UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q/A




(Mark
One)





x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30,
2008





o
 TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.





Commission File No. 333-140637








PREMIER
POWER RENEWABLE ENERGY, INC.





(Exact
name of registrant as specified in it charter)





Delaware
            
            13-4343369(State
      or other jurisdiction of incorporation or
            
            (IRS
      Employer Identificationorganization)
            
            No.)





4961
Windplay Drive, Suite 100


El
Dorado Hills, CA 95762





(Address
of principal executive offices)


(916)
939-0400





(Registrant's telephone number, including area code)





Indicate
by check mark whether the registrant (1) has 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  o





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





Large
      Accelerated filer  o
            Non-Accelerated
      Filer oAccelerated
      Filer o
            Smaller
      Reporting Company x





The
registrant is a shell company (as defined by Rule 12b-2 of the Exchange
Act). Yes  o No x




APPLICABLE
ONLY TO CORPORATE ISSUERS:





Indicate
the number of shares outstanding of each issuer's classes of common stock, as of
the latest practicable date:  26,018,750 issued and outstanding as of
November 7, 2008.












EXPLANATORY
NOTE





This
Amendment No. 1 to our Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 2008 is filed to (i) restate certain information in our
Condensed Consolidated Balance Sheets as of September 30, 2008 and December 31,
2007; (ii) restate certain information in our Condensed Consolidated Statements
of Operations for the Three and Nine Months Ended September 30, 2008 and 2007;
(iii) restate certain information in our Condensed Consolidated Statements of
Shareholders’ Equity as of September 30, 2008; (iv) restate certain information
in our Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 2008 and 2007; (v) amend our footnotes to the financial
statements; (vi) amend our disclosures in the “Results of Operations”
sub-section of “Management’s Discussion and Analysis”; (vii) amend our
disclosures in the “Liquidity and Capital Resources” sub-section of
“Management’s Discussion and Analysis”; (viii) amend our disclosures in the
“Contractual Obligations and Off-Balance Sheet Arrangements” sub-section of
“Management’s Discussion and Analysis”; (ix) amend our disclosures in the
“Controls and Procedures” section; (x) amend our disclosures in the “Legal
Proceedings” section; (xi) amend our disclosures in the “Risk Factors” section;
and (xii) update the Exhibit Table.





These
changes were made, and this Form 10-Q/A was filed subsequent to
our Amendment No. 1 to the Registration Statement on Form S-1
(333-155241), in response to a letter from the Commission dated December 5,
2008.  Except as required to reflect the changes noted above, this
Form 10-Q/A does not attempt to modify or update any other disclosures set forth
in our Quarterly Report on Form 10-Q. Additionally, this Form 10-Q/A does not
purport to provide a general update or discussion of any other developments of
the Company subsequent to the original filing.  The filing of this
Form 10-Q/A shall not be deemed an admission that the original filing, when
made, included any untrue statement of material fact or omitted to state a
material fact necessary to make a statement not misleading.









PREMIER
POWER RENEWABLE ENERGY, INC.


TABLE OF
CONTENTS


TO
QUARTERLY REPORT ON FORM 10-Q


FOR
PERIOD ENDED SEPTEMBER 30, 2008




PagePART I
            FINANCIAL INFORMATION
            1Item
      1.
            Financial
      Statements
            1Item
      2.
            Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
            2Item
      3.
            Quantitative
      and Qualitative Disclosures About Market Risk
            7Item
      4.
            Controls
      and Procedures
            7PART
      II
            OTHER
      INFORMATION
            9Item
      1.
            Legal
      Proceedings
            9Item
      1A.
            Risk
      Factors
            9Item
      2.
            Unregistered
      Sales of Equity Securities and Use of Proceeds
            23Item
      3.
            Defaults
      Upon Senior Securities
            23Item
      4.
            Submission
      of Matters to a Vote of Security Holders
            23Item
      5.
            Other
      Information
            23Item
      6.
            Exhibits
            24Signatures
            25









PART
I - FINANCIAL INFORMATION






ITEM
      1.
            FINANCIAL
      STATEMENTS





Our
financial statements start on the following page, beginning with page
F-1.




1




PREMIER POWER RENEWABLE ENERGY,
      INC.CONDENSED
      CONSOLIDATED BALANCE SHEETS




As
      of
                
                
                As
      ofSeptember
      30,
                  2008
                
                
                December
      31,
                  2007(Unaudited)ASSETSCurrent
      assets:Cash
      and cash equivalents
                
                $
                5,446,853
                
                
                $
                1,278,651Accounts
      receivable, net of allowance for doubtful accountsof
      $10,000
                
                
                7,730,325
                
                
                
                2,437,851Due
      from shareholders
                
                
                —
                
                
                
                23,458Cost
      and estimated earnings in excess of billingson
      uncompleted contracts
                
                
                640,833
                
                
                
                37,245Inventory,
      net
                
                
                6,936,339
                
                
                
                1,417,338Deferred
      income taxes (1)
                
                
                524,466
                
                
                
                —Prepaid
      expenses and other current assets
                
                
                43,990
                
                
                
                69,332Total
      current assets (1)
                
                
                21,322,806
                
                
                
                5,263,875Property
      and equipment, net
                
                
                388,216
                
                
                
                314,166Intangible
      assets
                
                
                1,110,001
                
                
                
                —Goodwill
                
                
                483,496
                
                
                
                —Total
      assets (1)
                
                $
                23,304,519
                
                
                $
                5,578,041LIABILITIES
      AND SHAREHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable
                
                $
                5,035,378
                
                
                $
                2,611,162Accrued
      liabilities
                
                
                1,286,443
                
                
                
                527,550Deferred
      income taxes (1)
                
                
                396,725
                
                
                
                31,152Billings
      in excess of costs and estimated earningson
      uncompleted contracts
                
                
                6,775,344
                
                
                
                1,451,637Borrowings,
      current
                
                
                1,316,720
                
                
                
                58,165Total
      current liabilities (1)
                
                
                14,810,610
                
                
                
                4,679,666Borrowings,
      non-current
                
                
                186,906
                
                
                
                183,223Deferred
      income taxes (1)
                
                
                288,352
                
                
                
                —Total
      liabilities (1)
                
                
                15,285,868
                
                
                
                4,862,889Commitments
      and contingencies (Note 9)
                
                
                —
                
                
                
                —Minority
      interest
                
                
                —
                
                
                
                1,650Shareholders'
      equity:Series
      A Convertible preferred stock, par value $.0001 per share; 5,000,000
      shares designated of 20,000,000 shares of preferred stock authorized;
      3,500,000 and 0 shares issued and outstanding at September 30, 2008 and
      December 31, 2007, respectively
                
                
                350
                
                
                
                —Common
      stock, par $.0001 per share; 100,000,000 shares authorized; 26,018,750 and
      21,159,451 shares issued and outstanding at September 30, 2008 and
      December 31, 2007, respectively (1)
                
                
                2,602
                
                
                
                2,166Additional
      paid-in-capital (1)
                
                
                7,650,956
                
                
                
                1,408Retained
      earnings (1)
                
                
                412,773
                
                
                
                700,913Accumulated
      other comprehensive income (loss)
                
                
                (48,030
                )
                
                
                9,065Total
      shareholders' equity (1)
                
                
                8,018,651
                
                
                
                713,502Total
      liabilities and shareholders' equity (1)
                
                $
                23,304,519
                
                
                $
                5,578,041


(1)
As restated.  See Note 14.


The
      accompanying notes are an integral part of these financial
      statements




F-1





PREMIER POWER RENEWABLE ENERGY,
      INC.CONDENSED
      CONSOLIDATED STATEMENTS OF
OPERATIONS




For
      the Three Months Ended
            
            
            For
      the Nine Months EndedSeptember
      30, 2008
            
            
            September
      30, 2007
            
            
            September
      30, 2008
            
            
            September
      30, 2007(Unaudited)
            
            
            (Unaudited)
            
            
            (Unaudited)
            
            
            (Unaudited)Net
      sales
            
            $
            9,236,108
            
            
            $
            4,486,221
            
            
            $
            27,224,925
            
            
            $
            13,310,421Cost
      of sales
            
            
            (8,233,171
            )
            
            
            (3,057,589
            )
            
            
            (23,502,924
            )
            
            
            (9,822,046
            )Gross
      profit
            
            
            1,002,937
            
            
            
            1,428,632
            
            
            
            3,722,001
            
            
            
            3,488,375Operating
      expenses:Sales
      and marketing
            
            
            576,451
            
            
            
            290,177
            
            
            
            1,571,826
            
            
            
            975,229Administrative
      expense
            
            
            515,163
            
            
            
            515,201
            
            
            
            1,427,653
            
            
            
            1,363,301Total
      operating expenses
            
            
            1,091,614
            
            
            
            805,378
            
            
            
            2,999,479
            
            
            
            2,338,530Operating
      income (loss)
            
            
            (88,677
            )
            
            
            623,254
            
            
            
            722,522
            
            
            
            1,149,845Other
      income (expense):Interest
      expense
            
            
            (16,912
            )
            
            
            (9,197
            )
            
            
            (55,957
            )
            
            
            (15,201
            )Interest
      income
            
            
            50
            
            
            
            4,112
            
            
            
            21,867
            
            
            
            15,587Total
      other income (expense)
            
            
            (16,862
            )
            
            
            (5,085
            )
            
            
            (34,090
            )
            
            
            386Income
      (loss) before income taxes
            
            
            (105,539
            )
            
            
            618,169
            
            
            
            688,432
            
            
            
            1,150,231Income
      tax expense (benefit) (1)
            
            
            (352,762
            )
            
            
            5,877
            
            
            
            (148,428
            )
            
            
            11,111Net
      income before minority interest (1)
            
            
            247,223
            
            
            
            612,292
            
            
            
            836,860
            
            
            
            1,139,120Minority
      interest
            
            
            90,728
            
            
            
            (29,770
            )
            
            
            (224,315
            )
            
            
            (11,573
            )Net
      income (1)
            
            $
            337,951
            
            
            $
            582,522
            
            
            $
            612,545
            
            
            $
            1,127,547Earnings
      per share:Basic
      (1)
            
            $
            .02
            
            
            $
            .03
            
            
            $
            .03
            
            
            $
            .05Diluted
      (1)
            
            $
            .01
            
            
            $
            .03
            
            
            $
            .03
            
            
            $
            .05Weighted
      average shares outstanding:Basic
      (1)
            
            
            22,268,639
            
            
            
            21,159,451
            
            
            
            21,533,243
            
            
            
            21,159,451Diluted
      (1)
            
            
            23,067,552
            
            
            
            21,159,451
            
            
            
            21,802,474
            
            
            
            21,159,451


(1)
As restated.  See Note 14.


The
      accompanying notes are an integral part of these financial
      statements




F-2





PREMIER POWER RENEWABLE ENERGY,
      INC.CONDENSED
      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY(Unaudited)




AccumulatedAdditional
                            
                            
                            
                            
                            
                            OtherCommon
      Stock
                            
                            
                            Preferred
      Stock
                            
                            
                            Paid
                            
                            
                            Retained
                            
                            
                            Comprehensive
                            
                            
                            UnauditedShares
                            
                            
                            Amount
                            
                            
                            Shares
                            
                            
                            Amount
                            
                            
                            In
      Capital
                            
                            
                            Earnings
                            
                            
                            Income
                            
                            
                            TotalBalance
      December 31, 2007 (1)
                            
                            
                            21,159,451
                            
                            
                            $
                            2,116
                            
                            
                            
                            
                            
                            $
                            
                            
                            
                            $
                            1,408
                            
                            
                            $
                            700,913
                            
                            
                            $
                            9,065
                            
                            
                            $
                            713,502Net
      income (1)
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            612,545
                            
                            
                            
                            
                            
                            
                            
                            612,545Foreign
      currency translation adjustment
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            (57,095
                            )
                            
                            
                            (57,095
                            )Comprehensive
      income
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            555,450Issuance
      of shares to purchase minority interest
                            
                            
                            3,059,299
                            
                            
                            
                            306
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            1,488,928
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            1,489,234Shares
      issued in connection with reverse acquisition (1)
                            
                            
                            1,800,000
                            
                            
                            
                            180
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            664,009
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            664,189Issuance
      of Series A and Series B warrants
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            1,793,987
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            1,793,987Issuance
      of Series A convertible preferred stock
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            3,500,000
                            
                            
                            
                            350
                            
                            
                            
                            3,253,939
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            3,254,289Distributions
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            (452,000
                            )
                            
                            
                            
                            
                            
                            
                            (452,000
                            )Deemed
      constructive contribution(distribution)
      of S-Corpundistributed
      earnings (1)
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            448,685
                            
                            
                            
                            (448,685
                            )Balance
      September 30, 2008(unaudited)
      (1)
                            
                            
                            26,018,750
                            
                            
                            $
                            2,602
                            
                            
                            
                            3,500,000
                            
                            
                            $
                            350
                            
                            
                            $
                            7,650,956
                            
                            
                            $
                            412,773
                            
                            
                            $
                            (48,030
                            )
                            
                            $
                            8,018,651





(1) As
restated.  See Note 14.


The
accompanying notes are an integral part of these financial
statements




F-3





PREMIER POWER RENEWABLE ENERGY,
  INC.CONDENSED
      CONSOLIDATED STATEMENTS OF CASH
FLOWS




For
      the Nine Months EndedSeptember 30,
                                2008
                              
                              
                              September
      30,
                                2007(Unaudited)
                              
                              
                              (Unaudited)Cash
      flows from operating activities:Net
      income (1)
                              
                              $
                              612,545
                              
                              
                              $
                              1,127,547Minority
      interest
                              
                              
                              224,315
                              
                              
                              
                              11,573Net
      income before minority interest (1)
                              
                              
                              836,860
                              
                              
                              
                              1,139,120Adjustments
      to reconcile net income(used
      in) operating activities:Depreciation
      and amortization
                              
                              
                              73,286
                              
                              
                              
                              21,029Changes
      in operating assets and liabilities:Accounts
      receivable
                              
                              
                              (5,292,474
                              )
                              
                              
                              (1,527,422
                              )Cost
      and estimated earnings in excess of billingson
      uncompleted contracts
                              
                              
                              (603,588
                              )
                              
                              
                              (470,814
                              )Inventories
                              
                              
                              (5,519,001
                              )
                              
                              
                              (163,328
                              )Prepaid
      expenses and other assets
                              
                              
                              25,342
                              
                              
                              
                              137,903Accounts
      payable
                              
                              
                              2,424,216
                              
                              
                              
                              833,218Accrued
      liabilities
                              
                              
                              719,288
                              
                              
                              
                              121,473Deferred
      income taxes (1)
                              
                              
                              (203,542
                              )
                              
                              
                              (5,797
                              )Billings
      in excess of costs and estimated earningson
      uncompleted contracts
                              
                              
                              5,323,707
                              
                              
                              
                              (1,067,750
                              )Net
      cash used in operating activities (1)
                              
                              
                              (2,215,906
                              )
                              
                              
                              (982,368
                              )Cash
      flows from investing activities:Acquisition
      of property and equipment
                              
                              
                              (89,833
                              )
                              
                              
                              (63,841
                              )Proceeds
      from sale of property and equipment
                              
                              
                              5,480
                              
                              
                              
                              16,957Net
      cash used in investing activities (1)
                              
                              
                              (84,353
                              )
                              
                              
                              (46,884
                              )Cash
      flows from financing activities:Net
      principal payments on borrowings
                              
                              
                              (50,745
                              )
                              
                              
                              (38,296
                              )Net
      repayments from shareholders
                              
                              
                              23,458
                              
                              
                              
                              —Proceeds
      from borrowings
                              
                              
                              1,250,000
                              
                              
                              
                              840,098Issuance
      of preferred stock and warrants
                              
                              
                              5,712,128
                              
                              
                              
                              —Distributions
                              
                              
                              (452,000
                              )
                              
                              
                              (553,116
                              )Net
      cash provided by financing activities (1)
                              
                              
                              6,482,841
                              
                              
                              
                              248,686Effect
      of foreign currency
                              
                              
                              (14,380
                              )
                              
                              
                              3,620Increase
      (decrease) in cash and cash equivalents
                              
                              
                              4,168,202
                              
                              
                              
                              (776,946
                              )Cash
      and cash equivalents at beginning of period
                              
                              
                              1,278,651
                              
                              
                              
                              934,853Cash
      and cash equivalents at end of period
                              
                              $
                              5,446,853
                              
                              
                              $
                              157,907Supplemental
      cash flow information:Interest
      paid
                              
                              $
                              16,912
                              
                              
                              $
                              9,197Taxes
      paid
                              
                              $
                              55,113
                              
                              
                              $
                              16,908Non-cash
      investing and financing activities:Issuance
      of notes to acquire equipment
                              
                              $
                              62,983
                              
                              
                              $
                              80,098Common
      stock issued to acquire minority interest
                              
                              $
                              1,489,234




(1) As
restated.  See Note 14.





