PREMIER HOLDING CORPORATION

FORM 10-Q

FOR THE THREE AND NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20162017

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

PREMIER HOLDING CORPORATION

Condensed Consolidated Balance Sheets

See accompanying notes which are an integral part of theseto unaudited condensed consolidated financial statements.

PREMIER HOLDING CORPORATION

Condensed Consolidated STATEMENTS OF OPERATIONS

(Unaudited)

See accompanying notes which are an integral part of theseto unaudited condensed consolidated financial statements.

PREMIER HOLDING CORPORATION

Condensed Consolidated STATEMENTS OF CASH FLOWS

(Unaudited)

See accompanying notes which are an integral part of theseto unaudited condensed consolidated financial statements.

PREMIER HOLDING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 -– NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Company Overview

Premier Holding Corporation (the “Company”) is an energy services holding company. The Company provides an array of energy services through its subsidiary companies, Energy Efficiency Experts, Inc. (“E3”) and The Power Company USA, LLC (“TPC”). The Company provides solutions that enable customers to lower their electricity rates, reduce their energy consumption, lower their operating and maintenance costs, and realize environmental benefits. The Company’s comprehensive set of services includes competitive electricity plans and upgrades to a facility’s energy infrastructure.

The Company was organized under the laws of the State of Nevada on October 18, 1971 under the name of Mr. Nevada, Inc. On November 13, 2008, the Company filed a Certificate of Amendment to its Articles of Incorporation with the State of Nevada Secretary of State to change its name from OVM International Holding Corporation to Premier Holding Corporation. The Company is organized with a holding company structure such that the Company provides financial and management expertise, which includes access to capital, financing, legal, insurance, mergers, acquisitions, joint ventures and management strategies for its subsidiaries.

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

In the first quarter of 2013, the Company acquired an 80% stake in TPC, a deregulated power broker in Illinois. By the end of that quarter, TPC had over 11,000 clients and has beenwas adding between 1,000 and 3,000 clients per month. TheBy 2015 and 2016, TPC added an average of 5,000 clients per month, and the Company now has sold well over 200,000 residential contract equivalents (“RCEs”) and typically closes over 5,000 contracts per month. TPC has also contracted nearly 5,000expects this to continue for the foreseeable future. Over 1,000 of these clients have commercial/industrial clients to date,facilities such as small businesses, warehouses and distribution centers, which are then candidates for E3.

On October 22, 2014, the Company entered into a Membership Purchase Agreement (“Agreement”) to acquire 85% of the membership interests of Lexington Power & Light, LLC (“LP&L”) from its owners. LP&L was incorporated under the laws of the State of New York on July 8, 2010 as a Limited Liability Company. LP&L marketed and sold electricity and natural gas to both commercial and residential customers located primarily in five boroughs of New York City and on Long Island. The Company purchased electricity and natural gas on a wholesale basis pursuant to a combined supply and credit facility agreement. Under the Agreement, the Company was to acquire 85% of LP&L on the closing date for 7,500,000 shares of common stock and $500,000 in Promissory Notes, plus earn-out payments based upon EBITDA milestones during the 12 months following the closing date. Under the terms of the Agreement, the Company had a contingent funding obligation of $1,000,000 of which $500,000 will be used as working capital for LP&L, had the option to acquire the remaining 15% of LP&L until December 31, 2018 for $20,000,000 payable 1/2 in cash and 1/2 in common stock and was to limit its board of directors to five persons, with the members of LP&L having the right to appoint one board member. On April 7, 2015, the Agreement was terminated as per our default on our purchase obligations for the acquisition due to the non-performance of LP&L under the terms of the Agreement.

On May 6, 2016, we entered into a definitive agreement with WWCD, LLC, a company incorporated in the State of Illinois (“WWCD”), to acquire for $125,000 all membership units, including all licenses and contracts held, of American Illuminating Company, LLC, a Connecticut limited liability company (“AIC”), a company owned by WWCD. AIC is a FERC-licensed supplier of deregulated energy. Consummation of the acquisition of AIC iswas subject to FERC approval, which has not yet been granted. After final notifications and filings with regulatory agencies are complete,was granted in February 2017. AIC is expected to begin supplying power immediately to our customers and will recruit additional resellers of deregulated power and provide them with our sales tools to streamline sales efforts, enforce compliance, and increase productivity. The Company has reflected the $125,000 payment towards the acquisition as a depositan intangible asset on the balance sheet as of SeptemberJune 30, 2016.

The Company has two subsidiaries - E3 that is wholly-owned and TPC that is 80% owned (the “Subsidiaries”). In addition, we will add AIC as a wholly owned subsidiary when, and if, our acquisition is approved by FERC.2017.

As used in this quarterly report and unless otherwise indicated, the term “Company” refers to Premier Holding Corporation and the Company’s Subsidiaries. Unless otherwise specified, all dollar amounts are expressed in United States dollars.

Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted. However, in the opinion of management, all adjustments (which include only normal recurring adjustments, unless otherwise indicated) necessary to present fairly the financial position and results of operations for the periods presented have been made. The results for interim periods are not necessarily indicative of trends or of results to be expected for the full year. These financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 20152016 (including the notes thereto) set forth on Form 10-K. The Company uses as guidance Accounting Standard Codification (ASC) as established by the Financial Accounting Standards Board (FASB).

Significant Accounting Policies

For reference to a complete list of significant accounting policies, these financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 20152016 (including the notes thereto) set forth on Form 10-K.

During the ninesix months ended SeptemberJune 30, 2016,2017, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

NOTE 2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

As of SeptemberJune 30, 2016,2017, the Company had an accumulated deficit of $28,711,656.$33,888,384. For the ninesix months ended SeptemberJune 30, 20162017 and 2015,2016, the Company incurred operating losses of $3,887,113$4,534,127 and $1,935,159,$2,406,020, respectively, and used cash in operating activities of $2,976,879$1,422,910 and $2,270,305,$1,631,810, respectively. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company recognizes it will need to raise additional capital in order to fund operations, meet its payment obligations and execute its business plan. There is no assurance that additional financing will be available when needed or that management will be able to obtain financing on terms acceptable to the Company and whether the Company will generate revenues, become profitable and generate positive operating cash flow. If the Company is unable to raise sufficient additional funds on favorable terms, it will have to develop and implement a plan to further extend payables and to raise capital through the issuance of debt or equity which may be on less favorable terms, until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful. If the Company is unable to obtain financing on a timely basis, the Company could be forced to sell its assets, discontinue its operations and/or pursue other strategic avenues to commercialize its technology.

