UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549





Form 10-Q


(Mark one)


|X| QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE


ACT OF 1934





For the quarterly period ended September 30, 2010


OR


|_| TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT





For the transition period from ____________ to _____________





Commission file number 333-145569





PREMIER ENERGY CORP.


(Exact Name of Registrant as specified in its charter)








Florida
20-8724818(State or other jurisdiction of incorporation organization)
(IRS Employer Identification No.)








14785 Preston Road, Suite 550


Dallas, Texas 75254


(Address of principal executive offices)





(972) 789-5500


(Issuer's telephone number)





Indicate by check mark whether registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_|





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Yesx                                           No  o





Indicated by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filter and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):





Large accelerated filer   o
Accelerated fileroNon-accelerated filer         o
Smaller reporting companyx





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)       Yes |X| No |  |





As of December 20, 2010, there were 106,194,000 shares of the issuer's common stock issued and outstanding.


1











TABLE OF CONTENTS





PART I - FINANCIAL INFORMATIONPageItem 1.
Financial Statements.
3Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
12Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
15Item 4.
Controls and Procedures.
15PART II -  OTHER INFORMATIONItem 1.
Legal Proceedings.
16Item 1a.
Risk Factors
16Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
16Item 3.
Defaults Upon Senior Securities.
16Item 4.
Reserved.
16Item 5.
Other Information.
16Item 6.
Exhibits.
16














2

















PART I - FINANCIAL INFORMATION





Item 1. Financial Statements.





PREMIER ENERGY CORP. AND SUBSIDARY





Consolidated Balance Sheets


September 30 , 2010


December 31, 2009Note


(unaudited)


(audited)Current Assets:Cash




$
5,550


$
441Accounts and notes receivables, net





-



92,936Inventories





-



207,532Prepaid taxes and expenses





-



429,695Prepaid and other assets





-



18,2045,550



748,808Property, Plant and Equipment:Proven Oil and Gas properties (successful efforts), at cost





-



8,030,724Less- accumulated depletion, depreciation and amortization





-



(3,848,448
)Other property, plant and equipment





-



100,702Less- accumulated depreciation









(89,830
)4,193,146Deferred Income tax assets









64,203TOTAL ASSETS




$
5,550


$
5,006,157Current Liabilities:Accounts Payable and Accrued Expenses


6


$
446,361


$
686,161Short term borrowings


4



100,000



522,844Production taxes payable






-



314,460Provision for litigations






-



84,872546,361



1,608,336Long-Term Liabilities:Asset retirement obligations






-



600,115-



600,115TOTAL LIABILITIES






546,361



2,208,451STOCKHOLDERS' EQUITY (DEFICIT)Preferred stock, $0.0001 par value, 10,000,000 shares authorized, noneissued and outstanding










-Common Stock, $0.0001 par value,255,000,000 and 250,000,000 shares authorized, 213,600,000 and 210,600,000 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively


5



21,360



21,060Additional  Paid-in Capital






10,151,447



10,503,677Accumulated Deficit






(10,713,618
)


(7,392,870
)Accumulated other comprehensive income






-



(334,162
)Total Stockholders’’ Equity (deficit)






(540,811
)


2,797,705TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICT)





$
5,550


$
5,006,157





See accompanying notes to unaudited consolidated financial statements.




3





PREMIER ENERGY CORP. AND SUBSIDARY





Condensed Consolidated Statements of Operations


(Unaudited)








Three months ended


Three months ended


Nine months ended


Nine months endedSeptember 30, 2010


September 30, 2009


September 30, 2010


September 30, 2009Operating revenues:Oil and gas production revenue

$
-


$
139,578


$
201,432


$
299,083Other revenue


-



-



-



--



139,578



201,432



299,083Operating expenses:Oil and gas production expense


-



69,051



610,808



162,138Mineral extracton tax


-



46,809



59,569



116,376Depreciation, depletion and amortizaton


-



79,037



139,607



227,547Taxes other that income taxes


-



14,829



27,161



43,723Marketing and transportation expenses


-



62,063



146,163



142,043General and administrative


80,949



209,381



230,828



364,45280,949



481,170



1,214,136



1,056,279Operating loss


(80,949
)


(341,592
)


(1,012,704
)


