
to broaden our service offerings and expand our geographical reach.
The Market and Competitive Profile
Management believes that the market
for energy efficiency will continue to grow, that we will increase penetration in this market, and that revenue will continue to
increase over time. Continued fiscal uncertainty has and may continue to contribute to a lengthening of our sales cycle for both
municipal and commercial customers.
Due to the long and variable selling
cycle for E3 business, the sales, design and implementation process for energy efficiency projects can take from several months
to 36 months. Existing and potential customers generally follow extended budgeting and procurement processes, and sometimes must
engage in regulatory approval processes. This extended sales process requires the dedication of significant time by sales and
management personnel and the use of significant financial resources, with no certainty of success or recovery of related expenses.
All of these factors can contribute to fluctuations in quarterly financial performance and increase the likelihood that operating
results in any particular quarter may fall below investor expectations.
The ESCO market in
the United States is viable and growing due to many driving factors in the current economy. The United States government has recently
pushed towards energy conservation and efficiency which has led to substantial market growth in this industry. We are in competition
with other more established companies that may be better capitalized and have more established name recognition than we do. There
is no assurance that we can compete successfully in this marketplace.
For the LED Lighting industry,
competitors include other resellers, ESCO’s, distributors, as well as manufacturers who sell direct or through agents. These
manufacturers include Cree, Sylvania, Phillips, GE, as well as many specialty manufacturers. Resellers of LED lamps abound in the
industry both small and large and are usually categorized by their geographic or vertical segmentation, or their specialty (i.e.
residential, commercial/industrial, rebate-driven, ornamental, etc.). In addition, providers of other services may also sell LED
lamps, such as big box stores, electricians, solar or energy efficiency businesses.
TPC
sells power provided by energy suppliers, who may also sell directly. As a result, energy suppliers are both an ally and a potential
competitor. Those competing suppliers are allies in that TPC garners its clients by contracting consumers with those same energy
suppliers. When TPC presents a client/prospect to one or more of its contracted energy suppliers, that prospect/client is listed
and protected as TPC's introduction and client. An example of this "cooperation" is embodied in the largest energy retailer
in North America which has over 6 million customers. They are technically TPC's competition because clients can sign up with this
supplier without the assistance of TPC. However, TPC generates a substantial portion of its overall revenue by signing on new monthly
clients and selling this supplier's many energy offerings. In turn, this supplier counts on TPC’s volume of business.
Many of TPC’s competitors
contract with these same suppliers to sell their energy offerings. There are approximately 50 licensed suppliers in Illinois that
range from Constellation Energy, which is owned by Exelon, that generates approximately $30 Billion in revenue annually to suppliers
such as Agera Energy, LLC with whom TPC has had a sales agreement since their launch. Other competitors include, but are not limited
to, AEP Energy, Champion Energy, LLC, ConEdison Solutions, Eligo Energy IL, LLC, Entrust Energy, Green Mountain Energy Company,
IDT Energy, Inc., Kona Energy, Liberty Power Holdings LLC, MC Squared Energy Services, LLC, MidAmerican Energy, NextEra Energy
Services Illinois, LLC, Nordic Energy Services, Plymouth Rock Energy, LLC and Santanna Energy Services.
Property
We currently lease approximately 5,100
sq. feet of office space on a month to month lease in Tustin, California. The Company believes its office space is sufficient
for its current operations. Our telephone number is (949) 260-8070.
Legal Proceedings
We may be involved in legal proceedings
in the ordinary course of our business. Although our management cannot predict the ultimate outcome of these legal proceedings
with certainty, it believes that the ultimate resolution of our legal proceedings, including any amounts we may be required to
pay, will not have a material effect on our consolidated financial statements. Other than disclosed below, we know of no material
proceedings in which we or either of our subsidiaries is a party. We may be involved in legal proceedings in the ordinary course
of our business. Although our management cannot predict the ultimate outcome of these legal proceedings with certainty, it believes
that the ultimate resolution of our legal proceedings, including any amounts we may be required to pay, will not have a material
effect on our consolidated financial statements.
|
|
1.
|
Securities
and Exchange Commission v. Premier Holding Corporation, et. al. the “SEC Litigation”
Case No. 8:18-cv-00813-CJC-KES.
|
The
SEC Litigation, set in the U.S. District Court for the Central District of California, alleges that:
(1) Premier is liable for violating Section 17(a) of the Securities Act, Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(b) of the Exchange Act, and Rules 10b-5, 13a-1, 13a-11, and 13a-13 thereunder; and
(2) Randall Letcavage (our CEO and
President) is liable for: (i) violating Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5
thereunder, Exchange Act Sections 13(a) and 13(b)(5) and Rules 13a-14 and 13b2-1 thereunder; (ii) as a control person under
Exchange Act Section 20(a) for Premier’s violations of the Exchange Act; and (iii) under Exchange Act Section 20(e) and
Securities Act Section 15 (b) for aiding and abetting Premier’s violations of Securities Act Sections 17(a)(2) and
17(a)(3), Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B), and Rules 13a-1, 13a-11, and 13a-13 thereunder.
The SEC Litigation seeks permanent injunctions,
disgorgement of ill-gotten gains plus prejudgment interest thereon, and civil monetary penalties as to Premier and Letcavage,
as well as a penny stock bar and an officer-and-director bar against Mr. Letcavage, in connection with, among others, allegations
that the defendants did not properly value certain assets of the company. The SEC Litigation is currently in the discovery
stage, which ends in March of 2019, and is set for trial in June of 2019. The Company and Mr. Letcavage are currently vigorously
contesting the SEC Litigation. Settlement discussions to date have not been productive. At this time, an estimate of the outcome
of this matter cannot be determined.
|
|
2.
|
Shao Shu Zhang, et al. v. Premier Holding Corporation, et al., Case No. BC709673
|
(1) On June 18, 2018, Shao Shu Zhang and
others filed a complaint against Premier Holding Corporation and others in the Los Angeles Superior Court. The Plaintiffs allege,
among others, that the defendants verbally misrepresented certain facts about the future prospects of the company.
(2) Premier Holding Corporation filed a
general denial to the complaint on September 26, 2018.
(3) This litigation will be
vigorously contested by Premier Holding Corporation.
(4) It is currently too early in the
litigation to evaluate the likelihood of an unfavorable outcome or any estimate of the amount or range of potential loss.
|
|
3.
|
Patricia Guevara v. Premier Holding Corporation, et al., Case No.30-2018-01028598-CV-WT-CJC
|
(1) On or about October 30, 2018, Plaintiff
filed a complaint against Premier Holding Corporation, its CEO Randall Letcavage and others in Orange County (CA) Superior Court.
The Plaintiffs allege, among others, that the defendants wrongfully terminated Plaintiff’s employment and created a hostile
work environment for plaintiff. The company believes that the Plaintiff’s claims are completely false and without merit.
(2) Premier Holding Corp. and Mr. Letcavage
are vigorously contesting these claims and have filed general denials to the complaint.
(3) It is currently too early in
the threatened litigation to evaluate the likelihood of whether the complaint will be filed and, if it is filed, whether there
would be an unfavorable outcome or any estimate of the amount or range of potential loss. However, the company believes that
the Plaintiff’s claims are completely false, and without merit.
RISK FACTORS
Risks Related to Our Company
There is substantial doubt about our
ability to continue as a going concern.
We have not generated any profit from combined
operations since our inception. We expect that our operating expenses will increase over the next twelve months to continue our
development activities. Based on our average monthly expenses and current burn rate, we estimate that our cash on hand as of December
31, 2017 was not enough to sufficiently support our operation for the next year. This amount could increase if we encounter difficulties
that we cannot anticipate at this time or if we acquire other businesses. As of the date of this filing, we had cash and cash equivalents
of approximately $200,000. We do not expect to raise capital through debt financing from traditional lending sources since we are not
currently generating a profit from operations. Therefore, we only expect to raise money through equity financing via the sale of
our common stock or equity-linked securities such as convertible debt. If we cannot raise the money that we need in order to continue
to operate our business beyond the period indicated above, we will be forced to delay, scale back or eliminate some or all of our
proposed operations. If any of these were to occur, there is a substantial risk that our business would fail. If we are unsuccessful
in raising additional financing, we may need to curtail, discontinue or cease operations.
We have limited operating history with
our subsidiaries, and as a result, we may experience losses and cannot assure you that we will be profitable.
Our operations are subject to all of the
risks inherent with growing a business enterprise. In addition, E3 and TPC are not profitable. Accordingly, the likelihood of our
success must be considered in the light of the problems, expenses, difficulties, complications, and delays frequently encountered
in connection with the expansion of a business and the relatively competitive environment in which we operate. Unanticipated delays,
expenses and other problems such as setbacks in product development, product manufacturing, and market acceptance are frequently
encountered in establishing a new business such as ours. There can be no assurance that the Company will be successful in addressing
such risks, and any failure to do so could have a material adverse effect on the Company's business, results of operations and
financial condition.
Because of our limited operating history,
we have limited historical financial data on which to base planned operating expenses. Accordingly, our expense levels, which are,
to a large extent, variable, will be based in part on our expectations of future revenues. As a result of the variable nature of
many of our expenses, we may be unable to adjust spending in a timely manner to compensate for any unexpected delays in the development
and marketing of our products or any subsequent revenue shortfall. Any such delays or shortfalls will have an immediate adverse
impact on our business, operating results and financial condition.
The Company has not achieved profitability
on a quarterly or annual basis to date. To the extent that net revenue does not grow at anticipated rates or that increases in
its operating expenses precede or are not subsequently followed by commensurate increases in net revenue, or that the Company is
unable to adjust operating expense levels accordingly, the Company's business, results of operations and financial condition will
be materially and adversely affected. There can be no assurance that the Company's operating losses will not increase in the future
or that the Company will ever achieve or sustain profitability.
No Assurance of Revenues.
There can be no assurance that our proposed
operations will result in sufficient revenues to enable us to operate at profitable levels or to generate positive cash flow. As
a result of our limited operating history and the nature of the markets in which we compete, we may not be able to accurately predict
our revenues. Any failure by us to accurately make such predictions could have a material adverse effect on our business, results
of operations and financial condition. Further, our current and future expense levels are based largely on our investment plans
and estimates of future revenues. We expect operating results to fluctuate significantly in the future as a result of a variety
of factors, many of which are outside of our control. Factors that may adversely affect our operating results include, among others,
demand for our products, the budgeting cycles of potential customers, lack of enforcement of or changes in governmental regulations
or laws, the amount and timing of capital expenditures and other costs relating to the expansion of our operations, the introduction
of new or enhanced products and services by us or our competitors, the timing and number of new hires, changes in our pricing policy
or those of our competitors, the mix of products, increases in the cost of raw materials, technical difficulties with the products,
incurrence of costs relating to future acquisitions, general economic conditions, and market acceptance of our products. As a strategic
response to changes in the competitive environment, we may, from time to time, make certain pricing, service or marketing decisions
or business combinations that could have a material adverse effect on our business, results of operations and financial condition.
Any seasonality is likely to cause quarterly fluctuations in our operating results, and there can be no assurance that such patterns
will not have a material adverse effect on our business, results of operations and financial condition. We may be unable to adjust
spending in a timely manner to compensate for any unexpected revenue shortfall.
We need to raise additional funds in
the future that may not be available on acceptable terms or at all.
We need to raise capital to sustain our
operations. We may consider issuing additional debt or equity securities in the future to fund our business plan, for potential
acquisitions or investments, or for general corporate purposes. If we issue equity or convertible debt securities to raise additional
funds, our existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and
privileges senior to those of our existing stockholders. If we incur additional debt, it may increase our leverage relative to
our earnings or to our equity capitalization, requiring us to pay additional interest expenses. We may not be able to obtain financing
on favorable terms, or at all, in which case, we may not be able to develop or enhance our products, execute our business plan,
take advantage of future opportunities or respond to competitive pressures.
Our margins fluctuate which leads to
further uncertainty in our profitability model.
While we have the potential to negotiate
prices that benefit our clients and affect our profitability as we seek to gain market-share and increase our book of business,
margins in the energy business are fluid, and our margins vary based upon the supplier and the customer. This will lead to continued
uncertainty in margins from quarter to quarter.
If demand for energy efficiency does
not develop as expected, our projected revenues and profits will be affected.
Our future profits are influenced
by many factors, including economics, and will be predicated on a stable and/or growing market and consumption of energy efficiency
solutions and products. We believe, and our growth expectations assume, that the market for energy efficiency will continue to
grow, that we will increase our penetration of this market and that our anticipated revenue from selling into this market will
continue to increase. If our expectations as to the size of this market and our ability to sell our products and services in this
market are not correct, our revenue may not materialize, and our business will be harmed.
Projects generally require significant
capital, for which financing may not be available.
Our projects are occasionally financed
by third parties. The costs of these projects to our customers are costly. For our energy efficiency projects, we often assist
our customers in arranging third party financing. If we or our customers are unable to raise funds on acceptable terms when needed,
we may be unable to secure customer contracts, the size of contracts we do obtain may be smaller, or we could be required to delay
the development and construction of projects, reduce the scope of those projects or otherwise restrict our operations. Any inability
by us or our customers to raise the funds necessary to finance our projects could materially harm our business, financial condition
and operating results.
Operating results may fluctuate and
may fall below expectations in any fiscal quarter.
Our operating results are difficult to
predict and are expected to fluctuate from quarter to quarter due to a variety of factors, many of which are outside of our control.
As a result, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our
past results or future predictions prepared by the Company as an indication of our future performance. If our revenue or operating
results fall in any period, the value of our common stock would likely decline.
Factors that may cause our operating results
to fluctuate include:
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our ability to arrange financing for projects;
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our ability to acquire products to resell to our customers;
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changes in federal, state and local government policies and programs related to, or a reduction
in governmental support for, energy efficiency and deregulation, including rebates and tax incentives;
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the timing of work we do on projects where we recognize revenue on a percentage of completion basis;
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seasonality in demand for our products and services; poor weather inhibiting door-to-door sales;
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a customer’s decision to delay our work, on or other risks involved with, a particular project;
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availability and costs of labor and equipment;
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the addition of new customers or the loss of existing customers;
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the size and scale of new customer projects;
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the availability of bonding for our projects;
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our ability to control costs, including operating expenses;
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changes in the mix of our products and services;
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the rates at which customers renew their deregulated power contracts with us;
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the length of our sales cycle;
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the productivity and growth of our sales force;
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the timing of opening of new offices or making other significant investments in the growth of our
business, as the revenue we hope to generate from those expenses often lags several quarters behind those expenses;
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changes in pricing by us or our competitors, or the need to provide discounts to win business;
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costs related to the acquisition and integration of companies or assets;
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general economic trends, including changes in energy efficiency spending or geopolitical events
such as war or incidents of terrorism; and
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future accounting pronouncements and changes in accounting policies.
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A decline in fiscal health could reduce
demand for energy efficiency projects.
A significant decline in the fiscal health
of federal, state or provincial and local governments impacts our customer base. We view these entities as potential customers
and a decline in their fiscal health may make it difficult for them to enter into contracts for our services or to obtain financing
necessary to fund such contracts.
Our business is at risk if we lose key
personnel or we are unable to attract and integrate additional skills personnel.
The success of our business depends in
large part on the skill of our personnel. Accordingly, it is critical that we maintain, and continue to build, a highly-experienced
management team and specialized workforce, including engineers, experts in project management and business development, and sales
professionals. Competition for personnel, particularly those with expertise in the energy services industries, is high, and identifying
candidates with the appropriate qualifications can be difficult. We may not be able to hire the necessary personnel to implement
our business strategy given our anticipated hiring needs, or we may need to provide higher compensation or more training to our
personnel than we currently anticipate.
In the event, we are unable to attract,
hire and retain the requisite personnel and subcontractors, we may experience delays in completing projects in accordance with
project schedules and budgets, which may have an adverse effect on our financial results, harm our reputation and cause us to curtail
our pursuit of new projects. Further, any increase in demand for personnel and specialty subcontractors may result in higher costs,
causing us to exceed the budget on a project, which in turn may have an adverse effect on our business, financial condition and
operating results and harm our relationships with our customers.
Our future success is particularly dependent
on the vision, skills, experience and effort of our senior management team, including our executive officers and our president
and chief executive officer. If we were to lose the services of any of our executive officers or key employees, our ability to
effectively manage our operations and implement our strategy could be harmed and our business may suffer.
We operate in a highly competitive industry
and competitors may compete more effectively.
Both the deregulation and the energy efficiency
industries are highly competitive, with many companies of varying size and business models, many of which have their own proprietary
technologies, competing for the same business as we do. Many of our competitors have longer operating histories and greater resources
than us, and could focus their substantial financial resources to develop a competing business model, develop products or services
that are more attractive to potential customers than what we offer or convince our potential customers that they require financing
arrangements that would be impractical for smaller companies to offer. Our competitors may also offer energy efficiency solutions
at prices below cost and/or devote significant sales forces to competing with us or attempt to recruit our key personnel by increasing
compensation, any of which could improve their competitive positions. Any of these competitive factors could make it more difficult
for us to attract and retain customers; cause us to lower our prices in order to compete, and reduce our market share and revenue,
any of which could have a material adverse effect on our financial condition and operating results. We can provide no assurance
that we will continue to effectively compete against our current competitors or additional companies that may enter our markets.
In addition, we may also face competition
based on technological developments that reduce demand for electricity, increase power supplies through existing infrastructure
or that otherwise compete with our products and services. We also expect to encounter competition in the form of potential customers
electing to develop solutions or perform services internally rather than engaging an outside provider such as us.
We may be unable to manage our growth
effectively.
