ITEM 1.
DESCRIPTION OF BUSINESS
Executive Summary
Energy Holdings International, Inc. is focused on acquiring, developing and managing energy assets across in the Middle East, Asia and the Americas. The Company is led by a group of executive officers and directors with extensive experience in sourcing, acquiring and managing assets across the globe. EHII is dedicated to finding new, long-term energy solutions that are safe, economically viable and environmentally friendly to enhance the future of countries and economies worldwide. It is responding to international, political, environmental and free market demands for investments in the Independent Power Project (IPP) market with safer, cleaner and more technologically advanced energy sources. The Company is dedicated to the task of providing the best management and advisory services available in the complex arena of international business and project development in oil and gas production and power generation. EHII’s management has been in active discussions with several potential companies, either to acquire, manage, or joint venture with these entities. However, as of the date of this filing, no definitive agreements or arrangements have been finalized.
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Background
The Company’s predecessor, Green Energy Corp. was originally organized as a Colorado corporation, referred to in this document as “Old Green Energy”, commenced operations in 2003 as a marketer of a specific gasification technology for commercial applications to produce fuels and chemicals. On November 20, 2003, Old Green Energy filed a Limited Registration Offering Statement under cover of Form RL pursuant to the Colorado Securities Code relating to a proposed offering of up to 1.8 million shares of common stock, which was declared effective by the Colorado Division of Securities on January 21, 2004. The offering, which closed on June 29, 2004, raised $263,850 and sold a total of 527,700 shares in the offering. In December 2006, Old Green Energy reincorporated as a Nevada corporation and changed its name to Green Energy Holding Corp.
On December 28, 2008, GEHC entered into a stock purchase agreement to issue 14,370,300 shares to accredited investors for $175,000, giving those outside investors approximately 96.5% controlling interest in the Company. An additional $325,000 was used for legal and accounting fees and expenses, as well as administrative fees and costs. The aggregate cost of the change in control totaled $500,000.
On March 10, 2009, the Company amended the Articles of Incorporation to change its name from Green Energy Holding Corp. to Energy Holdings International, Inc.
EHII’S Business Strategy and Objectives
Oil & Gas Exploration
EHII’s acquisition and management strategy is focused on accumulating a portfolio of high cash generation producing assets across the oil and gas exploration and power generation sectors. Management has developed a pipeline of assets and secured preliminary terms for bank financing of potential acquisitions.
The Company believes that the global economic slowdown has created a unique opportunity to acquire and develop assets in the chosen sectors. Oil and gas prices recent depression has put many assets in distressed status due to the high leverage acquired in recent years. The distressed pricing on many assets and the long-term global demand for fossil fuels has presented EHII with what it expects is an opportunity to acquire several producing assets in the Midwestern United States. Its objective is to acquire cash flow positive properties with large unproven or undeveloped deposits. To date, EHII has not entered into any definitive agreements with such assets and cannot assure anyone that it will be able to or if it does, it will be on terms advantageous to the Company.
Power generation demand will be driven by the growth in demand from emerging markets, redevelopment of aged assets in the developed world and finally incremental demand. EHII will develop projects and acquire existing assets across the Middle East and Africa regions. The Company’s investment criteria for such projects and assets include long-term contracts, economic soundness of economy and local demand.
The Company’s specific strategies for value enhancement in the Power Generation sector are tailored to local requirements, but the company seeks to achieve the following:
·
Optimize the operations of acquired power plants, which includes maintaining our assets to high standards of safety and operating performance, managing our assets on a portfolio basis, particularly with regard to contingency and strategic spare parts planning so as to minimize the loss of generation during planned and forced outages, and closely co-coordinating our plant operation with trading activity to maximize the value of uncontracted output; and standardizing management reporting for all investments;
·
Leverage operational assets to enhance earnings in several ways, including financing at a variety of corporate, project and intermediate corporate levels, capturing operational, trading, and administrative economies of scale in asset aggregation; capitalizing on market knowledge derived through asset ownership, and leveraging off the skills, expertise and ideas of the management team;
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·
Grow trade assets to maximize value over time, and to seek to maximize the value of investments through dispositions if this generates a higher return, or if the management team determines, a comparable return can be obtained with lower risk elsewhere; and
·
Seek effective routes to market in those geographical areas where it is appropriate.
