Parent Of Broker Sees Lower Revenues As Competitor Recruits Its Sales Agents
Retail energy holding company Premier Holding Corporation, parent of retail supplier American Illuminating Company and broker The Power Company (TPC), among other companies, reported results for the quarter ending September 30, 2017
Premier Holding Corporation reported a net loss of $3 million for the quarter ending Sept. 30, 2017, versus a net loss of $2 million a year ago. The company reported an operating loss of $3 million for the quarter ending Sept. 30, 2017, versus an operating loss of $1.4 million a year ago.
Revenues for the quarter ending Sept. 30, 2017 were down 40% in the quarter -- from $1.1 million a year ago to $621,000 -- due primarily to a reduction in residential revenue at TPC, which was due primarily to the sales agent attrition of approximately 25% of the door-to-door sales force. The average number of agents in the field fell from 80 in September of 2016 to 60 in September 2017. The drop in the number of agents was due primarily to an outside sales organization who recruited these agents. Since then, TPC has settled a suit that TPC initiated against this firm in which, along with a monetary penalty, the firm agreed to not solicit TPC agents in the future. TPC is actively recruiting to replace this sales force. Also, sales were impacted due to the transitioning of resources to call center and online residential sales in preparation for transitioning to selling the company's own alternative supplier.
In the quarter ending Sept. 30, 2017, Premier Holding Corporation recorded an impairment loss related to goodwill of $2 million, which negatively impacted results.
"The impairment loss related to goodwill during the three months ended September 30, 2017 is a result of management’s determination of impairment of the goodwill related to its 2013 acquisition of TPC. We used a blend of the discounted cash flow method and the guideline company transactions method for the impairment testing as of September 30, 2017. The Company performed discounted cash flow analysis projected over 5 years to estimate the fair value of the reporting unit, using management’s best judgement as to revenue growth rates and expense projections. This analysis indicated cash flows (and discounted cash flows) less than the $4 million book value of goodwill. This analysis also factored the recent reduction in residential revenue at TPC. We determined these were indicators of impairment in goodwill for TPC during the three months ended September 30, 2017 and impaired the goodwill by $2,085,000," the company said in a 10-Q
As in prior quarters, Premier Holding Corporation disclosed going concern and access to capital issues.
"As of September 30, 2017, the Company had an accumulated deficit of approximately $37 million. For the nine months ended September 30, 2017 and 2016, the Company incurred operating losses of $7,544,869 and $3,887,113, respectively, and used cash in operating activities of $2,733,066 and $2,976,879, 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," the company said in a 10-Q