Enterprise Risk Management

Premiere Horizon Alliance Corporation exists to provide value to our stakeholders.

Faces with uncertainties in the different risks that the corporation has to deal with, the challenge for the PHA management is to determine how much of this uncertainty we should accept as we strive to grow our stakeholder value. The PHA management has set strategies and objectives that strike an optimal balance between growth, goals and related risks. The company continues to strive to effectively deploy resources in pursuit of the company’s objective of increasing shareholder value. Some of the risks that the company face are listed below.

Price Fluctuation
The price of securities can and does fluctuate and any individual security may experience upward or downward movements, and may even become valueless. There is an inherent risk that losses rather than profit may be incurred as a result of buying and selling securities. Past performance is not a guide to future performance. There is an extra risk of losing money when securities are bought from smaller companies. There may be a big difference between the buying and selling price of these securities. An investor deals in a range of investments each of which may carry a different level of risk.

Prior to making an investment decision, interested stockholders may carefully consider, along with other matters set out in this report, the following investment considerations or risk factors listed in order of importance, and which are not intended to be exclusive.

Hauling and Mining
Weather continues to be the primary concern of RCDC with regard to the mining operations in Surigao. Hauling of minerals is dependent on the weather condition. During rainy season extraction and hauling of minerals become more difficult compared to the dry season. However in 2014, RCDC is expecting the mining operations and hauling to begin early in April instead of May. Changes in weather patterns greatly affect the hauling of the minerals which can cause reduced volume of hauled minerals.

Inherent Business Risk
One of the Company’s revenue-generating activities involves operation of electronic games based on chance. These games provide equal odds both to the house and player. It is in this nature that the Company shares in the risk of losing from the games being played. The only advantage of the house is that gambling appeals to the increased betting behavior of the players whenever they win, thus giving chance to the Company to win back its losses.

The Company’s revenue from the hauling business is dependent on its client’s ability to continuously maintain substantial stock pile for shipment to their buyers. This is largely dependent on the weather conditions on the site.

Political and Economic Conditions
In general, the profitability of the Company depends on a large extent on the overall level of business and economic activity in the country, which in turn, is affected by political and economic factors. Any political or economic instability in the future may have a negative effect on the industries served by the Company.

Furthermore, a necessary procedure in establishing a PEGS is to secure a business permit from the local government unit in the city for which the PEGS will operate. Thus, the approval and renewal of the permit relies on the local government’s policy on gambling. This poses the risk of not being able to obtain a permit to operate once the city or municipality changes its policy on gambling.

Taxation
Laws may be enacted increasing existing tax rates or creating new taxes that would affect the Company. On the other hand, laws may also be enacted decreasing existing tax rates or rendering certain taxes inapplicable to the Company.

Foreign Currency Fluctuation
Future changes in the value of the peso against the US dollar or other currencies will affect the foreign currency equivalent of the value of the shares of the Company and any dividends. Such fluctuations will also affect the amount in foreign currency received upon conversion of cash dividends or other distributions paid in pesos by the Company on, and the peso proceeds received from any sales of, the shares.

Any potential restrictions which may be imposed by the Bangko Sentral ng Pilipinas ("BSP"), with the approval of the President of the Philippines, on the availability of foreign exchange may unduly affect the trading of the Company’s shares and any dividend distribution. As a result, although foreign investors will be able to sell their shares on the PSE, the repatriation of proceeds of sale or dividends, if coursed through the Philippine banking system, cannot be effected until registration with the BSP has been implemented. The Company is not responsible for the registration with the BSP or custodian banks of such non-residents’ subscriptions or purchases of Shares.

Development in other emerging market countries may adversely affect the Philippine economy and the market price of the Shares
In the past, the Philippine economy and the securities of companies in the country, in different degrees, have been influenced by the economic and other relevant events in other emerging markets, particularly countries in Southeast Asia. Although economic conditions vary from country to country, the reactions of investors to adverse global developments may have a negative impact on the market price of securities in other countries, including stocks listed in the Philippine Stock Exchange ("PSE").

Most of the Company’s shareholders are Filipinos and to the best of the Company’s knowledge, no foreign institutional funds have invested in its shares. Thus, the Company’s share price is not expected to be sensitive to capital flight by foreign institutional investors in case of an economic crisis abroad.

Indirect Foreign Ownership Limitations
The percentage of foreign-owned voting stocks in a corporation is determined by the citizenship of its stockholders. The citizenship of corporation that is a stockholder in a corporation follows the citizenship of the controlling stockholders of the corporation irrespective of its place of incorporation. Under the present rulings of the SEC, shares belonging to corporations or partnerships at least sixty percent (60%) of the capital of which is owned by Filipino citizens shall be considered as a Philippine nationality, but if the percentage of Filipino ownership in the corporation or partnership is less than sixty percent (60%), only the number of shares corresponding to such percentage shall be counted as Philippine nationality.

Accordingly, the Company cannot allow the issuance or the transfer of shares, and cannot record any issuance or transfers in the books of the Company, if such issuance or transfer would result in the Company breaching applicable foreign ownership restrictions. It must be noted, however, that the Company is currently not subject to any foreign ownership restrictions.

With all these inherent and business risks, the Company maintains a strong internal control environment, to mitigate, if not eliminate, some of the risks. It is the end goal of the management to minimize these risks and achieve operating profitability.