Accordingly, the accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP for interim financial statements, which contemplates continuation of the Company as a going concern and the realization of assets and the satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the consolidated financial statements do not necessarily represent realizable or settlement values. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3 – ACQUISITIONS & GOODWILL

The following table presents details of the Company’s goodwill and intangible assets as of SeptemberJune 30, 20162017 and December 31, 2015:

The Power Company USA, LLC Share Exchange

On February 28, 2013, the Company acquired 80% of the outstanding membership units of TPC, a deregulated power broker in Illinois for thirty million 30,000,000 shares of Premier’s common stock valued at $4,500,000. The total purchase price for TPC was allocated as follows:

The total amount of goodwill that is expected to be deductible for tax purposes is $4,500,000 and is amortized over 15 years. The total amortization expense for tax purposes for the ninesix months ended SeptemberJune 30, 20162017 is $225,000.$150,000.

NOTE 4 – CONVERTIBLE NOTES PAYABLE

Between July 15, 2014 and December 21, 2015, the Company entered into convertible notes with third partiesthird-parties for use as operating capital for a total of $1,358,500. The convertible notes payable agreements require the Company to repay the principal, together with 10 - 18% annual interest by the agreements’ expiration dates ranging between July 15, 2019 and August 6, 2020. The notes are secured by assets of the Company and mature five years from the issuance date and automatically convert into shares of common stock at a conversion price of 80% of the closing market price on the last day of the month upon which the maturity dates fall,date falls, unless an election is made for repayment in cash. Onecash one year from the contract date,date. In the event such an election is made, the holders may elect to convert the note in whole or in part into shares of common stock at a conversion price of 80% of the average closing market price over the prior 30 days of trading. During the threesix months ended SeptemberJune 30, 2016,2017, a total of $612,000$10,000 of these notes were converted into shares of common stock, with a total of $746,500$817,000 of these notes remaining as of SeptemberJune 30, 2016.2017.

The Company analyzed the conversion option of the notes for derivative accounting consideration under ASC 815-15,Derivatives and Hedgingand determined that the instrument should be classified as a liability once the conversion option becomes effective after one year sincedue to there isbeing no explicit limit to the number of shares to be delivered upon settlement of the above conversion options for the notes issued (see Note 6)5).

Between March 9, 2015 and May 11, 2016, the Company entered into convertible notes with third parties for use as operating capital for a total of $2,074,800. The convertible notes payable agreements require the Company to repay the principal, together with 12% annual interest by the agreements’ expiration dates ranging between March 9, 20172018 and May 11, 2019. The notes are secured by assets of the Company and mature three years from the issuance date. Six months from the contract date, the holders may elect to convert the note in whole or in part into shares of common stock at $0.15. Two warrants were issued with each note including (1) a warrant to purchase an amount of equal to 50% of face value of the note at an exercise price $0.15 for a period of three years following the note issuance date and (2) a warrant to purchase an amount of equal to 83.33% of face value of the note at an exercise price $0.25 for a period of three years following the note issuance date. The Company recorded an aggregate debt discount of $686,536 for the fair value of these warrants through SeptemberJune 30, 2016,2017, which is being amortized over the term of the notes, and is included in convertible notes on the Company’s balance sheet at an unamortized remaining balance of $276,502.$124,495. The total debt discount recorded during the ninesix months ended SeptemberJune 30, 2017 and 2016 was $0 and 2015 was $70,398, and $565,519, respectively. Interest expense related to the amortization of this debt discount for the ninesix months ended SeptemberJune 30, 2017 and 2016 was $70,626 and 2015 was $156,426 and $56,859,$113,618, respectively. During the threesix months ended SeptemberJune 30, 2016,2017, a total of $690,500$311,500 of these notes were converted into shares of common stock, with a total of $1,384,300$992,300 of these notes remaining as of SeptemberJune 30, 2016.2017.

During the threesix months ended SeptemberJune 30, 2016,2017, the total of all notes converted was $1,302,500,$321,500, with the holders receiving an aggregate of 32,562,5008,037,500 shares of common stock. The net balance of all notes as of June 30, 2017 of $1,144,844 reflects total notes of $1,809,300, net of debt discounts of $124,495 related to the warrants and $539,961 related to the derivative liability (see Note 5).

During the ninesix months ended SeptemberJune 30, 20162017 and 2015,2016, the Company recorded interest expense of $1,769,083$366,476 and $256,819,$816,926, respectively.

NOTE 5 – DERIVATIVE LIABILITY

The embedded conversion feature in the convertible debt instruments (the “Notes”) that the Company issued beginning in July 2014 (See Note 4), and became convertible beginning in July 2015, qualified it as a derivative instrument since the number of shares issuable under the note is indeterminate based on guidance under ASC 815,Derivatives and Hedging. The conversion feature of these convertible promissory notes has been characterized as a derivative liability beginning in July 2015 to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

The valuation of the derivative liability attached to the convertible debt was determined by management using a binomial pricing model that values the derivative liability within the notes. Using the results from the model, the Company recorded a derivative liability of $1,086,000$544,000 for the fair value of the convertible feature included in the Company’s convertible debt instruments as of SeptemberJune 30, 2016.2017. The derivative liability recorded for the convertible feature created a debt discount of $1,437,000,$1,438,000, which is being amortized over the remaining term of the notes using the effective interest rate method and is included in convertible notes on the balance sheet.sheet at June 30, 2017 with an unamortized balance of $539,961. Interest expense related to the amortization of this debt discount for the ninesix months ended SeptemberJune 30, 2016,2017, was $186,081.$101,286. Additionally, $444,000$0 of debt discount was charged to interest expense during the ninesix months ended SeptemberJune 30, 2016,2017, representing the amount of debt discount in excess of the convertible debt. A total of $514,067$0 of the debt discount was charged to interest expense during the threesix months ended SeptemberJune 30, 20162017 related to convertible debt converted during the period.year.