We expect our business and operations to
expand rapidly and we anticipate that further expansion of our organization and operations will be required to achieve our expectations
for future growth. In order to manage our expanding operations, we will also need to improve our management, operational and financial
controls and our reporting systems and procedures. All of these measures will require significant expenditures and will demand
the attention of management. If we do not continue to enhance our management personnel and our operational and financial systems
and controls in response to growth in our business, we could experience operating inefficiencies that could impair our competitive
position and could increase our costs more than we had planned. If we are unable to manage growth effectively, our business, financial
condition and operating results could be adversely affected.
We face a long and variable selling
cycle that requires significant resource commitments for energy efficiency.
The sales, design and implementation process
for energy efficient projects typically takes from 6 to 36 months, with sales to government and housing authority customers tending
to require the longest sales processes. Our potential customers are expected to have extended budgeting and procurement processes,
and sometimes must engage in regulatory approval processes, related to our services. Most of our potential customers issue a request
for proposal, or RFP, as part of their consideration. In preparation for responding to an RFP, we intend to conduct a preliminary
audit of the customer’s needs and the opportunity to reduce its energy costs. In addition, we or the customer typically need
to obtain financing for the project. This extended sales process requires the dedication of significant time by our sales and management
personnel and our use of significant financial resources, with no certainty of success or recovery of our related expenses. A potential
customer may go through the entire sales process and not accept our proposal. All of these factors can contribute to fluctuations
in our quarterly financial performance and increase the likelihood that our operating results in a particular quarter will fall
below expectations. These factors could also adversely affect our business, financial condition and operating results due to increased
spending by us that is not offset by increased revenue.
We plan to expand our business, in part,
through future acquisitions.
Historically, acquisitions have been a
significant part of our growth strategy. We plan to continue to acquire companies or assets to expand our project skill-sets and
capabilities, expand our geographic markets, add experienced management and increase our product and service offerings. However,
we may be unable to implement this growth strategy if we cannot identify suitable acquisition candidates, reach agreement with
acquisition targets on acceptable terms or arrange required financing for acquisitions on acceptable terms. In addition, the time
and effort involved in attempting to identify acquisition candidates and consummate acquisitions may divert members of our management
from the operations of our company.
Any future acquisitions could disrupt
business.
If we are successful in consummating acquisitions,
those acquisitions could subject us to a number of risks, including:
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the purchase price we pay could significantly deplete our cash reserves or result in dilution to
our existing stockholders;
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we may find that the acquired company or assets do not improve our customer offerings or market
position as planned;
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we may have difficulty integrating the operations and personnel of the acquired company;
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key personnel and customers of the acquired company may terminate their relationships with the
acquired company as a result of the acquisition;
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we may experience additional financial and accounting challenges and complexities in areas such
as tax planning and financial reporting;
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we may assume or be held liable for risks and liabilities as a result of our acquisitions, some
of which we may not discover during our due diligence or adequately adjust for in our acquisition arrangements;
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we may incur one-time write-offs or restructuring charges in connection with the acquisition;
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we may acquire goodwill and other intangible assets that are subject to amortization or impairment
tests, which could result in future charges to earnings; and
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we may not be able to realize the cost savings or other financial benefits we anticipated.
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These factors could have a material adverse
effect on our business, financial condition and operating results.
We may incur a variety of costs to engage
in future acquisitions of companies, products or technologies, and the anticipated benefits of those acquisitions may never be
realized.
As a part of our business strategy, we
may make acquisitions of, or significant investments in, complementary companies, products or technologies, although no acquisitions
or investments are currently pending. Any future acquisitions would be accompanied by risks such as:
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difficulties in assimilating the operations and personnel of acquired companies;
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diversion of our management’s attention from ongoing business concerns;
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our potential inability to maximize our financial and strategic position through the successful
incorporation of acquired technology and rights into our products and services;
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additional expense associated with amortization of acquired assets;
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charges at the time of acquisitions related to the expensing of in process research and development;
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the exposure to additional debt to fund an acquisition;
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dilution to existing shareholders should the Company raise additional equity;
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maintenance of uniform standards, controls, procedures and policies; and
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impairment of existing relationships with employees, suppliers and customers as a result of the
integration of new management personnel.
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We cannot guarantee that we will be able
to successfully integrate any business, products, technologies or personnel that we might acquire in the future, and our failure
to do so could have a material adverse effect on our business, financial condition and operational results.
We may be subject to liability claims
for damages and other expenses not covered by insurance that could reduce our earnings and cash flows.
Our business, profitability and growth
prospects could suffer if we pay damages or defense costs in connection with a liability claim that is outside the scope of any
applicable insurance coverage. We intend to maintain, but do not yet have, general and product liability insurance. There is no
assurance that we will be able to obtain insurance in amounts, or for a price, that will permit our Company to purchase desired
amounts of insurance. Additionally, if our costs of insurance and claims increase, then our earnings could decline. Further, market
rates for insurance premiums and deductibles have been steadily increasing, which may prevent us from being adequately insured.
A product liability or negligence action in excess of insurance coverage could harm our profitability and liquidity.
Insurance and contractual protections
may not always cover lost revenue.
We possess insurance, warranties from suppliers,
and our subcontractors make contractual obligations to meet certain performance levels, and we also attempt, where feasible, to
pass risks we cannot control to our customers, the proceeds of such insurance, warranties, performance guarantees or risk sharing
arrangements may not be adequate to cover lost revenue, increased expenses or liquidated damages payments that may be required
in the future.
We intend to obtain comprehensive insurance,
including liability, fire, and extended coverage. Certain losses of a catastrophic nature such as from floods, tornadoes, thunderstorms
and earthquakes are uninsurable or not economically insurable. Such “Acts of God,” work stoppages, regulatory actions
or other causes, could interrupt operations and adversely affect our business.
We rely on outside consultants, employees,
manufacturers and suppliers.
We will rely on the experience of outside
consultants, employees, manufacturers and suppliers. In the event that one or more of these consultants or employees terminates
employment with the Company, or becomes unavailable, suitable replacements will need to be retained and there is no assurance that
such employees or consultants could be identified under conditions favorable to us.
We rely on strategic relationships to
promote our products.
We rely on strategic partnerships with
outside companies and individuals to promote and supply certain of our products and services, thus making the future success of
our business particularly contingent on the efforts of other parties. An important part of our strategy is to promote acceptance
of our products through technology and product alliances with certain distributors who we feel could assist us with our promotion
strategies. Our dependence on outside distributors, however, raises potential risks with respect to the future success of our business.
Our success is dependent on the successful completion and commercial deployment of our products and services and on the future
commitment of our distributors to our products and technology.
We rely on our suppliers.
We will rely on key vendors and suppliers
to provide power, as well as high quality products and services on a consistent basis. We outside assembly facilities and contract
manufacturers to produce quantities of materials these include, manufacturing facilities, warehouses, shippers, testing facilities
and other critical vendor partners. Our future success is contingent on the efforts and performance of these suppliers. Although
in the past we have obtained adequate quantities of raw materials and finished product on acceptable terms to meet our requirements,
we may have difficulty in locating or using alternative resources should supply problems arise with the current suppliers. An interruption
or reduction in the source of supply of any of the component materials, or an unanticipated increase in vendor prices, could materially
affect our operating results and damage customer relationships as well as our business.
Our business is subject to commodity
price risk.
Our cost to serve our retail energy customers
is exposed to fluctuations in commodity prices. Although we enter into commodity derivative instruments with our suppliers to manage
the commodity price risks, we are exposed to commodity price risk where estimated customer requirements do not match actual customer
requirements or where we are not able to exactly purchase the estimated customer requirements. In such cases, we may suffer a loss
if we are required to sell excess supply in the spot market (compared to weighted average cost of supply) or to purchase additional
supply in the spot market. Such losses could have a material adverse impact on our operating results, cash flow and liquidity.
A key risk to our business model is a sudden
and significant drop in the commodity market price resulting in increase in customer churn, regulatory pressure and resistance
on enforcement of liquidation damages and enactment of provisions to reset the customer price to current market price levels, which
could have significant impact on our business.
If we fail to protect our intellectual
property, our planned business could be adversely affected.
Despite our efforts to protect our proprietary
rights, unauthorized parties may attempt to copy aspects of our products or obtain and use information that we regard as proprietary.
Unauthorized use of our proprietary technology could harm our business. Litigation to protect our intellectual property rights
can be costly and time-consuming to prosecute, and there can be no assurance that we will have the financial or other resources
necessary to enforce or defend a patent infringement or proprietary rights violation action.
There has been substantial litigation regarding
patent and other intellectual property rights in the energy device industry generally. From time to time, we may be forced to defend
ourselves against other claims and legal actions alleging infringement of the intellectual property rights of others. Adverse determinations
in any such litigation could subject us to significant liabilities, which could have a material adverse effect on us. Third parties
could also obtain patents that may require us to either redesign products or obtain a license. If we are unable to redesign products
or are unable to obtain a license, our business and financial condition would be adversely affected.
Although we perform investigations of the
intellectual property of third parties, we cannot be certain that we have not infringed the intellectual property rights of such
third parties. Any such infringement or misappropriation claim could result in significant costs, substantial damages, and our
inability to operate our business. We also could be forced to obtain licenses from third parties or to develop a non-infringing
alternative, which could be costly and time-consuming. A court could also order us to pay compensatory damages for such infringement,
plus prejudgment interest, and could, in addition, treble the compensatory damages and award attorney fees. These damages could
be substantial and could harm our reputation, business, financial condition, and operating results.
Because intellectual property litigation
can be costly and time consuming, our intellectual property litigation expenses could be significant, even if we are successful
in defending our intellectual property rights. Even invalid claims alone could materially adversely affect our financial condition.
We may be subject to lawsuits related
to products we purchase from our suppliers or the services performed by our providers.
In the future, we may be a party to, or
may be otherwise responsible for, pending or threatened lawsuits or other claims related to products we purchase from our approved
manufacturers and suppliers. We intend to require our approved providers to have product liability insurance, but there can be
no assurance that such product liability insurance will be sufficient to protect us against potential liability. Additionally,
there is no certainty that we will not be named in an action for product liability. Such cases and claims may raise difficult and
complex factual and legal issues and may be subject to many uncertainties and complexities, including, but not limited to, the
facts and circumstances of each particular case or claim, the jurisdiction in which each suit is brought, and differences in applicable
law. Upon resolution of any pending legal matters or other claims, we may incur charges in excess of established reserves. Product
liability lawsuits and claims, safety alerts or product recalls in the future, regardless of their ultimate outcome, could have
a material adverse effect on our business and reputation and on our ability to attract and retain customers and joint venture partners.
Our business, profitability and growth prospects could suffer if we face such negative publicity.
Certain Risk Factors Related to
AOTS
No managerial control over AOTS.
In the event that the AOTS Transactions
are consummated, holders of AOTS shares will collectively have less than a majority of the issued and outstanding shares of AOTS.
As a result, such holders of AOTS shares will not be able to exert any material management control over AOTS, and will therefore
be dependent on AOTS management to make the material business decisions of AOTS. Additionally, individuals holding AOTS shares
will also not have any material managerial control of Rescom and Advanced, AOTS’ wholly-owned subsidiaries.
Lack of Liquid Market for AOTS Shares.
AOTS is a privately-held company, the AOTS
shares are not registered with the Securities and Exchange Commission, and are not publicly-traded on any stock exchange. As such
there is currently no liquid market for the AOTS shares.
Restricted nature of AOTS shares.
The AOTS shares have not been registered
with the Securities and Exchange Commission. Accordingly, they may not be sold or transferred under the federal securities laws
without registration or an exemption from registration.
Need for additional
Capital.
AOTS may need to raise
additional capital to meet our future business requirements and such capital raising may be costly or difficult to obtain and could
dilute AOTS shareholder’s ownership interest.
Privately-held Company Risk.
Small privately held companies like
AOTS are inherently risky and may be exposed to market factors beyond their control. If such events were to occur, it may result
in a loss of investment for AOTS shareholders.
Dividends.
AOTS does not anticipate dividends
to paid on AOTS common stock and investors holding AOTS shares may lose the entire amount of their investment.
A dividend has never been declared
or paid in cash on our common stock and we do not anticipate such a declaration or payment for the foreseeable future. We expect
to use future earnings, if any, to fund business growth. Therefore, stockholders will not receive any funds absent a sale of their
shares. We cannot assure stockholders of a positive return on their investment when they sell their shares nor can we assure that
stockholders will not lose the entire amount of their investment.
AOTS shares are restricted and not
freely-transferrable.
The distribution of AOTS shares to Premier
shareholders will result in Premier shareholders holding restricted stock in a private company, and such AOTS shares will accordingly
not be freely transferrable absent, among others, their registration with the SEC, or an exemption from registration.
Speculative Nature of AOTS Shares/Dilution
The AOTS shares are highly speculative,
involve a high degree of risk, including risk of substantial, immediate dilution in the future.
Risks Related to E3's Business
Availability of quality products in
a timely manner could cause delays in delivery and completion.
Our success depends on our ability to provide
services and complete projects in a timely manner, which in part depends on the ability of third parties to provide us with timely
and reliable services and products, such as, lighting and other complex components. In providing our services and completing our
projects, we rely on products that meet our design specifications and components manufactured and supplied by third parties, as
well as on services performed by subcontractors.
We will rely on subcontractors to perform
substantially all of the installation work related to our projects. We intend to continue to establish relationships with subcontractors
that we believe to be reliable and capable of producing satisfactory results. If any of our contractors or subcontractors are unable
to provide services that meet or exceed our customers’ expectations or satisfy our contractual commitments, our reputation,
business and operating results could be harmed.
The warranties provided by our third-party
suppliers and subcontractors may limit any direct harm we might experience as a result of our relying on their products and services.
However, there can be no assurance that a supplier or subcontractor will be willing or able to fulfill its contractual obligations
and make necessary repairs or replace equipment. In addition, these warranties generally expire within one to five years or may
be of limited scope or provide limited remedies. If we are unable to avail ourselves of warranty protection, we may incur liability
to our customers or additional costs related to the affected products and components, including replacement and installation costs,
which could have a material adverse effect on our business, financial condition and operating results.
Moreover, any delays, malfunctions, inefficiencies
or interruptions in these products or services - even if covered by warranties - could adversely affect the quality and performance
of our solutions. This could cause us to experience difficulty retaining customers and attracting new customers, and could harm
our brand, reputation and growth. In addition, any significant interruption or delay by our suppliers in the manufacture or delivery
of products or services on which we depend could require us to expend considerable time, effort and expense to establish alternate
sources for such products and services.
Risks Related to Our Products
We face a risk of defective products
and, as a result, a damaged reputation.
If any of our products contain defects,
or have reliability, quality or compatibility problems, our reputation could be damaged significantly, and customers might be reluctant
to use our products, which could result in the loss of revenues. We may have to invest significant capital and other resources
to correct these problems. Such expenditures to correct defects and the effect on our reputation could have a material adverse
effect on the business, financial condition and results of operations.
We face the risk of product liability
claims and uninsured losses.
We face an inherent business risk of exposure
to product liability claims in the event that the use of our technology or products is alleged to have resulted in adverse effects.
To date, no claim for damages has been asserted against us. There can be no assurance that liability claims will not exceed the
coverage limits of any policies purchased by us or that such insurance will continue to be available on commercially reasonable
terms or at all. If we do not or cannot maintain sufficient liability insurance, its ability to operate may be significantly impaired.
In addition, liability claims could have a material adverse effect on our business, financial condition and results of operations.
It is incumbent upon us to keep up with
technological change so that our products can maintain their demand in the marketplace.
There can be no assurance that our competitors
will not succeed in developing or marketing products or technologies that are more effective and/or less costly and which render
our products obsolete or non-competitive. In addition, new technologies and procedures could be developed that replace or reduce
the value of our products. Our success will depend in part on our ability to respond quickly to technological changes through the
development and introduction of new products and to successfully market these products. There can be no assurance that new product
development efforts will result in any commercially successful products. A failure to develop and successfully market new products
could have a material adverse effect on our business, financial condition and results of operations.
Risks Related to TPC’s Business
We face the risk that deregulation could
be repealed.
If the federal government and/or any individual
state decided to repeal deregulation, we would have to rely entirely on our energy efficiency sales in order to generate revenue.
Our business, in part, depends on federal,
state, and local government support for deregulation and energy efficiency.
Deregulated power is currently adopted
by sixteen states, twelve of which have attractive deregulation programs, with the intent that many more states will adopt some
form of deregulation by the year 2020. TPC depends on this continued deregulation. This may not occur or be delayed, affecting
our long-term growth. We will depend in part on government legislation and policies that support energy efficiency and renewable
energy projects that enhance the economic feasibility of our energy efficiency services and small-scale renewable energy projects.
The U.S. and Canadian federal governments and several of the states and provinces in which we will operate support our potential
customers’ investments in energy efficiency and renewable energy through legislation and regulations that authorize and regulate
the manner in which certain governmental entities are expected to do business with us, encourage or subsidize governmental procurement
of our services, provide regulatory, tax and other incentives to others to procure our services and provide us with tax and other
incentives that reduce our costs or increase our revenue.
We are subject to government regulations
at both the state and federal levels, including the Federal Energy Regulatory Commission (“FERC”) and individual states’
Public Utilities Commission (“PUC”) for a substantial level of rates and services that we provide. The FERC regulates
certain activities of public utilities. The scope of the jurisdiction of the FERC under the FPA encompasses review and approval
of (i) rates charged by public utilities for wholesale sales of electricity; (ii) issuances of securities and assumption of liabilities
by public utilities; (iii) interstate transmission of electricity; (iv) certain dispositions of assets; and (v) interlocking directorships
between public utilities and certain interested parties. The various state PUC’s will regulate the rates that can be charged
for such services or distributions, ancillary services and other retail power services, and will determine the terms under which
we can compete with the investor owned utilities and other energy service providers. There is no certain assurance that the regulations
promulgated by FERC and/or state PUCs will act to our benefit.