(757,196
)Other Income (Expense):Currency translation gain/(loss)


-



10,809



(8,790
)


(22,930
)Loss on disposal of investment in Karbon


(2,286,857
)


-



(2,286,857
)


-Other income


-



-



43,409



-Interest expense


-



(12,072
)


(51,489
)


(34,953
)(2,286,857
)


(1,263
)


(2,303,727
)


(57,883
)Loss Before Provision forIncome Taxes


(2,367,806
)


(342,855
)


(3,316,431
)


(815,079
)Benefit(Provision) for Income Tax


-



(3,107
)


(4,317
)


(26,938
)Net Loss

$
(2,367,806
)

$
(345,962
)


(3,320,748
)


(842,017
)Loss Per ShareBasic and diluted

$
(0.01
)


(0.00
)

$
(0.02
)

$
(0.00Weighted Average Number of Shares Outstanding


212,772,013



210,600,000



211,877,778



210,600,000





See accompanying notes to unaudited condensed consolidated financial statements.





4




PREMIER ENERGY CORP. AND SUBSIDIARY





Statement of Stockholders’ Equity


For the period January 1, 2010 through September 30, 2010


(Unaudited)








AccumulatedAdditional


Accumulated


OtherComprehensive


Common


Paid-in


Deficit


Comprehensiveincome/(loss)


Stock


Capital





Income


TotalBalance at December31, 2009




210,600,000


$
21,060


$
10,503,677


$
(7,392,870
)

$
(334,162
)

$
2,797,705Common stock issued for legal services




2,000,000



200



-



-



-



200Net loss for nine months ended September 30, 2010

$
(3,320,748
)














(3,320,748
)






(3,320,748
)Foreign currency translation adjustment


(67,968
)


















(67,968
)


(67,968
)$
(3,388,716
)Common Stock issued for legal and consulting services






1,000,000



100



49,900











50,000Effect of disposal of Karbon














(402,130
)






402,130



-Balance at September 30, 2010






213,600,000


$
21,360


$
10,151,447


$
(10,713,618
)

$
-


$
(540,811
)





See accompanying notes to unaudited consolidated financial statements.





5





PREMIER ENERGY CORP. AND SUBSIDIARIES


Condensed Consolidated Statement of Cash Flows


(Unaudited)





Nine months ended


Nine months endedSeptember 30, 2010


September 30, 2009Cash flows from operating activitiesNet (loss)

$
(3,320,748
)

$
(842,017
)Depreciation, depletion and amortization


139,607



227,579Interest expense


25,153



34,953Deferred income taxes


4,317



31,856Currency (gain)/loss


8,790



-Equity issued in exchange for services


50,200



-Loss on disposal of Karbon


2,286,857



-Changes in operating assets and liabilities:Accounts and notes receivable


(498
)


(70,107
)Inventories


91,417



(7,493
)Prepaid expenses and taxes


935



18,919Prepaid and others assets


(2,898
)


(6,770Accounts payable and accrued expenses


431,020



370,983Taxes payable


145,946



61,410Net Cash Flows used in operating activities


(139,902
)


(180,687
)Cash flows from investing activitiesPayments to Acquire Oil and Gas properties


(482
)


(541
)Net cash used in investing activities


(482
)


(541
)Cash flows from financing activitiesShort-term Borrowings


145,602



213,419Net cash provided by financing activities


145,602



213,419Effect of exchange rate changes on cash and cash equivalents


(109
)


(31,960Net increase (decrease) in cash and cash equivalents


5,109



231Cash and cash equivalents at beginning of period


441



52Cash and cash equivalents at end of period

$
5,550


$
283Supplemental disclosures of cash flow information:Interest paid

$
-



-Income taxes paid

$
-



4,599





See accompanying notes to unaudited condensed consolidated financial statements.





6





PREMIER ENERGY CORP.