Key inputs and assumptions used to value the embedded conversion feature in the month the Notes became convertible were as follows:

Additional key inputs and assumptions used to value the embedded conversion feature as of SeptemberJune 30, 2016:2017:

The following table summarizes the derivative liability included in the consolidated balance sheet:

NOTE 6 – STOCKHOLDERS’ EQUITY

Preferred Stock

On June 3, 2013, the Company filed a Certificate of Amendment of Articles of Incorporation with the State of Nevada Secretary of State giving it the authority to issue 50,000,000 shares of preferred stock with a par value of $0.0001 per share. As of SeptemberJune 30, 2016,2017, there were 200,000 Series A Non-Voting Convertible Stock shares and 250,000 Series B Voting Convertible Preferred Stock shares issued and outstanding.

On March 31, 2014, the Board of Directors of the Company approved the creation of a Series A Non-Voting Convertible Preferred Stock (the “Series A Preferred Stock”). On April 1, 2014, the Company filed a Certificate of Designation for the Company’s Series A Preferred Stock in Nevada of which the Company is authorized to issue up to 7,000,000 shares with a par value of $0.0001 per share. In general, each share of Series A Preferred Stock has no voting or dividend rights, a stated value of $1.00 per share (the “Stated Value”), and is convertible ninethree months after issuance into common stock at the conversion price equal to one-tenth (1/10) of the Stated Value, or at $0.10 per common share.

On December 11, 2015, the Board of Directors of the Company approved the creation of the Corporation’s Series B Voting Convertible Preferred Stock (“Series B Preferred Stock”). On December 16, 2015, the Corporation filed a Certificate of Designation for the Series B Preferred Stock in Nevada of which the Company is authorized to issue up to 250,000 shares with a par value of $0.0001 per share. Holders of Series B Preferred Stock shall be entitled to 1,000 votes for each share of Series B Preferred Stock. Votes of shares of Series B Preferred Stock shall be added to votes of shares of common stock of the Company at any meeting of stockholders of the Company at which stockholders have the right to vote. Series B Preferred Stock shall have voting rights for a period of three years from the date of issuance. On the third anniversary of the issuance of shares of Series B Preferred Stock, each share of Series B Preferred Stock shall be converted into four shares of common stock without further action of the Board of Directors. Series B Preferred Stock shall have the same dividends per share and, except as provided above, the same powers, designations, preferences and relative rights, qualifications, limitations or restrictions as those of shares of Series A Preferred Stock of the Company.

Common Stock

During the ninesix months ended SeptemberJune 30, 2016,2017, the Company entered into a series of stock purchase agreements with accredited investors for the sale of 76,587,10624,633,448 shares of its common stock in amount of $4,014,823.$858,590. Additionally, 15,392,85827,428,000 shares of common stock were issued for consulting services valued at $0.052 to $0.077$0.074 per share, based upon the fair value of the common stock on the measurement date totaling $992,800,$2,429,428, which was recognized immediately as general and administrative expense. The Company issued 32,562,5008,037,500 shares of common stock for the conversion of convertible notes totaling $1,302,500. Additionally, approximately 1,000,000$321,500.

The Company has received proceeds of $797,333 from accredited investors ($279,576 received during the six months ended June 30, 2017) for the purchase and sale of 12,266,902 shares of common stock were cancelled and returnednot yet issued as of the date of this filing. The value of these shares is reflected in common stock to the treasury.be issued as of June 30, 2017.

Unless otherwise set forth above, the securities described above were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state, and were offered and sold in reliance on the exemption from registration afforded by Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering.

Options for Common Stock

A summary of option activity as of SeptemberJune 30, 20162017 is presented below:

On June 30, 2014, the Board of Directors of the Company approved a new employment agreement with the Company’s Chief Executive Officer, Randy Letcavage (the “Employment Agreement”). The Employment Agreement has a retroactive effective date of January 1, 2014 and replaces all prior agreements between the Company and Mr. Letcavage. The Employment Agreement provides for an annual base salary of $240,000, a discretionary bonus of $50,000 over each 12-month period, expense reimbursement, and a grant of stock options onfor 5,000,000 shares vesting over 2 years at an initial exercise price per share equal to $.0025 per share. Stock options are vestinghave vested at the following rate:

In addition, the Company agreed to indemnify Mr. Letcavage to the fullest extent permitted by law for claims related to Mr. Letcavage’s role as an officer and director of the Company, or its subsidiaries. The Company recorded $355,725 and $516,591 as his stock based compensation related to the stock options for the years ended December 31, 2015 and 2014, respectively. As of December 31, 2015, $872,316 had been recorded as his stock based compensation related to the stock options, with $0 unrecognized cost related to the stock options remaining. On October 8, 2015, Mr. Letcavage exercised 4,000,000 options for common stock at an aggregate price of $10,000, which was paid through the reduction of accounts payable owed Mr. Letcavage.

On December 31, 2014, the Board of Directors of the Company granted 150,000 stock options to each of its three board members with vesting immediately at an initial exercise price per share equal to $.15 per share.

The Company valued the options using the Black-Scholes option pricing model with the following assumptions: dividend yield of zero, years to maturity of between 0.5 and 5 years, risk free rates of between 1.65 and 1.73 percent, and annualized volatility of between 108% and 217%.

Warrants for Common Stock

A summary of warrant activity as of SeptemberJune 30, 20162017 is presented below:

During the ninesix months ended SeptemberJune 30, 2016,2017, the Company issued 1,966,650 warrants included with certain convertible notes payable (see Note 4) with a value of $70,397. The Company valued the warrants using the Black-Scholes option-pricing model with the following assumptions: dividend yield of zero, years to maturity of 3 years, risk free rates of between 0.85 and 1.31 percent, and annualized volatility of between 124% and 130%.

During the nine months ended September 30, 2016, the Company issued 128,559,60678,395,012 warrants included with certain stock purchases from accredited investors, with exercise prices ranging from $0.07 to $0.10, and expiration dates ranging from 7 months to 5 years. There was no expense resulting from these warrants.