Our business is affected by seasonal
trends that could affect operating results.
Seasonal weather could inhibit the ability
of door-to-door sales staff from selling deregulated power. Also, we are subject to seasonal fluctuations and construction cycles,
particularly in climates that experience colder weather during the winter months, such as the northern United States and Canada,
or at educational institutions, where large projects are typically carried out during summer months when their facilities are unoccupied.
In addition, government customers, many of which have fiscal years that do not coincide with ours, typically follow annual procurement
cycles and appropriate funds on a fiscal-year basis even though contract performance may take more than one year. Further, government
contracting cycles can be affected by the timing of, and delays in, the legislative process related to government programs and
incentives that help drive demand for energy efficiency projects. As a result of such fluctuations, we may occasionally experience
declines in revenue or earnings as compared to the immediately preceding quarter, and comparisons of our operating results on a
period-to-period basis may not be meaningful.
Risks Relating to Our Common Stock
If we issue additional shares in the
future, it will result in the dilution of our existing stockholders.
Our articles of incorporation authorize
the issuance of up to 450,000,000 shares of our common stock and 50,000,000 shares of our preferred stock, each with a par value
of $0.0001 per share. Our board of directors may choose to issue some or all of such shares to acquire one or more companies or
products and to fund our overhead and general operating requirements. The issuance of any such shares will reduce the book value
per share and may contribute to a reduction in the market price of the outstanding shares of our common stock. If we issue any
such additional shares, such issuance will reduce the proportionate ownership and voting power of all current stockholders. Further,
such issuance may result in a change of control of our company.
Trading of our stock is restricted by
the Securities Exchange Commission’s penny stock regulations, which may limit a stockholder’s ability to buy and sell
our common stock.
The Securities and Exchange Commission
has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as
defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities
are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons
other than established customers and “accredited investors”. The term “accredited investor” refers generally
to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities
and Exchange Commission, which provides information about penny stocks and the nature and level of risks in the penny stock market.
The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of
the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny
stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information,
must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing
before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure
requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject
to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities.
We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
FINRA sales practice requirements may
also limit a stockholder’s ability to buy and sell our stock.
In addition to the “penny stock”
rules described above, the Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in
recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable
for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers
must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives
and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced
securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend
that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on
the market for our stock.
Our common stock is illiquid and the
price of our common stock may be negatively impacted by factors that are unrelated to our operations.
Although our common stock is currently
listed for quotation on the OTCQB, there is no active trading market for our common stock. Even if a more active market is established,
trading through the OTCQB is frequently thin and highly volatile. There is no assurance that a sufficient market will develop in
our stock, in which case it could be difficult for stockholders to sell their stock. The market price of our common stock could
fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth,
quarterly operating results of our competitors, trading volume in our common stock, changes in general conditions in the economy
and the financial markets or other developments affecting our competitors or us. In addition, the stock market is subject to extreme
price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies
for reasons unrelated to their operating performance and could have the same effect on our common stock.
We do not intend to pay dividends on
any investment in the shares of stock of our company.
We have never paid any cash dividends, and currently do not intend to pay any dividends for the foreseeable
future. Because we do not intend to declare dividends, any gain on an investment in our company will need to come through an increase
in the stock’s price. This may never happen, and investors may lose all of their investment in our company.
EXECUTIVE COMPENSATION
Summary Compensation
The following table summarizes the compensation
of each named executive for the years ended December 31, 2017 and 2016 awarded to or earned by (i) each individual serving as our
principal executive officer and principal financial officer of the Company and (ii) each individual that served as an executive
officer of the Company at the end of such fiscal years who received compensation in excess of $100,000.
|
Name and
Principal
Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
|
Stock
Awards
($)
|
|
|
|
Option
Awards
($)
|
|
|
|
Nonequity
Incentive
Plan
Compensa-
tion
($)
|
|
|
|
Change in
Pension Value
and Non
Qualified
Deferred
Compensation
Earnings
($)
|
|
|
|
All Other
Compensa
tion
($)
|
|
|
Total
($)
|
|
Randall Letcavage
CEO, CFO 1,2, 3
|
|
2017
2016
|
|
374,880
240,000
|
|
50,000
52,000
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
424,880
292,000
|
Notes
|
(1)
|
During the year ended December 31, 2016, Mr. Letcavage (directly or through related entities) earned $374,880 as compensation for his role as our CEO and CFO.
|
|
(2)
|
During the year ended December 31, 2016, the Company incurred expenses of $10,571 to iCapital Advisory for consulting services, a related party entity for which Mr. Letcavage is the President.
|
|
(3)
|
No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by us for the benefit of our employees.
|
We currently do not have a written employment
agreement with Mr. Letcavage.
Outstanding Equity Awards at Fiscal
Year End
The following table summarizes the outstanding
equity awards held by each named executive officer of our company as of December 31, 2017.
|
|
|
Number of
Securities
Underlying
Unexercised
Options
(#) Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expir-
ation
Date
|
|
Number of
Shares or
Units
of
Stock that
have
not
Vested
(#)
|
|
|
Market
Value
of
Shares
or
Units
of
Stock
that
have
not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
that
have
not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares, Units
or
Other
Rights that
Have
not
Vested
($)
|
|
|
Randall Letcavage, CEO, CFO
|
|
|
1,150,000
|
|
|
|
–
|
|
|
|
–
|
|
|
|
0.0025
to
0.15
|
|
|
12/31/19
to
12/31/20
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Woodrow
Clark, PhD, Director
|
|
|
150,000
|
|
|
|
–
|
|
|
|
–
|
|
|
|
0.15
|
|
|
12/31/19
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
Lane Harrison, Director
|
|
|
150,000
|
|
|
|
–
|
|
|
|
–
|
|
|
|
0.15
|
|
|
12/31/19
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Retirement or Similar Benefit Plans
There are no arrangements or plans in which
we provide retirement or similar benefits for our directors or executive officers.
Resignation, Retirement, Other Termination,
or Change in Control Arrangements
We have no contract, agreement, plan or
arrangement, whether written or unwritten, that provides for payments to our directors or executive officers at, following, or
in connection with the resignation, retirement or other termination of our directors or executive officers, or a change in control
of our company or a change in our directors’ or executive officers’ responsibilities following a change in control.
Director Compensation
The following table sets forth for each
director certain information concerning his compensation for the year ended December 31, 2017.
|
|
|
Fees
Earned or
Paid in
Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All other
Compensation
($)
|
|
|
Total
($)
|
|
|
Randall Letcavage
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
–
|
|
|
-–
|
|
|
–
|
|
|
Woodrow Clark, PhD
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
8,500
|
|
|
|
8,500
|
|
|
Lane Harrison
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
8,000
|
|
|
|
8,000
|
|
|
Robert Baron
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
24,000
|
|
|
|
24,000
|
|
All directors receive reimbursement for
reasonable out of pocket expenses in attending board of directors’ meetings and for promoting our business. From time to
time we may engage certain members of the board of directors to perform services on our behalf. In such cases, we intend to compensate
the members for their services at rates no more favorable than could be obtained from unaffiliated parties.
Mr. Letcavage receives compensation for
his services as an executive officer of the Company, but not as a director. Dr. Clark received speaking fees when speaking on behalf
of the company at symposia and conventions. Mr. Harrison received fees for extra services he provided including consulting and
lead generation. Mr. Baron received fees for extra services he provides including consulting and other services.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following tables set forth, as
of October __, 2018, certain information with respect to the beneficial ownership of our common stock by each stockholder
known by us to be the beneficial owner of more than 5% of our common stock and by each of our current directors and executive
officers. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise
indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise
indicated.
In the following tables, we have determined
the number and percentage of shares beneficially owned in accordance with Rule 13d3 of the Securities Exchange Act of 1934 based
on information provided to us by our controlling stockholder, executive officers and directors, and this information does not necessarily
indicate beneficial ownership for any other purpose. In determining the number of shares of our common stock beneficially owned
by a person and the percentage ownership of that person, we include any shares as to which the person has sole or shared voting
power or investment power, as well as any shares subject to warrants or options held by that person that are currently exercisable
or exercisable within 60 days.
Security Ownership of Management
|
Title of Class
|
Name and Address of
Beneficial Owner
|
Amount and Nature of
Beneficial Ownership(4) (5)
|
Percent of
Class
|
|
Common Stock
|
Randall Letcavage
1382 Valencia, Unit F
Tustin, CA 92780
|
8,638,486 Direct (1) (2)
|
1.64%
|
|
Common Stock
|
Green Central Holdings, Inc.
18101 Von Karman, 3rd Floor
Irvine, CA 92612
|
2,810,719 Direct (6)
|
<1%
|
|
Common Stock
|
Woodrow Clark, PhD
1382 Valencia, Unit F
Tustin, CA 92780
|
150,000 Direct (3)
|
<1%
|
|
Common Stock
|
Lane Harrison
1382 Valencia, Unit F
Tustin, CA 92780
|
150,000 Direct (3)(5)
|
<1%
|
|
Common Stock
|
Robert Baron
1382 Valencia, Unit F
Tustin, CA 92780
|
–
|
–
|
|
Common Stock
|
Directors & Executive Officers
as a group (4 persons)
|
11,749,205 Direct
|
2.23%
|
Notes
|
|
(1)
|
Includes 7,488,486 common shares, 1,000,000 stock options exercisable at $0.0025, 150,000 stock
options exercisable at $0.15, and 250,000 Series B Preferred Shares, which carry voting rights of 1,000 shares of common stock
for every 1 share of preferred stock. Including the common and preferred shares, Mr. Letcavage possesses the combined voting power
of 257,488,486 shares of common stock.
|
|
|
(2)
|
Beneficial ownership includes stock options.
|
|
|
(3)
|
The beneficial owner has sole voting and investment power with respect to the shares shown.
|
|
|
(4)
|
All ownership is beneficial and of record, unless indicated otherwise.
|
|
|
(5)
|
Stock options owned by Patriot Advisory Group, LLC, Series A, of which Mr. Harrison is the Manager.
|
|
|
(6)
|
Mr. Letcavage is the President of Green Central Holdings, Inc.
|
Changes in Control
Series B Preferred Stock
On December 16, 2015, the Board of Directors
of the Company authorized a Series B Preferred Stock, designated as the “Series B Voting Convertible Preferred Stock”
(the “Series B Preferred”). The Series B Preferred consists of Two Hundred Fifty Thousand (250,000) shares at $.0001
par value and voting rights of 1,000 votes for each share of Series B Preferred. All other rights and privileges shall be the
same as the Series A Preferred. As of December 31, 2017, there were 250,000 shares of Series B Preferred issued and outstanding
which constitutes a combined voting right of 250,000,000 shares of our common stock.
DISSENTERS’
RIGHTS
Under Nevada Revised Statutes (The “NRS”),
shareholders may be entitled to dissenters’ rights with respect to the transactions described in this Information Statement.
Pursuant to Chapter 92A (Section 300 through
500 inclusive) of the NRS, or the “Dissenters’ Rights Provisions”, and specifically Section 92A.380(d), any unaffiliated
stockholder of PREMIER is entitled to dissent to the share exchange and to obtain payment of the fair value of the Shares. These
rights are granted to the shareholders of Premier in the resolution approving the share exchange, which provided that the shareholders
would be granted dissenters’ rights under Nevada law. In the context of the exchange, the Dissenters’ Rights Provisions
provide that the unaffiliated stockholders may elect to have Premier purchase the Shares held by the unaffiliated stockholders
for a cash price that is equal to the “fair value” of such Shares, as determined in a judicial proceeding in accordance
with the Dissenters’ Rights Provisions. The fair value of the Shares of any unaffiliated stockholder means the value of such
Shares immediately before the effectuation of the exchange, excluding any appreciation or depreciation in anticipation of the exchange,
unless exclusion of any appreciation or depreciation would be inequitable.
A copy of the Dissenters’ Rights
Provisions is attached as Exhibit A hereto. If you wish to exercise your dissenters’ rights or preserve the right to do so,
you should carefully review Exhibit A hereto. If you fail to comply with the procedures specified in the Dissenters’ Rights
Provisions in a timely manner, you may lose your dissenters’ rights. Because of the complexity of those procedures, you should
seek the advice of counsel if you are considering exercising your dissenters’ rights.
Unaffiliated stockholders who perfect their
dissenters’ rights by complying with the procedures set forth in the Dissenters’ Rights Provisions will have the fair
value of their Shares determined by a Nevada state district court and will be entitled to receive a cash payment equal to such
fair value. Any such judicial determination of the fair value of such Shares could be based upon any valuation method or combination
of methods the court deems appropriate. The value so determined could be more or less than the Exchange Price to be paid in connection
with the exchange. In addition, unaffiliated stockholders who invoke dissenters’ rights may be entitled to receive payment
of a fair rate of interest from the effective time of the exchange on the amount determined to be the fair value of their Shares.
Within 10 days after the effectuation of
the exchange, Premier will send a written notice (the “Notice of Exchange and Dissenter’s Rights”) to all the
record stockholders of Premier entitled to dissenters’ rights. Pursuant to NRS 92A.430, the Notice of Exchange and Dissenter’s
Rights will be accompanied by information that will: (a) state where the demand for payment must be sent and where and when certificates,
if any, for Shares must be deposited; (b) inform the holders of Shares not represented by certificates to what extent the transfer
of the Shares will be restricted after the demand for payment is received; (c) supply a form for demanding payment that includes
the date of the first announcement to the news media or to the stockholders of the terms of the proposed action and requires that
the person asserting dissenter’s rights certify whether or not the person acquired beneficial ownership of the Shares before
that date; (d) set a date by which Premier must receive the demand for payment, which may not be less than 30 nor more than 60
days after the date the notice is delivered and state that the stockholder shall be deemed to have waived the right to demand payment
with respect to the shares unless the form is received by Premier by such specified date; and (e) be accompanied by a copy of NRS
92A.300 to 92A.500, inclusive.
Under NRS 92A.440, a stockholder wishing
to exercise dissenter’s rights must:
|
|
•
|
demand payment;
|
|
|
|
|
|
|
•
|
certify whether the stockholder acquired beneficial ownership of the common stock before the date specified in the Notice of Exchange and Dissenter’s Rights; and
|
|
|
|
|
|
|
•
|
deposit its certificates, if any, in accordance with the terms of the Notice of Exchange and Dissenter’s Rights.
|
Under NRS 92A.440(5), stockholders who
fail to demand payment or deposit their certificates where required by the dates set forth in the Notice of Exchange and Dissenter’s
Rights will not be entitled to demand payment or receive the fair market value for their Shares as provided under Nevada law. Instead,
such stockholders will receive the same consideration as the stockholders who do not exercise rights of a dissenting owner.
Pursuant to NRS 92A.460, within 30 days
after receipt of a demand for payment, Premier must pay each dissenter who complied with the provisions of the Dissenters’
Rights Provisions the amount Premier estimates to be the fair value of such shares, plus interest from the effective date of the
exchange. The payment must be accompanied by the following: (a) Premier’s balance sheet as of the end of 2017, a statement
of income for 2017, a statement of changes in the stockholders’ equity for 2017 or, where such financial statements are not
reasonably available, then such reasonably equivalent financial information and the latest available quarterly financial statements,
if any; (b) a statement of Premier’s estimate of the fair value of the Shares; and (c) a statement of the dissenter’s
rights to demand payment under NRS 92A.480 and that if any such stockholder does not do so within the period specified, such stockholder
shall be deemed to have accepted such payment in full satisfaction of Premier’s obligations under Chapter 92A of the NRS.
Under NRS 92A.470(1), Premier is entitled
to withhold payment from a dissenter unless the dissenter was the beneficial owner before the date set forth in the dissenters’
notice as the first date of any announcement to the news media or to the stockholders of the terms of the proposed corporate action.
If Premier chooses to withhold payment, it is required, within 30 days after receiving demand for payment, to notify the dissenter:
(a) of Premier’s balance sheet as of the end of a fiscal year ending not more than 16 months before the date of the notice,
a statement of earnings for that year, and a statement of changes in stockholders’ equity for that year, or, where such financial
statements are not reasonably available, then such reasonably equivalent financial information, as well as the latest available
financial statements, if any; (b) of Premier’s estimate of the fair value of the Shares; (c) that the dissenter may accept
Premier’s estimate of the fair value, plus interest, in full satisfaction of his or her demands or demand appraisal; (d)
that if the dissenter wishes to accept the offer, the dissenter must notify Premier of acceptance within 30 days after receiving
of the offer; and (e) that if the dissenter does not satisfy the requirements for demanding appraisal, the dissenter shall be deemed
to have accepted Premier’s offer.
NRS 92A.480(1) provides that a dissenter
who believes that the amount paid or offered is less than the full value of his or her, or that the interest due is incorrectly
calculated, may, within 30 days after Premier made or offered payment for the Shares, either (i) notify Premier in writing of his
or her own estimate of the fair value of the Shares and the amount of interest due and demand payment of difference between this
estimate and any payments made, or (ii) reject the offer for payment made by Premier and demand payment of the fair value of his
or her Shares and interest due.
If Premier does not deliver payment within
30 days of receipt of the demand for payment, the dissenting stockholder may enforce under NRS 92A.460(1) the dissenter’s
rights by commencing an action in Carson City, Nevada or if the dissenting stockholder resides or has its registered office in
Nevada, in the county where the dissenter resides or has its registered office.
If a dissenting stockholder disagrees with
the amount of Premier’s payment, then the dissenting stockholder may, pursuant to NRS 92A.480, within 30 days of such payment,
(i) notify Premier in writing of the dissenting stockholder’s own estimate of the fair value of the dissenting shares and
the amount of interest due, and demand payment of such estimate, less any payments made by Premier, or (ii) reject the offer by
Premier if the dissenting stockholder believes that the amount offered by Premier is less than the fair value of the dissenting
shares or that the interest due is incorrectly calculated. If a dissenting stockholder submits a written demand as set forth above
and Premier accepts the offer to purchase the Shares at the offer price, then such dissenting stockholder will be sent a check
for the full purchase price of the Shares within 30 days of acceptance.