AND SUBSIDIARY





NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS








Note 1 - Basis of Presentation, Organization and Business Overview





A summary of the significant accounting policies applied in the presentation of the accompanying unaudited condensed consolidated financial statements follows:





General





Premier Energy Corp. (“Premier”, and collectively with its subsidiary, the “Company”) was incorporated in the State of Florida on December 26, 2006. The accompanying unaudited condensed consolidated financial statements include the accounts of Premier Energy Corp.  through  September 30, 2010  and its wholly owned subsidiary, KARBON, CJSC through June 30, 2010 (see discussion of  basis of presentation of the Company’s financial statements  below). All significant inter-company balances and transactions have been eliminated in the consolidation. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of our management, the accompanying unaudited condensed financial statements include all adjustments, consisting of normal recurring accruals, necessary to present fairly our financial position, results of operations and cash flows. Interim results are not necessarily indicative of the results that may be expected for the entire year. These condensed consolidated financial statements should be read in connection with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.





Basis of Presentation





Disposition of  Company’s Sole Operating Business





On November 4, 2010, the Company entered into an agreement and release (the “Agreement”) with Auxerre Trading  Limited (“Auxerre”).  Pursuant to the Agreement, the Company disposed of its entire interest in its  subsidiary, Karbon CJSC (“Karbon”), a corporation organized under the laws of the Russian Federation, and Auxerre, owner of  107,406,000 shares of the Company’s  common stock (the “Auxerre Shares”),  representing approximately 51% ownership  of the Company’s  issued and outstanding common shares, returned the Auxerre Shares to the Company for cancellation.  Except for the fact that Auxerre was a shareholder of the Company prior to close, no material relationship exists between Auxerre and the Company and/or its affiliates, directors, officers or any associate of an officer or director.  In addition, Auxerre has released the Company from any claims that it may have and assumed all obligations, liabilities and losses of Karbon (“Existing Liabilities”) and agreed to indemnify the Company from any losses associated with the Existing Liabilities.





As a result of the disposition of the Company’s entire interest in Karbon , the Company’s management has no access or control over Karbon’s accounting records and financial statements effective with periods after June 30, 2010.  Accordingly, the Company  has  elected not presented results of operations, financial position and cash flows attributed to Karbon for the period July1, 2010 through September 30, 2010 in the Company’s accompanying  financial statements for the nine months ended September 30, 2010.





Upon  the disposition of Karbon, the Company has no significant operations or assets and is a shell company as defined in Rule 12b-2 of the Exchange Act








The financial statements included herein as of  September 30, 2010, and for the nine month periods ended  September 30, 2010 and 2009, are unaudited, and in the opinion of management, the information furnished reflects all material adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and of the results for the interim period presented.





On September 25, 2008, the Board of Directors and holder of a majority of our issued and outstanding common stock adopted a resolution changing the name of Premier Nursing Products Corp. to Premier Energy Corp. and in connection therewith on September 25, 2008 filed Articles of Amendment to its Articles of Incorporation with the Secretary of State of Florida. The effective time of the name change was close of business on October 6, 2008. There were no mandatory exchange of stock certificates. Following the name change, the share certificates which reflected our prior name continue to be valid. Certificates reflecting the corporate new name will be issued in due course as old share certificates are tendered for exchange or transfer to our transfer agent in activities raising capital.





7




Note 2 - Summary of significant accounting policies





Use of Estimates in the Preparation of Financial Statements





The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.





Cash and cash equivalents





Cash and cash equivalents comprise cash on hand, deposits held with banks, and other short-term highly liquid investments with original maturities of three months or less.





Income Taxes





The Company accounts for income taxes in accordance with FASB ASC 740-10 “Income Taxes.” Under this method, deferred taxes (when required) are provided based on the difference between the financial reporting and income tax bases of assets and liabilities and net operating losses at the statutory rates enacted for future periods. The Company has a policy of establishing a valuation allowance when it is more likely than not that the Company will not realize the benefits of its deferred tax assets in the future.





In June 2006, the FASB issued FASB ASC 740-10-25, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740-10-25 also provides guidance on derecognition, classification, treatment of interest and penalties, and disclosure of such positions. Effective January 1, 2007, the Company adopted the provisions of ASC 740-10-25, as required. As a result of implementing ASC 740-10-25, there has been no adjustment to the Company’s financial statements and the adoption of ASC 740-10-25 did not have a material effect on the Company’s consolidated financial statements for the three months ended September 30, 2010.


Starting on January 1, 2009, the combined statutory tax is 20% (Federal and city income tax rates that total 2.0% and a regional income tax rate that varies from 13.5% to 18.0%.