NOTE 7 – DISCONTINUED OPERATION

During the six months ended June 30, 2017, the Company issued 28,544,760 warrants to consultants for services, with exercise prices ranging from $0.07 to $0.10, and an expiration date of one year. The Company acquired assets from LP&L on October 22, 2014. Duerecorded expense of $808,356 related to the default of the purchase agreement between the Companythese warrants which is included in selling, general and LP&L on April 7, 2015, the Company lost control over LP&L. Based on the requirements of ASC 810, Consolidation, the Company will no longer present assets and liabilities retained as of the date of deconsolidation. To accomplish this, the results of LP&L’s operations are reported in discontinued operations in accordance with ASC 205, Presentation of Financial Statements.

Summarized operating resultsadministrative expense for the discontinuation of operations is as follows:six months ended June 30, 2017.

As of the date of deconsolidation, in accordance with ASC 810, Consolidation, we recognized a gain of $1,852,884 related to this event during the second quarter of 2015. We have no carried value of assets related to our retained investment in LP&L, but retain a non-controlling equity interest, which is 1.56% of LP&L interest with fair value amount of $0. The Company analyzed the carrying value of LP&L’s net assets on the deconsolidation date and determined the amount to be $1,439,077 including the following,

The Company had no involvement with the management of LP&L after the date of deconsolidation and confirms that this transaction was not with a related party and that LP&L will not be a related party going forward after the deconsolidation.

Major assets and liabilities of the discontinued operation of LP&L are as follows as of December 31, 2014:

Major line items constituting net loss of the discontinued operations of LP&L are as follows for the periods from January 1, 2015 through April 7, 2015 (deconsolidation):

NOTE 87 – RELATED PARTY TRANSACTIONS

During the ninesix months ended SeptemberJune 30, 20162017 and 2015,2016, Mr. Letcavage (directly or through related entities) recorded $180,000earned $215,160 and $180,000,$120,000, respectively as compensation for his role as our CEO and CFO. The following tables outline the related parties associated with the Company and amounts due or receivable for each period indicated.

During the ninesix months ended SeptemberJune 30, 2016,2017, the Company received loans from Mason Ventures of approximately $710,453$15,450 and repaid approximately $783,370.$0. The loans are unsecured and non-interest bearing.

Additionally, we have also reviewed the facts and circumstance of our relationship with Nexalin Technology and iCapital Advisory, both of which are affiliated companies of our CEO, and have assessed whether these two companies are variable interest entities (VIEs). Based on the guidance provided inASC 810, Consolidation, these two companies are not considered VIEs. The Company is not the primary beneficiary of Nexalin Technology and iCapital Advisory and, whether those two companies have any income (losses) for the ninesix months ended SeptemberJune 30, 2016,2017, it would not be absorbed by Premier Holding Corporation.

NOTE 98 – COMMITMENTS AND CONTINGENCIES

Operating lease

For the operations of TPC, the Company leases 4,260 square feet of office space at 1165 N. Clark Street, Chicago, Illinois under a 65 month65-month operating lease through March 2019. The monthly base rent is approximately $9,415 per month and increases each year during the term of the lease.

Legal Proceedings

Whitaker Energy, LLC

In 2013, Whitaker Energy, LLC (“Whitaker”) filed a civil action the Superior Court of Dekalb County, State of Georgia, Case No. 13-CV8610-6, against TPC and the Company alleging that TPC is in default under its obligations to Whitaker under a promissory note pursuant to which Whitaker loaned TPC $150,000 in 2012 concurrent with Whitaker’s purchase of a membership interest in TPC. Under the terms of the loan between TPC and Whitaker, TPC owed a monthly payment to Whitaker, the amount of which varies each month and is based on the number of contracts TPC enters into from door-to-door sales and call centers. TPC and Whitaker dispute the number of contracts entered into by TPC after certain adjustments and charge-backs from cancellation of contracts by consumers. Under the complaint, Whitaker seeks to recover $93,080 of principal under the loan, plus prejudgment interest in the amount of $9,184 and reasonable attorneys’ fees and expenses of the litigation. In addition, Whitaker seeks an order from the court for access to TPC’s books and records. TPC and the Company dispute the claim by Whitaker that TPC is in default under the loan between TPE and Whitaker. As of April 23, 2014, the parties to the litigation have negotiated a settlement of the litigation which would include a monthly payment by TPC to Whitaker of $4,000 in payment of the principal and accrued interest. Under the terms of the settlement, Whitaker will recover a total of $110,000 plus interest on unpaid amounts. As of September 30, 2016, the Company has made payments totaling $110,000, with no remaining balance due at September 30, 2016.

Hi-Tech Specialists, Inc.

Prior to its acquisition by TPC, Hi-Tech Specialists, Inc. (“Hi-Tech”) filed suit against U.S.E.C. LLC d/b/a/ US Energy Consultants and Michail Skachko concerning the parties’ agreement seeking damages in an amount in excess of $789,077. The nature of the litigation relates to a contract between the parties wherein Hi-Tech was to solicit service agreements on behalf of U.S.E.C. LLC. The suit is ongoing and TPC is aggressively pursuing its claim against the parties named.

Lexington Power & Light, LLC

LP&L rents office space under several non-cancelable operating lease agreements in the same commercial building that commenced beginning in March 2014, all of which expired on February 28, 2016. The annual rental payments required under these operating lease agreements for 2015 and 2016 were $46,867 and $7,849, respectively. Due to the default of the acquisition note payable, the acquisition of LP&L was terminated on April 7, 2015, thus the Company is no longer obligated to this operating lease effective April 7, 2015.

As of December 31, 2013, LP&L had a contingent liability related to a complaint filed by a single commercial customer with the New York Public Service Commission seeking a reimbursement of $40,000. The Company had determined it appropriate under the circumstances to recognize and accrue this loss contingency. Due to the default of the acquisition note payable, the acquisition of LP&L was terminated on April 7, 2015, thus the Company is no longer obligated to this loss contingency effective April 7, 2015.

NOTE 10 -9 – SUBSEQUENT EVENTS

In October of 2016,From July 2017 through August 14, 2017, the Company issued 625,0003,513,000 shares of the Company’s common stock to accredited investors at a price of $0.04 per share for total proceeds of $25,000.

In October and November of 2016, the Company received proceeds of $668,185 from accredited investors for 10,276,214 common shares not yet issued as of November 14, 2016.$140,520. The shares were sold at prices ranging from $0.04 to $0.07 per common share.