The
      accompanying notes are an integral part of these financial
      statements




F-4





PREMIER
POWER RENEWABLE ENERGY, INC.


Notes
to Condensed Consolidated Financial Statements





Information
as of and for the Nine Months Ended September 30, 2008 and September 30,
2007


(Unaudited)





1.
            ORGANIZATION
      AND NATURE OF BUSINESS




Premier
Power Renewable Energy, Inc., a Delaware corporation (the “Parent”), and its
subsidiaries, Premier Power Renewable Energy, Inc., a California corporation
(Premier Power California), Bright Future Technologies, LLC (Bright Future), and
Premier Power Sociedad Limitada (Premier Power Spain) (collectively the
“Company”) designs, engineers, and installs photovoltaic systems in the United
States and Spain.





Prior to
September 9, 2008, Premier Power California and Bright Future were wholly owned
by a common shareholder group. That same shareholder group was deemed to
exercise control over Premier Power Spain through a 51% ownership interest,
management control, and the absence of disproportionate voting rights. On
September 1, 2008, that shareholder group exchanged their interests in Premier
Power Spain for shares of common stock of Premier Power California. On August
27, 2008, the holders of the 49% minority interest in Premier Power Spain
exchanged their interests in Premier Power Spain for shares of common stock of
Premier Power California. A summary of the fair value of the acquired tangible
and intangible assets and liabilities held by the 49% minority interest is as
follows:




Fair value of shares
      exchanged
            
            $
            1,489,234Tangible
      assets acquired
            
            $
            (1,033,603
            )Amortizing
      intangible assets acquired
            
            $
            (1,110,001
            )Liabilities assumed
            
            $
            1,137,867Goodwill
      for minority interest
            
            $
            483,496




The
estimated fair values of the acquired tangible assets and liabilities and
intangible assets may change as the Company completes the process of valuing the
acquired assets and liabilities and as direct costs of the transaction are
finalized. The final adjustments are not expected to be material.





The
following unaudited pro forma information gives effect to the acquisition of the
minority interest as if such had been acquired on January 1,
2007.  The pro forma information is not necessary indicative of what
would have occurred had the acquisition been made on such date, nor is it
indicative of future results of operations.  The pro forma amounts
give effect to appropriate adjustments for the fair value of the acquired assets
and liabilities.




Three Months Ended September
      30,
              
              
              Nine Months Ended September
      30,Description
              
              2008
              
              
              2007
              
              
              2008
              
              
              2007Pro
      forma operating expenses
              
              $
              1,126,967
              
              
              $
              840,731
              
              
              $
              3,105,538
              
              
              $
              2,497,045Pro
      forma net income
              
              $
              211,870
              
              
              $
              582,522
              
              
              $
              730,801
              
              
              $
              980,605Pro
      forma earnings per share:Basic
              
              $
              0.01
              
              
              $
              0.02
              
              
              $
              0.03
              
              
              $
              0.04Diluted
              
              $
              0.01
              
              
              $
              0.02
              
              
              $
              0.03
              
              
              $
              0.04




The
historical financial statements of the Company prior to September 9, 2008
present its financial position, results of operations and cash flows on a
combined basis.





Pursuant
to a reverse acquisition between the Parent (formerly “Harry’s Trucking, Inc.”)
and Premier Power California that closed on September 9, 2008, the shareholders
of Premier Power California exchanged 100% of their interests for an aggregate
24,218,750 shares of the Parent’s common stock.




Subsequent
to the merger, the former shareholders of Premier Power California held
approximately 87% of the outstanding common stock of the Company. The merger was
considered to be a reverse acquisition accounted for as a recapitalization.
Premier Power California was considered to be the accounting acquirer and the
historical financial statements of the Company are those of Premier Power
California. The outstanding shares, members’ equity and earnings per share in
the historical financial statements have been restated to give effect to the
common shares issued to the controlling shareholders.




In
connection with the reverse acquisition, the Company issued 3,500,000
units, consisting each of 1 share of Series A Convertible Preferred Stock, 1⁄2 of
a Series A Warrant, and 1⁄2 of a Series B Warrant in exchange for $5,712,127 in
net proceeds. Each 1 share of Series A Convertible Preferred Stock converts into
1 share of common stock. Each 1 Series A Warrant and 1 Series B Warrant entitles
the holder thereof to purchase one share of common stock at $2.50 and $3.00 per
share, respectively.




F-5





2.
            SIGNIFICANT
      ACCOUNTING POLICIES





Basis of Presentation - The
financial information as of September 30, 2008 and for the nine months ended
September 30, 2008 and 2007 is unaudited, but in the opinion of management of
the Company, contains all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation of financial position, results of operations
and cash flows.




Use of Estimates - The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect certain reported amounts and disclosures.
Significant estimates include the allowance for doubtful accounts, warranty
reserves, revenue recognition, the estimated useful life of property and
equipment and the provision for income taxes. Accordingly, actual results could
differ from those estimates.





Cash and Cash Equivalents -
Cash and cash equivalents include cash on hand or in the bank and short-term
investment securities with original maturity of 90 days or less at date of
purchase.





The
Company maintains its cash in bank deposit accounts that, at times, may exceed
federally insured limits. The Company has not experienced any losses in such
accounts. The Company had $6,318,564 and $1,600,061 in cash in bank
accounts at September 30, 2008 and December 31, 2007, respectively, in excess of
deposit insurance limits.





Concentrations and Credit Risk
- Two customers accounted for 15% and 16% of the Company’s revenues for the
three months ended September 30, 2008. For the nine months ended September
30, 2008, no single customer accounted for more than 10% of the Company’s
revenues. One customer accounted for 33% of the Company’s revenues for the
three months ended September 30, 2007. Two customers accounted for 12% and 14%,
respectively, of the Company’s revenues for the nine months ended September
30, 2007. Accounts receivable primarily consist of trade receivables and amounts
due from state agencies and utilities for rebates on solar systems installed. At
December 31, 2007, two customers accounted for 49% and 22% of accounts
receivable. At September 30, 2008, the Company had two customers that accounted
for 19% and 14%, respectively, of its accounts receivables, respectively.
The Company monitors account balances and follows up with accounts that are past
due as defined in the terms of the contract with the customer. To date, the
Company’s losses on uncollectible accounts receivable have been immaterial. The
Company maintains an allowance for doubtful accounts receivable based on the
expected collectability of its accounts receivable. The allowance for doubtful
accounts is based on assessments of the collectability of specific customer
accounts and the aging of the accounts receivable. If there is a deterioration
of a major customer’s credit worthiness or actual defaults are higher than
historical experience, the allowance for doubtful accounts is increased. The
allowance for doubtful accounts was $10,000 as of September 30, 2008 and
December 31, 2007.




The
Company purchases its solar panels from a limited number of vendors, but
believes that in the event it is unable to purchase solar panels from these
vendors alternative sources of solar panels will be available.





At
December 31, 2007 and September 30, 2008, the Company held $88,536 and $74,604,
respectively, of its long lived assets in Spain. For the nine months ended
September 30, 2008 and 2007, the Company recorded, $12,657,390 and $1,361,000,
respectively, in revenues from Spain.





Inventories - Inventories,
consisting primarily of raw materials, are recorded using the average cost
method and are carried at the lower of cost or market.





Property and Equipment -
Property and equipment with a value greater than $2,000 are recorded at cost and
depreciated using the straight-line method over estimated useful lives of 5
years, or in the case of leasehold improvements, the lease term, if shorter.
Maintenance and repairs are expensed as they occur.





Revenue Recognition - Revenue
on photovoltaic system installation contracts is recognized using the percentage
of completion method of accounting. At the end of each period, the Company
measures the cost incurred on each project and compares the result against its
estimated total costs at completion. The percent of cost incurred determines the
amount of revenue to be recognized. Payment terms are generally defined by the
contract and as a result may not match the timing of the costs incurred by the
Company and the related recognition of revenue. Such differences are recorded as
costs and estimated earnings in excess of billings on uncompleted contracts or
billings in excess of costs and estimated earnings on uncompleted contracts. The
Company determines its customer’s credit worthiness at the time the order is
accepted. Sudden and unexpected changes in a customer’s financial condition
could put recoverability at risk.





Contract
costs include all direct material and labor costs and those indirect costs
related to contract performance, such as indirect labor, supplies, tools,
repairs, and depreciation costs. Selling and general and administrative costs
are charged to expense as incurred. Provisions for estimated losses on
uncompleted contracts are made in the period in which such losses are
determined. Changes in job performance, job conditions, and estimated
profitability, including those arising from contract penalty provisions, and
final contract settlements may result in revisions to costs and income and are
recognized in the period in which the revisions are determined. Profit
incentives are included in revenues when their realization is reasonably
assured.





Advertising - The Company
expenses advertising costs as they are incurred. Advertising costs were $352,389
and $348,676 for the nine months ended September 30, 2008 and September 30,
2007, respectively.





Warranty Reserve - Prior to
January 1, 2007, the Company provided a five year warranty covering the labor
and materials associated with its installations. Effective January 1, 2007, the
Company changed the coverage to generally be ten years for contracts signed
after December 31, 2006 in the U.S. and one year in Spain. Solar panels and
inverters are warranted by the manufacturer for 25 years and 10 years,
respectively.  Activity in the Company’s warranty reserve was as
follows:





Nine
      Months Ended
                  September
      30, 2008
                
                
                Nine
      Months Ended
                  September
      30, 2007Balance
      at beginning of period
                
                $
                172,002
                
                
                $
                58,375Warranty
      expense
                
                
                199,482
                
                
                
                70,827Less:
      Warranty claims
                
                
                (39,698
                )
                
                
                (8,312
                )Balance
      at end of period
                
                $
                331,786
                
                
                $
                120,890




F-6





Foreign Currency - Premier
Power Spain’s functional currency is the Euro. Its assets and liabilities are
translated at year-end exchange rates, except for certain non-monetary balances
which are translated at historical rates. All income and expense amounts of
Premier Power Spain are translated at average exchange rates for the
period. Translation gains and losses are not included in determining net income
but are accumulated in a separate component of shareholders’ equity. Foreign
currency transaction gains and losses are included in the determination of net
income (loss) in the period in which they occur. For the nine months ended
September 30, 2008 and 2007 foreign currency transaction gains and losses were
$10,817 and $0 , respectively.





Minority Interest – The
minority interest reflected in the Balance Sheets and Statement of Operations
represent the 49% shareholdings of the non-controlling shareholders in the
Company’s Spanish operations, Premier Power Spain.  Concurrent with
the reverse merger, these shareholdings were converted into shares of the
Company’s stock and no longer reported as a minority interest effective
September 9, 2008.




Earnings for Share – Earnings
per share are computed in accordance with the provisions of SFAS No. 28, “Earnings Per
Share.”  Basic net income (loss) per share is computed using
the weighted-average number of common shares outstanding during the period, as
adjusted for the dilutive effect of the Company’s outstanding convertible
preferred shares using the “if-converted method.”  Diluted earnings
per share is computed using the weighted-average number of common shares
outstanding during the period, as adjusted for the dilutive effect of the
Company’s outstanding convertible preferred shares using the “if-converted”
method and dilutive potential common shares.  The Company’s dilutive
potential common shares consist of warrants.




Comprehensive Income - Statement of Financial
Accounting Standards No. 130, “ Reporting Comprehensive
Income ,” establishes standards for reporting comprehensive income and
its components in a financial statement that is displayed with the same
prominence as other financial statements. Comprehensive income, as defined,
includes all changes in equity during the period from non-owner sources, such as
foreign currency translation adjustments.





Income Taxes - The Company
accounts for income taxes under the liability method. Under this method,
deferred tax assets and liabilities are determined based on differences between
the financial reporting and tax reporting bases of assets and liabilities and
are measured using enacted tax rates and laws that are expected to be in effect
when the differences are expected to reverse. Realization of deferred tax assets
is dependent upon the weight of available evidence, including expected future
earnings. A valuation allowance is recognized if it is more likely than not that
some portion, or all of a deferred tax asset will not be realized.




Prior
to September 9, 2008, Premier Power California (a Subchapter S corporation)
and Bright Future (a limited liability company) were not subject to federal
income tax, but were subject to state income tax. From January 1, 2008 to
September 9, 2008, the Company recorded $14,674 in state income tax expense
related to these entities. For the nine months ended September 30, 2007, the
Company recorded $11,111 in state income tax. In
conjunction with the conversion to a C-corporation for tax purposes, the Company
recorded a net deferred tax asset of $485,864.The majority of this
benefit is attributable to changing the method of accounting from the cash to
accrual basis of accounting for tax purposes.




Subsequent
to September 8, 2008 and in conjunction with the reverse acquisition, the
Company and its U.S. subsidiaries became subject to federal income taxes. The
change in tax status did not result in a change in the tax basis of the Company
and its U.S. subsidiaries. For the period from September 9, 2008 to September
30, 2008, the Company and its U.S. subsidiaries recorded an income tax benefit
of $556,281. The difference in the level of income tax expense incurred by the
Company and its U.S subsidiaries for the three and nine month periods ended
September 30, 2008 is primarily a function of the change in tax status.
Additionally, in conjunction with the acquisition of the Spain minority
interest, the Company recorded a deferred tax liability of $333,000 resulting in
an offsetting increase to goodwill.




Premier
Power Spain is organized under the laws of Spain and is subject to federal and
provincial taxes. For the nine months ended September 31, 2008 and 2007, Premier
Power Spain recorded income tax expense of $393,179 and $0,
respectively.





Effective
September 1, 2008, the Company adopted Financial Accounting Standards
Interpretation, or FIN No. 48, “ Accounting for Uncertainty in Income
Taxes – an interpretation of FASB Statement No. 109 ” (FIN 48).
FIN 48 prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of uncertain tax positions taken
or expected to be taken in a company’s income tax return, and also provides
guidance on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure, and transition.




As a
result of the implementation of FIN 48, the Company recognized no change in the
liability for unrecognized tax benefits related to tax positions taken in prior
periods, and no corresponding change in retained earnings.




As a
result of the implementation of FIN 48, the Company recognized no material
adjustment in the liability for unrecognized income tax benefits as of the
September 2008 adoption date and at September 30, 2008. Also, the Company
had no amounts of unrecognized tax benefits that, if recognized, would affect
its effective tax rate.




The
Company’s policy for deducting interest and penalties is to treat interest as
interest expense and penalties as taxes. As of September 30, 2008, the Company
had no amount accrued for the payment of interest and penalties related to
unrecognized tax benefits and no amounts as of the adoption date of FIN
48.




Recently Issued Accounting
Pronouncements - In September of 2006, the Financial Accounting Standards
Board (“FASB”) issued FAS No. 157, " Fair Value Measurement "
("FAS 157"), which defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles (GAAP) and
expands disclosures about fair value measurements. This statement applies under
other accounting pronouncements that require or permit fair value
measurements, FASB having previously concluded in those accounting
pronouncements that fair value is the relevant measurement attribute.
Accordingly, this statement does not require any new fair value
measurements.  This statement is effective for fiscal years beginning
after November 15, 2007, except for non-financial assets and liabilities
measured at fair value on a non-recurring basis for which the
effective date will be for fiscal years beginning after November 15, 2008,
and is not expected to have a material impact on the Company's
consolidated financial statements.