Stock-based Compensation





In April 2010, 2,000,000 shares of common stock were issued to a legal advisor for services to be rendered from April 2010 through December 2010. In September , 2010 , 1,000,000 shares were issued for legal and financial consulting services to be rendered





The Company records stock-based compensation in accordance with ASC 718 (formerly SFAS No. 123R "Share Based Payments"), using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.





Loss per Share





Basic loss per share is calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each reporting period. The Company does not have any potentially dilutive instruments.





Fair Value of Assets and Liabilities





Effective June 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 157,Fair Value Measurements (SFAS 157), which provides a framework for measuring fair value under GAAP. SFAS 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS 157 requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. SFAS 157 also establishes a fair value hierarchy, which prioritizes the valuation inputs into three broad levels.




8





There are three general valuation techniques that may be used to measure fair value, as described below:





A)
Market approach – Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. Prices may be indicated by pricing guides, sale transactions, market trades, or other sources;





B)
Cost approach – Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost); and





C)
Income approach – Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about the future amounts (includes present value techniques and option-pricing models). Net present value is an income approach where a stream of expected cash flows is discounted at an appropriate market interest rate.





Financial assets and liabilities are valued using either level 1 inputs based on unadjusted quoted market prices within active markets or using level 2 inputs based primarily on quoted prices for similar assets or liabilities in active or inactive markets. For certain long-term debt, fair value is based on present value techniques using inputs derived principally or corroborated from market data. Using level 3 inputs using management’s assumptions about the assumptions market participants would utilize in pricing the asset or liability. In the Company’s case this entailed assumptions used in pricing models for attached warrant calculations. Valuation techniques utilized to determine fair value are consistently applied.





The Company’s short-term debt is the only item that is subject to SFAS 157 in the amounts of $100,000 at  September 30, 2010.





The carrying value of cash equivalents and accrued expenses approximates fair value due to the short period of time to maturity.








Recent accounting pronouncements





The company has evaluated all the recent accounting pronouncements through December 10, 2010 and believes that none of them will have a material effect on the company's financial statements.





Note 3 - Going concern





These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At September 30, 2010, the Company had not yet achieved profitable operations giving rise to substantial doubt as to the Company’s ability to continue as a going concern.





The Company's ability to continue as a going concern is dependent upon:


(i) raising additional capital to fund operations and to complete the recapitalization,and


(ii) ultimately, the achievement of profitable operations.





Management is currently contemplating several additional financing sources to fund operations until profitability can be achieved. However, there can be no assurance that additional financing can be obtained on conditions considered by management to be reasonable and appropriate, if at all. The financial statements do not include any adjustments that might arise as a result of this uncertainty.





Note 4 -  Borrowings





The Company borrows operating funds under several loans agreements with non-financial institutions:





As of September 30, 2010

(unaudited)


As of December 31, 2009Interest free, unsecured loans from RossGas, LLC a related party (debt is repayable on mutual consent)




$
118,667Interest free, unsecured loans from Vlasov N.V. a related party (debt is repayable on mutual consent)





84,314Interest free, unsecured loans from Galazov A.A. a related party (debt is repayable on mutual consent)





102,8308%, Unsecured loans from Auxerre trading Ltd. a related party (debt is repayable on March 2, 2011)


100,000



-Interest free, unsecured loans from ZRV Consulting, Inc. a related party (debt is repayable on mutual consent)


-



2,350Interest free, unsecured loan from Tintrade Limited






200,000Interest free, unsecured loans from members of staff


-



14,683$
100,000


$
522,844





9




Note 5 - Stockholders' Equity





All descriptions and transactions that affect stockholders’ equity are in terms of Premier (See Note 1).





On May 30, 2008, the Company increased its number of Authorized Common Shares from 100,000,000 (One Hundred Million Common Shares) to 250,000,000 (Two Hundred and Fifty Million Common Shares) and the Par Value changed from ($.001) to ($.0001). The Aggregate par value of the Common Shares changed from ($10,000) to ($25,000) and the Aggregate par value of the Preferred changed from ($10,000) to ($1,000). The number of authorized preferred shares remained at 10,000,000.