On July 30, 2017, the Company issued 50,000 shares to a noteholder who converted their $2,000 convertible note at $0.04 per share.

On August 4, 2017, 4,050,000 shares of the Company’s common stock were cancelled and returned to the Company.

On June 22, 2017, the Board of Directors of the Company approved, and recommended to the holders of a majority of the total voting power of all issued and outstanding voting capital of the Company (the “Majority Stockholders”) that they approve an increase in the total number of authorized shares of the Company’s common stock from 450,000,000 to 1,400,000,000. On June 23, 2017, the Company received written consent in lieu of a meeting from the Majority Stockholders, amending the Company's Certificate of Incorporation, as amended, to this increase in authorized shares. The Company filed the amendment with the State of Nevada on August 14, 2017. As of June 30, 2017, and through this filing of the amendment on August 14, 2017, the Company may have been in violation of certain convertible note covenants due to insufficient available shares.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Management's Discussion and Analysis of Financial Condition and Results of OperationsQuarterly Report on Form 10-Q includes a number of forward-looking statements that reflect Management'smanagement's current views with respect to future events and financial performance. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology.Those statements include statements regarding the intent, belief or current expectations of us and members of our management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements.Forward-lookingThese statements madeare only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in this quarterly reportthe section entitled “Risk Factors” set forth in our Annual Report on Form 10-Q includes statements about:10-K for the year ended December 31, 2016, as filed with the Securities and Exchange Commission on March 31, 2017, any of which may cause our company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Some of those risks and uncertainties include, but are not limited to, the following:

These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” set forth in our Form 10-K, as amended, as filed on April 14, 2016, any of which may cause our Company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and not in limitation:

Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the Securities and Exchange Commission. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company should be read in conjunction with the Condensed Consolidated Financial Statements and notes related thereto included in this quarterly report on Form 10-Q. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time except as required by law. We believe that our assumptions are based upon reasonable data derived from and known about our current business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions.

As used in this Quarterly Report on Form 10-Q and unless otherwise indicated, the terms “Premier,” “we,” “us,” “our,” or the “Company” refer to Premier Holding Corporation and its Subsidiaries, Energy Efficiency Experts, Inc. (“E3”), The Power Company USA, LLC (“TPC”) and American Illuminating Company, LLC (“AIC”). Unless otherwise specified, all dollar amounts are expressed in United States dollars.

Corporate Overview

We are an energy services holding company. We provide an array of energy services through our subsidiary companies, E3 and TPC. In addition, we have entered into agreements to acquire AIC, and can consummate that acquisition upon receipt of FERC approval. We provide solutions that enable customers to reduce their electricity rates and 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. Our stock is quoted on the OTC Markets under the symbol “PRHL”.

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 engaged in reorganizationreorganized 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. On November 13, 2008, the Company filedWe have been organized as a Certificate of Amendmentholding company that provides financial and management expertise, which includes access to its Articles of Incorporation with the State of Nevada Secretary to change its name from OVM International Holding Corporation to Premier Holding Corporation. In 2012, we discontinued our former lines of businesscapital, financing, legal, insurance, mergers, acquisitions, joint ventures and began offering clean energy products and services. In December 2011, we acquired assets from WePower, LLC and Green Central Holdings, Inc. in order to start a second line of business unrelatedmanagement strategies to our historical businesses. We also formed WePower Ecolutionssubsidiaries. Our common stock is quoted on the OTC Markets Group Inc., QB tier (“Ecolutions”OTCQB”) as a wholly-owned subsidiary and began to offer clean energy products and services to commercial markets and developers and management companies of large-scale residential developments., under the symbol “PRHL”.

In October 2012, we divested our businessAugust of certain underperforming product lines and prospects which were acquired by a newly formed entity known as WePowerEco Corp. and negotiated the sale of the product line and prospects with WePowerEco Corp. in exchange for an unsecured promissory note in the face amount of $5,000,000. Subsequently the note had been conservatively valued at approximately $869,000. In connection with the sale of the product line and prospects, we agreed not to compete with WePower Eco Corp’s solar and wind products for a period of two years following the sale. In addition, we agreed to the let the prior management team use the WePower name in a newly formed company separate from the Company.

In 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 where the other current options for efficiency are new and untested, and expensive. This technology is being marketed by E3.applications. In the fourth quarter of 2012, wethe 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, wethe Company acquired an 80% stake in TPC, a deregulated power broker in Illinois. By the end of that quarter, TPC had over 11,000 clients and has beenwas adding between 1,000 and 3,000 clients per month. By 2015 and 2016, TPC added an average of 5,000 clients per month, and the Company expects this to continue for the foreseeable future. Over 1,000 of these clients have commercial/industrial facilities such as small businesses, warehouses and distribution centers, which we believe are candidates for E3. While

As a result of our acquisitions, today we provide an array of energy services through E3 and TPC. In addition to organic growth, we expect that strategic acquisitions of complementary businesses and assets will remain an important part of our company, this has growngrowth plan to over 200,000 contracts sold,enable us to broaden our service offerings and selling over 5,000 per month.expand our geographical reach.

On May 6, 2016, we entered into a definitive agreement with WWCD, LLC, a company incorporated in the State of Illinois (“WWCD”), to acquire for $125,000 all membership units, including all licenses and contracts held, of American Illuminating Company, LLC, a Connecticut limited liability company (“AIC”), a company owned by WWCD. AIC is a FERC-licensed supplier of deregulated energy. Consummation of the acquisition of AIC is subject to FERC approval, which has not yet been granted.was granted in February 2017. After final notifications and filings with regulatory agencies are complete, AIC is expected to begin supplying power immediately to our customers, will recruit additional resellers of deregulated power and provide them with our sales tools to streamline sales efforts, enforce compliance, and increase productivity. The Company has reflected the $125,000 payment as an intangible asset on the balance sheet as of June 30, 2017.