In
February 2007, the FASB issued FAS No. 159, “ The Fair Value Option
forFinancial
Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115 ” (“FAS
159”), which permits entities to choose to measure many financial instruments
and certain other items at fair value at specified election dates. A business
entity is required to report unrealized gains and losses on items for which the
fair value option has been elected in earnings at each subsequent reporting
date. This statement is expected to expand the use of fair value measurement.
FAS 159 is effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years, and is
applicable beginning in the first quarter of 2008. The adoption of FAS 159 did
not have a material effect on our results of operations, cash flows or financial
position.





In
December 2007, the FASB issued FAS No. 141(R), “Business Combinations” (“FAS
141(R)”), which requires the acquiring entity in a business combination to
recognize all (and only) the assets acquired and liabilities assumed in the
transaction; establishes the acquisition-date fair value as the measurement
objective for all assets acquired and liabilities assumed; and requires the
acquirer to disclose to investors and other users all of the information they
need to evaluate and understand the nature and financial effect of the business
combination. FAS 141(R) is prospectively effective to business combinations for
which the acquisition is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. The impact of FAS 141(R) on the
Company's consolidated financial statements will be determined in part by the
nature and timing of any future acquisition completed.




F-7





In
December 2007, the FASB issued FAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements (as amended)” (“FAS 160”), which
improves the relevance, comparability, and transparency of financial information
provided to investors by requiring all entities to report noncontrolling
(minority) interests in subsidiaries in the same way as equity consolidated
financial statements. Moreover, FAS 160 eliminates the diversity that currently
exists in accounting from transactions between an entity and non-controlling
interests by requiring they be treated as equity transactions. FAS 160 is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008; earlier adoption is prohibited. The
Company is currently evaluating the impact that FAS 160 will have on its
consolidated financial statements.




In March
2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No.
161, “ Disclosures about
Derivative Instruments and Hedging Activities, an amendment of FASB Statement
No. 133, ” which requires additional disclosures about the objectives of
the derivative instruments and hedging activities, the method of accounting for
such instruments under SFAS No. 133 and its related interpretations, and a
tabular disclosure of the effects of such instruments and related hedged items
on our financial position, financial performance, and cash flows. SFAS No. 161
is effective beginning January 1, 2009. We are currently assessing the potential
impact that adoption of SFAS No. 161 may have on our financial
statements.




In May
2008, the FASB issued FAS No. 162, “ The Hierarchy of Generally Accepted
Accounting Principles ”, which identifies the sources of accounting
principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles in the
United States of America (the GAAP hierarchy). This statement is effective
November 15, 2008 which is 60 days following the SEC’s approval of the Public
Company Accounting Oversight Board amendments of AU Section 411, “ The Meaning of Presents Fairly in
Conformity with Generally Accepted Accounting Principles. ” The Company
is currently evaluating the impact that FAS 162 will have on its consolidated
financial statement.





3.
            INCOME
      TAX





For
the nine months ended September 31, 2008, income tax expense has been
restated to property account for the change to a C-corporation for the
U.S. subsidiaries. This change was
primarily responsible for an income tax benefit of $148,428
recorded
for the nine months ended September 30, 2008.





The
following unaudited pro forma information gives effect as if Premier Power
California and Bright Future previously operated as
C-corporations.  The pro forma data below shows the estimated effect
of income taxes on net income and earnings per share for periods prior to
becoming a taxable corporation.





For
      the Nine Months Ended
              September
      30,2008
            
            
            2007Pro
      Forma DisclosuresIncome
      before income tax and minority interest
            
            $
            688,432
            
            
            $
            1,150,231Income
      tax expense
            
            $
            193,601
            
            
            $
            263,601Net
      income
            
            $
            494,831
            
            
            $
            886,630Earnings
      per share:Basic
            
            $
            0.02
            
            
            $
            0.04Diluted
            
            $
            0.02
            
            
            $
            0.04





4.
            INTANGIBLE
      ASSETS





Intangibles
consist of amortizing intangibles and goodwill. At September 30, 2008, such
amounts were as follows:




September
      30, 2008Amortizing
      IntangiblesTrademark
            
            $
            878,018Employee
      Contract
            
            
            179,527Backlog
            
            
            52,456Subtotal
            
            $
            1,110,001Goodwill
            
            
            483,496Total
            
            $
            1,593,497




Amortization
periods for the intangibles are as follows: trademark - 17 years, employee
contract - 2 years, backlog - 6 months. Amortization for the three and nine
month periods ended September 30, 2008 was insignificant.






F-8




5.
            PROPERTY
      AND EQUIPMENT





Property
and equipment consists of the following:





September
      30, 2008
            
            
            December
      31, 2007Equipment
            
            $
            124,492
            
            
            $
            138,151Furniture
      and computers
            
            
            47,821
            
            
            
            12,352Vehicles
            
            
            464,189
            
            
            
            338,663636,502
            
            
            
            489,166Less:
      Accumulated depreciation
            
            
            (248,286
            )
            
            
            (175,000
            )Total
            
            $
            388,216
            
            
            $
            314,166





Depreciation
expense was $73,286 and $21,029 for the nine months ended September 30, 2008 and
September 30, 2007, respectively.





6.
            ACCRUED
      LIABLILITIES





Accrued
liabilities consisted of the following:





September
      30, 2008
            
            
            December
      31, 2007Payroll
            
            $
            274,437
            
            
            $
            215,434Warranty
      reserve
            
            
            331,786
            
            
            
            172,002401K
      plan
            
            
            12,000
            
            
            
            60,000Taxes
            
            
            584,292
            
            
            
            24,020Workers
      compensation insurance
            
            
            —
            
            
            
            20,000Other
      operational accruals
            
            
            83,928
            
            
            
            36,094Total
            
            $
            1,286,443
            
            
            $
            527,550





7.
            BORROWINGS




Borrowings
consist of notes payable and lines of credit.




Notes
Payable




Notes
payable were $253,626 and $241,388 at September 30, 2008 and December 31, 2007,
respectively.The notes are secured by vehicles and have maturities
through 2014. The annual interest rates on the notes range from 1.9% to 6.6%.
The future principal payments on these notes as of September 30, 2008 are as
follows:




2008
            
            $
            17,7632009
            
            
            65,3922010
            
            
            56,2762011
            
            
            53,3092012
            
            
            42,8642013
            
            
            13,0822014
            
            
            4,940Total
            
            $
            253,626




Lines of
Credit




In
February 2007, Premier Power entered into an agreement for a $2 million line of
credit (LOC) with a bank, maturing in February 2008. The LOC is secured by the
Company’s assets and a personal guaranty by the Company’s Chief Executive
Officer and his wife. Actual amounts available under the LOC are dependent on
the balance of accounts receivable and inventory. The LOC bears interest at the
prime rate plus 1% (6% at September 30, 2008). At September 30, 2008 and
December 31,2007, $1,250,000 and $0, respectively, were outstanding on the LOC.
The LOC was renewed in February 2008 with a borrowing limit of $3 million and
maturing in February of 2009.




The
Company also has a separate $100,000 line of credit that is secured by the
personal guarantee of certain of the owners. This line of credit is callable at
any time by the bank. Interest is payable monthly at the prime rate plus 4.75%,
or 9.75% at September 30, 2008. No balance was outstanding on this line of
credit at September 30, 2008 and December 31, 2007.


F-9




8.
            EQUITY




Preferred
Stock




The
Company has 20,000,000 shares of preferred stock, par value $0.0001 per
share (“Preferred Stock”), authorized. The preferred stock may be issued from
time to time in series having such designated preferences and rights,
qualifications and to such limitations as the Board of Directors may
determine.





The
Company has designated 5,000,000 shares of Preferred Stock as Series A
Convertible Preferred Stock (“Series A Stock”). The holders of Series A Stock
have no voting rights except with regards to certain corporate events, enjoys a
liquidation preference over holders of common stock, and may convert each share
of Series A Stock into one share of common stock at any time. Series A stock
converts automatically upon the occurrence of an offering meeting certain
criteria. As of September 30, 2008, there are 3,500,000 shares of Series A Stock
outstanding.





Warrants




During
the ninth months ended September 30, 2008, the Company issued Series A
Warrants and Series B Warrants to purchase 1,750,000 and 1,750,000 shares of
common stock, respectively, in connection with the issuance of Series A
Stock.




Both the
Series A and B Warrants have four year lives. The Company has the right to call
for cancellation each outstanding Series A Warrant or Series B Warrant under
certain circumstances. The Series A Warrants have an exercise price of
$2.50 and a fair value of $.15 per warrant. The Series B Warrants have an
exercise price of $3.00 and a fair value of $.13 per warrant.





The significant
assumptions used to determine the fair values of the warrants, are as
follows:





Significant
      assumptions (weighted-average):Risk-free interest rate at grant
      date
            
            
            4.5
            %Expected
      stock price volatility
            
            
            95
            %Expected
      dividend payout
            
            
            —Expected
      option life-years
            
            
            4
      yrs




The
fair value of the preferred stock was calculated based on the estimated fair
value and underlying number of common shares it would convert into at the time
of the transaction.  The estimated fair value of our common stock on
the transaction date was $.42 per share, and the preferred stock would have
converted into 3,500,000 common shares, thus deriving a fair value of $1,470,000
for the underlying common shares.





Based
on the relative fair values of the preferred stock and the warrants, we
allocated $5,206,013 and $1,793,987 of the $7,000,000 proceeds, before issuance
costs, to the preferred stock and warrants, respectively.





9.
            COMMITMENTS
      AND CONTINGENCIES





At
September 30, 2008, Premier Power Spain was party to a non-cancelable lease for
operating facilities in Madrid, Spain, which expires in 2013, and a
non-cancelable lease for operating facilities in Navarra, Spain, which expires
in 2012.  Also at September 30, 2008, Premier Power California was
party to a non-cancelable lease for operating facilities in Redlands,
California, which expires in 2010. These leases provide for annual rent
increases tied to the Consumer Price Index. The leases require the following
payments as of September 30, 2008, subject to annual adjustment, if
any:




2008
            
            $
            19,1312009
            
            
            76,5252010
            
            
            67,8892011
            
            
            41,9802012
            
            
            33,5772013
            
            
            22,032Total
            
            $
            261,134




For the
nine months ended September 30, 2008 and 2007, the Company recorded $14,788 and
$5,740, respectively, in rent expense for these leases.





10.
            EMPLOYEE
      BENEFIT PLAN





Premier
Power Renewable Energy, Inc. has a 401(k) plan (the Plan) for its employees.
Employees are eligible to make contributions when they attain an age of
twenty-one and have completed at least one year of service. Premier Power makes
discretionary matching contributions to employees who qualify for the Plan and
were employed on the last day of the Plan year. Such contributions totaled $0
and $60,000 for the nine months ended September 30, 2008 and 2007, respectively.
Employees are vested 100% after 3 years of service. Neither Bright Future nor
Premier Power Spain offer defined contribution or defined benefit plans to their
employees.





11.
            RELATED
      PARTY TRANSACTION





The
Company’s CEO and controlling shareholder of the Company is a
guarantor of the Company’s line of credit.  Prior to the merger,
Premier Power California made distributions to its members to cover their
estimated tax liabilities on their deemed portion of its income. These
distributions are based on the Company's best estimates and available
information, and may be revised at a later date. Such revisions may result in a
portion of previously made distributions being refunded to the Company. The
balance of  $23,458 was recorded as due from shareholders at
December 31, 2007 and represents payments made to a member of Premier
Power California in excess of the member’s actual tax liability.  Such
amounts were repaid on June 30, 2008.  Due to the nature of the
receivable and its short duration, it was not interest bearing or
collateralized.




F-10


12.
              EARNINGS
      PER SHARE
 
 The
weighted average shares outstanding used in the calculation of earnings per
share were as follows:
 
 Three
      Months Ended
                September
      30,
              
              
              Nine
      Months Ended
                September
      30,2008
              
              
              2007
              
              
              2008
              
              
              2007Basic
              
              
              22,268,639
              
              
              
              21,159,451
              
              
              
              21,533,243
              
              
              
              21,159,451Conversion
      of convertible preferred stock
              
              
              798,913
              
              
              
              ―
              
              
              
              269,231
              
              
              
              ―Diluted
              
              
              23,067,552
              
              
              
              21,159,451
              
              
              
              21,802,474
              
              
              
              21,159,451
 
 For
the three and nine month periods ending September 30, 2008, the Company paid no
dividends on its convertible preferred stock.  Potentially diluted
securities that were excluded from the calculation of earnings per share because
they were anti-dilutive for each period consist of warrants to purchase
3,500,000 shares of common stock.
 
 13.
              SUBSEQUENT
      EVENTS
 
 On
December 19, 2008, the Company’s Board of Directors approved the Company’s 2008
Equity Incentive Plan (the “Plan”).  Under the terms of the Plan,
2,951,875 shares of common stock are eligible for issuance by the Company under
the Plan.  On January 9, 2009, the Board approved the grant of up to
1,142,479 stock options.
 
 On
November 24, 2008, the Company filed an Amendment to its Certificate of
Incorporation with the Secretary of State of the State of Delaware to increase
the number of authorized shares of its common stock.  Pursuant to the
Amendment, the total number of authorized shares of common stock, par value
$0.0001 per share, that the Company is authorized to issue was increased from
100,000,000 shares to 500,000,000 shares. The total number of authorized shares
of preferred stock, par value $0.0001 per share, that the Company is authorized
to issue remains at 20,000,000 shares.
 
 14.
              RESTATEMENT
 
 As a
result of a change in its tax status during the quarter ended September 30,
2008, the Company determined that it had incorrectly calculated its deferred tax
position as of September 30, 2008 and its provision for income taxes for the
three and nine months ended September 30, 2008.  The impact of this
correction was to increase deferred tax assets by $524,466 and reduce income tax
expense by an offsetting amount.  Additionally, the Company has
determined that distributions made to its members and shareholders totaling
$452,000 and $553,116 for the nine months ended September 30, 2008 and 2007,
respectively, were incorrectly classified as investing activities rather than
financing activities. The
Company also revised its calculation of shares outstanding at December 31, 2007
and 2006 from 19,578,853 to 21,159,451 as a result of its determination
that only 1,800,000 shares of common stock should be treated as being
issued in conjunction with the reverse merger as opposed to the 3,380,598 shares
previously disclosed.  As a result of this change, and the correction of a
clerical error in the determination of diluted shares, weighted average
shares outstanding for the three and nine month periods ending September 30,
2008 and 2007 were also changed.  Earnings per share for certain
periods were also revised as a result of the change. Further,
the Company revised the Statement of Shareholders' Equity to present the
undistributed retained earnings of Premier Power California, an S-corporation,
at the time of the reverse merger, as a constructive dividend from the former
S-corporation shareholders. This change resulted in
a reduction of retained earnings of $448,685 and a
corresponding increase to additional paid in capital.
  The
impact of these corrections is summarized below:
  Shareholder
and member distributions:
 Nine
      Months Ended
                        September 30, 2008
                      
                      
                      Nine
      Months Ended
                        September 30, 2007As Reported
                      
                      
                      As Restated
                      
                      
                      As Reported
                      
                      
                      As RestatedNet
      cash provided by (used in) investing activities
                      
                      $
                      (536,354
                      )
                      
                      $
                      (84,353
                      )
                      
                      $
                      (600,512
                      )
                      
                      $
                      (46,884
                      )Net
      cash provided by (used in) financing activities
                      
                      $
                      6,934,841
                      
                      
                      $
                      6,482,481
                      
                      
                      $
                      801,802
                      
                      
                      $
                      248,686
 
 Income
taxes and weighted average shares outstanding :
  As
      of and for the
                        Three
      Months Ended
                        September 30, 2008
                      
                      
                      As
      of and for the
                        Nine
      Months Ended
                        September 30, 2008As Reported
                      
                      
                      As Restated
                      
                      
                      As Reported
                      
                      
                      As RestatedDeferred
      tax assets (liabilities), net
                      
                      $
                      (749,402
                      )
                      
