When you’re on the road and you see a field full of giant wind turbines, it’s hard not to drift away in grandiose dreams about a better world where everything is powered by green energy… Well, we’re not quite there yet, but clean energy companies are very popular.
Today there is one such company touted by a couple of pumper newsletters – Premier Holding Corp. (OTC:PRHL). In June the price climbed above $1.40 per share. Yesterday PRHL closed at $0.86.
The promoters suggest this is a great entry level, and some traders may be inclined to believe that. Promoters aren’t often interested in details. In this case $90 thousand was all the pumpers wanted for their efforts. Below are some other picks touted by the same newsletters.
We, however, prefer to dig a little deeper. The promoters say there is a “killer CEO” behind the company. The person in question is Kevin Donovan. Indeed, Mr. Donovan has had some impressive achievements.
However, one of his latest positions was CEO of Electronic Game Card, Inc. Shareholders filed a lawsuit against the company. Mr. Donovan happened to be one of the named defendants, but claims against him were Dismissed with a leave to amend in 2011. That company filed for Chapter 7 bankruptcy.
At the current price the market cap of PRHL is approximately $40 million. The latest 10-Q didn’t show anything impressive enough to warrant such a valuation. The company had about $384 thousand total assets and close to $60 thousand in revenues for Q1.
Why was it trading above $1.40? The most obvious answer lies in the press releases issued by PRHL, and there’s been a lot of them.
Over the last several months the company has announced distribution, marketing and sales agreements, all of which sound very promising. At the same time, none of them gives actual information about what the effect on PRHL’s financial situation might be.
Also, apparently, the management doesn’t deem these developments important, as there aren’t any 8-K filings about the agreements. Alternatively there may have been some mistake; as with the Distribution Agreement with Ciralight Global, Inc. It was announced in a press release on May 8 and then retracted on May 30.
Now we get to why the price dropped. On Jun. 25 PRHL revealed it had sold common stock to accredited investors for proceeds of $572,500. There is an 8-K from Jun. 22, which reveals some of the details omitted in the press release. The investors got approximately 2.3 million shares which means they bought the shares at $0.25 per share.
The resale of those shares had been restricted by placing a Rule 144 legend on them. Then again, neither the 8-K nor the press release gave the dates when the shares had been purchased, and it so happens that restricted shares of companies which report to the SEC can sometimes be sold in the open market after six months.[BANNER]
Even at $0.86 per share one could get a nice premium over his investment at $0.25. Nice enough to spare $90 thousand for a pump. Traders may want to take this information into consideration before they decide whether PRHL is a solid investment or it would be just throwing money in the wind.