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

We bridge two industries in the Energy field: Deregulation (reselling power from suppliers) and energy efficiency technologies. Deregulated power is expected to be one of the largest markets since the deregulation of telecom, only much larger. Energy efficiency companies, sometimes referred to as energy services companies, or ESCOs, develop, install and arrange financing for projects designed to improve the energy efficiency of client facilities. Typical products and services offered by energy efficiency companies include lighting and lighting retrofits, HVAC upgrades, motor controls, equipment installations, load management, and can include power generation including on-site cogeneration, renewable energy plants, etc. As we grow, we expect to be involved in all these opportunities. Energy efficiency companies often offer their products and services through energy savings performance contracts, or ESPCs. Under these contracts, energy efficiency companies assume certain responsibilities for the performance of the installed measures, under assumed conditions, for a portion of the project’s economic lifetime. We operate as a deregulated power reseller and as an ESCO.

E3’s Business

E3 is an Energy Services Company (ESCO) formed by the Company to provide the best-of-breed energy reduction solutions for its clients. Through surveys and various analysis, E3 prescribes the best solution for the unique circumstance of each client by providing the most current, vettedfully-vetted solutions in energy reduction technologies, as well as management tools which capture the client for future opportunities.

Many companies only provide stand-alone solutions and only address one area of energy efficiency. E3 looks at its clients’ entire energy footprint and develops custom solutions that fit their distinct requirements. E3 prescribes the most appropriate solutions for its clients’ facilities and operations based on their budget. In addition, E3 facilitates the entire process from assessment of needs to planning and implementation to ensure that all expectations for energy reduction and technology performance are met. E3 also provides financing through third-party partners for its customers.

E3 lowers the cost of energy through competitive supplier bidding and creates comprehensive energy savings solutions through the implementation of energy reduction projects. The mission of E3 is to help a customer select and implement the most cost effective energy conservation measures for its facilities. E3’s energy services division is focused on providing business customers with best-in-class demand management solutions such as lighting (LED etc.)(LED), HVAC, Commercial Refrigeration and Water Sub-MeteringSub-Metering.

The sales, design and Smart Building technology.implementation process for energy efficiency projects can take from several months to several years. 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 of the Company and the use of significant financial resources, with no certainty of success or recovery of related expenses.

To date, E3 and its growing reseller base have prospected a large number of qualified potential installations and is developing strategic partners including energy auditors, suppliers, installers, sales organizations and funding sources. These suppliers exponentially increased the number of the product offerings mostly in the LED and other lighting field. The installers not only bring a technical expertise in implementing solutions E3 provides its customers, but they also bring their list of clients and the various funding sources that can provide every sort of financing to meet any client’s needs from short-term loans, leases, on-bill financing, to PACE funding.

The Company believes that E3 is finding success in the sale and installation of LED lighting both as direct sales to mid- and large-sized customers and in utilizing rebate programs from power providers (SCE, etc.). E3 continues to recruit LED resellers whose clients have declined an LED sale and is going back to those clients and offering the E-Series technology as a solution for their existing (and preferred) HID lighting. This includes, but is not limited to, end users such as auto dealerships, warehouses, and parking structures.

In 2016 E3 signed an agreement with Sustainability Partners (“SP”) to generate leads for SP’s unique “Sustainability-as-a-Services” business model. The model involves SP providing all technology, labor and maintenance at no up-front costs, and the agreement is to place pre-agreed rate onto the existing utility bill. If there is no consumption, there is no bill, and all maintenance is the responsibility of SP. This appears as a month-to-month fee, with no long-term obligation. There are additional features and conditions. This is very different from the ESCO (typically “shared savings” for an extended time, sometimes in perpetuity), lease, and PACE (costs placed on property taxes over time) programs, with less risk and more benefits to the client. In this agreement, E3 receives a commission on the entire sustainability project, which can be much larger than a lighting project, and the majority of the work is performed by SP. E3 expects that the volume of sales could increase due to the reduced efforts required by E3 on each sale. E3 is building a network of lead generators in support of this program.

TPC’s Business

TPC provides competitive energy pricing delivered with no change in service.services provided by a customer’s local utility provider. There are currently 1416 states that have deregulated their electrical energy markets in a manner attractive to business.markets. While many consumers have already benefitted from deregulated energy, there are millions more that have not taken advantage of this opportunity. It is estimated that federally requested energy deregulation will be enacted in some form in more of the 50 states by 2020. The deregulation industry is estimated at 7 to 11 times larger than when the telecom industry deregulated. Today and as this market broadens, the Company expects TPC to continue to leverage its strength in these emerging markets.

Prior to deregulation, the utility market in each state was monopolized. At that time, a few, sometimes only one,One utility in each state provided all components of energy services: supply and distribution. In 1992, Congress passed the National Energy Policy Act, allowing consumers in deregulated states the power to choose their energy supplier. TPC is an experienced energy consulting firm in the deregulation space that utilizes its market standing and its large, well-established network of energy suppliers to compete for its clients’ business. With no cost to, or obligation forby its clients, TPC serves as its clients’ energy advocatesadvocate and negotiates the most competitive pricing and options for its clientele. Because of TPC’s buying power, market expertise, and strong and diverse supplier relationships, TPC can achieve results and cost savings that are greater than most individuals and/or organizations can obtain on their own.

TPC’s business model is to enlist commercial and residential clients who benefit from the law passed allowing for competition in the energy markets as a result of deregulation of energy. In many cases TPC saves its clients 10% to 30% on their energy bills by simply switching suppliers, all while the enrollee still receives services from their local utility (the local utility continues to distribute the power, read the meter, bill, and service any interruptions). TPC is different than several of its competitors in that isTPC has agreements with multiple energy suppliers allowing TPC to leverage its standing in the marketplace to garner competitive pricing for its clients by having its suppliers compete for theirits clients’ business. Currently, TPC has access to over 30 different suppliers and has most of the agreements in place that allow for TPC to be paid for the life of the client’s tenure with the supplier. TPC acquires its clients through strategic partnerships, trained in-house commercial and door-to-door residential agents and call centers.

TPC utilizes its online client energy portal. Thisportal, which is a sophisticated energy portal enablesenabling rapid, efficient and secure sales transactions of deregulated power. The energy portal is designed to enable sales agents, whether from a computer terminal, a smart phone, or any web browser to access the pertinent information on a particular prospect.prospective client. Agents can view their clients’ energy profiles and quickly access the energy options available to them. The transparency and ease of the energy portal allows TPC’s agents to select the best power provider for their customers and process the paperwork online in real-time, which enables client acquisition in minutes. This sales portal enables large-scale, rapid sales of deregulated power. The energy portal is built for scalability so that it can be monetized on its own, meaning it can be offered to any deregulated power company as itsa sales tool. The technology also provides sales management, reporting, verification, and compliance tracking which may be among the best in the industry.