                      $
                      (160,611
                      )
                      
                      $
                      (749,402
                      )
                      
                      $
                      (160,611
                      )Income
      tax expense (benefit)
                      
                      $
                      236,027
                      
                      
                      $
                      (352,762
                      )
                      
                      $
                      440,362
                      
                      
                      $
                      (148,428
                      )Net
      income (loss)
                      
                      $
                      (250,839
                      )
                      
                      $
                      337,951
                      
                      
                      $
                      23,755
                      
                      
                      $
                      612,545Weighted
      average shares outstanding:Basic
                      
                      
                      21,847,743
                      
                      
                      
                      22,268,639
                      
                      
                      
                      20,343,460
                      
                      
                      
                      21,353,243Diluted
                      
                      
                      21,847,743
                      
                      
                      
                      23,067,552
                      
                      
                      
                      20,343,460
                      
                      
                      
                      21,802,474Earnings
      per share:Basic
                      
                      $
                      (0.01
                      )
                      
                      $
                      0.02
                      
                      
                      $
                      0.00
                      
                      
                      $
                      0.03Diluted
                      
                      $
                      (0.01
                      )
                      
                      $
                      0.01
                      
                      
                      $
                      0.00
                      
                      
                      $
                      0.03
  Three
      Months Ended
                  September 30, 2007
                
                
                Nine
      Months Ended
                  September 30, 2007As Reported
                
                
                As Restated
                
                
                As Reported
                
                
                As RestatedWeighted
      average shares outstanding:Basic
                
                
                19,578,853
                
                
                
                21,159,451
                
                
                
                19,578,853
                
                
                
                21,159,451Diluted
                
                
                19,578,853
                
                
                
                21,159,451
                
                
                
                19,573,853
                
                
                
                21,159,451Earnings
      per share:Basic
                
                $
                0.03
                
                
                $
                0.03
                
                
                $
                0.06
                
                
                $
                0.05Diluted
                
                $
                0.03
                
                
                $
                0.03
                
                
                $
                0.06
                
                
                $
                0.05
  F-11


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





Forward
Looking Statements





Certain
statements in the Management’s Discussion and Analysis (“MD&A”), other than
purely historical information, including estimates, projections, statements
relating to our business plans, objectives and expected operating results, and
the assumptions upon which those statements are based, are “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act
of 1995, Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934. These forward-looking statements generally
are identified by the words “believe,” “project,” “expect,” “anticipate,”
“estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,”
“will be,” “will continue,” “will likely result,” and similar expressions.
Forward-looking statements are based on current expectations and assumptions
that are subject to risks and uncertainties which may cause actual results to
differ materially from the forward-looking statements. A detailed discussion of
risks and uncertainties that could cause actual results and events to differ
materially from such forward-looking statements is included in the section under
“Risk Factors”. We undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future
events, or otherwise.




As
used in this Form 10-Q, unless the context requires otherwise, “we” or “us” or
the “Company” or “Premier Power” means Premier Power Renewable Energy, Inc. and
its subsidiaries.




Overview





We are a
developer, designer, and integrator of solar energy solutions. We develop,
market, sell, and maintain solar energy systems for residential, commercial, and
industrial customers in North America and Spain through our wholly owned
subsidiary Premier Power Renewable Energy Group, Inc., a California corporation
(“Premier Power California”), and Premier Power California’s two wholly owned
subsidiaries, Bright Future Technologies, LLC, a Nevada limited liability
company (“Bright Future”) and Premier Power Sociedad Limitada, a limited
liability company formed in Spain (“Premier Power Spain”).





We use
solar components from the industry’s leading suppliers and manufacturers such as
General Electric (“GE”), Sharp, Fronius, Wattsun, SMA, Satcon, Xantrex, Schuco
and SunPower Corporation. We were one of GE’s leading resellers and their number
one reseller in the United States in 2006 and 2007. Based on data tracked by the
California Energy Commission, we consistently rank among the top solar power
system installers in the United States, and we have international operations
headquartered in Spain. Our clients have included utility companies such as
Pacific Gas and Electric and Sierra Pacific Power Company, home builders such as
KB Homes, and numerous agricultural clients such as leading wineries in Napa
Valley, California.





Corporate
History





We were
originally incorporated as “Harry’s Trucking, Inc.” in Delaware on September 1,
2006, and had business operations as a third-party logistics provider for supply
chain management through a wholly owned subsidiary, “Harry’s Trucking, LLC,”
which was formed on April 2, 2004 as a limited liability company in California.
In connection with the closing of a share exchange that closed in September
2008, we sold 100% of our interest in Harry’s Trucking, LLC to Haris Tajyar and
Omar Tajyar. Effective September 5, 2008, we changed our name to “Premier Power
Renewable Energy, Inc.”





Share
Exchange and $7 Million Financing





On
September 9, 2008, we closed a share exchange transaction under a Share Exchange
Agreement entered into by and among the Company, our majority stockholder,
Premier Power California, and the stockholders of Premier Power California,
consisting of four individuals and one entity, who, immediately prior
to such closing, collectively held 100% of Premier Power California’s
issued and outstanding share capital (the "PPG Owners"). We completed the
acquisition of all of the equity interests of Premier Power California held by
the PPG Owners through the issuance of 24,218,750 restricted shares of our
common stock to the PPG Owners. Immediately prior to the Financing
described below and taking into account the cancellation of 25,448,000
shares of our common stock held by Vision Opportunity Master Fund, Ltd.
concurrent with the closing of the share exchange, we had 1,800,000 shares of
common stock issued and outstanding. Immediately after the issuance of the
shares to the PPG Owners, we had 26,018,750 shares of common stock issued and
outstanding.




2





As a
result of the Share Exchange, the PPG Owners became our controlling
stockholders, and Premier Power California became our wholly owned subsidiary.
In connection with Premier Power California becoming our wholly owned
subsidiary, we acquired the business and operations of Premier Power California,
and Premier Power California’s wholly owned subsidiaries, Bright Future and
Premier Power Spain, became our indirect wholly owned subsidiaries.





Concurrently
with the Exchange Agreement, we also entered into a Securities Purchase
Agreement (the “Purchase Agreement”) pursuant to which we agreed to issue and
sell a total of 3,500,000 units (the “Units”) to one accredited investor (the
“Investor”) for an aggregate purchase price of $7,000,000 (the “Financing”).
Each unit consists of one share of our Series A Convertible Preferred Stock
(“Series A Preferred Stock”), one-half of one Series A Warrant (the “Series A
Warrants”), and one-half of one Series B Warrant (the “Series B Warrants”). Each
one share of Series A Preferred Stock will be convertible into one share of our
common stock, par value $0.0001 per share (“Common Stock”) at any time at the
holder’s option, and each share of Series A Preferred Stock will automatically
convert in the event that the Company completes an underwritten secondary public
offering with minimum gross proceeds of $25,000,000 and at a minimum price per
share of $4.00 or upon listing on NASDAQ. We are required to register the Common
Stock underlying each of the Series A Preferred Stock, Series A Warrants, and
Series B Warrants issued in the Financing with the Securities and Exchange
Commission (the “SEC”) for resale by the Investor. Each Series A Warrant and
each Series B Warrant entitles the holder to purchase a share of Common Stock at
an exercise price of $2.50 and $3.00 per share, respectively, of Common Stock
for a period of four years. Thus, at the Closing, we issued 3,500,000 shares of
Series A Preferred Stock, Series A Warrants for the purchase of an aggregate
1,750,000 shares of Common Stock, and Series B Warrants for the purchase of an
aggregate 1,750,000 shares of Common Stock to the Investor.





Critical
Accounting Policies and Estimates




Basis of
Presentation.
Our financial statements as of and for the period prior to September 9, 2008
reflect the combined financial position, cash flows, and results of operations
of (i) Premier Power California; (ii) Bright Future; and (iii) Premier Power
Spain, collectively the “Accounting Predecessor,” that were each majority owned
by a common shareholder group and have common management and operations. All
significant inter-company accounts and transactions were eliminated upon
combination.





In
conjunction with a share exchange transaction that closed on September 9, 2008,
the financial statements of the Accounting Predecessor became the historical
financial statements of the Company and include the financial position, cash
flows, and results of operations on a consolidated basis subsequent to September
9, 2008. All significant intercompany accounts and transactions were eliminated
upon consolidation.





Premier
Power California designs, engineers, and installs photovoltaic systems in the
United States. Bright Future distributes solar panels to Premier Power and
Premier Power Spain. Premier Power Spain designs, engineers, and installs
photovoltaic systems in Spain. The Company sold its third-party logistics
operations immediately prior to the share exchange transaction that closed on
September 9, 2008.




The
financial information as of September 30, 2008 and for the three and nine months
ended September 30, 2008 and 2007 is unaudited, but in the opinion of our
management, contains all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation of financial position, results of operations,
and cash flows. The results of operations for the interim periods are not
necessarily indicative of the results to be expected for the entire
year.





Inventories.
 Inventories,
consisting primarily of raw materials, are recorded using the average cost
method and are carried at the lower of cost or market.





Revenue
Recognition.
Revenue on photovoltaic system installation contracts is recognized using the
percentage of completion method of accounting. At the end of each period, the
Company measures the cost incurred on each project and compares the result
against its estimated total costs at completion. The percent of cost incurred
determines the amount of revenue to be recognized. Payment terms are generally
defined by the contract and as a result may not match the timing of the costs
incurred by the Company and the related recognition of revenue. Such differences
are recorded as costs and estimated earnings in excess of billings on
uncompleted contracts or billings in excess of costs and estimated earnings on
uncompleted contracts. The Company determines its customer’s credit worthiness
at the time the order is accepted. Sudden and unexpected changes in a customer’s
financial condition could put recoverability at risk.




Contract
costs include all direct material and labor costs and those indirect costs
related to contract performance, such as indirect labor, supplies, tools,
repairs, and depreciation costs. Selling and general and administrative costs
are charged to expense as incurred. Provisions for estimated losses on
uncompleted contracts are made in the period in which such losses are
determined. Changes in job performance, job conditions, and estimated
profitability, including those arising from contract penalty provisions, and
final contract settlements may result in revisions to costs and income and are
recognized in the period in which the revisions are determined. Profit
incentives are included in revenues when their realization is reasonably
assured.




Allowance for
Doubtful Accounts.   The Company monitors
account balances and follows up with accounts that are past due as defined in
the terms of the contract with the customer. To date, the Company’s losses on
uncollectible accounts receivable have been immaterial. The Company maintains an
allowance for doubtful accounts receivable based on the expected collectability
of its accounts receivable. The allowance for doubtful accounts is based on
assessments of the collectability of specific customer accounts and the aging of
the accounts receivable. If there is a deterioration of a major customer’s
credit worthiness or actual defaults are higher than historical experience, the
allowance for doubtful accounts is increased.




3





Earnings per
Share. Earnings per share are computed in accordance with the provisions
of SFAS No. 28, “ Earnings Per
Share .” Basic net income (loss) per share is computed using the
weighted-average number of common shares outstanding during the period, as
adjusted for the dilutive effect of the Company’s outstanding convertible
preferred shares using the “if-converted method.” Diluted earnings per share is
computed using the weighted-average number of common shares outstanding during
the period, as adjusted for the dilutive effect of the Company’s outstanding
convertible preferred shares using the “if-converted” method and dilutive
potential common shares. The Company’s dilutive potential common shares consist
of warrants.





For
the three and nine month periods ended September 30, 2008, warrants convertible
into 3,500,000 shares of common stock were excluded from the computation of
diluted loss per share since their effect would be anti-dilutive. For the three
and nine month periods ended September 30, 2007, there were no potential common
shares outstanding.




Product
Warranties.
  Prior to January 1, 2007, the Company provided a five year warranty
covering the labor and materials associated with its installations. Effective
January 1, 2007, the Company changed the coverage to generally be ten years in
the U.S. and to one year in Spain for all contracts signed after December 31,
2006. Solar panels and inverters are warranted by the manufacturer for 25 years
and 10 years, respectively. Activity in the Company’s warranty reserve for the
nine months ended September 30, 2008 and 2007 was as follows:





Nine
      Months Ended
              September
      30, 2008
            
            
            Nine
      Months Ended
              September
      30, 2007Balance
      at beginning of period
            
            $
            172,002
            
            
            $
            58,375Warranty
      expense
            
            
            199,482
            
            
            
            70,827Less:
      Warranty claims
            
            
            (39,698
            )
            
            
            (8,312
            )Balance
      at end of period
            
            $
            331,786
            
            
            $
            120,890




Comprehensive
Income. Statement
of Financial Accounting Standards No. 130, “Reporting Comprehensive Income,”
establishes standards for reporting comprehensive income and its components in a
financial statement that is displayed with the same prominence as other
financial statements. Comprehensive income, as defined, includes all changes in
equity during the period from non-owner sources. Examples of items to be
included in comprehensive income, which are excluded from net income, include
foreign currency translation adjustments and unrealized gain (loss) of
available-for-sale securities.





Results
of Operations





Comparison
of Three Months Ended September 30, 2008 and 2007





Net Sales.
For the three months ended September 30, 2008, net sales increased 106% relative
to the three months ended September 30, 2007, from $4,486,221 to $9,236,108. The
increase in net sales is due primarily to significant growth in both our U.S.
and Spain commercial businesses as a result of increased sales efforts in these
markets, as well as continued growth in our U.S. residential business as a
result of a new Southern California residential office that opened in
2008.





Cost of
Sales. Cost of sales increased 169% from $3,057,589, or approximately 68%
of net sales for the three months ended September 30, 2007, to $8,233,171, or
approximately 89% of net sales for the three months ended September 30, 2008.
The increase in cost of sales is due primarily to a substantial increase in
commercial project revenues, which carry a lower profit margin.





Gross
Profit. Gross profit decreased approximately 30% from $1,428,632 (32% of
net sales) for the three months ended September 30, 2007 to $1,002,937 (11%
of net sales) for the three months ended September 30, 2008 due to a general
shift towards larger commercial projects, which carry a lower profit margin. In
the three months ended September 30, 2008, the Company also successfully
completed a large project on which it acted solely as a subcontractor
and that did not involve the high level of integration that
we normally provide, resulting in a lower than average
profitability. We do not intend to offer such non-integrated services in
the future.




4





Sales and
Marketing Expense. For the three months ended
September 30, 2008, sales and marketing expense increased approximately 99% from
$290,177 to $576,451 relative to the three months ended September 30, 2007. The
increase is attributable to an increase in our commercial sales
force.




Administrative
Expenses. Administrative expenses were $515,163 and $515,201 for the
three months ended September 30, 2008 and 2007, respectively. Administrative
expense as a percentage of revenue declined year over year to 6% from 11% as we
continued to see operating leverage off a larger revenue base.





Net
Income. Net income decreased from $582,522 for the three months ended
September 30, 2007 to $337,951 for the three months ended September 30, 2008.
The decrease in net income was primarily due to decreasing sales margins in the
Company’s commercial business and increased sales and marketing
expenses.





Comparison
of Nine Months Ended September 30, 2008 and 2007





Net Sales.
 For the nine
months ended September 30, 2008, net sales increased 105% relative to the nine
months ended September 30, 2007, from $13,310,421 to $27,224,925.  The
increase in net sales is mainly due to significant growth in both our U.S. and
Spain commercial businesses as a result of increased sales efforts in these
markets, as well as continued growth in our U.S. residential business as a
result of a new Southern California residential office that opened during the
nine months ended September 30, 2008.





Cost of
Sales. 
Cost of sales increased 139% from $9,822,046, or approximately 74% of net sales
for the nine months ended September 30, 2007, to $23,502,924, or approximately
86% of net sales for the nine months ended September 30, 2008. The increase in
costs of sales as a percentage of net sales is due to a general shift towards
larger commercial projects, which carry a lower profit margin. In addition,
during the third quarter of 2008, we were awarded and completed a large
commercial project performing only installation services, which had lower
margins than our normal contracts. We do not intend to offer such
non-integrated services in the future.





Gross
Profit. Gross profit increased 7% from $3,488,375 (26% of net sales) for
the nine months ended September 30, 2007 to $3,722,001 (14% of net sales)
for the nine months ended September 30, 2008. The decrease in gross profit
percentage was directly related to our decision to increase our commercial
contracts, which generally have lower gross profit margins.





Sales and
Marketing Expenses. For the nine months ended September 30, 2008, sales
and marketing expenses increased approximately 61% from $975,229 to $1,571,826
relative to the nine months ended September 30, 2007. The increase is
attributable to growth in our commercial sales force.




Administrative
Expenses. Administrative expenses were $1,427,653 and $1,363,301 for the
nine months ended September 30, 2008 and 2007, respectively. Administrative
expenses as a percentage of revenue declined year-over-year to 5% from 10% as we
continued to see operating leverage off a larger revenue base.




Net
Income. Net income decreased from $1,127,547 for the nine months
ended September 30, 2007 to $612,545 for the nine months ended September 30,
2008. This was due primarily to decreasing margins on sales and increased
sales and marketing expenses.





Liquidity
and Capital Resources





Cash
Flows




(in
      thousands)
            
            Nine
      Months
              Ended
      September 30,
              2008
            
            
            Nine
      Months
              Ended
      September 30,
              2007Net
      cash used in operating activities
            
            $
            (2,215,906
            )
            
            $
            (982,368
            )Net
      cash used in investing activities
            
            $
            (84,353
            )
            
            $
            (46,884
            )Net
      cash provided by financing activities
            
            $
            6,482,841
            
            
            $
            248,686Net
      increase (decrease) in cash and cash equivalents
            
            $
            4,168,202
            
            
            $
            (776,946
            )





Net
cash used in operating activities was $2,215,906 for the nine months ended
September 30, 2008, while net cash used in operating activities was $982,368 for
the nine months ended September 30, 2007. The increase in net cash used in
operating activities for the nine months ended September 30, 2008 was mainly due
to a decrease in net income and increased inventory and receivable levels
attributable to the growth in our operations.




5





Net
cash used in investing activities was $84,353 for the nine months ended
September 30, 2008 and $46,884 for the nine months ended September 30, 2007. The
use of cash was primarily for purchases of property and
equipment.




Net
cash provided by financing activities was $6,482,841 for the nine months
ended September 30, 2008, compared to $248,686 for the nine months ended
September 30, 2007. The increase in financing cash flow was primarily
attributable to proceeds from the issuance of preferred stock in conjunction
with a reverse merger that closed during the nine months ended September 30,
2008 and proceeds from our line of credit.





Material
Impact of Known Events on Liquidity





There
are no known events that are expected to have a material impact on our
short-term or long-term liquidity. We believe that we have enough diversity in
the domestic and international markets and diversity in residential and
commercial segments to minimize any risk of tightening credit markets having a
material impact on our liquidity.





Capital
Resources





Historically,
we have financed our operations primarily through cash flows from
operations and borrowings, and, on September 10, 2008, we received net
proceeds of $5,712,128 from a private placement financing transaction. We also
have a credit line that is utilized solely for working capital and capital
expenditures.  This credit line expires in February 2009, but we plan
to renew it with the lender or replace it with a credit line with a new lender.
Additionally, as the credit markets tighten, we continue to strengthen our
balance sheet, allowing us to continue to receive favorable credit terms as
needed.  Thus, we believe that our current cash and cash equivalents,
anticipated cash flow from operations, net proceeds from the private placement
financing, and line of credit will be sufficient to meet our anticipated cash
needs in the ordinary course of business, including our cash needs for
working capital and capital expenditures for at least the next 12 months. The
proceeds from the private placement financing will be used for general working
capital purposes (including funding the purchase of additional inventory and
advertising and marketing expenses) and for acquisitions we may decide to
pursue.





Other
than our lines of credit with banks, we currently do not have any binding
commitments for, or readily available sources of, additional financing. We
cannot provide any assurances that we will be able to secure the additional cash
or working capital we may require to continue our operations.




Contractual
Obligations and Off-Balance Sheet Arrangements





Line of Credit





In
February 2007, Premier Power California entered into an agreement with Guaranty
Bank for a $2,000,000 line of credit, maturing in February 2008. The line of
credit was secured by our assets and a personal guaranty by our Chief
Executive Officer and his wife. Actual amounts available under the line of
credit each month are dependent on the balance of accounts receivable and
inventory. The line of credit bears interest at the prime rate plus 1%. At
September 30, 2008, the interest rate was 6%. The line of credit was renewed in
February 2008 with a borrowing limit of $3,000,000, maturing on February 26,
2009. As of January
30, 2009, there were no amounts outstanding under the Company’s agreement
with Guaranty Bank.





The
line of credit includes certain financial covenants. At August 30, 2008, Premier
Power California was in violation of a minimum net worth covenant. The Bank
waived the covenant violation through September 30, 2008, at which time Premier
Power California was in compliance of the covenant.





Contractual
Obligations





We have
certain fixed contractual obligations and commitments that include future
estimated payments. Changes in our business needs, cancellation provisions,
changing interest rates, and other factors may result in actual payments
differing from the estimates. We cannot provide certainty regarding the timing
and amounts of payments. We have presented below a summary of the most
significant assumptions used in our determination of amounts presented in the
tables, in order to assist in the review of this information within the context
of our consolidated financial position, results of operations, and cash
flows.





The
following table summarizes our contractual obligations as of September 30, 2008,
and the effect these obligations are expected to have on our liquidity and cash
flows in future periods.




Payments
      Due by PeriodTotal
            
            Less
      than 1 year
            
            1-3
      Years
            
            3-5
      Years
            
            5
      Years +Contractual
      Obligations:Bank
      Indebtedness
            
            $
            1,250,000
            
            
            $
            1,250,000
            
            
            $
            -
            
            
            $
            -
            
            
            $
            -Other
      Indebtedness
            
            
            253,626
            
            
            
            66,720
            
            
            
            156,438
            
            
            
            29,700
            
            
            
            768Operating
      Leases
            
            
            261,134
            
            
            
            19,131
            
            
            
            144,414
            
            
            
            75,557
            
            
            
            22,032Totals:
            
            $
            1,764,760
            
            
            $
            1,335,851
            
            
            $
            300,852
            
            
            $
            105,257
            
            
            $
            22,800





Off-Balance
Sheet Arrangements





At
September 30, 2008, we did not have any transactions, obligations, or
relationships that are considered off-balance sheet arrangements.




6





ITEM
      3.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Not
applicable.




ITEM
      4.
            CONTROLS
      AND PROCEDURES





Disclosure
Controls and Procedures





As of
the end of the period covered by this quarterly report, we carried out an
evaluation, under the supervision of, and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the Company’s disclosure controls and procedures (as
defined in Rules 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 report. Based on that evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that, as of the end of the period covered by
this report, our disclosure controls and procedures were effective as of the end
of the applicable period to ensure that the information required to be disclosed
by the Company in reports that it files or submits under the Exchange Act (i) is
recorded, processed, summarized, and reported within the time periods specified
in Securities and Exchange Commission rules and forms and (ii) is accumulated
and communicated to our management, including our Chief Executive Officer
(principal executive officer) and Chief Financial Officer (principal financial
officer), as appropriate to allow timely decisions regarding required
disclosures.





Remediation
of Material Weaknesses in Internal Control over Financial Reporting





For
the year ended December 31, 2007, our independent auditors identified material
weaknesses in our internal control over financial reporting involving revenue
recognition and segregation of duties.





To
remediate the material weaknesses, we have implemented the following
processes:





·
            Revenue
      Recognition – As part of our transition in focus from residential
      to commercial projects, our auditors noted that we needed to revise our
      revenue recognition processes and procedures to include job specific cost
      estimates, allocation of allowable indirect costs to projects and the
      development of project monitoring and reporting processes.  We
      have put in place controls for appropriate review with our operations and
      accounting departments to ensure proper revenue recognition consisting of
      monthly “installed module count reports,” monthly review with the
      operations department on program budgets, amount spent to date, and amount
      left to spend on jobs.  Additionally, we hold monthly reviews
      with our sales and operations department on revenue and cost of goods sold
      recognition for each project, and we hold weekly reviews of purchase
      orders to ensure project budgets have accurate reporting on budget,
      actual, and accrued costs.





·
            Segregation
      of Duties – Our auditors recommended that we review the processes
      and procedures of the accounting department and re-allocate selected
      processes to increase segregation of duties. We implemented a multi-step
      approval system within our accounts payable department for cash
      disbursements, and our monthly bank reconciliations are reviewed and
      approved by our Chief Financial
Officer.





Our
independent auditors also noted a significant deficiency relating to procedures
over the preparation and approval of journal entries in our internal control
over financial reporting.  To remediate the significant deficiency
relating to journal entries, we plan to implement a formal process for preparing
and controlling journal entries to prevent processing erroneous or unauthorized
entries by taking the following specific steps:





·
            Restricting
      preparation of monthly journal entries to certain authorized
      personnel.





·
            Implementing
      a system of sequential numbering and numeric accounting of each journal
      entry.





·
            Implementing
      a system of attaching supporting documentation to each journal
      entry.





·
            Implementing
      a system of independent review of each journal
  entry.




7


Changes
in Internal Control over Financial Reporting
 
 During
the quarter ended September 30, 2008, we made the following change in our
internal control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Securities Exchange Act of 1934, as amended), which change
has materially affected or is reasonably likely to materially affect our
internal control over financial reporting, in connection with continued
remediation of the material weaknesses and significant deficiency we disclose
above:
  ·
              Revenue
      Recognition – As part of our transition in focus from residential
      to commercial projects, we put in place controls for appropriate review
      with our operations and accounting departments to ensure proper revenue
      recognition consisting of monthly “installed module count reports,”
      monthly review with the operations department on program budgets, amount
      spent to date, and amount left to spend on jobs.  Additionally,
      we now hold monthly reviews with our sales and operations department on
      revenue and cost of goods sold recognition for each project, and we now
      hold weekly reviews of purchase orders to ensure project budgets have
      timely reporting on budget, actual, and accrued
  costs.
   8


PART
II - OTHER INFORMATION





ITEM
      1.
            LEGAL
      PROCEEDINGS





We are
not currently involved in any material legal proceedings, and we are not aware
of any material legal proceedings pending or threatened against
us.  We are also not aware of any material legal proceedings involving
any of our directors, officers, or affiliates or any owner of record or
beneficially of more than 5% of any class of our voting
securities.




ITEM
      1A.
            RISK
      FACTORS





You should carefully consider the
risks described below together with all of the other information included in
this prospectus. The statements contained in or incorporated into this
prospectus that are not historic facts are forward-looking statements that are
subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in or implied by forward-looking statements. If
any of the following risks actually occurs, our business, financial condition or
results of operations could be harmed. In that case, the trading price of our
common stock could decline, and you may lose all or part of your
investment.





Risks
Relating to Our Business





We
have a short operating history as a public company, and the limited operating
history of some of our subsidiaries makes it difficult to evaluate our future
prospects and results of operations.





Our
current management has limited experience in operating a public company, and we
may need to hire additional management personnel and outside assistance from
legal, accounting, and other professionals to assist us with complying with
additional SEC reporting requirements and compliance under the Sarbanes-Oxley
Act of 2002 not previously required of us as a private company prior to the
Share Exchange that could be more costly than planned.  Further, the
limited operating history of Bright Future and Premier Power Spain makes it
difficult to evaluate our business. In the event that we are not able to manage
our growth and operate as a public company due to our limited experience, our
business may suffer uncertainty and failures, which makes it difficult to
evaluate our business.





We are dependent upon our suppliers
for the components used in the systems   we design and install, and our major
suppliers are dependent upon the continued   availability and pricing of
polysilicon and other raw materials used in solar   panels. Any increases in the price of
solar components or any interruptions to or shortage or decline in the quality
of the solar components we purchase for our solar energy systems could adversely
affect our business.





Key
components used in our systems are purchased from a limited number of
manufacturers. In particular, Sharp, SunPower Corporation, and General Electric
account for over 80% of our purchases of solar panels. We are subject to market
prices for the components that we purchase for our installations, which are
subject to fluctuation. We cannot ensure that the prices charged by our
suppliers will not increase because of changes in market conditions or other
factors beyond our control. An increase in the price of components used in our
systems could result in an increase in costs to our customers and could have a
material adverse effect on our revenues and demand for our products and
services. Our suppliers are dependent upon the availability and pricing of
polysilicon, one of the main materials used in manufacturing solar panels. The
world market for solar panels recently experienced a shortage of supply due to
insufficient availability of silicon and limited manufacturing capacity. This
shortage caused the prices for solar panels to increase. Interruptions in our
ability to procure needed components for our systems, whether due to
discontinuance by our suppliers, delays or failures in delivery, shortages
caused by inadequate production capacity or unavailability, or for other
reasons, would adversely affect or limit our sales and growth. In addition,
increases in the prices of solar panels could make systems that have been sold
but not yet installed unprofitable for us. There is no assurance that we will
continue to find qualified manufacturers on acceptable terms and, if we do,
there can be no assurance that product quality will continue to be acceptable,
which could lead to a loss of sales and revenues.




9





Various
licenses and permits are required to operate our business, and the loss of or
failure to renew any or all of these licenses and permits could prevent us from
either completing current projects or obtaining future projects, and, thus,
materially adversely affect our business.





We
hold electrical contractor licenses in all states in which we operate, including
C10, C2, and C46. Also, we are certified by the North America Board of Certified
Energy Practitioners (NABCEP). The loss of any such licenses or certifications,
or the loss of any key personnel who hold such licenses or certifications, would
materially adversely affect our business because it could prevent us from
obtaining and/or completing solar integration projects in states where we or our
personnel lose such licenses or certifications or are in non-compliance with
state licensing or certification requirements.




We
are highly dependent on senior management and key sales and technical
personnel.  The loss and inability to replace any such persons could
have a material adverse effect on our business and operations.




We are
highly dependent on our senior management to manage our business and operations
and our key managerial, financial, sales, design, engineering, technical and
other personnel for the sale, development and installation of our solar power
systems. In particular, we rely substantially on Dean R. Marks, our President
and Chief Executive Officer, and Miguel de Anquin, our Chief Operating Officer,
and Corporate Secretary, to manage our operations. Although we have entered into
employment agreements with and obtained key-man life insurance policies for our
benefit on the lives of Messrs. Marks and de Anquin, we cannot assure their
continued services to the Company. The loss of either one of them, or any other
member of our senior management, would have a material adverse effect on our
business and operations. Competition for senior management and sales and
technical personnel is intense, and the pool of suitable candidates is limited.
We may be unable to locate a suitable replacement for any member of our senior
management or key sales and technical personnel that we lose. In addition, if
any member of our senior management or key sales and technical personnel joins a
competitor or forms a competing company, they may compete with us for customers,
business partners and other key professionals and staff members of our company.

Although each of our senior management and key sales and technical personnel has
signed a confidentiality and non-competition agreement in connection with his
employment with us, we cannot provide assurances that we will be able to
successfully enforce these provisions in the event of a dispute between us and
any member of our senior management or key research and development
personnel.





If we are unable to attract, train
and retain highly qualified personnel,   the quality of our services may
decline, and we may not meet our business and financial
goals.





We
compete for qualified personnel with other solar integration companies. Intense
competition for these personnel could cause our compensation costs to increase
significantly, which, in turn, could have a material adverse effect on our
results of operations. Our future success and ability to grow our business will
depend in part on the continued service of these individuals and our ability to
identify, hire and retain additional qualified personnel. If we are unable to
attract and retain qualified employees, we may be unable to meet our business
and financial goals, which will require the retention of these qualified
employees to work on our future solar integration projects as we expand our
business.





Our
growth strategy may prove to be disruptive and divert management
resources.





Our
growth strategy may involve large transactions and present financial, managerial
and operational challenges, including diversion of management attention from our
existing businesses, difficulty with integrating personnel and financial and
other systems, increased expenses, including compensation expenses resulting
from newly hired employees, the assumption of unknown liabilities and potential
disputes. We could also experience financial or other setbacks if any of our
growth strategies incur problems of which we are not presently aware. We may
also require additional financing in the future in connection with our growth
strategy.





We
may need to obtain additional debt or equity financing to fund future capital
expenditures and to meet working capital requirements, which may be obtained on
terms that are unfavorable to the Company and/or our
stockholders.





Additional
equity may result in dilution to the holders of our outstanding shares of
capital stock. Additional debt financing may include conditions that would
restrict our freedom to operate our business, such as conditions
that:





·
            limit
      our ability to pay dividends or require us to seek consent for the payment
      of dividends;





·
            increase
      our vulnerability to general adverse economic and industry
      conditions;





·
            require
      us to dedicate a portion of our cash flow from operations to payments on
      our debt, thereby reducing the availability of our cash flow to fund
      capital expenditures, working capital and other general corporate
      purposes; and





·
              limit
      our flexibility in planning for, or reacting to, changes in our business
      and our industry.





We cannot
guarantee that we will be able to obtain any additional financing on terms that
are acceptable to us, or at all.







10





Geographical business expansion
efforts we make could result in   difficulties in successfully managing
our business and consequently harm our   financial
condition.





As part
of our business strategy, we may seek to expand by acquiring competing
businesses or customer contracts outside of our current geographic markets, or
we may open offices in the geographical markets we desire to operate within. We
may face challenges in managing expanding product and service offerings and in
integrating acquired businesses with our own. We cannot accurately predict the
timing, size and success of our expansion efforts and the associated capital
commitments that might be required. We expect to face competition for expansion
candidates, which may limit the number of expansion opportunities available to
us and may lead to higher expansion costs. There can be no assurance that we
will be able to identify, acquire or profitably manage additional businesses and
contracts or successfully integrate acquired businesses and contracts, if any,
into our company, without substantial costs, delays or other operational or
financial difficulties. In addition, expansion efforts involve a number of other
risks, including:





·
            failure
      of the expansion efforts to achieve expected
  results;





·
            diversion
      of management’s attention and resources to expansion
    efforts;





·
            failure
      to retain key customers or personnel of the acquired businesses;
      and





·
            risks
      associated with unanticipated events, liabilities or
      contingencies.





Client
dissatisfaction or performance problems at a single acquired business could
negatively affect our reputation. The inability to acquire businesses on
reasonable terms or successfully integrate and manage acquired companies, or the
occurrence of performance problems at acquired companies, could result in
dilution to our stockholders, unfavorable accounting charges and difficulties in
successfully managing our business.





Our inability to obtain capital, use
internally generated cash, or use   shares of our common stock or debt to
finance future expansion efforts could   impair the growth and expansion of
our business.





Reliance
on internally generated cash or debt to finance our operations or to complete
business expansion efforts could substantially limit our operational and
financial flexibility. The extent to which we will be able or willing to use
shares of common stock to consummate expansions will depend on our market value
from time to time and the willingness of potential sellers to accept it as full
or partial payment. Using shares of common stock for this purpose also may
result in significant dilution to our then existing stockholders. To the extent
that we are unable to use common stock to make future expansions, our ability to
grow through expansions may be limited by the extent to which we are able to
raise capital for this purpose through debt or equity financings. No assurance
can be given that we will be able to obtain the necessary capital to finance a
successful expansion program or our other cash needs. If we are unable to obtain
additional capital on acceptable terms, we may be required to reduce the scope
of any expansion. In addition to requiring funding for expansions, we may need
additional funds to implement our internal growth and operating strategies or to
finance other aspects of our operations. Our failure to (i) obtain additional
capital on acceptable terms, (ii) use internally generated cash or debt to
complete expansions because it significantly limits our operational or financial
flexibility, or (iii) use shares of common stock to make future expansions may
hinder our ability to actively pursue any expansion program we may decide to
implement and negatively impact our stock price.





Our obligations under our credit
facility are secured by our   assets. Thus, if the lender
forecloses on its security interest, we may have to   liquidate some or all of our assets,
which may cause us to curtail or cease operations.





Our
obligations under our current loan and security agreement with Guaranty Bank are
secured by all of our assets. If we default under the credit facility, we could
be required to repay all of our borrowings thereunder. In addition, Guaranty
Bank could foreclose its security interest and liquidate some or all of our
assets, which could cause us to curtail or cease operations.  As of
January 30, 2009, there were no amounts outstanding under our agreement with
Guaranty Bank.




11





We are subject to restrictive
covenants in connection with our credit   facility that may limit our ability
to borrow additional funds or to raise   additional equity as may be required
to fund our future operations.




The terms
of the current credit facility with Guaranty Bank may limit our ability, without
Guaranty Bank’s consent, to, among other things, enter into certain transactions
(such as an acquisition of another company) and create additional liens on our
assets, and could adversely affect our liquidity and our ability to attract
additional funding if required for our business.





Our
operations are cash intensive, and our business could be adversely affected if
we fail to maintain sufficient levels of working capital.





We expend
a significant amount of cash in our operations, principally to fund our
materials procurement. Our suppliers typically provide us with credit. In turn,
we typically require our customers to make payment at various stages of the
project. We generally fund most of our working capital requirements out of cash
flow generated from operations and our line of credit. If we fail to generate
sufficient revenues from our sales, or if we experience difficulties collecting
our accounts receivables, we may not have sufficient cash flow to fund our
operating costs, and our business could be adversely affected.





Our
operating results may fluctuate from period to period, and if we fail to meet
market expectations for a particular period, our stock price may
decline.





Our
operating results have fluctuated from period to period and are likely to
continue to fluctuate as a result of a wide range of factors, including sales
demands, electricity rate changes, changes in incentives and technological
improvements. Our production and sales are generally lower in the winter due to
weather conditions and holiday activities. Interim reports may not be indicative
of our performance for the year or our future performance, and period-to-period
comparisons may not be meaningful due to a number of reasons beyond our control.
We cannot provide assurances that our operating results will meet the
expectations of market analysts or our investors. If we fail to meet their
expectations, there may be a decline in our stock price.





Because the solar integration
industry is highly competitive and has low barriers to entry, we may lose market share to larger
companies that are better equipped to   weather deterioration in market
conditions due to increased competition.





Our
industry is highly competitive and fragmented, is subject to rapid change and
has low barriers to entry. We may in the future compete for potential customers
with solar system installers and servicers, electricians, roofers, utilities and
other providers of solar power equipment or electric power. Some of these
competitors may have significantly greater financial, technical and marketing
resources and greater name recognition than we have. We believe that our ability
to compete depends in part on a number of factors outside of our control,
including:





·
            the
      ability of our competitors to hire, retain and motivate qualified
      technical personnel;





·
            the
      ownership by competitors of proprietary tools to customize systems to the
      needs of a particular customer;





·
            the
      price at which others offer comparable services and
    equipment;





·
            the
      extent of our competitors’ responsiveness to client
  needs;





·
            risk
      of local economy decline; and





·
            installation
      technology.





Competition
in the solar power services industry may increase in the future, partly due to
low barriers to entry, as well as from other alternative energy resources now in
existence or developed in the future. Increased competition could result in
price reductions, reduced margins or loss of market share and greater
competition for qualified technical personnel. There can be no assurance that we
will be able to compete successfully against current and future competitors. If
we are unable to compete effectively, or if competition results in a
deterioration of market conditions, our business and results of operations would
be adversely affected.





We
act as the general contractor for our customers in connection with the
installation of our solar power systems and are subject to risks associated with
construction, bonding, cost overruns, delays and other contingencies, which
could have a material adverse effect on our business and results of
operations.





We act as
the general contractor for our customers in connection with the installation of
our solar power systems. All essential costs are estimated at the time of
entering into the sales contract for a particular project, and these are
reflected in the overall price that we charge our customers for the project.
These cost estimates are preliminary and may or may not be covered by contracts
between us or the other project developers, subcontractors, suppliers and other
parties to the project. In addition, we require qualified, licensed
subcontractors to install some of our systems. Shortages of such skilled labor
could significantly delay a project or otherwise increase our costs. Should
miscalculations in planning a project or defective or late execution occur, we
may not achieve our expected margins or cover our costs. Also, many systems
customers require performance bonds issued by a bonding agency. Due to the
general performance risk inherent in construction activities, it is sometimes
difficult to secure suitable bonding agencies willing to provide performance
bonding. In the event we are unable to obtain bonding, we will be unable to bid
on, or enter into, sales contracts requiring such bonding. Delays in solar panel
or other supply shipments, other construction delays, unexpected performance
problems in electricity generation or other events could cause us to fail to
meet these performance criteria, resulting in unanticipated and severe revenue
and earnings losses and financial penalties. Construction delays are often
caused by inclement weather, failure to timely receive necessary approvals and
permits, or delays in obtaining necessary solar panels, inverters or other
materials. The occurrence of any of these events could have a material adverse
effect on our business and results of operations.




12





We
generally recognize revenue on system installations on a “percentage of
completion” basis and payments are due upon the achievement of contractual
milestones, and any delay or cancellation of a project could adversely affect
our business.





We
recognize revenue on our system installations on a “percentage of completion”
basis and, as a result, our revenue from these installations is driven by the
performance of our contractual obligations, which is generally driven by
timelines for the installation of our solar power systems at customer sites.
This could result in unpredictability of revenue and, in the short term, a
revenue decrease. As with any project-related business, there is the potential
for delays within any particular customer project. Variation of project
timelines and estimates may impact the amount of revenue recognized in a
particular period. In addition, certain customer contracts may include payment
milestones due at specified points during a project. Because we must invest
substantial time and incur significant expense in advance of achieving
milestones and the receipt of payment, failure to achieve milestones could
adversely affect our business and cash flows.





We
are subject to particularly lengthy sales cycles with our commercial and
government customers, which may adversely affect our sales and marketing
efforts.





Factors
specific to certain of our customers’ industries have an impact on our sales
cycles. Our commercial and government customers may have longer sales cycles due
to the timing of various state and federal requirements. These lengthy and
challenging sales cycles may mean that it could take longer before our sales and
marketing efforts result in revenue, if at all, and may have adverse effects on
our operating results, financial condition, cash flows and stock
price.





Our failure to meet a client’s
expectations in the performance of our services, and the risks and
liabilities associated with placing our employees and technicians in our customers’
homes and businesses, could give rise to claims against
us.





Our
engagements involve projects that are critical to our customers’ business or
home. Our failure or inability to meet a customer’s expectations in the
provision of our products and services could damage or result in a material
adverse change to their premises or property, and therefore could give rise to
claims against us or damage our reputation. In addition, we are exposed to
various risks and liabilities associated with placing our employees and
technicians in the homes and workplaces of others, including possible claims of
errors and omissions, harassment, theft of client property, criminal activity
and other claims.





We
generally do not have long-term agreements with our solar integration customers
and, accordingly, could lose customers without warning.





Our
products are generally not sold pursuant to long-term agreements with solar
integration customers, but instead are sold on a purchase order basis. We
typically contract to perform large projects with no assurance of repeat
business from the same customers in the future. Although cancellations on our
purchase orders to date have been insignificant, our customers may cancel or
reschedule purchase orders with us on relatively short notice. Cancellations or
rescheduling of customer orders could result in the delay or loss of anticipated
sales without allowing us sufficient time to reduce, or delay the incurrence of,
our corresponding inventory and operating expenses. In addition, changes in
forecasts or the timing of orders from these or other customers expose us to the
risks of inventory shortages or excess inventory. This, in addition to the
non-repetition of large systems projects and our failure to obtain new large
system projects due to current economic conditions and reduced corporate and
individual spending, could cause our revenues to decline, and, in turn, our
operating results to suffer.




13





Our profitability depends, in part,
on our success in brand recognition,   and we could lose our competitive
advantage if we are unable to protect our   trademark against infringement. Any
related litigation could be   time-consuming and
costly.





We
believe our brand has gained substantial recognition by customers in certain
geographic areas. We have applied for trademark protection for the brand names
“Premier Power” and “Bright Skies” and our sales slogan “Your Solar Electricity
Specialist.” Use of our name or a similar name by competitors in geographic
areas in which we have not yet operated could adversely affect our ability to
use or gain protection for our brand in those markets, which could weaken our
brand and harm our business and competitive position. In addition, any
litigation relating to protecting our trademark against infringement is likely
to be time consuming and costly.





Our
Premier Ballasting and Premier Racking systems are untested and may not be
effective or patentable or may encounter other unexpected problems, which could
adversely affect our business and results of operations.





Our
Premier Ballasting and Premier Racking systems  are new and have not
been tested in installation settings for a sufficient period of time to prove
their long-term effectiveness and benefits. These systems may not be effective
or other problems may occur that are unexpected and could have a material
adverse effect on our business or results of operations. While we anticipate
filing patent applications for our Premier Ballasting and Premier Racking
systems 
technology, patents may not be issued on such technology, or we may not be able
to realize the benefits from any patents that are issued.





We
may face intellectual property infringement claims that could be time-consuming
and costly to defend and could result in our loss of significant rights and the
assessment of damages.





If we
receive notice of claims of infringement, misappropriation or misuse of other
parties’ proprietary rights, some of these claims could lead to litigation. We
cannot provide assurances that we will prevail in these actions, or that other
actions alleging misappropriation or misuse by us of third-party trade secrets,
infringement by us of third-party patents and trademarks or the validity of our
patent or trademarks, will not be asserted or prosecuted against us. We may also
initiate claims to defend our intellectual property rights. Intellectual
property litigation, regardless of outcome, is expensive and time-consuming,
could divert management’s attention from our business and have a material
negative effect on our business, operating results or financial condition. If
there is a successful claim of infringement against us, we may be required to
pay substantial damages (including treble damages if we were to be found to have
willfully infringed a third party’s patent) to the party claiming infringement,
develop non-infringing technology, stop selling our products or using technology
that contains the allegedly infringing intellectual property or enter into
royalty or license agreements that may not be available on acceptable or
commercially practical terms, if at all. Our failure to develop non-infringing
technologies or license the proprietary rights on a timely basis could harm our
business. Parties making infringement claims on any future issued patents may be
able to obtain an injunction that would prevent us from selling our products or
using technology that contains the allegedly infringing intellectual property,
which could harm our business.





Product
liability claims against us could result in adverse publicity and potentially
significant monetary damages.





As a
seller of consumer products, we face an inherent risk of exposure to product
liability claims in the event that our solar energy systems’ use results in
damages, injuries or fatalities. Since solar energy systems are electricity
producing devices, it is possible that our products could result in damage,
injury or fatality, whether by product malfunctions, defects, improper
installation or other causes. If such damages, injuries or fatalities or claims
were to occur, we could incur monetary damages, and our business could be
adversely affected by any resulting negative publicity. The successful assertion
of product liability claims against us also could result in potentially
significant monetary damages and, if our insurance protection is inadequate to
cover these claims, could require us to make significant payments from our own
resources.




14





We
do not carry business interruption insurance, and any unexpected business
interruptions could adversely affect our business.





Our
operations are vulnerable to interruption by earthquake, fire, power failure and
power shortages, hardware and software failure, floods, computer viruses and
other events beyond our control. In addition, we do not carry business
interruption insurance to compensate us for losses that may occur as a result of
these kinds of events, and any such losses or damages incurred by us could
disrupt our production and other operations without reimbursement.





A
decrease in the availability of credit or an increase in interest rates could
make it difficult for customers to finance the cost of solar energy systems and
could reduce demand for our services and products.





Some of
our prospective customers may depend on debt financing, such as home equity
loans, to fund the initial capital expenditure required to purchase a solar
energy system. Third-party financing sources, specifically for solar energy
systems, are currently limited, especially due to recent domestic and worldwide
economic troubles. Currently, many of our customers rely on some form of
third-party financing, including home equity loans, to purchase solar energy
systems. The lack of financing sources, a decrease in the availability of credit
or an increase in interest rates could make it difficult or more costly for our
potential customers to secure the financing necessary to purchase a solar energy
system on favorable terms, or at all, thus lowering demand for our products and
services and negatively impacting our business.




A
portion of our revenues is generated by construction contracts, and, thus, a
decrease in construction could reduce our construction contract-related sales
and, in turn, adversely affect our business.