On July 28, 2008 the Corporation's Board of Directors and the holder of a majority of its issued and outstanding common stock adopted resolutions approving an eighteen for one (18:1) forward stock split of the Corporation's issued and outstanding common stock, par value $0.0001 per share. The split became effective August 8, 2008. All prior amounts have been adjusted retroactive for the stock split.





On September 5, 2008, the Company and its principal shareholder and executive officer, entered into an agreement with ZRV Consulting Inc. pursuant to which ZRV acquired 162,000,000 shares of Premier for a cash consideration of $300,000. The transaction was completed on September 5, 2008. As a result of this transaction, there were 210,600,000 outstanding common shares of which Auxerre Trading Ltd. owned 107,406,000 common shares or approximately 51% of the outstanding common shares.





On April 16, 2010, the Company filed a Form S8 Registration Statement (File No. 333-166113) registering 5,000,000 shares of common stock issuable under its 2010 Incentive Stock Plan  In April 2010, 2,000,000 shares of common stock were issued to a legal advisor for services to be rendered from April 2010 through December 2010. In September 2010, 1,000,000 shares of the Company’s common stock were issued for legal and consulting services to be rendered to the Company from September 2010 through December 2010. The fair value of  the shares issued was charged to operations .





On November 4, 2010, the Company entered into an agreement and release (the “Agreement”) with Auxerre Trading  Limited (“Auxerre”).  Pursuant to the Agreement, the Company disposed of its entire interest in its  subsidiary, Karbon CJSC (“Karbon”), a corporation organized under the laws of the Russian Federation, and Auxerre, owner of  107,406,000 shares of the Company’s  common stock (the “Auxerre Shares”),  representing approximately 51% ownership  of the Company’s  issued and outstanding common shares, returned the Auxerre Shares to the Company for cancellation (see Note 7)





Note 6- Commitments





Employment Agreements





Dr. Anton  Prodanovic





On October 16, 2008, the Company entered into an employment agreement with Dr. Anton  Prodanovic. Under the terms of the 24 month agreement, he will serve as Chief Executive Officer. In addition, during the term of the agreement we agreed to cause him to be successively nominated for election to the Board of Directors. As compensation, the Company agreed to pay Dr. Prodanovic an annual base salary of $100,000, which such base is subject to annual merit review and increase as deemed appropriate by the Board, together with bonus compensation in amounts as may be determined by the Board. The Company has agreed to issue Dr. Prodanovic options to purchase 200,000 of our common stock. As of  September  30, 2009 the Options have not be granted and the Company is currently negotiating the terms. He is also entitled to participate in such benefit packages as we provide to similarly situated employees, four weeks paid vacation and 10 paid holidays. The agreement contains customary provisions related to non-compete, confidentiality, non-solicitation and invention assignment. As of  September  30, 2010 the Company recorded accrued salary of $ 158,333 and is included in the accompanying financial statements as an accrued expense.





The agreement may be terminated by us for cause as set forth in the agreement, by us without cause, or by Dr. Prodanovic under certain circumstances. If we terminate the agreement for cause, he is not entitled to any severance benefits. If we should terminate the agreement without cause, we are obligated to pay Dr. Prodanovic an amount equal to his monthly base salary for the greater of 24 months or until he is hired in a new position which is consistent with his experience and stature. If such new position pays less than his then current base salary we are obligated to pay the difference for the balance of the 24 month severance period. If his employment in the new position should terminate prior to the expiration of the 24 month severance period, we are obligated to pay his monthly base salary during the remaining period. In the event we should fail to appoint Dr. Prodanovic Chief Executive Officer and a member of our Board of Directors in any successive periods during the term of the agreement, should we fail to compensate him pursuant to the terms of the agreement, or if there is a material breach of the agreement, Dr. Prodanovic is entitled to terminate the agreement and we shall be obligated to pay him the same severance benefits had we terminated the agreement without cause.





Dr. Prodanovic, in addition to his duties as the Company’s President and Chief Executive Officer,  was appointed the Company’s Chief Financial Officer on November 4, 2010





10





Alexey Goleshev





On February 27, 2009, the Company entered into an employment agreement with Alexey Goleshev. Under the terms of the agreement, Mr. Goleshev  served as Chief Financial Officer and a member of the Company’s Board of Directors. As of September  30, 2010 the Company recorded accrued salary of $25,000 and is included in the accompanying financial statements as an accrued expense.





On December 21, 2010, Mr. Goleshev was terminated as a director and an officer effective November 4, 2010.


Bosko Popovic





On February 27, 2009, the Company entered into an employment agreement with Bosko Popovic. Under the terms of the agreement, Mr. Popovic  served as Chief Operating Officer and a member of  the  Company’s Board of Directors . As of  September  30, 2010 the Company recorded accrued salary of $25,000 and is included in the accompanying financial statements as an accrued expense.





On December 21, 2010, Mr. Popovic was terminated as a director and an officer effective November 4, 2010.


Aslanbi Kodzokov





On February 27, 2009, the Company entered into an employment agreement with Aslanbi Kodzokov. Under the terms of the agreement, Mr. Kodzokov  served as the Company  Secretary and a member of the Company’s Board of Directors . As of  September  30, 2010 the Company recorded accrued salary of $25,000 and is included in the accompanying financial statements as an accrued expense.





On December 21, 2010, Mr. Kodzokov was terminated as a director and an executive officer effective November 4, 2010.


Note 7 - Subsequent events





On November 4, 2010, the Company entered into an agreement and release (the “Agreement”) with Auxerre Trading  Limited (“Auxerre”).  Pursuant to the Agreement, the Company disposed of its entire interest in its  subsidiary, Karbon CJSC (“Karbon”), a corporation organized under the laws of the Russian Federation, and Auxerre, owner of  107,406,000 shares of the Company’s  common stock (the “Auxerre Shares”),  representing approximately 51% ownership  of the Company’s  issued and outstanding common shares, returned the Auxerre Shares to the Company for cancellation.  Except for the fact that Auxerre was a shareholder of the Company prior to close, no material relationship exists between Auxerre and the Company and/or its affiliates, directors, officers or any associate of an officer or director.  In addition, Auxerre has released the Company from any claims that it may have and assumed all obligations, liabilities and losses of Karbon (“Existing Liabilities”) and agreed to indemnify the Company from any losses associated with the Existing Liabilities.





As a result of the disposition the Company has no significant operations or assets and is a shell company as defined in Rule 12b-2 of the Exchange Act




On December 21, 2010, the Company agreed to issued its professional advisors  an aggregate of 23 millions of shares of common stock to be registered on a Form S-8 Registration Statement 90 days after the Company is no longer considered a shell company.





11


Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations





FORWARD LOOKING STATEMENTS





Some of the statements contained in this Form 10-Q that are not historical facts are "forward-looking statements" which can be identified by the use of terminology such as "estimates," "projects," "plans," "believes," "expects," "anticipates," "intends," or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Form 10-Q, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:





•
Our ability to attract and retain management,





•
Our ability to raise capital when needed and on acceptable terms and conditions;





•
The intensity of competition; and





•
General economic conditions.





All written and oral forward-looking statements made in connection with this Form 10-Q that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.





The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements.





Overview





Disposition of  Company’s Sole Operating Business





On November 4, 2010, the Company entered into an agreement and release (the “Agreement”) with Auxerre Trading  Limited (“Auxerre”).  Pursuant to the Agreement, the Company disposed of its entire interest in its  subsidiary, Karbon CJSC (“Karbon”), a corporation organized under the laws of the Russian Federation, and Auxerre, owner of  107,406,000 shares of the Company’s  common stock (the “Auxerre Shares”),  representing approximately 51% ownership  of the Company’s  issued and outstanding common shares, returned the Auxerre Shares to the Company for cancellation.  Except for the fact that Auxerre was a shareholder of the Company prior to close, no material relationship exists between Auxerre and the Company and/or its affiliates, directors, officers or any associate of an officer or director.  In addition, Auxerre has released the Company from any claims that it may have and assumed all obligations, liabilities and losses of Karbon (“Existing Liabilities”) and agreed to indemnify the Company from any losses associated with the Existing Liabilities.





As a result of the disposition the Company has no significant operations or assets and is a shell company as defined in Rule 12b-2 of the Exchange Act





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Plan of Operations





The Company’s plan of operations for the next twelve months is to locate a suitable acquisition or merger candidate and consummate a business combination. The Company may need additional cash advances from stockholders or loans from other parties to pay for operating expenses until the Company consummates the merger with a privately-held company. Although it is currently anticipated that the Company can satisfy its cash requirements with additional cash advances or loans from other parties, if needed, for at least the next twelve months, the Company can provide no assurance that it can continue to satisfy its cash requirements for such period.





The Company’s purpose is to effect a business combination with an operating business which we believe has significant growth potential. We are currently considered to be a “blank check” company in as much as we have no specific business plans, no operations, revenues or employees. We currently have no definitive agreements or understanding with any prospective business combination candidates and have not targeted any business for investigation and evaluation nor are there any assurances that we will find a suitable business with which to combine. The implementation of our business objectives is wholly contingent upon a business combination and/or the successful sale of securities in the company. We intend to utilize the proceeds of any offering, any sales of equity securities or debt securities, bank and other borrowings or a combination of those sources to effect a business combination with a target business which we believe has significant growth potential. While we may, under certain circumstances, seek to effect business combinations with more than one target business, unless and until additional financing is obtained, we will not have sufficient proceeds remaining after an initial business combination to undertake additional business combinations.





As a result of our limited resources, we expect to effect only a single business combination. Accordingly, the prospects for our success will be entirely dependent upon the future performance of a single business. Unlike certain entities that have the resources to consummate several business combinations or entities operating in multiple industries or multiple segments of a single industry, we will not have the resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. A target business may be dependent upon the development or market acceptance of a single or limited number of products, processes or services, in which case there will be an even higher risk that the target business will not prove to be commercially viable.





Our officers are only required to devote a very limited portion of their time to our affairs on a part-time or as-needed basis. We expect to use outside consultants, advisors, attorneys and accountants as necessary, none of which will be hired on a retainer basis. We do not anticipate hiring any full-time employees so long as we are seeking and evaluating business opportunities.





We expect our present management to play no managerial role in the Company following a business combination. Although we intend to scrutinize closely the management of a prospective target business in connection with our evaluation of a business combination with a target business, our assessment of management may be incorrect. We cannot assure you that we will find a suitable business with which to combine.





Critical Accounting Estimates





Our unaudited condensed consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amount of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends, and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, estimates, assumptions and judgments to ensure that our consolidated financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.





Accounting for disposition of Karbon





As previously disclosed, on November 4, 2010, the Company disposed of  its entire interest in  Karbon , its sole operating business and previously consolidated subsidiary. As a result of the disposition of the Company’s entire interest in Karbon , the Company’s management has no access or control over Karbon’s accounting records and financial statements.





Accordingly, the Company  has  elected not presented results of operations, financial position and cash flows attributed to Karbon for the period July1, 2010 through September 30, 2010 in the Company’s accompanying  financial statements for the nine months ended September 30, 2010.








Our significant accounting policies are discussed in NoteSummary of Significant Accounting Policies, of the Notes to Unaudited Condensed Consolidated Financial Statements included in Item 1 Financial Statements.





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New Accounting Policies





The company has evaluated all the recent accounting pronouncements through  December 12, 2010 and believes that none of them will have a material effect on the company's financial statements.





Results of Operations





The following discussion and analysis summarizes the results of operations of the Company for the nine  month and three month periods ended September 30, 2010 and 2009.





Comparison  of Three Months Ended September 30, 2010 and 2009





The Company has not conducted any active operations since  disposal of Karbon , the Company’s sole operating business in November 2010, except for its efforts to locate a suitable acquisition or merger transaction. No revenue has been generated by the Company during such period, and it is unlikely the Company will have any future revenues unless it is able to consummate or effect an acquisition of, or merger with, an operating company, of which there can be no assurance.





Accordingly a comparison of  results of operations for the  three months ended September 30, 2010 and 2009 is not meaningful





Net loss for the three months ended September 30, 2010 and 2009 was $2,367,806 and $ 345,962, respectively, an increase of $ 2,021,844. The net loss for the three months ended September 30, 2010  is comprised of the loss on disposal of Karbon of $ 2,286,857 and corporate general  and administrative  expenses of  $80,949 .





Comparison  of Nine  Months Ended September 30, 2010 and 2009





The Company has not conducted any active operations since  disposal of Karbon , the Company’s sole operating business in November 2010, except for its efforts to locate a suitable acquisition or merger transaction. No revenue has been generated by the Company during such period, and it is unlikely the Company will have any future revenues unless it is able to consummate or effect an acquisition of, or merger with, an operating company, of which there can be no assurance.





Accordingly a comparison of  results of operations for the  nine months ended September 30, 2010 and 2009 is not meaningful





Net loss for the nine months ended September 30, 2010 and 2009 was $ 3,320,748 and $842,017, respectively , an increase of $2,478,731. The net loss for the nine months ended September 30, 2010  is comprised of a loss on  the disposal of Karbon of $2,286,857 and approximately $950,000 of operating  losses through June 30 2010.





Liquidity and Capital Resources





The Company will not have any revenues from any operations absent a merger or other business combination with an operating company, and no assurance can be given that such a merger or other business combination will occur or that the Company can engage in any public or private sales of the Company’s equity or debt securities to raise working capital. The Company is dependent upon future loans from its present stockholders or management, and there can be no assurances that its present stockholders or management will make any loans to the Company. At September 30, 2010, the Company had cash of $ 5,550 and working capital deficiency  of $ 540,811.





The Company's present material commitments are professional and administrative fees and expenses associated with the preparation of its filings with the SEC and other regulatory requirements. In the event that the Company engages in any merger or other business combination with an operating company, it will have additional material commitments. Although the Company from time to time may engage in discussions regarding a merger or other combination with an operating company, we cannot offer any assurances that we will engage in any merger or other combination with an operating company within the next twelve months.




Our registered independent certified public accountants have stated in their report dated April 14, 2010  that we have incurred operating losses in the last two years, and have a  significant working capital deficit. These factors among others may raise substantial doubt about our ability to continue as a going concern.





Off Balance Sheet Arrangements





We have no significant 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 our stockholders.





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Inflation




Our opinion is that inflation has not had a material effect on our operation.




ITEM 3.   Quantitative and Qualitative Disclosures about Market Risk.





Not applicable.





Contractual Obligations





Presently we have no Company hedging policy in place.  Collared hedges have the effect of providing a protective floor while allowing us to share in upward pricing movements to a fixed point. Consequently, while these hedges are designed to decrease our exposure to price decreases, they also have the effect of limiting the benefit of price increases beyond the ceiling. As we need, we may pursue hedging to protect a portion of our production against future pricing fluctuations, or enter into derivative contracts to decrease exposure to commodity price volatility.





Item 3.  Quantitative and Qualitative Disclosures About Market Risk





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





Item 4.  Controls and Procedures




Evaluation of Disclosure Controls and Procedures


The Company’s management, under the supervision of and with the participation of the Company’s principal executive officer and principal financial officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures, as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were not effective as of  September  30, 2010 to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act of 1934, as amended ("Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.





Our management, including our Chief Executive Officer/Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.




Changes in Internal Control Over Financial Reporting


There were no changes in the Company’s internal control over financial reporting during the quarter ended  September  30, 2010, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.




15





PART II - OTHER INFORMATION





Item 1.  Legal Proceedings





From time to time, the Company may become a party to litigation or other legal proceedings that it considers to be a part of the ordinary course of its business. The Company is not involved currently in legal proceedings that could reasonably be expected to have a material adverse effect on its business, prospects, financial condition or results of operations. The Company may become involved in material legal proceedings in the future.





Item 1(A).  Risk Factors





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 2.  Unregistered Sales of Equity Securities and Use of Proceeds





None.





Item 3.  Defaults Upon Senior Securities





None.





Item 4.  Reserved





Not applicable.





Item 5.  Other Information





On December 21, 2010, the Company agreed to issue its professional advisors an aggregate of 23 millions of shares of common stock to be registered in a Form S-8 Registration Statement 90 days following the Company is no longer considered a shell company.


Item 6.  Exhibits





31.1
Certification of the Chief Executive Officer pursuant to Section 302 of theSarbanes-Oxley Act of 2002




31.2
Certification of the Chief Financial Officer pursuant to Section 302 of theSarbanes-Oxley Act of 2002




32
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002














16





SIGNATURES





Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.







PREMIER ENERGY CORP.Dated: December 22, 2010
By:
/s/ Anton ProdonavicAnton Prodonavic, Chief Executive Officer and Director(Principal Executive Officer and Principal Financial and Accounting Officer)