AIC’s Business

The primary value that AIC will add to the Company (assuming we obtain FERC approval for the acquisition) is that it enables customers to recognize immediate savings via lowering their electricity bills by supplying energy marketing firms with a more competitive platform to access electricity contracts and support. Through the Company’s ownership of TPC, this creates a built-in strategic partnership for the states that TPC is already licensed in to broker power, including Connecticut, District of Columbia, Delaware, Illinois, Maine, Massachusetts, Maryland, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Texas. AIC will have to obtain state, local, utility and other approvals in order to supply power in these several states, but pending such approvals, AIC may benefit from TPCs existing database of over 200,000 current and past clients to “jumpstart” its progress. We anticipate that half of all contracts written by TPC could be supplied by AIC.

Through this relationship to establish a large wholesale broker sales network, AIC plans to achieve operating and sales velocity more quickly in order to form a strong foundation to establish positive cash flows. We believe that TPC can direct a material portion of its customers to AIC. We believe this presents a major opportunity for AIC to scale quickly through its strong relationship with TPC. In addition to contract sales generated by TPC, we expect that AIC will expand its offerings to consumers through other energy brokers in order to expand revenue.

Corporate Developments During 2016

Since the commencement of the year through September 30, 2016, we experienced the following corporate developments:

Development of ESP

During the first quarter ended March 31, 2016, we began development of the next generation of the Energy Services Portal (“ESP”) V3.0. Formerly the National Energy Services Transactor, or NEST, the name was changed to avoid confusion in the market with another product. This new version is being developed to further expand its features and capabilities and to accommodate the needs of multiple resellers of deregulated power on behalf of the newly acquired supplier.

Corporate Developments During the Period Covered by this Report

On June 12, 2017, the Company announced the signing of a non-binding letter of intent with Ridgefield Partners, LLC, to participate in a newly created energy roll-up. The Company intends to contribute its subsidiary, TPC, and certain other assets, in exchange for an interest in a combined company that has entered into three separate letters of intent with three other entities. The Company is expected to receive approximately 20% ownership of the combined company and intend to distribute a portion of these shares to its existing shareholders upon consummation of the transaction, and then distribute the remaining shares over the course of the year following completion of the transaction.

Results of Operations

Comparison of the Three Months Ended SeptemberJune 30, 20162017 to the Three Months Ended SeptemberJune 30, 20152016

Revenue and Operating Expenses

The Company’s revenue and operating expenses for the three months ended September 30, 2016 and 2015 are summarized as follows:

The decrease in revenue for the three months ended September 30, 2016, compared to the three months ended September 30, 2015 is due primarily to a reduction in residential revenue from our TPC subsidiary.

The increase in selling, general and administrative expenses for the three months ended September 30, 2016, compared to the three months ended September 30, 2015 is due primarily to the increased use of consultants.

Other Income (Expense)

The increase in other expense for the three months ended September 30, 2016, compared to the prior period is mainly attributable to the increase in convertible notes and derivative liability, as well as the write-off of unamortized derivative debt discounts on converted notes, resulting in increased interest expense and increase in consulting fees. This increase is partially offset by the gain from the decrease in the fair value of the derivative liability during the three months ended September 30, 2016.

Comparison of the Nine Months Ended September 30, 2016 to the Nine Months Ended September 30, 2015

Revenue and Operating Expenses

The Company’s revenue and operating expenses for the ninethree months ended SeptemberJune 30, 20162017 and 20152016 are summarized as follows:

The decrease in revenue for the three months ended June 30, 2017, compared to the three months ended June 30, 2016 is due primarily to a reduction in residential and call center revenue from our TPC subsidiary, and a reduction in product revenue from our E3 subsidiary.

The decrease in cost of revenue for the three months ended June 30, 2017, compared to the three months ended June 30, 2016 is due to a reduction in product revenue from our E3 subsidiary.

The decrease in selling, general and administrative expenses for the three months ended June 30, 2017, compared to the three months ended June 30, 2016 is due primarily to a decrease stock based compensation paid to consultants for services and a decrease in commissions paid at our TPC subsidiary.

Other Income (Expense)

The decrease in other expense for the three months ended June 30, 2017, compared to the prior period is mainly attributable to the decrease in convertible notes from conversions to common stock resulting in decreased interest expense.

Comparison of the Six Months Ended June 30, 2017 to the Six Months Ended June 30, 2016

Revenue and Operating Expenses

The Company’s revenue and operating expenses for the six months ended June 30, 2017 and 2016 are summarized as follows:

The decrease in revenue for the ninesix months ended SeptemberJune 30, 2016,2017, compared to the ninesix months ended SeptemberJune 30, 20152016 is due primarily to a decreasereduction in residential and call center revenue from our TPC subsidiary, partially offset by increaseand a reduction in its commercial and call center revenues.product revenue from our E3 subsidiary.

The decrease in cost of revenue for the six months ended June 30, 2017, compared to the six months ended June 30, 2016 is due to a reduction in product revenue from our E3 subsidiary.

The increase in selling, general and administrative expenses for the ninesix months ended SeptemberJune 30, 2016,2017, compared to the ninesix months ended SeptemberJune 30, 20152016 is due primarily to an increase in stock based compensation paid to consultants for services during the increased usefirst quarter of consultants.2017.

Other Income (Expense)

The increasedecrease in other expense for the ninesix months ended SeptemberJune 30, 2016,2017, compared to the prior period is mainly attributable to the increasedecrease in convertible notes from conversions to common stock resulting in decreased interest expense, and a decrease in the derivative liability as well as the write-off of unamortized derivative debt discounts on convertedrelated to those convertible notes, resulting in increased interest expense. This increase is partially offset bya higher gain on the gain from the decreasechange in the fair value of the derivative liability during the nine months ended September 30, 2016.liability.