Some of
our solar-related revenues were generated from the design and installation of
solar power products in newly constructed and renovated buildings, plants and
residences. Our ability to generate revenues from construction contracts will
depend on the number of new construction starts and renovations, which should
correlate with the cyclical nature of the construction industry and be affected
by general and local economic conditions, changes in interest rates, lending
standards and other factors. For example, the current housing slump and
tightened credit markets have resulted in reduced new home construction, which
could limit our ability to sell solar products to residential and commercial
developers.





We
derive most of our revenue from sales in a limited number of territories, and we
will be unable to further expand our business if we are unsuccessful in adding
additional geographic sales territories to our oeprations.





We
currently derive most of our revenue from sales of our solar integration
servcies in California and Spain. This geographic concentration exposes us to
growth rates, economic conditions, and other factors that may be specific to
those territories to which we would be less subject if we were more
geographically diversified. The growth of our business will require us to expand
our operations and commence operations in other states, countries, and
territories. Any geographic expansion efforts that we undertake may not be
successful, which, in turn, would limit our growth opportunities.





We
face risks associated with international trade and currency exchange that could
have a material impact on our profitability.





We
transact business in the U.S. dollar and the Euro. Changes in exchange rates
would affect the value of deposits of currencies we hold. We do not currently
hedge against exposure to currencies. We cannot predict with certainty future
exchange rates and their impact on our operating results. Movements between the
U.S. dollar and the Euro could have a material impact on our
profitability.





Our
success may depend in part on our ability to make successful
acquisitions.





As part
of our business strategy, we plan to expand our operations through strategic
acquisitions in our current markets and in new geographic markets. We cannot
accurately predict the timing, size and success of our acquisition efforts. Our
acquisition strategy involves significant risks, including the
following:





·
            our
      ability to identify suitable acquisition candidates at acceptable
      prices;





·
            our
      ability to successfully complete acquisitions of identified
      candidates;





·
            our
      ability to compete effectively for available acquisition
      opportunities;




15





·
            increases
      in asking prices by acquisition candidates to levels beyond our financial
      capability or to levels that would not result in the returns required by
      our acquisition criteria;





·
            diversion
      of management’s attention to expansion
efforts;





·
            unanticipated
      costs and contingent liabilities associated with
    acquisitions;





·
            failure
      of acquired businesses to achieve expected
  results;





·
            our
      failure to retain key customers or personnel of acquired businesses;
      and





·
            difficulties
      entering markets in which we have no or limited
  experience.





These
risks, as well as other circumstances that often accompany expansion through
acquisitions, could inhibit our growth and negatively impact our operating
results. In addition, the size, timing and success of any future acquisitions
may cause substantial fluctuations in our operating results from quarter to
quarter. Consequently, our operating results for any quarter may not be
indicative of the results that may be achieved for any subsequent quarter or for
a full fiscal year. These fluctuations could adversely affect the market price
of our common stock.




Our
failure to integrate the operations of acquired businesses successfully into our
operations or to manage our anticipated growth effectively could materially and
adversely affect our business and operating results.




In order
to pursue a successful acquisition strategy, we must integrate the operations of
acquired businesses into our operations, including centralizing certain
functions to achieve cost savings and pursuing programs and processes that
leverage our revenue and growth opportunities. The integration of the
management, operations, and facilities of acquired businesses with our own could
involve difficulties, which could adversely affect our growth rate and operating
results. We may be unable to do any of the following:





·
            effectively
      complete the integration of the management, operations, facilities and
      accounting and information systems of acquired businesses with our
      own;





·
            efficiently
      manage the combined operations of the acquired businesses with our
      operations;





·
            achieve
      our operating, growth and performance goals for acquired
      businesses;





·
            achieve
      additional revenue as a result of our expanded operations;
    or





·
            achieve
      operating efficiencies or otherwise realize cost savings as a result of
      anticipated acquisition synergies.





Our rate
of growth and operating performance may suffer if we fail to manage acquired
businesses profitably without substantial additional costs or operational
problems or to implement effectively combined growth and operating
strategies.





If
we fail to develop and maintain an effective system of internal controls, we may
not be able to accurately report our financial results or prevent fraud. As a
result, current and potential stockholders could lose confidence in our
financial reports, which could harm our business and stock
price.





Effective
internal controls are necessary for us to provide reliable financial reports and
effectively prevent fraud. We are currently required to provide an assessment of
our internal controls over financial reporting. In the future, under Section 404
of the Sarbanes-Oxley Act of 2002, we may be required to evaluate and report on
these same controls and have our independent registered public accounting firm
annually attest to our evaluation, as well as issue their own opinion on our
internal controls over financial reporting. We plan to prepare for compliance
with Section 404 by strengthening, assessing, and testing our system of internal
controls to provide the basis for our report. The process of strengthening our
internal controls and complying with Section 404 is expensive and
time-consuming, and requires significant management attention, especially given
that we have just initiated efforts to comply with the requirements of
Section 404. We cannot be certain that the measures we will undertake will
ensure that we will maintain adequate controls over our financial processes and
reporting in the future. Furthermore, if we are able to rapidly grow our
business, the internal controls that we will need will become more complex, and
significantly more resources will be required to ensure our internal controls
remain effective. Failure to implement required controls, or difficulties
encountered in their implementation, could harm our operating results or cause
us to fail to meet our reporting obligations. If our auditors identify a
material weakness in our internal controls, then the disclosure of that fact,
even if the weakness is quickly remedied, could diminish investors’ confidence
in our financial statements and harm our stock price. In addition,
non-compliance with Section 404 could subject us to a variety of administrative
sanctions, including the suspension of trading, ineligibility for listing on a
national securities exchange, and the inability of registered broker-dealers to
make a market in our common stock, which would further reduce our stock
price.




16





Costs
incurred because we are a public company may affect our
profitability.





As a
public company, we incur significant legal, accounting and other expenses, and
we are subject to the SEC’s rules and regulations relating to public disclosure
that generally involve a substantial expenditure of financial resources. In
addition, the Sarbanes-Oxley Act of 2002, as well as new rules subsequently
implemented by the SEC, require changes in corporate governance practices of
public companies. We expect that full compliance with these new rules and
regulations will significantly increase our legal and financial compliance costs
and make some activities more time-consuming and costly. For example, we will be
required to create board committees and adopt policies regarding internal
controls and disclosure controls and procedures. Such additional reporting and
compliance costs may negatively impact our financial results. To the extent our
earnings suffer as a result of the financial impact of our SEC reporting or
compliance costs, our ability to develop an active trading market for our
securities could be harmed.





As a
public company, we also expect that these new rules and regulations may make it
more difficult and expensive for us to obtain director and officer liability
insurance in the future, and we may be required to accept reduced policy limits
and coverage or incur substantially higher costs to obtain the same coverage. As
a result, it may be more difficult for us to attract and retain qualified
persons to serve on our board of directors or as executive
officers.





It may be
time-consuming, difficult and costly for us to develop and implement the
internal controls and reporting procedures required by the Sarbanes-Oxley Act,
when applicable to us. Some members of our management team have limited or
no experience operating a company with securities traded or listed on an
exchange, or subject to SEC rules and requirements, including SEC reporting
practices and requirements that are applicable to a publicly traded company. We
may need to recruit, hire, train and retain additional financial reporting,
internal controls and other personnel in order to develop and implement
appropriate internal controls and reporting procedures. If we are unable to
comply with the internal controls requirements of the Sarbanes-Oxley Act, when
applicable, we may not be able to obtain the independent accountant
certifications required by the Sarbanes-Oxley Act.





Risks
Relating To Our Industry





We have experienced technological
changes in our industry. New   technologies may prove inappropriate
and result in liability to us or may not   gain market acceptance by our
customers.





The solar
power industry, which currently accounts for less than 1% of the world’s power
generation according to the Solar Energy Industries Association, is subject to
technological change. Our future success will depend on our ability to
appropriately respond to changing technologies and changes in function of
products and quality. If we adopt products and technologies that are not
attractive to consumers, we may not be successful in capturing or retaining a
significant share of our market. In addition, some new technologies are
relatively untested and unperfected and may not perform as expected or as
desired, in which event our adoption of such products or technologies may cause
us to lose money.





A drop in the retail price of
conventional energy or non-solar alternative   energy sources may negatively impact
our profitability.





We
believe that a customer’s decision to purchase or install solar power
capabilities is primarily driven by the cost and return on investment resulting
from solar power systems. Fluctuations in economic and market conditions that
impact the prices of conventional and non-solar alternative energy sources, such
as decreases in the prices of oil, coal and other fossil fuels and changes in
utility electric rates and net metering policies, could cause the demand for
solar power systems to decline, which would have a negative impact on our
profitability.




17





Existing regulations, and changes to
such regulations, may present technical, regulatory and economic
barriers to the purchase and use of solar power products, which may
significantly reduce demand for our products.




Installations
of solar power systems are subject to oversight and regulation in accordance
with national and local ordinances, building codes, zoning, environmental
protection regulation, utility interconnection requirements for metering and
other rules and regulations. We attempt to keep up-to-date about these
requirements on a national, state, and local level, and must design systems to
comply with varying standards. Certain cities may have ordinances that prevent
or increase the cost of installation of our solar power systems. In addition,
new government regulations or utility policies pertaining to solar power systems
are unpredictable and may result in significant additional expenses or delays
and, as a result, could cause a significant reduction in demand for solar energy
systems and our services. For example, there currently exist metering caps in
certain jurisdictions that effectively limit the aggregate amount of power that
may be sold by solar power generators into the power grid.





Our business depends on the
availability of rebates, tax credits and other financial incentives, the reduction
or elimination of which would reduce the demand   for our services.





Many
states, including California, Nevada and New Jersey, offer substantial
incentives to offset the cost of solar power systems. These incentives can take
many forms, including direct rebates, state tax credits, system performance
payments and Renewable Energy Credits (“RECs”). Moreover, although the United
States Congress recently passed legislation to extend for 8 years a 30% federal
tax credit for the installation of solar power systems, there can be no
assurance that they will be further extended once they expire. Businesses may
also elect to accelerate the depreciation on their system over five years. Spain
also offers substantial incentives, including feed-in tariffs. Spain’s
Industry Ministry has implemented a capped solar subsidy program for MW
installation and reduced tariff levels.  A reduction in or elimination
of such incentives could substantially increase the cost to our customers,
resulting in significant reductions in demand for our products and services,
which may negatively impact our sales.




If solar power technology is not
suitable for widespread adoption or sufficient demand for solar power
products does not develop or takes longer to develop than we anticipate, our sales
would decline, and we would be unable to achieve or sustain
profitability.





The
market for solar power products is emerging and rapidly evolving, and its future
success is uncertain. Many factors will influence the widespread adoption of
solar power technology and demand for solar power products,
including:





·
            cost
      effectiveness of solar power technologies as compared with conventional
      and non-solar alternative energy
technologies;





·
            performance
      and reliability of solar power products as compared with conventional and
      non-solar alternative energy
products;





·
            capital
      expenditures by customers that tend to decrease if the U.S. economy slows;
      and





·
            availability
      of government subsidies and
incentives.





If solar
power technology proves unsuitable for widespread commercial deployment or if
demand for solar power products fails to develop sufficiently, we would be
unable to generate enough revenue to achieve and sustain profitability. In
addition, demand for solar power products in the markets and geographic regions
we target may not develop or may develop more slowly than we
anticipate.




Risks
Related to Doing Business in Spain





Adverse
changes in the political and economic policies of the Spanish government could
have a material adverse effect on the overall economic growth of Spain, which
could reduce the demand for our products and materially and adversely affect our
competitive position.





A
significant portion of our business operations are conducted in Spain through
our indirect wholly owned subsidiary, Premier Power Spain, and some of our sales
are made in Spain. Spain also offers substantial incentives, including feed-in
tariffs. Accordingly, our business, financial condition, results of operations,
and prospects are affected significantly by economic, political, and legal
developments in Spain. Any adverse change in such policies could have a material
adverse effect on the overall economic growth in Spain or the level of our
incentives, which in turn could lead to a reduction in demand for our products
and consequently have a material adverse effect on our businesses.




18





Fluctuation
in the value of the Euro may have a material adverse effect on an investment in
our securities.





The
change in value of the Euro against the U.S. dollar depends on, among other
things, changes in Spain’s political and economic conditions. Changes in
exchange rates would affect the value of deposits of currencies we hold. We do
not currently hedge against exposure to currencies. We cannot predict with
certainty future exchange rates and their impact on our operating results.
Movements between the U.S. dollar and the Euro could have a material impact on
our profitability.




Our
business benefits from certain Spanish government incentives. Expiration of, or
changes to, these incentives could have a material adverse effect on our
operating results.




The
Spanish government has provided various incentives to solar energy providers in
order to encourage development of the solar industry. Such incentives include
feed-in tariffs and other measures. Reduction in or elimination of such
incentives or delays or interruptions in the implementation of such favorable
policies could substantially decrease the economic benefits of solar to our
customers, resulting in significant reductions in demand for our products and
services, which would negatively impact our sales.




Effecting service of legal process,
enforcing foreign judgments, or bringing original actions in Spain based on
United States or other foreign laws against us or our management may be
difficult.




We
conduct a significant amount of our business through our indirect wholly owned
subsidiary, Premier Power Spain, which is established in Spain, and a portion of
our assets are located in Spain. As a result, it may not be possible to effect
service of process in Spain against us or upon our executive officers or
directors, including with respect to matters arising under U.S. federal
securities laws or applicable state securities laws. Moreover, there is
uncertainty that the courts of Spain would enforce judgments of U.S. courts
against us or our directors and officers based on the civil liability provisions
of the securities laws of the United States or any state, or entertain an
original action brought in Spain based upon the securities laws of the United
States or any state.  These risks may discourage a potential acquirer
from seeking to acquires shares of our common stock, which in turn could reduce
our stock price or prevent our stockholders from realizing a premium over our
stock price.




Risk
Relating to Our Securities





Generally,
we have not paid any cash dividends, and no cash dividends will be paid in the
foreseeable future, which may require our stockholders to generate a cash flow
from their investment in our securities through alternative
means.





We do
not anticipate paying cash dividends on our common stock in the foreseeable
future, and we may not have sufficient funds legally available to pay dividends
to our stockholders. Even if funds are legally available for distribution, we
may nevertheless decide not to or may be unable to pay any dividends. We intend
to retain all earnings for our operations. Accordingly, our stockholders may
have to sell some or all of their common stock in order to generate cash flow
from their investment. Our stockholders may not receive a gain on your
investment when they sell their common stock and may lose some or all of the
amount of their investment. Any determination to pay dividends in the future on
our common stock will be made at the discretion of our board of directors and
will depend on our results of operations, financial conditions, contractual
restrictions, restrictions imposed by applicable law, capital requirements and
other factors that our board of directors deems relevant.





We
may need additional capital, and the sale of additional shares or other equity
securities could result in dilution to our
stockholders.  Additionally, our stockholders may face dilution from
exercise of our warrants or conversion of our Series A Convertible Preferred
Stock.





We
believe that our current cash and cash equivalents, anticipated cash flow from
operations, and net proceeds from our September 9, 2008 financing will be
sufficient to meet our anticipated cash needs for the near future. We may,
however, require additional cash resources due to changed business conditions or
other future developments, including any investments or acquisitions we may
decide to pursue. If our resources are insufficient to satisfy our cash
requirements, we may seek to sell additional equity or debt securities or obtain
an increased credit facility. The sale of additional equity securities could
result in dilution to our stockholders. The incurrence of additional
indebtedness would result in increased debt service obligations and could result
in further operating and financing covenants that would further restrict our
operations. We cannot provide assurances that financing will be available in
amounts or on terms acceptable to us, if at all.  Additionally, there
are outstanding warrants and shares of our Series A Convertible Preferred Stock
issued by us, the exercise or conversion, respectively, of which may also dilute
our stockholders.





The
application of the “penny stock” rules could adversely affect the market price
of our common stock and increase our stockhodlers’ transaction costs to sell
those shares.




Our
common stock may be subject to the “penny stock” rules adopted under Section
15(g) of the Securities Exchange Act of 1934. The penny stock rules apply to
companies that are not traded on a national securities exchange whose common
stock trades at less than $5.00 per share or that have tangible net worth of
less than $5,000,000 ($2,000,000 if the company has been operating for three or
more years). The “penny stock” rules impose additional sales practice
requirements on broker-dealers who sell securities to persons other than
established customers and accredited investors (generally those with assets in
excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together
with their spouse). For transactions covered by these rules, the broker-dealer
must make a special suitability determination for the purchase of securities and
have received the purchaser’s written consent to the transaction before the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the broker-dealer must deliver, before the transaction, a disclosure
schedule prescribed by the SEC relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. These additional burdens
imposed on broker-dealers may restrict the ability or decrease the willingness
of broker-dealers to sell our common stock, and may result in decreased
liquidity for our common stock and increased transaction costs for sales and
purchases of our common stock as compared to other securities.




19





Our
common stock is thinly traded, and an active public market for our common stock
may not develop or be sustained.





Although
our common stock is quoted on the Over-the-Counter Bulletin Board (“OTC”), we
cannot predict the extent to which an active public market for our common stock
will develop or be sustained. Our common stock has historically been
sporadically or “thinly traded” on the OTC, meaning that the number of persons
interested in purchasing our common stock at or near bid prices at any given
time may be relatively small or nonexistent. This situation is attributable to a
number of factors, including the fact that we are a small company that is
relatively unknown to stock analysts, stock brokers, institutional investors and
others in the investment community that generate or influence sales volume, and
that even if we came to the attention of such persons, they tend to be
risk-adverse and would be reluctant to follow an unproven company such as ours
or purchase or recommend the purchase of our shares until such time as we become
more seasoned and viable. As a consequence, there may be periods of several days
or more when trading activity in our shares is minimal or non-existent, as
compared to a seasoned issuer that has a large and steady volume of trading
activity that will generally support continuous sales without an adverse effect
on stock price. We cannot provide assurances that a broader or more active
public trading market for our common stock will develop or be sustained, or that
current trading levels will be sustained.





The
volatility of the market price of our common stock may render our stockholders
unable to sell their shares of our common stock at or near “ask” prices or at
all if they need to sell their shares to raise money or otherwise desire to
liquidate their shares.





The
market price of our common stock is particularly volatile given our status as a
relatively small company with a small and thinly traded “float” that could lead
to wide fluctuations in our stock price. The price at which our common stock is
purchased may not be indicative of the price that will prevail in the trading
market. An investor in our common stock may be unable to sell their common stock
at or above their purchase price if at all, which may result in substantial
losses to such investor.





The
market for our common stock is characterized by significant price volatility
when compared to seasoned issuers, and we expect that our stock price will
continue to be more volatile than a seasoned issuer for the indefinite future.
The volatility in our stock price is attributable to a number of factors. As
noted above, our common stock is sporadically and/or thinly traded. As a
consequence of this lack of liquidity, the trading of relatively small
quantities of shares by our stockholders may disproportionately influence the
price of those shares in either direction. The price for our shares could, for
example, decline precipitously in the event a large number of our shares are
sold on the market without commensurate demand, as compared to a seasoned issuer
which could better absorb those sales without adverse impact on its stock price.
The following factors also may add to the volatility in the price of our common
stock: actual or anticipated variations in our quarterly or annual operating
results; adverse outcomes; additions to or departures of our key personnel, as
well as other items discussed under this “Risk Factors” section, as well as
elsewhere in this prospectus. Many of these factors are beyond our control and
may decrease the market price of our common stock, regardless of our operating
performance. We cannot make any predictions or projections as to what the
prevailing market price for our common stock will be at any time, including as
to whether our common stock will sustain its current market prices, or as to
what effect the sale of shares or the availability of shares for sale at any
time will have on the prevailing market price.




If
we do not meet the listing standards established by Nasdaq, NYSE Alternext US
LLC, or other similar markets, our common stock may not become listed for
trading on one of those markets, which may restrict the liquidity of shares held
by our stockholders.





As
soon as reasonably practicable, we intend to apply to list our common stock for
trading on a national securities exchange such as the Nasdaq Stock Market
(“Nasdaq”) or NYSE Alternext US LLC (the “Alternext”).  The listing of
our common stock on a national securities exchange may result in a more active
public market for our common stock, resulting in turn in greater liquidity of
shares held by our stockholders.  Nasdaq and the Alternext have
established certain quantitative criteria and qualitative standards that
companies must meet in order to become and remain listed for trading on these
markets. We cannot guarantee that we will be able to meet or maintain all
necessary requirements for listing; therefore, we cannot guarantee that our
common stock will be listed for trading on a national securities
exchange.




20





Volatility
in our common stock price may subject us to securities litigation that could
result in substantial costs to our business.





The
market for our common stock may be characterized by significant price volatility
when compared to seasoned issuers, and we expect our stock price will be more
volatile than a seasoned issuer for the indefinite future. In the past,
plaintiffs have often initiated securities class action litigation against a
company following periods of volatility in the market price of its securities.
We may, in the future, be the target of similar litigation. Securities
litigation could result in substantial costs and liabilities and could divert
management’s attention and resources that otherwise could have been focused on
our business operations.





Past
activities of our company and affiliates may lead to future liability for our
company.





Prior
to our acquisition of Premier Power California, we were a thirty-party logistics
provider for supply chain management, a business unrelated to our current
operations. Any liabilities relating to such prior business against which we are
not completely indemnified will be borne by us and may result in substantial
costs to the Company and could divert management’s attention and resources that
otherwise could have been focused on our business operations.





We
have raised substantial amounts of capital in a recent financing, and if we
inadvertently failed to comply with applicable securities laws, ensuing
rescission rights or lawsuits would severely damage our financial
position.





The
securities offered in our September 9, 2008 private placement were not
registered under the Securities Act or any state “blue sky” law in reliance upon
exemptions from such registration requirements. Such exemptions are highly
technical in nature, and if we inadvertently failed to comply with the
requirements or any of such exemptive provisions, the investor would have the
right to rescind their purchase of our securities or sue for damages. If the
investor was to successfully seek such rescission or prevail in any such suit,
we would face severe financial demands that could materially and adversely
affect our financial position. Financings that may be available to us under
current market conditions frequently involve sales at prices below the prices at
which our common stock currently is quoted on the OTC or exchange on which our
common stock may in the future be listed, as well as the issuance of warrants or
convertible securities at a discount to market price.




Our
principal stockholders are two members of our management.  As these
principal stockholders substantially control our corporate actions, our other
stockholders may face difficulty in exerting any influence over matters not
supported by these two members of management.





Our
principal stockholders include Dean R. Marks, who is our Chairman of the Board,
President, and Chief Executive Officer, and Miguel de Anquin, who is our Chief
Operating Officer and Corporate Secretary and a member of our Board. Messrs.
Marks and de Anquin own approximately 69.1% of our outstanding shares of common
stock. These stockholders, acting individually or as a group, could exert
substantial influence over matters such as electing directors, amending our
certificate of incorporation or bylaws, and approving mergers or other business
combinations or transactions. In addition, because of the percentage of
ownership and voting concentration in these principal stockholders and their
affiliated entities, elections of our board of directors will generally be
within the control of these stockholders and their affiliated entities. While
all of our stockholders are entitled to vote on matters submitted to our
stockholders for approval, the concentration of shares and voting control
presently lies with these principal stockholders and their affiliated entities.
As such, it would be difficult for stockholders to propose and have approved
proposals not supported by these principal stockholders and their affiliated
entities. There can be no assurance that matters voted upon by our officers and
directors in their capacity as stockholders will be viewed favorably by all
stockholders of our company. The stock ownership of our principal stockholders
and their affiliated entities may discourage a potential acquirer from seeking
to acquire shares of our common stock, which in turn could reduce our stock
price or prevent our stockholders from realizing a premium over our stock
price.




21





We
are responsible for the indemnification of our officers and directors, which
could result in substantial expenditures.




Our
bylaws provide for the indemnification of our directors, officers, employees,
and agents, and, under certain circumstances, against attorneys’ fees and other
expenses incurred by them in litigation to which they become a party arising
from their association with or activities on behalf of the Company. This
indemnification policy could result in substantial expenditures, which we may be
unable to recoup.





Our certificate of incorporation
authorizes our board to create new series   of preferred stock without further
approval by our stockholders, which could   adversely affect the rights of the
holders of our common stock.





Our
board of directors has the authority to fix and determine the relative rights
and preferences of preferred stock. Our board of directors also has the
authority to issue preferred stock without further stockholder approval. As a
result, our board of directors could authorize the issuance of a series of
preferred stock that would grant to holders the preferred right to our assets
upon liquidation, the right to receive dividend payments before dividends are
distributed to the holders of common stock and the right to the redemption of
the shares, together with a premium, prior to the redemption of our common
stock. In addition, our board of directors could authorize the issuance of a
series of preferred stock that has greater voting power than our common stock or
that is convertible into our common stock, which could decrease the relative
voting power of our common stock or result in dilution to our existing
stockholders.





Contractual
limitations that restrict conversion or exercise of securities held by Vision
Opportunity Master Fund may not necessarily prevent substantial dilution of the
voting power and value of an investment in our securities.





The
contractual limitations that restrict conversion and exercise of shares of
Series A Convertible Preferred Stock (“Series A Stock”) and Series A and Series
B Warrants (collectively, the “Warrants”) held by Vision Opportunity Master Fund
(“Vision”) for shares of our common stock are limited in their application and
effect and may not prevent substantial dilution of our existing stockholders.
Pursuant to the terms of such securities, Vision may not convert the Series A
Stock or exercise the Warrants to the extent that such conversion or exercise
would cause Vision’s beneficial ownership, together with its affiliates, to
exceed 9.99% of the number of shares of our outstanding common stock immediately
after giving effect to the issuance of shares of common stock as a result of a
conversion or exercise.  Vision, may, however waive this limitation
upon 61 days’ notice to the Company.   In addition, this 9.99%
limitation does not prevent Vision from converting the Series A Stock into, or
exercising the Warrant for, shares of our common stock and then reselling those
shares in stages over time where Vision and its affiliates do not, at any given
time, beneficially own shares in excess of the 9.99%
limitation.  Consequently, this limitation will not necessarily
prevent substantial dilution of the voting power and value of an investment in
our securities.




22





ITEM
      2.
            UNREGISTERED
      SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS





On
September 9, 2008, in connection with a share exchange that closed on the same
day, we issued 24,218,750 shares of our common stock to the stockholders of
Premier Power California, consisting of four individuals and one entity, in
exchange for 100% of the capital stock of Premier Power California. The issuance
of the common stock to such persons was exempt from registration under the
Securities Act pursuant to Section 4(2) and Regulation D thereof. We made this
determination based on the representations of such persons in that certain Share
Exchange Agreement dated September 9, 2008 which included, in pertinent part,
that such stockholders were "accredited investors" within the meaning of Rule
501 of Regulation D promulgated under the Securities Act, and that such
stockholders were acquiring our common stock for investment purposes for their
own respective accounts and not as nominees or agents and not with a view to the
resale or distribution thereof, and that each owner understood that the shares
of our common stock may not be sold or otherwise disposed of without
registration under the Securities Act or an applicable exemption
therefrom.




On
September 9, 2008, we issued a total of 3,500,000 units, each unit consisting of
one share of our Series A Preferred Stock, one-half of one Series A Warrant, and
one-half of one Series B Warrant, to Vision Opportunity Master Fund, Ltd. (the
“Investor”) in connection with the closing of a financing in connection with the
share exchange that closed on September 9, 2008. The issuance of the units to
the Investor was exempt from registration under the Securities Act pursuant to
Section 4(2) and Regulation D thereof. We made this determination based on the
representations of the Investor, which included, in pertinent part, that such
person was an "accredited investor" within the meaning of Rule 501 of Regulation
D promulgated under the Securities Act, and that such person was acquiring our
common stock for investment purposes for its own respective account and not as a
nominee or agent and not with a view to the resale or distribution thereof, and
that the Investor understood that the shares of our Series A Preferred Stock and
our Series A Warrants and Series B warrants may not be sold or otherwise
disposed of without registration under the Securities Act or an applicable
exemption therefrom.







ITEM
      3.
            DEFAULTS
      UPON SENIOR SECURITIES





None.





ITEM
      4.
            SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY
HOLDERS





Reference
is made to the disclosures in our Current Report on Form 8-K filed with the SEC
on August 29, 2008, which information is incorporated herein by
reference.




ITEM
      5.
            OTHER
      INFORMATION




(a)
            None.





(b)
            There
      were no changes to the procedures by which security holders may recommend
      nominees to our board of directors.




23





ITEM 6.
            EXHIBITS





Exhibit
      Number
            
            Description2.1
            
            Share
      Exchange Agreement by and among the Company, its majority stockholder,
      Premier Power Renewable Energy, Inc., and its stockholders, dated
      September 9, 2008 (3)3.1
            
            Certificate
      of Incorporation (1)3.2
            
            Bylaws
      (1)3.3
            
            Certificate
      of Amendment of the Certificate of Incorporation, filed August 19, 2008
      with the Secretary of State of the State of Delaware (2)3.4
            
            Certificate
      of Amendment of the Certificate of Incorporation, filed August 29, 2008
      and effective September 5, 2008 with the Secretary of State of the State
      of Delaware (3)3.5
            
            Certificate
      of Designation of Preferences, Rights and Limitations of Series A
      Convertible Preferred Stock, filed September 10, 2008 with the Secretary
      of State of the State of Delaware (3)3.6
            
            Amendment
      to Certificate of Incorporation, filed November 24, 2008 with the
      Secretary of State of Delaware (4)3.7
            
            Amendment
      to Bylaws (5)10.1
            
            Employment
      Agreement between Premier Power Renewable Energy, Inc. and Dean R. Marks,
      dated August 22, 2008 (3)10.2
            
            Employment
      Agreement between Premier Power Renewable Energy, Inc. and Miguel de
      Anquin, dated August 22, 2008 (3)10.3
            
            Form
      of Securities Purchase Agreement (3)10.4
            
            Form
      of Registration Rights Agreement (3)10.5
            
            Form
      of Series A Common Stock Purchase Warrant (3)10.6
            
            Form
      of Series B Common Stock Purchase Warrant (3)10.7
            
            Form
      of Lock-up Agreement (3)10.8
            
            Purchase
      and Sale Agreement between Harry’s Trucking, Inc. and Haris Tajyar and
      Omar Tajyar, dated September 9, 2008 (3)10.9
            
            Guaranty
      of Payment by the Company in favor of Guaranty Bank, dated September 9,
      2008 (3)31.1
            
            Section 302
      Certification by the Corporation’s Chief Executive Officer
    *31.2
            
            Section 302
      Certification by the Corporation’s Chief Financial Officer
    *32.1
            
            Section 906
      Certification by the Corporation’s Chief Executive Officer
    *32.2
            
            Section 906
      Certification by the Corporation’s Chief Financial Officer
    *







(1)
              Filed
      on February 13, 2007 as an exhibit to our Registration Statement on Form
      SB-2/A, and incorporated herein by reference.(2)
              Filed
      on August 29, 2008 as an exhibit to our Current Report on Form 8-K, and
      incorporated herein by reference.(3)
              Filed
      on September 11, 2008 as an exhibit to our Current Report on Form 8-K, and
      incorporated herein by reference.(4)
              Filed
      on November 26, 2008 as an exhibit to our Current Report on Form 8-K, and
      incorporated herein by reference.(5)
              Filed
      on January 16, 2009 as an exhibit to our Current Report on Form 8-K, and
      incorporated herein by
reference.




24





SIGNATURES





In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.




PREMIER
      POWER RENEWABLE ENERGY, INC.(Registrant)Date:
      February
      5, 2009
            By:
            /s/
      Dean MarksDean
      MarksChief
      Executive Officer and PresidentDate:
      February
      5, 2009
            By:
            /s/
      Teresa KelleyTeresa
      KelleyChief
      Financial Officer




25