If a demand for payment remains unsettled,
Premier must commence a proceeding in the Carson City, Nevada district court within 60 days after receiving the demand. Each dissenter
who is made a party to the proceeding shall be entitled to a judgment in the amount, if any, by which the court finds the fair
value of the dissenting shares, plus interest, exceeds the amount paid by Premier. If a proceeding is commenced to determine the
fair value of the Shares, the costs of such proceeding, including the reasonable compensation and expenses of any appraisers appointed
by the court, shall be assessed against Premier, unless the court finds the dissenters acted arbitrarily, vexatiously or not in
good faith in demanding payment. The court may also assess the fees and expenses of the counsel and experts for the respective
parties, in amounts the court finds equitable against Premier if the court finds that (i) Premier did not comply with the Dissenters’
Rights Provisions or (ii) against either Premier or a dissenting stockholder, if the court finds that such party acted arbitrarily,
vexatiously or not in good faith with respect to the rights provided by the Dissenters’ Rights Provisions.
If Premier fails to commence such a proceeding,
it would be required by NRS 92A.490(1) to pay the amount demanded to each dissenter whose demand remains unsettled. Dissenters
would be entitled to a judgment for the amount, if any, by which the court finds the fair value of his shares, plus accrued interest,
exceeds the amount paid by Premier; or the fair value, plus accrued interest, of his after-acquired shares for which Premier elected
to withhold payment pursuant to Section 92.470 of the NRS.
Under Section 92A.490(4) of the NRS, the
district court may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair
value. The appraisers have the powers described in the order appointing them or in any amendment to such order. In any such court
proceeding, the dissenters are entitled to the same discovery rights as parties in other civil proceedings.
Under Section 92A.500 of the NRS, the district
court will assess the costs of the proceedings against Premier, unless the court finds that all or some of the dissenters acted
arbitrarily, veraciously or not in good faith in demanding payment. The district court may also assess against Premier or the dissenters
the fees and expenses of counsel and experts for the respective parties, in the amount the court finds equitable.
A person having a beneficial interest in
Shares that are held of record in the name of another person, such as a broker, fiduciary, depository or other nominee, must act
to cause the record holder to follow the requisite steps properly and in a timely manner to perfect dissenters’ rights of
appraisal. If the Shares are owned of record by a person other than the beneficial owner, including a broker, fiduciary (such as
a trustee, guardian or custodian), depositary or other nominee, the written demand for dissenters’ rights of appraisal must
be executed by or for the record owner. If Shares are owned of record by more than one person, as in joint tenancy or tenancy in
common, the demand must be executed by or for all joint owners. An authorized agent, including an agent for two or more joint owners,
may execute a demand for appraisal for a stockholder of record, provided that the agent identifies the record owner and expressly
discloses, when the demand is made, that the agent is acting as agent for the record owner. If a stockholder owns Shares through
a broker who in turn holds the shares through a central securities depository nominee such as CEDE & Corp., a demand for appraisal
of such Shares must be made by or on behalf of the depository nominee and must identify the depository nominee as the record holder
of such Shares.
A record holder, such as a broker, fiduciary,
depository or other nominee, who holds Shares as a nominee for others, will be able to exercise dissenters’ rights of appraisal
with respect to the Shares held for all or less than all of the beneficial owners of those Shares as to which such person is the
record owner. In such case, the written demand must set forth the number of Shares covered by the demand. Where the number of Shares
is not expressly stated, the demand will be presumed to cover all Shares outstanding in the name of such record owner.
Under NRS 92A.380(2), a stockholder who
is entitled to dissent and obtain payment pursuant to NRS 92A.300 to 92A.500, inclusive, may not challenge the exchange unless
it is unlawful or fraudulent with respect to the stockholder or Premier. Because the exchange is being affected as a short-form
exchange under Section 92A.180 of the NRS, it does not require approval by the stockholders or the board of directors of Premier.
No such approval has been or will be sought.
The foregoing summary does not purport
to be a complete statement of the procedures to be followed by stockholders desiring to exercise their dissenter’s rights
and is qualified in its entirety by express reference to Section 92A.300 to 500 of the NRS, the full text of which is attached
hereto as Exhibit A.
STOCKHOLDERS ARE URGED TO READ EXHIBIT
A IN ITS ENTIRETY SINCE FAILURE TO COMPLY WITH THE PROCEDURES SET FORTH THEREIN WILL RESULT IN THE LOSS OF DISSENTER’S RIGHTS.
OUR BOARD OF DIRECTORS AND THE STOCKHOLDERS
HOLDING A MAJORITY OF THE ISSUED AND OUTSTANDING SHARES OF THE VOTING STOCK OF THE COMPANY HAVE APPROVED THIS TRANSACTION.
WHERE YOU CAN
FIND MORE INFORMATION
We file annual, quarterly and special reports,
proxy statements and other information with the SEC. You may read and copy any reports, statements or other information we file
at the SEC’s public reference room in Washington, D.C. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Our filings with the SEC are also available to the public from commercial document retrieval services and
at the website maintained by the SEC at “http://www.sec.gov.”
You should rely only on the information
contained or incorporated by reference in this Information Statement. We have not authorized anyone to provide you with information
that is different from what is contained in this Information Statement. You should not assume that the information contained in
this Information Statement is accurate as of any date other than that date, and the mailing of this Information Statement to stockholders
shall not create any implication to the contrary.
By Order of the Board of Directors,
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Date: October
21, 2019
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By:
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/s/ Randall Letcavage
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Randall Letcavage
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Chief Executive Officer
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Exhibit A
FORM OF NOTICE
OF EXCHANGE
AND DISSENTER’S RIGHTS
October
21, 2019
To the Shareholders of Common Stock of
Premier Holding Corporation:
NOTICE IS HEREBY GIVEN, pursuant to Chapter
92A (Section 300 through 500 inclusive) of the Nevada Revised Statute (the “NRS”) (the “Dissenters’ Rights
Provisions”), that the Share Exchange Agreement between AOTS 42, a Delaware corporation (“AOTS”), and Premier
Holding Company (“Premier”), became effective on March 23, 2018 (the “Effective Date”).
The Company will not be retaining ownership
of any of the 19,250,000 AOTS shares (the “Exchange Stock”) it receives as a result of the Share Exchange Agreement.
Accordingly, on March 27, 2018, the Board
authorized the Company to make a pro rata stock distribution to its common shareholders of the 19,250,000 AOTS common shares
received by the Company pursuant to the Share Exchange Agreement (the “AOTS Share Distribution”).
Pursuant to the AOTS Share Distribution,
holders of Company common stock will receive a certain amount of shares of AOTS common stock for each share of Company Common Stock
held at the close of business on a record date to be determined by the Board as the record date for the AOTS Stock Dividend (the
“Distribution Record Date”), at a ratio to be determined by the Board (the “AOTS Share Distribution Ratio”).
Consummation of the AOTS Share Exchange Agreement is a condition to the AOTS Share Distribution.
On or about May 17, 2018, the Company received
affirmative consent for the Share Exchange Agreement from 55% of the total shares outstanding as of the record date of March 15,
2018. Under applicable Nevada law, no further action was required by the remaining stockholders of Premier for the Share Exchange
Agreement to become effective.
As a result of the Share Exchange Agreement,
AOTS will have acquired the assets of Premier’s two wholly-owned subsidiaries, TPC, and AIC.
Premier will no longer own those assets
and since the sale of the assets represents substantially all the assets of Premier, stockholders not previously consenting to
the Share Exchange Agreement have dissenter’s rights of appraisal under Nevada law.
To obtain payment for your Shares, the
certificate(s) representing such Shares, together with the enclosed Letter of Transmittal, must be mailed or delivered by hand
or overnight courier to the Paying Agent of the Share Exchange Agreement, c/o Premier Holding Corporation, Jack Gregory (the “Paying
Agent”), at the address set forth in the enclosed Letter of Transmittal. Please read and follow carefully the instructions
set forth in the enclosed Letter of Transmittal to obtain payment for your Shares.
Former stockholders of Premier who do not
wish to accept the Exchange Stock have the right under Nevada law to seek an appraisal of the fair cash value of their Shares,
exclusive of any element of value arising from the accomplishment or expectation of the Exchange, in Carson City, Nevada.
Pursuant to the Dissenters’ Rights
Provisions, any former stockholder of Premier is entitled to dissent to the Share Exchange Agreement and obtain payment of the
fair value of the shares. In the context of the Exchange, the Dissenters’ Rights Provisions provides that the former stockholders
may elect to have Premier purchase the Shares held by the former stockholders for a cash price that is equal to the “fair
value” of such Shares, as determined in a judicial proceeding in accordance with the Dissenters’ Rights Provisions.
The fair value of the Shares of any former stockholder means the value of such Shares immediately before the effectuation of the
Share Exchange Agreement, excluding any appreciation or depreciation in anticipation of the Share Exchange Agreement, unless exclusion
of any appreciation or depreciation would be inequitable.
A copy of the Dissenters’ Rights
Provisions is attached as Appendix A hereto. If you wish to exercise your dissenters’ rights or preserve the right to
do so, you should carefully review Appendix A hereto. IF YOU FAIL TO COMPLY WITH THE PROCEDURES SPECIFIED IN THE DISSENTERS’
RIGHTS PROVISIONS IN A TIMELY MANNER, YOU MAY LOSE YOUR DISSENTERS’ RIGHTS. BECAUSE OF THE COMPLEXITY OF THOSE PROCEDURES,
YOU SHOULD SEEK THE ADVICE OF COUNSEL IF YOU ARE CONSIDERING EXERCISING YOUR DISSENTERS’ RIGHTS.
Former stockholders who perfect their dissenters’
rights by complying with the procedures set forth in the Dissenters’ Rights Provisions will have the fair value of their
Shares determined by a Nevada state district court and will be entitled to receive a cash payment equal to such fair value. Any
such judicial determination of the fair value of shares could be based upon any valuation method or combination of methods the
court deems appropriate. The value so determined could be more or less than the Exchange Stock to be paid in connection with the
Share Exchange Agreement. In addition, former stockholders who invoke dissenters’ rights may be entitled to receive payment
of a fair rate of interest from the effective time of the Share Exchange Agreement on the amount determined to be the fair value
of their Shares.
If you do NOT plan to seek an appraisal
of all of your Shares, please execute (or, if you are not the record holder of such shares, to arrange for such record holder or
such holder’s duly authorized representative to execute) and mail postage paid the enclosed Letter of Transmittal to the
Paying Agent at the address set forth in the Letter of Transmittal. You should note that surrendering to Premier certificates for
your Shares will constitute a waiver of your appraisal rights under the NRS.
You should note that the method of delivery
of the Letter of Transmittal and/or any other required documentation is at the election and risk of the former stockholder. If
the decision is made to send the Letter of Transmittal by mail, it is recommended that such Letter of Transmittal be sent by registered
mail, properly insured, with return receipt requested.
This Notice of Exchange and Dissenters’
Rights affords you the notice required by NRS 92A.430. The right to appraisal will be lost unless it is perfected by full and precise
satisfaction of the requirements of the Dissenters’ Rights Provisions, the text of which is set forth in full in Appendix
A attached to this Notice of Exchange and Dissenters’ Rights. Mere failure to execute and return the enclosed stock power
or lost stock affidavit along with your stock certificate(s) does NOT satisfy the requirements of the Dissenters’ Rights
Provisions; rather, a separate written demand for appraisal must be properly executed and delivered to Premier as described below.
You have the right, on or prior to
November 25, 2019 (i.e., within 30 days after the date of this Notice of Exchange and Dissenters’ Rights
written above), to demand in writing from PREMIER an appraisal of your shares of Shares. Such demand will be sufficient if it
reasonably informs PREMIER of the identity of the stockholder making the demand and that the stockholder intends thereby to
demand an appraisal of the fair value of his or her Shares. Failure to make such a timely demand will foreclose your right to
appraisal. All written demands for appraisal of Shares should be sent or delivered to PREMIER at the following address:
PREMIER HOLDING CORPORATION
1382 Valencia Ave, Suite F
Tustin, CA 92780
Under NRS 92A.440(5), stockholders who
fail to demand payment or deposit their certificates where required by the dates set forth in this Notice of Exchange and Dissenter’s
Rights will not be entitled to demand payment or receive the fair market value for their shares of capital stock as provided under
Nevada law. Instead, such stockholders will receive the same consideration as the stockholders of who do not exercise rights of
a dissenting owner.
Pursuant to NRS 92A.460, within 30 days
after receipt of a demand for payment (form of which is attached hereto as Schedule A), Premier must pay each dissenter who complied
with the provisions of the Dissenters’ Rights Provisions the amount Premier estimates to be the fair value of such shares,
plus interest from the effective date of the Exchange. The payment must be accompanied by the following: (a) Premier’s balance
sheet as of the end of 2017, a statement of income for 2017, a statement of changes in the stockholders’ equity for 2017;
(b) A statement of Premier’s estimate of the fair value of the shares; (c) An explanation of how interest was calculated,
and (d) A statement of the dissenter’s rights to demand payment under NRS 92A.480 and that if any such stockholder does not
do so within the period specified, such stockholder shall be deemed to have accepted such payment in full satisfaction of the corporation’s
obligations under Chapter 92A of the NRS.
Under NRS 92A.470(1), Premier is entitled
to withhold payment from a dissenter unless the dissenter was the beneficial owner before the date set forth in the dissenters’
notice as the first date of any announcement to the news media or to the stockholders of the terms of the proposed corporate action.
If Premier chooses to withhold payment, it is required, within 30 days after receiving demand for payment, to notify the dissenter:
(a) of Premier’s balance sheet as of the end of 2017, a statement of income for 2017, a statement of changes in the stockholders’
equity for 2017; (b) of Premier’s estimate of the fair value of the shares; (c) that the dissenter may accept Premier’s
estimate of the fair value, plus interest, in full satisfaction of her demand or demand appraisal; (d) that if the dissenter wishes
to accept the offer, the dissenter must notify Premier of acceptance within 30 days after receiving of the offer; and (e) that
if the dissenter does not satisfy the requirements for demanding appraisal, the dissenter shall be deemed to have accepted Premier’s
offer.
If Premier does not deliver payment within
30 days of receipt of the demand for payment, the dissenting stockholder may enforce under NRS 92A.460(1) the dissenter’s
rights by commencing an action in Carson City, Nevada.
If a dissenting stockholder disagrees with
the amount of Premier’s payment, then the dissenting stockholder may, pursuant to NRS 92A.480, within 30 days of such payment,
(i) notify Premier in writing of the dissenting stockholder’s own estimate of the fair value of the dissenting shares and
the amount of interest due, and demand payment of such estimate, less any payments made by Premier, or (ii) reject the offer by
Premier if the dissenting stockholder believes that the amount offered by Premier is less than the fair value of the dissenting
shares or that the interest due is incorrectly calculated. If a dissenting stockholder submits a written demand as set forth above
and Premier accepts the offer to purchase the Shares at the offer price, then such dissenting stockholder will be sent a check
for the full purchase price of the Shares within 30 days of acceptance.
If a demand for payment remains unsettled,
Premier must commence a proceeding in the Carson City, Nevada district court within 60 days after receiving the demand. Each dissenter
who is made a party to the proceeding shall be entitled to a judgment in the amount, if any, by which the court finds the fair
value of the dissenting shares, plus interest, exceeds the amount paid by Premier. If a proceeding is commenced to determine the
fair value of the Shares, the costs of such proceeding, including the reasonable compensation and expenses of any appraisers appointed
by the court, shall be assessed against Premier, unless the court finds the dissenters acted arbitrarily, vexatiously or not in
good faith in demanding payment. The court may also assess the fees and expenses of the counsel and experts for the respective
parties, in amounts the court finds equitable against Premier if the court finds that (i) Premier did not comply with the Dissenters’
Rights Provisions or (ii) against either Premier or a dissenting stockholder, if the court finds that such party acted arbitrarily,
vexatiously or not in good faith with respect to the rights provided by the Dissenters’ Rights Provisions.
If PREMIER fails to commence such a proceeding,
it would be required by NRS 92A.490(1) to pay the amount demanded to each dissenter whose demand remains unsettled. Dissenters
would be entitled to a judgment for the amount, if any, by which the court finds the fair value of his shares, plus accrued interest,
exceeds the amount paid by PREMIER; or the fair value, plus accrued interest, of his after-acquired shares for which PREMIER elected
to withhold payment pursuant to Section 92.470 of the NRS.
Under Section 92A.490(4) of the NRS, the
district court may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair
value. The appraisers have the powers described in the order appointing them or in any amendment to such order. In any such court
proceeding, the dissenters are entitled to the same discovery rights as parties in other civil proceedings.
Under Section 92A.500 of the NRS, the district
court will assess the costs of the proceedings against PREMIER, unless the court finds that all or some of the dissenters acted
arbitrarily, vexatiously or not in good faith in demanding payment. The district court may also assess against PREMIER or the dissenters
the fees and expenses of counsel and experts for the respective parties, in the amount the court finds equitable.
A person having a beneficial interest in
Shares that are held of record in the name of another person, such as a broker, fiduciary, depository or other nominee, must act
to cause the record holder to follow the requisite steps properly and in a timely manner to perfect dissenters’ rights of
appraisal. If the Shares are owned of record by a person other than the beneficial owner, including a broker, fiduciary (such as
a trustee, guardian or custodian), depositary or other nominee, the written demand for dissenters’ rights of appraisal must
be executed by or for the record owner. If Shares are owned of record by more than one person, as in joint tenancy or tenancy in
common, the demand must be executed by or for all joint owners. An authorized agent, including an agent for two or more joint owners,
may execute a demand for appraisal for a stockholder of record, provided that the agent identifies the record owner and expressly
discloses, when the demand is made, that the agent is acting as agent for the record owner. If a stockholder owns Shares through
a broker who in turn holds the shares through a central securities depository nominee such as CEDE & Corp., a demand for appraisal
of such Shares must be made by or on behalf of the depository nominee and must identify the depository nominee as the record holder
of such Shares.
A record holder, such as a broker, fiduciary,
depository or other nominee, who holds Shares as a nominee for others, will be able to exercise dissenters’ rights of appraisal
with respect to the Shares held for all or less than all of the beneficial owners of those Shares as to which such person is the
record owner. In such case, the written demand must set forth the number of Shares covered by the demand. Where the number of Shares
is not expressly stated, the demand will be presumed to cover all Shares outstanding in the name of such record owner.
Under NRS 92A.380(2), a stockholder who
is entitled to dissent and obtain payment pursuant to NRS 92A.300 to 92A.500, inclusive, may not challenge the Exchange unless
it is unlawful or fraudulent with respect to the stockholder or Premier The board of directors of Premier was not required under
NRS 78.138(5) to consider the proposed effect of the Exchange upon any particular group having an interest in the corporation as
a dominant factor, such as the unaffiliated stockholders, and the board of directors of Premier did not appoint an independent
committee to consider the proposed effect of the Exchange on the stockholders of Premier.
The foregoing summary of the rights of
dissenting stockholders under the Dissenters’ Rights Provisions does not purport to be a complete statement of the procedures
to be followed by stockholders desiring to exercise any dissenters’ rights of appraisal rights available under NRS. The preservation
and exercise of dissenters’ rights of appraisal require strict adherence to the applicable provisions of NRS, and the foregoing
summary is qualified in its entirety by reference to Appendix A hereto. You should carefully read Chapter 92A (Sections 300 through
500 inclusive) of the NRS, particularly the procedural steps required to perfect appraisal rights, because failure to strictly
comply with the procedural requirements set forth in Chapter 92A (Sections 300 through 500 inclusive) of the NRS will result in
a loss of appraisal rights. YOU ARE URGED TO CONSULT WITH YOUR OWN ATTORNEY REGARDING THE DISSENTERS’ RIGHTS AVAILABLE TO
YOU, AND THE PROCESS TO PERFECT YOUR DISSENTERS’ RIGHTS UNDER CHAPTER 92A (SECTIONS 300 THROUGH 500 INCLUSIVE) OF THE NRS.
Additional Information
In connection with the exchange,
Premier and AOTS filed with the U.S. Securities and Exchange Commission (the “SEC”) a Schedule 14C, which was
mailed to the stockholders of Premier along with this Notice of Exchange and Dissenter’s Rights on or about October
25, 2019.
In making your decision as to the exercise
of dissenter’s rights, you are urged to review the Schedule 14C and all related materials. A copy of the Schedule 14C is
enclosed herewith. In addition, copies of the Schedule 14C, including all amendments and supplements thereto, can be obtained at
Premier’s expense from Premier if you are a bank or a broker. Finally, the Schedule 14C is also available free of charge
on the SEC’s website at http://www.sec.gov.
Premier in the past has been subject to
the informational and reporting requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith filed
and furnished periodic and current reports, proxy statements and other information with the SEC relating to its business, financial
condition and other matters. Such periodic and current reports, proxy statements and other information may be read and copied at
the SEC’s Public Reference Room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at
1- 800-SEC-0330 for further information on the public reference room. Premier’s filings with the SEC are also available to
the public from commercial document-retrieval services and on the website maintained by the SEC at http://www.sec.gov.
Very Truly Yours,
Premier Holding Company
SCHEDULE A
DEMAND FOR PAYMENT BY A DISSENTING STOCKHOLDER
The undersigned is the owner of the following
number of shares of capital stock of Premier Holding Company and hereby demands payment for the same: Common Stock:
The undersigned represents and warrants
that the foregoing shares are all of the shares of capital stock of Premier Holding Company beneficially owned by the undersigned,
except that if the undersigned is a nominee holder this Form for Demanding Payment by a Dissenting Stockholder is accompanied by
a certification by each beneficial stockholder that both the beneficial owner and the record holders of all shares of common stock
owned beneficially by the beneficial owner have asserted, or will timely assert, dissenter’s rights as to all the shares
beneficially owned by the beneficial owner.
By initialing in the box to the
right of this statement, the undersigned, or the person on whose behalf the undersigned is asserting dissenters’
rights, hereby certifies that the undersigned acquired ownership of the foregoing shares before November 25, 2019,
the date of the first announcement of the terms of the proposed action to the public through the filing of the initial
Schedule PRE14C with the SEC (Any failure to so initial will be interpreted as a failure to provide this certification).
Dissenters’ rights payments with
respect to the shares identified above should be sent to the following address:
Signature:
Name of Record Holder:
Name of Beneficial Holder:
Date:
NOTE: THIS DEMAND MUST BE
RECEIVED BY AT, ON OR BEFORE NOVEMBER 25, 2019. FAILURE TO DELIVER THE DEMAND BY THE DATE INDICATED WILL WAIVE ALL
RIGHTS THAT THE STOCKHOLDER HAS TO DISSENT. THIS DEMAND MUST BE ACCOMPANIED BY THE CERTIFICATES WITH RESPECT TO WHICH DISSENT
AND PAYMENT DEMAND IS BEING MADE.
APPENDIX A
Dissenter’s Rights Provisions
Nevada Revised Statutes § 92A.300
to § 92A.500
(“Dissenters’ Rights Provisions”)
92A.300. Definitions.
As used in NRS 92A.300 to 92A.500, inclusive,
unless the context otherwise requires, the words and terms defined in NRS 92A.305 to 92A.335, inclusive, have the meanings ascribed
to them in those sections.
92A.305. “Beneficial stockholder”
defined.
“Beneficial stockholder” means
a person who is a beneficial owner of shares held in a voting trust or by a nominee as the stockholder of record.
92A.310. “Corporate action”
defined.
“Corporate action” means the
action of a domestic corporation.
92A.315. “Dissenter” defined.
“Dissenter” means a stockholder
who is entitled to dissent from a domestic corporation’s action under NRS 92A.380 and who exercises that right when and in
the manner required by NRS 92A.400 to 92A.480, inclusive.
92A.320. “Fair value” defined.
“Fair value,” with respect
to a dissenter’s shares, means the value of the shares determined:
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1.
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Immediately before the effectuation of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable
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2.
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Using customary and current valuation concepts and techniques generally
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employed for similar businesses in the context of the transaction requiring appraisal; and
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3.
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Without discounting for lack of marketability or minority status.
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92A.325. “Stockholder” defined.
“Stockholder” means a stockholder
of record or a beneficial stockholder of a domestic corporation.
92A.330. “Stockholder of record”
defined.
“Stockholder of record” means
the person in whose name shares are registered in the records of a domestic corporation or the beneficial owner of shares to the
extent of the rights granted by a nominee’s certificate on file with the domestic corporation.
92A.335. “Subject corporation”
defined.
“Subject corporation” means
the domestic corporation which is the issuer of the shares held by a dissenter before the corporate action creating the dissenter’s
rights becomes effective or the surviving or acquiring entity of that issuer after the corporate action becomes effective.
92A.340. Computation of interest.
Interest payable pursuant to NRS 92A.300
to 92A.500, inclusive, must be computed from the effective date of the action until the date of payment, at the rate of interest
most recently established pursuant to NRS 99.040.
92A.350. Rights of dissenting partner
of domestic limited partnership.
A partnership agreement of a domestic limited
partnership or, unless otherwise provided in the partnership agreement, an agreement of merger or exchange, may provide that contractual
rights with respect to the partnership interest of a dissenting general or limited partner of a domestic limited partnership are
available for any class or group of partnership interests in connection with any merger or exchange in which the domestic limited
partnership is a constituent entity.
92A.360. Rights of dissenting member
of domestic limited-liability company.
The articles of organization or operating
agreement of a domestic limited-liability company or, unless otherwise provided in the articles of organization or operating agreement,
an agreement of merger or exchange, may provide that contractual rights with respect to the interest of a dissenting member are
available in connection with any merger or exchange in which the domestic limited-liability company is a constituent entity.
92A.370. Rights of dissenting member
of domestic nonprofit corporation.
1. Except as otherwise provided in subsection
2, and unless otherwise provided in the articles or bylaws, any member of any constituent domestic nonprofit corporation who voted
against the merger may, without prior notice, but within 30 days after the effective date of the merger, resign from membership
and is thereby excused from all contractual obligations to the constituent or surviving corporations which did not occur before
the member’s resignation and is thereby entitled to those rights, if any, which would have existed if there had been no merger
and the membership had been terminated or the member had been expelled.
2. Unless otherwise provided in its articles
of incorporation or bylaws, no member of a domestic nonprofit corporation, including, but not limited to, a cooperative corporation,
which supplies services described in chapter 704 of NRS to its members only, and no person who is a member of a domestic nonprofit
corporation as a condition of or by reason of the ownership of an interest in real property, may resign and dissent pursuant to
subsection 1.
92A.380. Right of stockholder to dissent
from certain corporate actions and to obtain payment for shares.
Except as otherwise provided in NRS 92A.370
and 92A.390, any stockholder is entitled to dissent from, and obtain payment of the fair value of the stockholder’s shares
in the event of any of the following corporate actions:
(a) Consummation of a plan of merger to
which the domestic corporation is a constituent entity:
(1) If approval by the stockholders is
required for the merger by NRS 92A.120 to 92A.160, inclusive, or the articles of incorporation, regardless of whether the stockholder
is entitled to vote on the plan of merger; or
(2) If the domestic corporation is a subsidiary
and is merged with its parent pursuant to NRS 92A.180.
(b) Consummation of a plan of conversion
to which the domestic corporation is a constituent entity as the corporation whose subject owner’s interests will be converted.
(c) Consummation of a plan of exchange
to which the domestic corporation is a constituent entity as the corporation whose subject owner’s interests will be acquired,
if the stockholder’s shares are to be acquired in the plan of exchange.
(d) Any corporate action taken pursuant
to a vote of the stockholders to the extent that the articles of incorporation, bylaws or a resolution of the board of directors
provides that voting or nonvoting stockholders are entitled to dissent and obtain payment for their shares.
(e) Accordance of full voting rights to
control shares, as defined in NRS 78.3784, only to the extent provided for pursuant to NRS 78.3793.
(f) Any corporate action not described
in this subsection that will result in the stockholder receiving money or scrip instead of fractional shares except where the stockholder
would not be entitled to receive such payment pursuant to NRS 78.205, 78.2055 or 78.207.
2. A stockholder who is entitled to dissent
and obtain payment pursuant to NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action creating the entitlement
unless the action is unlawful or fraudulent with respect to the stockholder or the domestic corporation.
3. From and after the effective date of
any corporate action described in subsection 1, no stockholder who has exercised the right to dissent pursuant to NRS 92A.300 to
92A.500, inclusive, is entitled to vote his or her shares for any purpose or to receive payment of dividends or any other distributions
on shares. This subsection does not apply to dividends or other distributions payable to stockholders on a date before the effective
date of any corporate action from which the stockholder has dissented.
92A.390. Limitations on right of dissent:
Stockholders of certain classes or series; action of stockholders not required for plan of merger.
1. There is no right of dissent with respect
to a plan of merger, conversion or exchange in favor of stockholders of any class or series which is:
(a) A covered security under section 18(b)(1)(A)
or (B) of the Securities Act of 1933, 15 U.S.C. 77r(b) (1)(A) or (B), as amended;
(b) Traded in an organized market and has
at least 2,000 stockholders and a market value of at least $20,000,000, exclusive of the value of such shares held by the corporation’s
subsidiaries, senior executives, directors and beneficial stockholders owning more than 10 percent of such shares; or
(c) Issued by an open end management investment
company registered with the Securities and Exchange Commission under the Investment Company Act of 1940 and which may be redeemed
at the option of the holder at net asset value, unless the articles of incorporation of the corporation issuing the class or series
provide otherwise.
2. The applicability of subsection 1 must
be determined as of:
(a) The record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the corporate action requiring
dissenter’s rights; or
(b) The day before the effective date of
such corporate action if there is no meeting of stockholders.
3. Subsection 1 is not applicable and dissenter’s
rights are available pursuant to NRS 92A.380 for the holders of any class or series of shares who are required by the terms of
the corporate action requiring dissenter’s rights to accept for such shares anything other than cash or shares of any class
or any series of shares of any corporation, or any other proprietary interest of any other entity, that satisfies the standards
set forth in subsection 1 at the time the corporate action becomes effective.
4. There is no right of dissent for any
holders of stock of the surviving domestic corporation if the plan of merger does not require action of the stockholders of the
surviving domestic corporation under NRS 92A.130.
5. There is no right of dissent for any
holders of stock of the parent domestic corporation if the plan of merger does not require action of the stockholders of the parent
domestic corporation under NRS 92A.180.
92A.400. Limitations on right of dissent:
Assertion as to portions only to shares registered to stockholder; assertion by beneficial stockholder.
1. A stockholder of record may assert dissenter’s
rights as to fewer than all of the shares registered in his or her name only if the stockholder of record dissents with respect
to all shares of the class or series beneficially owned by any one person and notifies the subject corporation in writing of the
name and address of each person on whose behalf the stockholder of record asserts dissenter’s rights. The rights of a partial
dissenter under this subsection are determined as if the shares as to which the partial dissenter dissents and his or her other
shares were registered in the names of different stockholders.
2. A beneficial stockholder may assert
dissenter’s rights as to shares held on his behalf only if the beneficial stockholder:
(a) Submits to the subject corporation
the written consent of the stockholder of record to the dissent not later than the time the beneficial stockholder asserts dissenter’s
rights; and
(b) Does so with respect to all shares
of which he or she is the beneficial stockholder or over which he or she has power to direct the vote.
92A.410. Notification of stockholders
regarding right of dissent.
1. If a proposed corporate action creating
dissenters’ rights is submitted to a vote at a stockholders’ meeting, the notice of the meeting must state that stockholders
are, are not or may be entitled to assert dissenters’ rights under NRS 92A.300 to 92A.500, inclusive. If the domestic corporation
concludes that dissenter’s rights are or may be available, a copy of NRS 92A.300 to 92A.500, inclusive, must accompany the
meeting notice sent to those record stockholders entitled to exercise dissenter’s rights.
2. If the corporate action creating dissenters’
rights is taken by written consent of the stockholders or without a vote of the stockholders, the domestic corporation shall notify
in writing all stockholders entitled to assert dissenters’ rights that the action was taken and send them the dissenter’s
notice described in NRS
92A.430. Dissenter’s notice: Delivery
to stockholders entitled to assert rights; contents.
1. The subject corporation shall deliver
a written dissenter’s notice to all stockholders entitled to assert dissenters’ rights.
2. The dissenter’s notice must
be sent no later than 10 days after the effective date of the corporate action specified in NRS 92A.380, and must:
(a) State where the demand for payment
must be sent and where and when certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not
represented by certificates to what extent the transfer of the shares will be restricted after the demand for payment is received;
(c) Supply a form for demanding payment
that includes the date of the first announcement to the news media or to the stockholders of the terms of the proposed action and
requires that the person asserting dissenter’s rights certify whether or not the person acquired beneficial ownership of
the shares before that date;
(d) Set a date by which the subject
corporation must receive the demand for payment, which may not be less than 30 nor more than 60 days after the date the notice
is delivered and state that the stockholder shall be deemed to have waived the right to demand payment with respect to the shares
unless the form is received by the subject corporation by such specified date; and
(e) Be accompanied by a copy of NRS
92A.300 to 92A.500, inclusive.
92A.420. Prerequisites to demand for
payment for shares.
1. If a proposed corporate action creating
dissenters’ rights is submitted to a vote at a stockholders’ meeting, a stockholder who wishes to assert dissenter’s
rights with respect to any class or series of shares:
(a) Must deliver to the subject corporation,
before the vote is taken, written notice of the stockholder’s intent to demand payment for his or her shares if the proposed
action is effectuated; and
(b) Must not vote, or cause or permit to
be voted, any of his or her shares of such class or series in favor of the proposed action.
2. If a proposed corporate action creating
dissenters’ rights is taken by written consent of the stockholders, a stockholder who wishes to assert dissenters’
rights with respect to any class or series of shares must not consent to or approve the proposed corporate action with respect
to such class or series.
3. A stockholder who does not satisfy the
requirements of subsection 1 or 2 and NRS 92A.400 is not entitled to payment for his or her shares under this chapter.
92A.430. Dissenter’s notice: Delivery
to stockholders entitled to assert rights; contents.
1. The subject corporation shall deliver
a written dissenter’s notice to all stockholders entitled to assert dissenters’ rights.
2. The dissenter’s notice must be
sent no later than 10 days after the effective date of the corporate action specified in NRS 92A.380, and must:
(a) State where the demand for payment
must be sent and where and when certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented
by certificates to what extent the transfer of the shares will be restricted after the demand for payment is received;
(c) Supply a form for demanding payment
that includes the date of the first announcement to the news media or to the stockholders of the terms of the proposed action and
requires that the person asserting dissenter’s rights certify whether or not the person acquired beneficial ownership of
the shares before that date;
(d) Set a date by which the subject corporation
must receive the demand for payment, which may not be less than 30 nor more than 60 days after the date the notice is delivered
and state that the stockholder shall be deemed to have waived the right to demand payment with respect to the shares unless the
form is received by the subject corporation by such specified date; and
(e) Be accompanied by a copy of NRS 92A.300
to 92A.500, inclusive.
92A.440. Demand for payment and deposit
of certificates; loss of rights of stockholder; withdrawal from appraisal process.
1. A stockholder who receives a dissenter’s
notice pursuant to NRS 92A.430 and who wishes to exercise dissenter’s rights must:
(a) Demand payment;
(b) Certify whether the stockholder or
the beneficial owner on whose behalf he or she is dissenting, as the case may be, acquired beneficial ownership of the shares before
the date required to be set forth in the dissenter’s notice for this certification; and
(c) Deposit the stockholder’s certificates,
if any, in accordance with the terms of the notice.
2. If a stockholder fails to make the certification
required by paragraph (b) of subsection 1, the subject corporation may elect to treat the stockholder’s shares as after-acquired
shares under NRS 92A.470.
3. Once a stockholder deposits that stockholder’s
certificates or, in the case of uncertified shares makes demand for payment, that stockholder loses all rights as a stockholder,
unless the stockholder withdraws pursuant to subsection 4.
4. A stockholder who has complied with
subsection 1 may nevertheless decline to exercise dissenter’s rights and withdraw from the appraisal process by so notifying
the subject corporation in writing by the date set forth in the dissenter’s notice pursuant to NRS 92A.430. A stockholder
who fails to so withdraw from the appraisal process may not thereafter withdraw without the subject corporation’s written
consent.
5. The stockholder who does not demand
payment or deposit his or her certificates where required, each by the date set forth in the dissenter’s notice, is not entitled
to payment for his or her shares under this chapter. 92A.450. Uncertificated shares: Authority to restrict transfer after
demand for payment.
The subject corporation may restrict the
transfer of shares not represented by a certificate from the date the demand for their payment is received.
92A.460. Payment for shares: General
requirements.
1. Except as otherwise provided in NRS
92A.470, within 30 days after receipt of a demand for payment, the subject corporation shall pay in cash to each dissenter who
complied with NRS 92A.440 the amount the subject corporation estimates to be the fair value of the dissenter’s shares, plus
accrued interest. The obligation of the subject corporation under this subsection may be enforced by the district court:
(a) Of the county where the subject corporation’s
principal office is located;
(b) If the subject corporation’s
principal office is not located in this State, in the county in which the corporation’s registered office is located; or
(c) At the election of any dissenter residing
or having its principal or registered office in this State, of the county where the dissenter resides or has its principal or registered
office.
The court shall dispose of the complaint
promptly.
2. The payment must be accompanied by:
(a) The subject corporation’s balance
sheet as of the end of a fiscal year ending not more than 16 months before the date of payment, a statement of income for that
year, a statement of changes in the stockholders’ equity for that year or, where such financial statements are not reasonably
available, then such reasonably equivalent financial information and the latest available quarterly financial statements, if any;
(b) A statement of the subject corporation’s
estimate of the fair value of the shares; and
(c) A statement of the dissenter’s
rights to demand payment under NRS 92A.480 and that if any such stockholder does not do so within the period specified, such stockholder
shall be deemed to have accepted such payment in full satisfaction of the corporation’s obligations under this chapter.
92A.470. Withholding payment for shares
acquired on or after date of dissenter’s notice: General requirements.
1. A subject corporation may elect to withhold
payment from a dissenter unless the dissenter was the beneficial owner of the shares before the date set forth in the dissenter’s
notice as the first date of any announcement to the news media or to the stockholders of the terms of the proposed action.
2. To the extent the subject corporation
elects to withhold payment, within 30 days after receipt of a demand for payment, the subject corporation shall notify the dissenters
described in subsection 1:
(a) Of the information required by paragraph
(a) of subsection 2 of NRS 92A.460;
(b) Of the subject corporation’s
estimate of fair value pursuant to paragraph (b) of subsection 2 of NRS 92A.460;
(c) That they may accept the subject corporation’s
estimate of fair value, plus interest, in full satisfaction of their demands or demand appraisal under NRS 92A.480;
(d) That those stockholders who wish to
accept such an offer must so notify the subject corporation of their acceptance of the offer within 30 days after receipt of such
offer; and
(e) That those stockholders who do not
satisfy the requirements for demanding appraisal under NRS
92A.480 shall be deemed to have accepted
the subject corporation’s offer.
3. Within 10 days after receiving the stockholder’s
acceptance pursuant to subsection 2, the subject corporation shall pay in cash the amount offered under paragraph (b) of subsection
2 to each stockholder who agreed to accept the subject corporation’s offer in full satisfaction of the stockholder’s
demand.
4. Within 40 days after sending the notice
described in subsection 2, the subject corporation shall pay in cash the amount offered under paragraph (b) of subsection 2 to
each stockholder described in paragraph (e) of subsection 2.
92A.480. Dissenter’s estimate
of fair value: Notification of subject corporation; demand for payment of estimate.
1. A dissenter paid pursuant to NRS 92A.460
who is dissatisfied with the amount of the payment may notify the subject corporation in writing of the dissenter’s own estimate
of the fair value of his or her shares and the amount of interest due, and demand payment of such estimate, less any payment pursuant
to NRS 92A.460. A dissenter offered payment pursuant to NRS 92A.470 who is dissatisfied with the offer may reject the offer pursuant
to NRS 92A.470 and demand payment of the fair value of his or her shares and interest due.
2. A dissenter waives the right to demand
payment pursuant to this section unless the dissenter notifies the subject corporation of his or her demand to be paid the dissenter’s
stated estimate of fair value plus interest under subsection 1 in writing within 30 days after receiving the subject corporation’s
payment or offer of payment under NRS 92A.460 or 92A.470 and is entitled only to the payment made or offered.
92A.490. Legal proceeding to determine
fair value: Duties of subject corporation; powers of court; rights of dissenter.
1. If a demand for payment remains unsettled,
the subject corporation shall commence a proceeding within 60 days after receiving the demand and petition the court to determine
the fair value of the shares and accrued interest. If the subject corporation does not commence the proceeding within the 60-day
period, it shall pay each dissenter whose demand remains unsettled the amount demanded by each dissenter pursuant to NRS 92A.480
plus interest.
2. A subject corporation shall commence
the proceeding in the district court of the county where its principal office is located in this State. If the principal office
of the subject corporation is not located in the State, it shall commence the proceeding in the county where the principal office
of the domestic corporation merged with or whose shares were acquired by the foreign entity was located. If the principal office
of the subject corporation and the domestic corporation merged with or whose shares were acquired is not located in this State,
the subject corporation shall commence the proceeding in the district court in the county in which the corporation’s registered
office is located.
3. The subject corporation shall make all
dissenters, whether or not residents of Nevada, whose demands remain unsettled, parties to the proceeding as in an action against
their shares. All parties must be served with a copy of the petition. Nonresidents may be served by registered or certified mail
or by publication as provided by law.
4. The jurisdiction of the court in which
the proceeding is commenced under subsection 2 is plenary and exclusive. The court may appoint one or more persons as appraisers
to receive evidence and recommend a decision on the question of fair value. The appraisers have the powers described in the order
appointing them, or any amendment thereto. The dissenters are entitled to the same discovery rights as parties in other civil proceedings.
5. Each dissenter who is made a party to
the proceeding is entitled to a judgment:
(a) For the amount, if any, by which the
court finds the fair value of the dissenter’s shares, plus interest, exceeds the amount paid by the subject corporation;
or
(b) For the fair value, plus accrued interest,
of the dissenter’s after-acquired shares for which the subject corporation elected to withhold payment pursuant to NRS 92A.470.
92A.500. Assessment of costs and fees
in certain legal proceedings.
1. The court in a proceeding to determine
fair value shall determine all of the costs of the proceeding, including the reasonable compensation and expenses of any appraisers
appointed by the court. The court shall assess the costs against the subject corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to the extent the court finds the dissenters acted
arbitrarily, vexatiously or not in good faith in demanding payment.
2. The court may also assess the fees and
expenses of the counsel and experts for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation and
in favor of all dissenters if the court finds the subject corporation did not substantially comply with the requirements of NRS
92A.300 to 92A.500, inclusive; or
(b) Against either the subject corporation
or a dissenter in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted
arbitrarily, vexatiously or not in good faith with respect to the rights provided by NRS 92A.300 to 92A.500, inclusive.
3. If the court finds that the services
of counsel for any dissenter were of substantial benefit to other dissenters similarly situated, and that the fees for those services
should not be assessed against the subject corporation, the court may award to those counsel reasonable fees to be paid out of
the amounts awarded to the dissenters who were benefited.
4. In a proceeding commenced pursuant to
NRS 92A.460, the court may assess the costs against the subject corporation, except that the court may assess costs against all
or some of the dissenters who are parties to the proceeding, in amounts the court finds equitable, to the extent the court finds
that such parties did not act in good faith in instituting the proceeding.
5. To the extent the subject corporation
fails to make a required payment pursuant to NRS 92A.460, 92A.470 or 92A.480, the dissenter may bring a cause of action directly
for the amount owed and, to the extent the dissenter prevails, is entitled to recover all expenses of the suit.
6. This section does not preclude any party
in a proceeding commenced pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68 or NRS 17.115.
Exhibit A
MEMBERSHIP INTEREST EXCHANGE AND CONTRIBUTION
AGREEMENT
THIS SHARE EXCHANGE
AGREEMENT, dated as of the 23 day of March, 2018 (the "Agreement"), by and among AOTS 42, a Delaware
corporation (the "Company"). THE POWER COMPANY USA, LLC, an Illinois limited liability company ("TPC"),
AMERICAN ILLUMINATING COMPANY. LLC, a Connecticut limited liability company ("AIC"), and Premier Holding Corporation,
the sole member of TPC and AIC ("PRHL") each of whom has executed a counterpart signature page to this Agreement.
The Company, TPC, AIC and PRHL are individually referred to herein as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, the capitalization
of TPC consists of Membership Interests (the "Membership Interests"), all of which arc held by PRHL;
WHEREAS, the capitalization
of AIC consists of Membership Interests (the "Membership Interests"), all of which are held by PRHL;
WHEREAS, the Company
desires to acquire from PRHL and PRHL desires to contribute (the "Premier Contribution") to the Company, subject to
shareholder vote and approval and Federal Energy Regulatory Commission approval, all of the issued and outstanding membership
interests of TPC (the "TPC Membership Interests") and all of the issued and outstanding membership interests
of AIC (the "AIC Membership Interests") in exchange for the issuance by the Company of an aggregate of nineteen
million two hundred fifty thousand (19,250,000) shares (the "Company Shares") of the Company's common stock,
$0.0001 par value per share (the "Common Stock"), to PRHL on the terms and conditions set forth herein (the "Share
Exchange");
WHEREAS. the contribution
and exchange contemplated hereby (the "Contribution and Exchange") in addition to the: (i) contribution by Advanced
E Lighting, LLC ("Advanced") in exchange for six million (6,000,000) Company Shares (the "Advance Contribution");
(ii) contribution by PowerOne Corporation, Units of Rescom Energy, LLC ("Rescom") in exchange for ten million (10,000,000)
Company Shares (the "Rescom Contribution"); (iii) contribution by TPC Management Company, LLC, ("TPMC")
of the Portal Technology in exchange for six million (6,000,000) Company Shares (the "Technology Contribution").
WHEREAS the "Advance
Contribution" the "Premier Contribution" the "Technology Contribution" and the "Rescom
Contribution", (hereinafter collectively referred to as the "351 Contributions"), is intended to qualify
as an integrated contribution and exchange as described under Section 351 of the Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, the Company
intends to conduct a private placement offering of its Common Stock consisting of a minimum of 1,000,000 shares at price per share
of $1.00 for each share of Common Stock (the "Minimum Offering Amount"), subject to an increase of up to 10%
in accordance with the terms and conditions of the Subscription Agreement (the "Maximum Increase"), with funds
being placed in escrow of which at least the Minimum Offering Amount will be released simultaneously with the closing of the Share
Exchange and, if applicable, subsequent closings thereafter of up to the Minimum Offering Amount and Maximum Increase (the "Equity
Financing"). any equity offerings over the Maximum Increase amount will be subject to board vote needing majority
approval.
WHEREAS. the Company
has engaged WestPark Capital, Inc. ("WestPark") as the placement agent for the equity financing pursuant to a
Placement Agent Agreement mutually acceptable to the Company and WestPark;
AGREEMENT
NOW, THEREFORE. in
consideration. of the promises and of the mutual representations. warranties and agreements set forth herein, the Parties hereto
agree as follows:
ARTICLE 1.
THE SHARE EXCHANGE
1.1 The Share Exchange. Subject to the
terms and conditions of this Agreement, on the Closing Date (as hereinafter defined):
(a)
the Company shall issue and deliver to PRHL the number of authorized but unissued shares of Company Common Stock set forth
opposite her and/or her designees' names set forth on Schedule I hereto or pursuant to separate instructions to be delivered
prior to Closing, and
(b)
if applicable. PRHL agrees to deliver to the Company duly endorsed certificates representing the TPC Membership Interests
and AIC Membership Interests.
1.2 Time
and Place of Closing. The closing of the Share Exchange (the "Closing") shall take place at the offices of
WestPark, or at such place and time as mutually agreed upon by the Parties hereto. The date upon which the Closing occurs is defined
as the "Closing Date."
1.3 Effective
Time. The Share Exchange shall become effective (the "Effective Time") at such time as all of the conditions
to set forth in Article 7 hereof have been satisfied or waived by the Parties hereto.
1.4 Tax Consequences. It is intended by
the Parties hereto that for United States income tax purposes, the contribution and transfer of the membership Interests by the
Member to the Company in exchange for the Company Shares constitutes a "tax-free" contribution of stock by the Member
pursuant to the provisions of Sections 351 of the Code.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
The Company represents and warrants to the
Members that now and/or as of the Closing:
2.1 Due Organization and Qualification;
Due Authorization.
(a) The
Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware with
full corporate power and authority to own, lease and operate its respective business and properties and to carry on its business
in the places and in the manner as presently conducted or proposed to be conducted. The Company is in good standing as a foreign
corporation in each jurisdiction in which the properties owned, leased or operated, or the business conducted, by it requires
such qualification except for any such failure, which when taken together with all other failures, is not likely to have a material
adverse effect on the business of the Company.
(b)
The Company does not own, directly or indirectly, any capital stock, equity or interest in any corporation, firm, partnership,
joint venture or other entity.
(c)
The Company has all requisite corporate power and authority to execute and deliver this Agreement, and to consummate the
transactions contemplated hereby and thereby. The Company has taken all corporate action necessary for the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby, and this Agreement constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with its terms, except
as may be affected by bankruptcy, insolvency, moratoria or other similar laws affecting the enforcement of creditors'
rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the
court before which any proceeding therefore may be brought, equitable remedies is subject to the discretion of the court before
which any proceeding therefore may be brought.
2.2 No
Conflicts or Defaults. The execution and delivery of this Agreement by the Company and the consummation of the transactions
contemplated hereby do not and shall not (a) contravene the Certificate of Incorporation or By-laws of the Company or (b) with
or without the giving of notice or the passage of time (i) violate, conflict with, or result in a breach of, or a default or loss
of rights under, any material covenant, agreement, mortgage, indenture, lease, instrument, permit or license to which the Company
is a party or by which the Company is bound, or any judgment, order or decree, or any law, rule or regulation to which the Company
is subject, (ii) result in the creation of, or give any party the right to create, any lien, charge, encumbrance or any other
right or adverse interest (the "Liens") upon any of the assets of the Company, (iii) terminate or give any party
the right to terminate, amend, abandon or refuse to perform, any material agreement, arrangement or commitment to which the Company
is a party or by which the Company's assets are bound, or (iv) accelerate or modify, or give any party the right to accelerate
or modify, the time within which. or the terms under which, the Company is to perform any duties or obligations or receive any
rights or benefits under any material agreement. arrangement or commitment to which it is a party.
2.3 Capitalization.
The authorized capital stock of the Company consists of 110,000,000 shares of which 100,000,000 shares have been designated
as Company Common Stock and 10.000,000 shares have been designated as preferred stock, $0.0001 par value per share (the "Preferred
Stock"). As of the date hereof, there are 8.250,000 shares of Company Common Stock issued and outstanding, no shares
of Preferred Stock outstanding, of Company Common Stock outstanding with an exercise price of $0.0001 per share (the "Warrants").
All the outstanding shares of Company Common Stock are, and the Company Shares when issued in accordance with the terms hereof
will be, duly authorized, validly issued, fully paid and non-assessable, and have not been or, with respect to the Company Shares
will not be, issued in violation of any preemptive right of stockholders. Other than as set forth on Item 2.3 to the Disclosure
Schedule to this Agreement, or as contemplated by this Agreement, there is no outstanding voting trust agreement or other contract,
agreement, arrangement, option, warrant, call, commitment or other right of any character obligating or entitling the Company
to issue, sell, redeem or repurchase any of its securities, and there is no outstanding security of any kind convertible into
or exchangeable for Company Common Stock. The Company has not granted registration rights to any person.
2.4 No Assets or Liabilities. As of
the Closing, the Company shall have no more than $10,000 in liabilities. Except for the foregoing or as set forth on the Financial
Statements, the Company does not have any (a) assets of any kind or (b) liabilities or obligations, whether secured or unsecured,
accrued. determined, absolute or contingent, asserted or unasserted or otherwise.
2.5 Taxes.
The Company has filed all United States federal, state, county and local returns and reports which were required to be filed
on or prior to the date hereof in respect of all income, withholding, franchise, payroll, excise, property, sales, use, value-added
or other taxes or levies, imposts. duties, license and registration fees, charges, assessments or withholdings of any nature whatsoever
(together, the "Taxes"), and has paid all Taxes (and any related penalties, fines and interest) which have become
due pursuant to such returns or reports or pursuant to any assessment which has become payable, or, to the extent its liability
for any Taxes (and any related penalties, fines and interest) has not been fully discharged, the same have been properly reflected
as a liability on the books and records of the Company and adequate reserves therefore have been established.
2.6 Indebtedness:
Contracts; No Defaults. Other than as set forth in Item 2.7 of the Disclosure Schedule or as described in the Financial
Statements, the Company has no material instruments, agreements, indentures, mortgages, guarantees, notes, commitments,
accommodations, letters of credit or other arrangements or understandings, whether written or oral, to which the Company is a
party.
2.7 Real
Property. The Company does not own or lease any real property.
2.8 Compliance with Law. The Company
is in compliance with all applicable federal, state, local and foreign laws and regulations relating to the protection of the
environment and human health. Then are no claims, notices, actions, suits, hearings, investigations, inquiries or proceedings
pending or, to the knowledge of the Company, threatened against the Company that arc based on or related to any environmental
matters or the failure to have any required environmental permits, and there are no past or present conditions that the Company
has reason to believe are likely to give rise to any material liability or other obligations of the Company under any environmental
laws.
2.9 Permits and Licenses. The Company
has all certificates of occupancy, rights, permits, certificates, licenses, franchises, approvals and other authorizations as
are reasonably necessary to conduct its respective business and to own, lease, use, operate and occupy its assets, at the places
and in the manner now conducted and operated, except those the absence of which would not materially adversely affect its respective
business.
2.10 Litigation.
There is no claim, dispute. action, suit, proceeding or investigation pending or, to the knowledge of the
Company, threatened, against or affecting the business of the Company. or challenging the validity or propriety of the
transactions contemplated by this Agreement, at law or in equity or admiralty or before any federal, state, local, foreign or
other governmental authority, board, agency, commission or instrumentality, nor to the knowledge of the Company, has any
such claim, dispute, action, suit, proceeding or investigation been pending or threatened, during the twelve (12) month
period preceding the date hereof. There is no outstanding judgment, order, writ, ruling, injunction, stipulation or decree of
any court, arbitrator or federal, state, local, foreign or other governmental authority, board, agency, commission
or instrumentality, against or materially affecting the business of the Company. The Company has not received any written
or verbal inquiry from any federal, state, local, foreign or other governmental authority, hoard, agency, commission
or instrumentality concerning the possible violation of any law, rule or regulation or an) matter disclosed in respect of
its business.
2.11 Insurance. The Company does not currently
maintain any form of insurance.
2.12 Patents,
Trademarks and Intellectual Property Rights. The Company does not own or possess any patents, trademarks, service marks,
trade names. copyrights, trade secrets. licenses, information. Internet web site(s) or proprietary rights of any nature.
2.13 Securities
Law Compliance. The Company has complied with all of the applicable requirements of the Securities Act of 1933, as amended
(the "Securities Act"), the Securities Exchange Act of 1934, as amended (the "Exchange Act")
and has complied with all applicable blue sky laws.
2.14 Conflicts
of Interest The Company acknowledges that it is aware and understands the facts and circumstances of the Conflicts of Interest,
as defined in Section 3.8, that may, individually and in the aggregate, create a conflict of interest The Company hereby waives
each and all of the Conflicts of Interest. in addition to any other conflicts of interest that may exist or arise by virtue of
the Conflicts of Interest and acknowledges that it has carefully read this Agreement, that it is consistent with the terms previously
negotiated by the Parties, and understands that it is free at any time to obtain independent counsel for further guidance.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF TPC,
AIC AND PRHL
Each of
TPC and PRHL, jointly and severally, represents and warrants to the Company that now and/or as of the Closing:
3.1 Due Organization and Qualification:
Due Authorization.
(a)
TPC is a limited liability company duly organized and in good standing under the laws of the State of Connecticut, with
full corporate power and authority to own, lease and operate its business and properties and to carry on its business in the places
and in the manner as presently conducted or proposed to he conducted. TPC is in good standing in each jurisdiction in which the
properties owned, leased or operated, or the business conducted, by it requires such qualification except for any such failure,
which when taken together with all other failures, is not likely to have a material adverse effect on the business of TPC.
(b)
TPC does not have any subsidiaries other than those set forth in Item 3.1(b) of the Disclosure Schedule (the "Subsidiaries")
and TPC does not own, directly or indirectly, any capital stock, equity or interest in any corporation, firm, partnership, joint
venture or other entity. Other than as set forth in Item 3.1(b) of the Disclosure Schedule, each Subsidiary is wholly owned by
TPC, free and clear of all liens, and there is no contract, agreement, arrangement, option, warrant, call, commitment or other
right of any character obligating or entitling TPC to issue, sell, redeem or repurchase any of its securities, and there is no
outstanding security of any kind convertible into or exchangeable for securities of TPC or any of the Subsidiaries.
(c)
TPC has all requisite power and authority to execute and deliver this Agreement, and to consummate the transactions contemplated
hereby and thereby. TPC has taken all corporate action necessary for the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, and this Agreement constitutes the valid and binding obligation of TPC, enforceable against
TPC in accordance with its terms, except as may be affected by bankruptcy, insolvency, moratoria or other similar laws affecting
the enforcement of creditors' rights generally and subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefore may be brought.
3.2 No Conflicts or Defaults. The execution
and delivery of this Agreement by TPC and the consummation of the transactions contemplated hereby do not and shall not (a) contravene
the governing documents of any of the TPC or its Subsidiaries, or (b) with or without the giving of notice or the passage of time,
(i) violate. conflict with, or result in a breach of, or a default or loss of rights under, any material covenant, agreement,
mortgage, indenture, lease, instrument, permit or license to which TPC or by which TPC or any of its respective assets arc bound.
or any judgment, order or decree, or any law, rule or regulation to which their assets are subject, (ii) result in the creation
of, or give any party the right to create, any lien upon any of the assets of TPC, (iii) terminate or give any party the right
to terminate, amend, abandon or refuse to perform any material agreement, arrangement or commitment to which TPC is a party or
by which TPC or any of its assets are bound, or (iv) accelerate or modify, or give any party the right to accelerate or modify,
the time within which, or the terms under which TPC is to perform any duties or obligations or receive any rights or benefits
under any material agreement, arrangement or commitment to which it is a party.
3.3 Capitalization. The total aggregate
number of authorized Membership Interests of TPC is one (1). As of the date hereof, one (I) Membership Interest are issued and
outstanding. Except as set forth herein, all of the outstanding membership interest of TPC are duly authorized, validly issued,
fully paid and non-assessable, and have not been or, with respect to the TPC Membership Interest will not be transferred in violation
of any rights of third parties. The TPC Membership Interests are not subject to any preemptive or subscription right, any voting
trust agreement or other contract, agreement, arrangement, option, warrant, call, commitment or other right of any character obligating
or entitling TPC to issue, sell, redeem or repurchase any of its securities that will survive Closing and there is no outstanding
security of any kind convertible into or exchangeable for common shares. The TPC Membership Interest are owned of record and beneficially
by the Member and free and clear of any liens, claims, encumbrances, or restrictions of any kind.
3.4 Taxes.
TPC has filed all returns and reports which were required to be filed on or prior to the date hereof, and has paid all
Taxes (and any related penalties, fines and interest) which have become due pursuant to such returns or reports or pursuant
to any assessment which has become payable, or, to the extent its liability for any Taxes (and any related penalties, fines
and interest) has not been fully discharged, the same have been properly reflected as a liability on the books and records of
TPC and adequate reserves therefore have been established. All such returns and reports filed on or prior to the date hereof
have been properly prepared and arc true, correct (and to the extent such returns reflect judgments made by TPC such
judgments were reasonable under the circumstances) and complete in all material respects. No extension for the filing of any
such return or report is currently in effect No tax return or tax return liability of TPC has been audited or, presently
under audit. All taxes and any penalties. fines and interest which have been asserted to be payable as a result of any audits
have been paid. TPC has not given or been requested to give waivers of any statute of limitations relating to the payment of
any Taxes (or any related penalties, fines and interest). There are no claims pending for past due Taxes. All payments for
withholding taxes, unemployment insurance and other amounts required to be paid for periods prior to the date hereof to any
governmental authority in respect of employment obligations of TPC have been paid or shall he paid prior to the Closing and
have been duly provided for on the books and records of TPC and in the financial statements of TPC.
3.5 Indebtedness; Contracts; No Defaults.
Other than as set forth in Item 3.5 of the Disclosure Schedule, TPC has no material instruments, agreements, indentures, mortgages,
guarantees. notes. commitments, accommodations, letters of credit or other arrangements or understandings, whether written or
oral, to which TPC is a party.
3.6 Compliance with Law. Except as specified
in Item 3.6 of the Disclosure Schedule, TPC is conducting its business in material compliance with all applicable law, ordinance,
rule, regulation, court or administrative order, decree or process, or any requirement of insurance carriers material to its business.
Except as specified in Item 3.6 of the Disclosure Schedule, TPC has not received any notice of violation or claimed violation
of any such law, ordinance, rule, regulation, order, decree, process or requirement.
3.7 Litigation.
(a) There
is no claim, dispute, action, suit, proceeding or investigation pending or threatened, against or affecting TPC or challenging
the validity or propriety of the transactions contemplated by this Agreement, at law or in equity or admiralty or before any federal,
state, local, foreign or other governmental authority, board, agency, commission or instrumentality, has any such claim, dispute,
action, suit, proceeding or investigation been pending or threatened, during the twelve (12) month period preceding the date hereof,
except as specified in Item 3.7 of the Disclosure Schedule;
(b)
there is no outstanding judgment, order, writ, ruling, injunction, stipulation or decree of any court, arbitrator or federal, state,
local, foreign or other governmental authority, board, agency, commission or instrumentality, against or materially affecting TPC;
and
(c)
TPC has not received any written or verbal inquiry from any federal, state, local, foreign or other governmental authority, board,
agency, commission or instrumentality concerning the possible violation of any law, rule or regulation or any matter disclosed
in respect of its business.
3.8 Conflict of Interest. TPC acknowledges
that it is aware and understands the following facts and circumstances that may, individually or in the aggregate, create a conflict
of interest:
(a)
WestPark, a FINRA member, will be the placement agent for the Equity Financing and WestPark will be paid a commission of the gross
proceeds from the Equity Financing for its services;
(b)
WestPark Financial Services LLC, which is the parent company of WestPark and of which Richard Rappaport controls and serves as
Chief Executive Officer and Chairman, is the sole stockholder of the Company beneficially holding 100% of the Company's issued
and outstanding Common Stock and Warrants (prior to the Share Exchange);
(c)
Richard Rappaport, who is the founder and Chief Executive Officer of WestPark and indirectly holds a 100% interest in WestPark
is the President and a Director of the Company, and is a controlling stockholder of the Company beneficially holding a majority
of the Company's issued and outstanding Common Stock and Warrants (prior to the Share Exchange, consisting of the Common Stock
and Warrants held by WestPark Financial Services, LLC); and
(d)
TPC hereby waives each and all of the Conflicts of Interest, in addition to any other conflicts of interest that may exist or
arise by virtue of the Conflicts of Interest and acknowledges that it has carefully read this Agreement, that it is consistent
with the terms previously negotiated by the Parties, and understands that it is free at any time to obtain independent counsel
for further guidance.
3.9 Due Organization and Qualification;
Due Authorization.
(a)
AIC is a limited liability company duly organized and in good standing under the laws of the State of Connecticut, with full corporate
power and authority to own, lease and operate its business and properties and to carry on its business in the places and in the
manner as presently conducted or proposed to be conducted. AIC is in good standing in each jurisdiction in which the properties
owned, leased or operated, or the business conducted, by it requires such qualification except for any such failure, which when
taken together with all other failures, is not likely to have a material adverse effect on the business of Tit.
(b)
AIC does not have any subsidiaries other than those set forth in Item 3.1(b) of the Disclosure Schedule (the "Subsidiaries")
and AIC does not own, directly or indirectly, any capital stock, equity or interest in any corporation, firm, partnership, joint
venture or other entity. Other than as set forth in Item 3.1(b) of the Disclosure Schedule, each Subsidiary is wholly owned by
AIC, free and clear of all liens, and there is no contract, agreement, arrangement, option, warrant, call, commitment or other
right of any character obligating or entitling AIC to issue, sell, redeem or repurchase any of its securities, and there is no
outstanding security of any kind convertible into or exchangeable for securities of AIC or any of the Subsidiaries.
(c) AIC
has all requisite power and authority to execute and deliver this Agreement, and to consummate the transactions contemplated hereby
and thereby. NC has taken all corporate action necessary for the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, and this Agreement constitutes the valid and binding obligation of AIC. enforceable against
AIC in accordance with its terms, except as may be affected by bankruptcy, insolvency, moratoria or other similar laws affecting
the enforcement of creditors' rights generally and subject to the qualification that the availability of equitable remedies is
subject to the discretion of the court before which any proceeding therefore may be brought.
3.10 No Conflicts or Defaults. The execution and delivery of this Agreement by NC and the consummation of the transactions contemplated
hereby do not and shall not (a) contravene the governing documents of any of the AIC or its Subsidiaries, or (b) with or without
the giving of notice or the passage of time. (i) violate, conflict with, or result in a breach of, or a default or loss of rights
under. any material covenant, agreement, mortgage, indenture, lease, instrument permit or license to which AIC or by which AIC
or any of its respective assets are bound, or any judgment, order or decree, or any law, rule or regulation to which their assets
are subject, (ii) result in the creation of, or give any party the right to create. any lien upon any of the assets of AIC, (iii)
terminate or give any party the right to terminate, amend, abandon or refuse to perform any material agreement, arrangement or
commitment to which AIC is a party or by which AIC or any of its assets are bound. or (iv) accelerate or modify, or give any party
the right to accelerate or modify. the time within which, or the terms under which AIC is to perform any duties or obligations
or receive any rights or benefits under any material agreement, arrangement or commitment to which it is a party.
3.11 Capitalization. The total aggregate number of authorized Membership Interests of AIC is one (1). As of the date hereof,
one (1) Membership Interest are issued and outstanding. Except as set forth herein, all of the outstanding membership interest
of AIC are duly authorized, validly issued, fully paid and non-assessable, and have not been or, with respect to the AIC Membership
Interest, will not be transferred in violation of any rights of third parties. The AIC Membership Interests are not subject to
any preemptive or subscription right, any voting mist agreement or other contract, agreement arrangement, option, warrant, call,
commitment or other right of any character obligating or entitling AIC to issue, sell, redeem or repurchase any of its securities
that will survive Closing and there is no outstanding security of any kind convertible into or exchangeable for common shares.
The AIC Membership Interest are owned of record and beneficially by the Member and free and clear of any liens, claims, encumbrances,
or restrictions of any kind.
3.12 Taxes.
AK has filed all returns and reports which were required to be filed on or prior to the date hereof and has paid all
Taxes (and any related penalties, fines and interest) which have become due pursuant to such returns or reports or pursuant
to any assessment which has become payable. or, to the extent its liability for any Taxes (and any related penalties, fines
and interest) has not been fully discharged. the same have been properly reflected as a liability on the books and records of
NC and adequate reserves therefore have been established. All such returns and reports filed on or prior to the date hereof
have been properly prepared and are true, correct (and to the extent such returns reflect judgments made by AIC such
judgments were reasonable under the circumstances) and complete in all material respects. No extension for the filing of any
such return or report is currently in effect. No tax return or tax return liability of AIC has been audited or, presently
under audit. All taxes and any penalties, lines and interest which have been asserted to be payable as a result of any audits
have been paid. AIC has not given or been requested to give waivers of any statute of limitations relating to the payment of
any Taxes (or any related penalties, fines and interest). There are no claims pending for past due Taxes. All payments for
withholding taxes, unemployment insurance and other amounts required to be paid for periods prior to the date hereof to any
governmental authority in respect of employment obligations of AIC have been paid or shall be paid prior to the Closing and
have been duly provided for on the books and records of AIC and in the financial statements of AIC.
3.13 Indebtedness;
Contracts; No Defaults. Other than as set forth in Item 3.5 of the Disclosure Schedule, AIC has no material instruments, agreements.
indentures, mortgages. guarantees, notes, commitments, accommodations, letters of credit or other arrangements or understandings,
whether written or oral, to which AIC is a party.
3.14 Compliance
with Law. Except as specified in Item 3.6 of the Disclosure Schedule, AIC is conducting its business in material compliance
with all applicable law, ordinance, rule, regulation, court or administrative order, decree or process, or any requirement of
insurance carriers material to its business. Except as specified in Item 3.6 of the Disclosure Schedule, AIC has not received
any notice of violation or claimed violation of any such law, ordinance, rule, regulation, order, decree, process or requirement.
3.15 Litigation.
(a)
There is no claim, dispute, action, suit, proceeding or investigation pending or threatened, against or affecting AIC or
challenging the validity or propriety of the transactions contemplated by this Agreement, at law or in equity or admiralty or before
any federal, state, local, foreign or other governmental authority, board, agency, commission or instrumentality, has any such
claim, dispute, action, suit, proceeding or investigation been pending or threatened, during the twelve (12) month period preceding
the date hereof, except as specified in Item 3.7 of the Disclosure Schedule;
(b)
there is no outstanding judgment, order, writ, ruling, injunction, stipulation or decree of any court, arbitrator or federal,
state, local, foreign or other governmental authority, board, agency, commission or instrumentality, against or materially affecting
AIC; and
(c)
AIC has not received any written or verbal inquiry from any federal, state, local. foreign or other governmental authority,
board, agency, commission or instrumentality concerning the possible violation of any law, rule or regulation or any matter disclosed
in respect of its business.
3.16 Conflict
of Interest. AIC acknowledges that it is aware and understands the following facts and circumstances that may, individually
or in the aggregate, create a conflict of interest:
(a)
WestPark, a FINRA member, will be the placement agent for the Equity Financing and WestPark will be paid a commission of
the gross proceeds from the Equity Financing for its services;
(b)
WestPark Financial Services LLC, which is the parent company of WestPark and of which Richard Rappaport controls and serves
as Chief Executive Officer and Chairman, is the sole stockholder of the Company beneficially holding 100% of the Company's issued
and outstanding Common Stock and Warrants (prior to the Share Exchange);
(c)
Richard Rappaport, who is the founder and Chief Executive Officer of WestPark and indirectly holds a 100% interest in WestPark
is the President and a Director of the Company. and is a controlling stockholder of the Company beneficially holding a majority
of the Company's issued and outstanding Common Stock and Warrants (prior to the Share Exchange, consisting of the Common Stock
and Warrants held by WestPark Financial Services, LLC); and
(d) AIC
hereby waives each and all of the Conflicts of Interest, in addition to any other conflicts of interest that may exist or arise
by virtue of the Conflicts of Interest and acknowledges that it has carefully read this Agreement, that it is consistent with
the terms previously negotiated by the Panics, and understands that it is free at any time to obtain independent counsel for further
guidance.
ARTICLE 4.
REPRESENTATION AND WARRANTIES OF THE
MEMBERS
The PRHL hereby represents and warrants
to the Company that now and/or as of the Closing:
4.1 Title to Membership Interest.
Each of the Members is the legal and beneficial owner of the TPC Membership Interests and AIC Membership Interests to be transferred
to the Company by such Members as set forth opposite each Member's name in Schedule II hereto, and upon consummation
of the Share Exchange contemplated herein, the Company will acquire from each of the Members good and marketable title to the
TPC Membership Interests and AIC Membership Interests, free and clear of all liens excepting only such restrictions hereunder
upon future transfers by the Company, if any, as may be imposed by applicable law. The information set forth on Schedule II
with respect to PRHL is accurate and complete.
4.2 Due Authorization. PRHL has all requisite
power and authority to execute and deliver this Agreement, and to consummate the transactions contemplated hereby and thereby.
This Agreement constitutes the valid and binding obligation of PRHL, enforceable against PRHL in accordance with its terms, except
as may be affected by bankruptcy, insolvency, moratoria or other similar laws affecting the enforcement of creditors' rights generally
and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before
which any proceeding therefore may be brought.
4.3 Purchase for Investment.
(a)
PRHL is acquiring the Company Shares for investment for such PRHL's own account and not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof, and PRHL has no present intention of selling, granting any participation
in, or otherwise distributing the same. PRHL further represents that he, she or it does not have any contract, undertaking, agreement
or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to
any of the Company Shares.
(b)
PRHL understands that the Company Shares are not registered under the Securities Act on the ground that the sale and the
issuance of securities hereunder is exempt from registration under the Securities Act pursuant to Section 4(2) thereof. and that
the Company's reliance on such exemption is predicated on such PRHL's representations set forth herein.
4.4 Investment Experience. PRHL acknowledges
that he, she or it can bear the economic risk of its investment and has such knowledge and experience in financial and business
matters that he, she or it is capable of evaluating the merits and risks of the investment in the Company Shares.
4.5 Information. PRHL has carefully
reviewed such information as he. she or it deemed necessary to evaluate an investment in the Company Shares. To the full satisfaction
of PRHL, he, she or it has been furnished all materials that he, she or it has requested relating to the Company and the issuance
of the Company Shares hereunder, and each PRHL has been afforded the opportunity to ask questions of representatives of the Company
to obtain any information necessary to verify the accuracy of any representations or information made or given to him, her or
it. Notwithstanding the foregoing, nothing herein shall derogate from or otherwise modify the representations and warranties of
the Company set forth in this Agreement, on which PRHL has relied in making an exchange of the TPC Membership Interests and AIC
Membership Interests for the Company Shares.
4.6 Restricted Securities. PRHL understands
that the Company Shares may not be sold, transferred, or otherwise disposed of without registration wider the Securities Act or
an exemption therefrom, and that in the absence of an effective registration statement covering the Company Shares or any available
exemption from registration under the Securities Act, the Company Shares must be held indefinitely. Each Member is aware that
the Company Shares may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of that
Rule are met. Among the conditions for use of Rule 144 may be the availability of current information to the public about the
Company.
4.7 Exempt Issuance. PRHL acknowledges
that he must assure the Company that the offer and sale of the Company Shares to PRHL qualifies for an exemption from the registration
requirements imposed by the Securities Act and from applicable securities laws of any state of the United States. Each Member
agrees that he qualifies as an "accredited investor," as that term is defined in Rule 501 of Regulation 1), promulgated
under the Securities Act.
ARTICLE 5.
COVENANTS
5.1 Further
Assurances. Each of the Parties shall use its reasonable commercial efforts to proceed promptly with the transactions contemplated
herein, to fulfill the conditions precedent for such Party's benefit or to cause the same to be fulfilled and to execute such
further documents and other papers and perform such further acts as may he reasonably required or desirable to carry out the provisions
of this Agreement and to consummate the transactions contemplated herein.
ARTICLE 6.
DELIVERIES
6.1 Items to be delivered to PRHL, prior
to or at Closing by the Company.
(a)
Certificate of Incorporation and amendments thereto, By-laws and amendments thereto. and certificate of good standing of
the Company in Delaware;
(b)
all applicable schedules hereto;
(c)
all minutes and resolutions of board of director and stockholder meetings in possession of the Company;
(d)
stockholder list;
(e)
all financial statements and all tax returns in possession of the Company;
(f) resolution
from the Company's Board of Directors appointing the designees of the Members to the Company's Board of Directors;
(g) resolution
from the Company's Board of Directors, and if applicable, stockholder resolutions approving this transaction and authorizing the
issuances of the shares hereto;
(h)
letters of resignation from the Company's current officers and directors to be effective upon Closing and after the appointments
described in this section. as requested by PRHL; and
(i)
any other document reasonably requested by PRHL, that it deems necessary for the consummation of this transaction.
6.2 Items to be delivered to the Company
prior to or at Closing by TPC, AIC and PRHL
(a)
all applicable schedules hereto;
(b)
instructions from the PRHL appointing their designees to the Company's Board of Directors;
(c)
share certificates and duly executed instruments of transfer and bought and sold notes from the Members transferring the
TPC Membership Interests and AIC Membership Interests to the Company;
(d)
resolutions from: (i) the Board of Directors of TPC and AIC and, if applicable, PRHL resolutions approving the transactions
contemplated hereby;
(e)
payment of all liabilities of the Company of up to $10,000 directly out of the proceeds of the Equity Financing to the appropriate
creditors of the Company which shall include indebtedness owed to Company stockholders and fees owing to Company lawyers, accountants
and similar parties; and
(f) any
other document reasonably requested by the Company that it deems necessary for the consummation of this transaction.
ARTICLE 7.
CONDITIONS PRECEDENT
7.1 Conditions Precedent to Closing. The
obligations of the Parties to consummate the transactions contemplated by this Agreement shall be and are subject to fulfillment,
prior to or at the Closing, of each of the following conditions:
(a) Each
of the representations and warranties of the Parties contained herein shall be true and correct at the time of the Closing Date
as if such representations and warranties were made at such time except for changes permitted or contemplated by this Agreement;
(b) The
Parties shall have performed or complied with all agreements. terms and conditions required by this Agreement to be performed or
complied with by them prior to or at the time of the Closing;
(c)
The Company shall have affected and completed an initial closing of the Equity Financing of at least the Minimum Offering
Amount;
(d)
The Company and WestPark shall have entered into a Placement Agent Agreement on mutually acceptable terms for WestPark's
engagement as the placement agent for the Equity Financing;
(e) The
Share Exchange Agreements between the Company and Advanced E Lighting, LLC and Rescom Energy, LLC shall have been fully
executed and delivered by the parties thereto; and
(f) All agreements and documents
required to be executed and delivered at the initial closing of the Equity Financing pursuant to the Placement Agent Agreement
shall have been duly executed and delivered by the necessary persons and/or entities prior to the Closing.
(g) TPC
Management Company, LLC shall be issued an aggregate of six million (6.000,000) shares of common stock of the Company for its
contribution of the Portal Technology and their appointment as officers and directors of the Company as of and at Closing.
7.2 Conditions to Obligations of the Member.
The obligations of PRHL shall be subject to fulfillment, prior to or at the Closing, of each of the following conditions:
(a)
The Company shall have received all of the regulatory, stockholder and other third-party consents, permits, approvals and
authorizations necessary to consummate the transactions contemplated by this Agreement; and
(b)
To the extent that the liabilities of the Company exceed $10,000 as of the Closing, the Company stockholders shall have
satisfied and paid such excess liabilities in full.
(c)
The Member shall have received all of the regulatory, board of directors/managers. shareholders/members, and other third-party
consents, permits, approvals and authorizations necessary to consummate the transactions contemplated by this Agreement;
(d)
The Company shall have obtained the evidence of waiver/cancellation the note issued by The Power Company USA LLC to Premier
Holding Corp. in the amount of approximately $3,076,500.
7.3 Conditions to Obligations of the Company.
The obligations of the Company shall be subject to fulfillment, prior to or at the Closing, of each of the following conditions:
(a)
PRHL shall have received all of the regulatory, board of directors/managers, shareholders/members, and other third-party
consents, permits, approvals and authorizations necessary to consummate the transactions contemplated by this Agreement;
(b)
PRHL shall have delivered to the Company the share certificates and duly executed instruments of transfer and bought and
sold notes from the Members transferring the TPC Membership Interests and AIC Membership Interests to the Company; and
(c)
All liabilities of the Company up to $10,000 shall be paid directly out of the proceeds of the Equity Financing to the appropriate
creditors, which shall include indebtedness owed to the Company stockholders and fees owing to lawyers, accountants and similar
parties.
ARTICLE 8.
TERMINATION
8.1 Termination. This Agreement may
be terminated at any time before or at Closing by:
(a)
The mutual agreement of the Parties;
(b)
Any Party if:
(i)
Any provision of this Agreement applicable to a Party shall be materially untrue or fail to be accomplished; or
(ii)
Any legal proceeding shall have been instituted or shall be imminently threatening to delay, restrain or prevent the consummation
of this Agreement or
(iii)
Any of the conditions set forth in Section 7.1, Section 7.2 or Section 7.3 shall not have been, or if it becomes apparent
that any of such conditions will not be, fulfilled by June 1, 2018.
Upon termination of
this Agreement for any reason, in accordance with the terms and conditions set forth in this paragraph, each said Party shall bear
all costs and expenses as each Party has incurred.
ARTICLE 9.
MISCELLANEOUS
9.1 Survival of Representations, Warranties
and Agreements. Each of the Parties hereto is executing and carrying out the provisions of this Agreement in reliance
upon the representations, warranties and covenants and agreements contained in this Agreement or at the closing of the transactions
herein provided for and not upon any investigation which it might have made or any representations, warranty, agreement, promise
or information, written or oral, made by the other Party or any other person other than as specifically set forth herein. Except
as specifically set forth in this Agreement, representations and warranties and statements made by a Party to in this Agreement
or in any document or certificate delivered pursuant hereto shall not survive the Closing Date, and no claims made by virtue of
such representations, warranties, agreements and covenants shall be made or commenced by any Party hereto from and after the Closing
Date.
9.2 Access to Books and Records. During
the course of this transaction through Closing, each Party agrees to make available for inspection all corporate books, records
and assets, and otherwise afford to each other and their respective representatives, reasonable access to all documentation and
other information concerning the business, financial and legal conditions of each other for the purpose of conducting a due diligence
investigation thereof. Such due diligence investigation shall be for the purpose of satisfying each Party as to the business,
financial and legal condition of each other for the purpose of determining the desirability of consummating the proposed transaction.
The Parties further agree to keep confidential and not use for their own benefit, except in accordance with this Agreement any
information or documentation obtained in connection with any such investigation.
9.3 Further Assurances. If at any time
after the Closing, the Parties shall consider or be advised that any further deeds, assignments or assurances in law or that any
other things are necessary, desirable or proper to complete the Share Exchange in accordance with the terms of this Agreement
or to vest, perfect or confirm, of record or otherwise. the title to any property or rights of the Parties hereto, the Parties
agree that their proper officers and directors shall execute and deliver all such proper deeds, assignments and assurances in
law and do all things necessary, desirable or proper to vest perfect or confirm title to such property or rights and otherwise
to carry out the purpose of this Agreement, and that the proper officers and directors of the Parties are fully authorized to
take any and all such action.
9.4 Notice. All communications, notices,
requests, consents or demands given or required under this Agreement shall be in writing and shall be deemed to have been duly
given when delivered to, or received by, prepaid registered or certified mail or recognized overnight courier addressed to, or
upon receipt of a facsimile sent to, the Party for whom intended, as follows, or to such other address or facsimile number as
may be furnished by such Party by notice in the manner provided herein:
Attention:
If to [TPC]
Address:
Attn:
Fax:
Email:
[Law Firm]
Attn:
Address:
Fax:
Email:
If to [AIC]:
Address: 1165
N Clark St., Suite 400, Chicago, IL 60610
Attn: Patrick
Farah
Fax: 800-864-4029
Email: pfarah@thepowercompany.com
[Law Firm]
Attn:
Address:
Fax:
Email:
If to [PRHL]:
Address: 1382 Valencia Ave, Suite F, Tustin, CA 92780
Attn: Randall Letcavage
Fax: (949) 666-6340
Email: rletcavage@prhlcorp.com
[Law Firm] Law Offices of Darryl C. Sheetz
Attn: Darryl C. Sheetz
Address: 335 Centennial Way, Suite 100, Tustin, CA 92780
Fax: (949) 553-0390
Email: dcsheetz@aol.com
If to the Company:
AOTS 42, INC.
1900 Avenue of the Stars. Suite 310
Los Angeles, CA 90067
Attn: Richard Rappaport
Fax: 310-843-9389
Email: r@wpcapital.com
With a copy to:
Julie E. Kamps, Esq.
1900 Avenue of the Stars, Suite 310
Los Angeles, CA 90067
Attn: Julie E. Kamps, Esq.
Fax: 310-843-9389
Email: jkamps@wpcfs.com
9.5 Entire Agreement. This Agreement, the
Disclosure Schedule and any instruments and agreements to be executed pursuant to this Agreement, sets forth the entire
understanding of the Parties hereto with respect to its subject matter, merges and supersedes all prior and contemporaneous understandings
with respect to its subject matter and may not be waived or modified, in whole or in part, except by a writing signed by each
of the Parties hereto. No waiver of any provision of this Agreement in any instance shall be deemed to be a waiver of the same
or any other provision in any other instance. Failure of any Party to enforce any provision of this Agreement shall not be construed
as a waiver of its rights under such provision.
9.6 Successors and Assigns. This Agreement
shall be binding upon, enforceable against and inure to the benefit of, the Parties and designees hereto and their respective
heirs, administrators, executors, personal representatives, successors and assigns, and nothing herein is intended to confer any
right, remedy or benefit upon any other person. This Agreement may not be assigned by any Party hereto except with the prior written
consent of the other Parties, which consent shall not be unreasonably withheld.
9.7 Governing Law. This Agreement shall
in all respects be governed by and construed in accordance with the laws of the State of Delaware are applicable to agreements
made and fully to be performed in such state, without giving effect to conflicts of law principles.
9.8 Counterparts.
This Agreement may be executed in multiple counterparts, which may be facsimiles, each of which shall be deemed an original.
but all of which together shall constitute one and the same instrument.
9.9 Construction. Headings contained in
this Agreement are for convenience only and shall not be used in the interpretation of this Agreement. References herein to Articles,
Sections and Exhibits are to the articles. sections and exhibits, respectively, of this Agreement. The Disclosure Schedule is
hereby incorporated herein by reference and made a part of this Agreement. As used herein, the singular includes the plural, and
the masculine, feminine and neuter gender each includes the others where the context so indicates.
9.10 Severability.
If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, this Agreement
shall be interpreted and enforceable as if such provision were severed or limited, but only to the extent necessary to render such
provision and this Agreement enforceable.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF,
each of the parties hereto has executed this Agreement as of the date first set forth above.
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AOTS 42, INC.
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By: /s/ Richard Rappaport
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Name: Richard Rappaport
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Title: President
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THE POWER COMPANY USA, LLC
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By: /s/ Randall Letcavage
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Name: Randall Letcavage
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Title: CEO
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ADVANCED ILLUMINATING COMPANY, LLC
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By: /s/ Patrick Farah
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Name: Patrick Farah
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Title: Managing Partner
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PREMIER HOLDING CORPORATION
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By: /s/ Randall Letcavage
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Name: Randall Letcavage
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Title: CEO
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SCHEDULE I
COMPANY SHARES TO BE ISSUED TO PRHL MEMBERS
AND/OR DESIGNEES
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Name
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Number of Company Shares
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Premier Holding Corporation
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19,250.000
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Total
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19,250,000
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SCHEDULE II
TPC MEMBERSHIP INTERESTS TO BE TRANSFERRED
TO COMPANY
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Name
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Number/Percentage of TPC
Membership Interests
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Percent of TPC
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Premier
Holding Corporation
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100 %
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%
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Total
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100%
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AIC MEMBERSHIP INTERESTS TO BE TRANSFERRED
TO COMPANY
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Name
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Number/Percentage of AIC
Membership Interests
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Percent of AIC
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Premier
Holding Commotion
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100
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%
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%
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Total
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100%
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SCHEDULE
III
WestPark Capital Financial Services,
LLC Shares for Second Registration Statement*
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Name
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Number of Company
Shares
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Number of Company
Warrants
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WestPark Capital Financial Services, LLC
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DISCLOSURE SCHEDULE