Liquidity and Capital Resources

Working Capital

The following table sets forth a summary of working capital as of SeptemberJune 30, 20162017 and December 31, 2015:2016:

The increase in working capital is due primarily from an increase in cash from the sale of the Company’s common stock, as well as a reduction in convertible notes and the related derivative liability due to notes converted to common stock.

Cash Flows

The following table sets forth a summary of changes in cash flows for the ninesix months ended SeptemberJune 30, 20162017 and 2015:2016:

The increasedecrease in cash used in operating activities was due primarily to an increasea decrease in cash-based selling, general and administrative expenses, including commissions paid related to commercial and call center revenue at our TPC subsidiary for the ninesix months ended SeptemberJune 30, 20162017 as compared to the same period in 2015.

The increase in cash used in investing activities was due primarily the acquisition of AIC for cash of $125,000 in May of 2016.

The increasedecrease in cash from financing activities was due primarily to increaseda decrease in proceeds from the sale of common stock and issuance of convertible notes payable for the ninesix months ended SeptemberJune 30, 20162017 as compared to the same period in 2015.2016.

Private Placement Offering

During the ninesix months ended SeptemberJune 30, 2016,2017, the Company entered into a series of stock purchase agreements with accredited investors for the sale of 76,587,10617,622,627 shares of its common stock in amount of $4,014,822.$858,590. The Company also received proceeds of $793,333 from accredited investors towards the sale of 12,266,902 shares of common stock not yet issued as of the date of this filing.

Short-Term Debt and Lines of Credit

The Company did not enter into any new short-term debt or lines of credit with third parties during the ninesix months ended SeptemberJune 30, 2016.2017.

Convertible Notes Payable

During the ninesix months ended SeptemberJune 30, 2016,2017, the Company entered intodid not issue any new convertible notes with third parties for use as operating capital for total proceeds of $295,000.notes.

During the ninesix months ended SeptemberJune 30, 2016,2017, the Company issued 32,562,5008,037,500 shares of its common stock for the conversion of convertible notes totaling $1,302,500.$321,500.

Going Concern

The unaudited condensed consolidated financial statements contained in this annualquarterly report on Form 10-Q have been prepared assuming that the Company will continue as a going concern. Since inception, the Company has financed its operations primarily through proceeds from the issuance of common stock and convertible notes payable. As of SeptemberJune 30, 2016,2017, the Company had an accumulated deficit of $28,711,656.$33,888,384. During the ninesix months ended SeptemberJune 30, 2016,2017, the Company incurred operating losses of $3,887,113$4,534,127 and used cash in operating activities of $2,976,879.$1,422,910. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is in the process of evaluating various financing alternatives in order to finance our research and development activitiesoperations and general and administrative expenses. These alternatives include raising funds through public or private equity markets and either through institutional or retail investors. Although there is no assurance that the Company will be successful with our fund raisingfund-raising initiatives, management believes that the Company will be able to secure the necessary financing as a result of ongoing financing discussions with third party investors and existing shareholders.

The condensed consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern. The Company’s continuation as a going concern is dependent on its ability to obtain additional financing as may be required and ultimately to attain profitability. If the Company raises additional funds through the issuance of equity, the percentage ownership of current shareholders could be reduced, and such securities might have rights, preferences or privileges senior to its common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, the Company may not be able to take advantage of prospective business endeavors or opportunities, which could significantly and materially restrict its future plans for developing its business and achieving commercialincreasing revenues. If the Company is unable to obtain the necessary capital, the Company may have to cease operations.

Future Financing

We will require additional funds to implement our growth strategy for our business. In addition, while we have received capital from various private placements and convertible loans that have enabled us to fund our operations, these funds have been largely used to supplement our working capital, although additional funds are needed for other corporate operational and working capital purposes. At this time and at our current burn rate, we have sufficient capital to fund our operations for the next 126 months. However, once we consummate the acquisition ofbegin operations at AIC, that is subject to FERC approval, which has not yet been granted, we expect to need additional capital to be able to purchase power and pay commissions. At this time, we have not determined the amount that may be needed. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis should it be required, or generate significant material revenues from operations, we will not be able to meet our other obligations as they become due and we will be forced to scale down or perhaps even cease our operations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Critical Accounting Policies and Estimates

Our significant accounting policies are more fully described in the notes to our financial statements included herein for the quarter ended SeptemberJune 30, 20162017 and in the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015.2016, as filed with the Securities and Exchange Commission on March 31, 2017.

Recently Issued Accounting Pronouncements

Any recently issued accounting pronouncements are more fully described in Note 1 to our financial statements included herein for the quarter ended SeptemberJune 30, 2016.2017.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As a smaller reporting company as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The Company maintainsWe maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’sour reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’sour management, including the Company’s interim president andour chief executive officer (who is the Company’s principal(principal executive officer) and the Company’s, who also serves as our chief financial officer treasurer, and secretary (who is the Company’s principal(principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure. In designing and evaluating the Company’sour disclosure controls and procedures, the Company’s management recognizeswe recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and the Company’sour management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of period covered in this report, our disclosure controls and procedures were not effective. The ineffectiveness of the Company’s disclosure controls and procedures was due to material weaknesses identified in the Company’s internal control over financial reporting, described below.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over the Company’s financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002, our management, with the participation of the Company’s principal executive officer and principal financial officer has conducted an assessment, including testing, using the criteria in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) (2013). Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal controlscontrol over financial reporting may not prevent or detect misstatements. This assessment included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, the Company’s management concluded its internal control over financial reporting was not effective as of SeptemberJune 30, 2016.2017. The ineffectiveness of the Company’s internal control over financial reporting was due to the following material weaknesses which are indicative of many small companies with small staff:

Our management feels the weaknesses identified above have not had any material effectaffect on our financial results. However, we are currently reviewing our disclosure controls and procedures related to these material weaknesses and, as resources allow, expect to implement changes in the next calendarfiscal year, including identifying specific areas within our governance, accounting and financial reporting processes to add adequate resources to potentially mitigate these material weaknesses.

Our management will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as fundsresources allow.

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management believes that despite our material weaknesses set forth above, our financial statements for the quarter ended June 30, 2017 are fairly stated, in all material respects, in accordance with U.S. GAAP.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the three monthsquarter ended SeptemberJune 30, 20162017 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings