Premier Alliance Provides Shareholder Update and Reports Financial Results for the 2012 Second Quarter

CHARLOTTE, NC--(Marketwire - Aug 16, 2012) - Premier Alliance Group, Inc (OTCBB: PIMO), a strategic advisory and consulting firm focused on providing 360° Intelligence Delivery services and solutions through our Knowledge Based Expertise ("KBE"), today provides a shareholder update and announces its second quarter financial results for the period ending June 30, 2012.

Three Month Financial Results for the period ended June 30, 2012
Net revenue for the three months ended June 30, 2012 totaled $5.5 million, an increase of 30%, compared to $4.2 million for the same period in 2011. Net revenue for the three months ended June 30, 2012 contributed by GreenHouse Holdings, Inc. (GHH) was $1,261,000 or 23% of total revenue. Excluding the second quarter contribution of GHH, net revenue would have been $4.2 million compared to $4.2 million for the same period in the prior year.

Cost of revenues was $4.1 million or 74.7% of revenue for the three months ended June 30, 2012, as compared to $3.1 million or 72.8% of revenue for the same period in 2011. Cost of revenue for GHH was $871,000 or 69.1% of total revenue. Cost of revenue for the core Premier business was 76.3% in second quarter 2012, which did not offset fixed consultant personnel expense, lower margins and utilization rates.

SG&A expenses were $2.1 million or 37.7% of revenue for the three months ended June 30, 2012, as compared to $1.6 million or 36.7% for the same period in 2011. SG&A expenses of GHH of $556,000 (which represented 44.1% of their total revenue), SG&A for Premier's core business was $1.5 million, a decrease of $31,000 for the same period in 2011. SG&A also included non-cash compensation expense related to the issuance of stock options and warrants and the amortization of stock option/warrant expense for previously awarded options/warrants that vest over time in the amount of $84,000, for the three months ended June 30, 2012, compared to $94,000, for the same period in the prior year.

Loss from operations for the three months ended June 30, 2012 was $751,000, as compared to a loss of $453,000 for the same period in 2011. The increase in the loss in 2012 is primarily attributable to the loss from operations from GHH for the period of $204,000 and an increase in Cost of Revenues for the three months ended June 31, 2012 compared to the same period for the prior year.

Other income and expense resulted in a net income of $1.6 million and was comprised almost exclusively of derivative income, a non-cash item, resulting from the revaluation of warrants and the related derivative liability at June 30, 2012, resulting in derivative income of $1.6 million, offset by interest expense of $17,000 and a decline in the market value of officers life insurance.

The effective income tax rate is 24.1%, and is impacted by the permanent differences attributable to certain derivative income and certain stock compensation expense which are considered permanent differences hence, nontaxable, and not providing a tax deduction or benefit.

Net income for the three months ended June 30, 2012 was $628,000, compared to a loss of $625,000, for the same period in the prior year. The increase in income of $1.3 million is primarily attributable to the derivative income recorded for the three months ended June 30, 2012 as described above, offset by an increased loss from operations of $298,000. This resulted in basic net income per share of $0.04 per share and $0.02 on a fully diluted basis for the three months ended June 30, 2012 compared to a net loss per share of $0.08 on a basic and fully diluted basis for the three months ended June 30, 2011.

Liquidity and Capital Resources
As of June 30, 2012, the Company had cash and cash equivalents of $1.1 million. Net working capital at June 30, 2012 was $0.9 million. Total current assets and total assets at June 30, 2012 were $5.2 million and $18.6 million respectively. At June 30, 2012, the Company had total current liabilities and total liabilities of $4.3 million, and $5.3 million respectively. Shareholders' equity as of June 30, 2012 was $13.3 million.

Operational Highlights

• The Energy and Sustainability Division continues to work with clients to implement the Southern California Edison's (SCE) Automated Demand Response (Auto-DR) program. After being awarded a three-year contract for SCE as a Technical Coordinator for customers enrolled in the Auto-DR program, Premier recently became engaged to implement this program with Triumph Actuation Systems and completed a technical assessment with Aldila;
• We were awarded a $460,000 contract to design, install and test the equipment necessary to utilize a new 12kV electrical service at the Southern California facility of a leading global provider of industrial equipment;
• We received a $400,000 contract to provide engineering, design and documentation services in support of the re-commission of a co-gen power plant for a southern California sanitation district;
• We were chosen by Seaboard Solar LLC to engineer, procure and construct $3.1 million in solar projects;
• We added two new members to the Board of Directors, John Catsimatidis and Seymour Siegel.

"I am pleased with the progress we have made with our Energy Division since the acquisition," stated Mr. Mark Elliott, Chairman and CEO of Premier Alliance. "Our Energy and Sustainability Division was successful in garnering several strategic relationships, notably with Southern California Edison. We anticipate continuing to leverage our expertise in Energy Efficiency, Demand Response, and renewable energy initiatives as we look to align ourselves with similar partners. We are also focused on building upon the foundation we have set within our other industry verticals, such as the Governmental sector, where we were awarded the first ever fully integrated military base energy audit with a public utility." 

Mr. Elliott continued, "A key to our success going forward is the leverage and cross selling opportunities available to our Company. We continue to make progress integrating the capabilities of each of our service and industry verticals, allowing us to service one client across multiple sectors and fulfill diverse needs. Examples of this are a Life Sciences client who utilizes our business process services to streamline operations and is now engaged in advisement on energy efficiency initiatives for their facilities. We are now in a position to create long lasting value through a wider scope of offerings for each client. This integrated approach comes at a time when large corporations, including our clients, are seeking to engage with consultancies such as ours that can provide multiple service capabilities. We are proud to be increasingly recognized as a leader across industries with our Knowledge Based Expertise and 360° Intelligence Delivery due to the quality of our work and expert professional services."

About Premier Alliance Group, Inc. 
Premier Alliance Group, Inc. (OTCBB: PIMO) is a strategic advisory and consulting firm focused on providing 360° Intelligence Delivery services and solutions through our Knowledge Based Expertise ("KBE"). We provide clients our KBE offering through our Professional Services Group and our Energy and Sustainability Solutions Group. Our focus is in the following industries today; Energy, Financial Services, Life Science and Biotechnology, Government, and Technology. Our Professional Services Group areas of expertise encompass Governance, Risk & Compliance (GRC), Business Performance & Technology, and Finance & Accounting as we assist clients with Risk Management, Compliance, Mergers & Acquisitions, Organizational Effectiveness, Project/Program Management, Information Management, Architecture and Software Development. The Energy and Sustainability Solutions Group is a leading provider of energy efficiency and sustainable facilities solutions. The division designs, engineers and installs disparate solutions and technologies that enable its clients to reduce their energy costs and carbon footprint. Premier Alliance is headquartered in Charlotte, NC. For more information, visit www.premieralliance.com.

Safe Harbor Statement
Certain information contained in this press release may be forward-looking. Actual results might differ materially from any forward-looking statements contained in this press release. Such forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause the actual results of Premier Alliance Group to be materially different from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms "believes," "belief," "expects," "intends," "anticipates" or "plans" to be uncertain and forward-looking.