Power generation demand will be driven by the growth in demand from emerging markets, redevelopment of aged assets in the developed world and finally incremental demand. The Company intends to acquire and build out power generation plants across the Middle East, North Africa, South America and Southeast Asian regions. However, EHII has not entered into any definitive agreements with any persons to acquire or build out such plants nor does it assure anyone that it will be able to do so.
The Oil & Gas and Power Generation Industry
The Independent Power Industry
Power generation is a strong and attractive global sector due to the significant demand growth in developing economies, replacement capacity required in many developed countries and tightening reserve requirements. EHII intends to focus power generation efforts in the Middle East and Africa regions.
The Middle East region offers stable governments, low country risk ratings and good credit ratings, which allows for the availability of long-term PWPAs with attractive return on investment and the availability of capital needed for development and acquisitions. GDP growth rates average 5-8% per annum with power growth rates averaging 6-10% per annum.
There is pressure on development plans throughout the industry due to the global liquidity crisis. This creates a unique opportunity for firms that are well capitalized.
Revenue Source
EHII expects that it may derive revenues from equity positions in oil and gas and power projects and consulting engagements performed for external groups. It also anticipates that additional revenue could be in the form of development fees from Farm-In Agreements with new partners in EHII projects, carried and royalty interest from projects revenue, and when appropriate, in the form of capital gains from the sale of all or a portion of EHII ownership interest in a project.
Regulatory Approvals and Environmental Laws
EHII is subject to various federal, state and local environmental laws and regulations, including those relating to the discharge of materials into the air, water and ground; the generation, storage, handling, use, transportation and disposal of hazardous materials; and the health and safety of our employees. These laws, regulations and permits also can require expensive pollution control equipment or operational changes to limit actual or potential impacts to the environment. A violation of these laws and regulations or permit conditions can result in substantial fines, natural resource damage, criminal sanctions, permit revocations and/or facility shutdowns. We do not anticipate a material adverse effect on our business or financial condition as a result of our efforts to comply with these requirements. We also do not expect to incur material capital expenditures for environmental controls in this or the succeeding fiscal year.
There is a risk of liability for the investigation and cleanup of environmental contamination at each of the properties that we may own or operate and at off-site locations where we may have arranged for the disposal of hazardous substances. If these substances have been or are disposed of or released at sites that undergo investigation and/or remediation by regulatory agencies, we may be responsible under CERCLA or other environmental laws for all or part of the costs of investigation and/or remediation and for damage to natural resources. We may also be subject to related claims by private parties alleging property damage and personal injury due to exposure to hazardous or other materials at or from these properties. Some of these matters may require us to expend significant amounts for investigation and/or cleanup or other costs. We do not have material environmental liabilities relating to contamination at or from our facilities or at off-site locations where we have transported or arranged for the disposal of hazardous substances.
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In addition, new laws, new interpretations of existing laws, increased governmental enforcement of environmental laws or other developments could require us to make additional significant expenditures. Continued government and public emphasis on environmental issues can be expected to result in increased future investments for environmental controls at our ongoing operations. Present and future environmental laws and regulations (and related interpretations) applicable to our operations, more vigorous enforcement policies and discovery of currently unknown conditions may require substantial capital and other expenditures. Our air emissions are subject to the federal Clean Air Act, the federal Clean Air Act Amendments of 1990 and similar state and local laws and associated regulations. The U.S. EPA has promulgated National Emissions Standards for Hazardous Air Pollutants, or NESHAP, under the federal Clean Air Act that could apply to facilities that we own or operate if the emissions of hazardous air pollutants exceed certain thresholds. If a facility we operate is authorized to emit hazardous air pollutants above the threshold level, then we are required to comply with the NESHAP related to our manufacturing process and would be required to come into compliance with another NESHAP applicable to boilers and process heaters by September 13, 2007. New or expanded facilities would be required to comply with both standards upon startup if they exceed the hazardous air pollutant threshold. In addition to costs for achieving and maintaining compliance with these laws, more stringent standards may also limit our operating flexibility. Because other domestic syngas manufacturers will have similar restrictions, however, we believe that compliance with more stringent air emission control or other environmental laws and regulations is not likely to materially affect our competitive position.
The hazards and risks associated with producing and transporting our products, such as fires, natural disasters, explosions, abnormal pressures, blowouts and pipeline ruptures also may result in personal injury claims or damage to property and third parties. As protection against operating hazards, we maintain insurance coverage against some, but not all, potential losses. Our coverage includes physical damage to assets, employer’s liability, comprehensive general liability, automobile liability and workers’ compensation. We believe that our insurance is currently adequate, but losses could occur for uninsurable or uninsured risks or in amounts in excess of existing insurance coverage. We do not currently have pending material claims for damages or liability to third parties relating to the hazards or risks of our business.
The international, federal and state rules and regulations are constantly changing. There may be additional restrictions or requirements in the future to which EHII will be subject, which may adversely affect the business, as well as its revenues and profitability.
Employees
The Company currently has engaged a Chief Executive Officer, a Chief Financial Officer and a Chief Operating Officer. To date, these individuals are consultants, but EHII anticipates that in the near future, it will enter into employment agreements with these individuals.
ITEM 1A.
ITEM 1A. RISK FACTORS
Important Risk Factors Concerning our Business.
You should carefully consider the following risk factors and all other information contained in this Annual Report in evaluating our business and prospects. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties other than those we described below that are not presently known to us or that we believe are immaterial may also impair our business operations. If any of the following risks occur, our business and financial results could be harmed. You should also refer to the other information contained in this Annual Report, including our consolidated financial statements and the related notes.
Risks Related to Our Business and Industry
We have a limited operating history.
We began operations in October 2003. Since the inception of our current business operations, we have been engaged in organizational activities, including developing a strategic operating plan, entering into contracts, hiring personnel, developing processing technology, raising private capital and seeking acquisitions. Accordingly, we have a limited relevant operating history upon which an evaluation of our performance and future prospects can be made.
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We have had a history of net losses.
We incurred a net loss of $180,436 for the year ended June 30, 2009, compared to a net loss of $39,488 for the same period in 2008. We incurred a net loss of $949,455 from inception through June 30, 2009. Through June of 2009, we have been funding our operations primarily through the sale of our securities and loans from our major shareholder. We expect to continue to incur net losses for the foreseeable future as focus on seeking potential joint venture partners and acquisitions in the area of oil, gas, and alternative energy. Our ability to generate and sustain significant additional revenues or achieve profitability will depend upon the factors discussed elsewhere in this “Risk Factors” section. We cannot assure you that we will achieve or sustain profitability or that our operating losses will not increase in the future. If we do achieve profitability, we cannot be certain that we can sustain or increase profitability on a quarterly or annual basis in the future.
We will be forced to continue to seek financing partners, either through debt or equity, to achieve our business objectives.
As of June 30, 2009, we had cash of $25,600. We will need significant capital expenditures and investments over the next twelve months related to our growth program. We are also currently evaluating potential joint venture partners. We do not plan to use a portion of our current cash to fund these site acquisitions or provide seed equity for the projects while we analyze financing options.
We are currently in discussions with several intermediaries, advisors and investors to structure and raise the funds to optimally finance potential projects. We are evaluating debt and equity placements at the corporate level as well as project specific capital opportunities. We have no commitments for any additional financing, and there can be no assurance that, if needed, additional capital will be available to use on commercially acceptable terms or at all. Our failure to raise capital as needed would significantly restrict our growth and hinder out ability to compete. We may need to curtail expenses, reduce planned investments in technology and research and development and forgo business opportunities. Additional equity financings are likely to be dilutive to holders of our common stock and debt financing, if available, may involve significant payment obligations and covenants that restrict how we operate our business.
Strategic acquisitions could have a dilutive effect on your investment. Failure to make accretive acquisitions and successfully integrate them could adversely affect our future financial results
As part of our growth strategy, we will seek to acquire or invest in complementary (including competitive) businesses, facilities or technologies and enter into co-location joint ventures in the oil & gas and power generation industries. Our goal is to make such acquisitions, integrate these acquired assets into our operations and reduce operating expenses. The process of integrating these acquired assets into our operations may result in unforeseen operating difficulties and expenditures, and may absorb significant management attention that would otherwise be available for the ongoing development of our business. We cannot assure you that the anticipated benefits of any acquisitions will be realized. In addition, future acquisitions by us could result in potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities and amortization expenses related to goodwill and other intangible assets, any of which can materially and adversely affect our operating results and financial position.
We depend on our officers and key personnel and the loss of any of these persons could adversely affect our operations and results.
We believe that implementing our proposed expansion strategy and execution of our business plan to acquire, manage and develop power generation and oil & gas assets will depend to a significant extent upon the efforts and abilities of our officers and key personnel. Because the oil, gas and alternative energy industries are highly competitive, we believe that the personal contacts of our officers and key personnel within the industry and within the scientific community engaged in related businesses are a significant factor in our continued success. Our failure to retain our officers or key personnel, or to attract and retain additional qualified personnel, could adversely affect our operations and results. We do not currently carry key-man life insurance on any of our officers.
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Because we are smaller and have fewer financial and other resources than energy focused companies, we may not be able to successfully compete in the very competitive industry.
There are significant competition among existing oil, gas, and alternative energy companies. Our business faces competition from a number of entities that have the financial and other resources that would enable them to expand their businesses. Even if we are able to enter into joint venture agreements, our competitors may be more profitable than us, which may make it more difficult for us to raise any financing necessary for us to achieve our business plan and may have a materially adverse effect on the market price of our common stock.
The United States oil, gas, and alternative energy industry is highly dependent upon federal and state legislation and regulation and any changes in that legislation or regulation could materially adversely affect our results of operations and financial condition.
The elimination or significant reduction in the federal tax incentive could have a material adverse effect on our results of operations
Costs of compliance with burdensome or changing environmental and operational safety regulations could cause our focus to be diverted away from our business and our results of operations to suffer.
Risks Related to an Investment in Our Common Stock
Our common stock price has fluctuated considerably and stockholders may not be able to resell their shares at or above the price at which such shares were purchased.
The market price of our common stock has fluctuated in the past, and may continue to fluctuate significantly in response to factors, some of which are beyond our control. For example, from May, 2004 through September 30, 2009, the high and low bid or sales price for our common stock has been $1.50 and $.15 per share, respectively. The stock market in general has experienced extreme price and volume fluctuations. The market prices of securities of fuel-related companies have experienced fluctuations that often have been unrelated or disproportionate to the operating results of these companies. Continued market fluctuations could result in extreme volatility in the price of our common stock, which could cause a decline in the value of our common stock. Price volatility might be intensified under circumstances where the trading volume of our common stock is low.
We may not be able to attract the attention of major brokerage firms for research and support which may adversely affect the market price of our common stock.
Securities analysts of major brokerage firms may not publish research on our common stock. The number of securities competing for the attention of such analysts is large and growing. Coverage of a security by analysts at major brokerage firms increases the investing public’s knowledge of and interest in the issuer, which may stimulate demand for and support the market price of the issuer’s securities. The failure of major brokerage firms to cover our common stock may adversely affect the market price of our common stock.
Future sales of common stock or other dilutive events may adversely affect prevailing market prices for our common stock.
We are currently authorized to issue up to 100.0 million shares of common stock, of which 29,662,109 shares were issued and outstanding as of October 12, 2009. Our board of directors has the authority, without further action or vote of our stockholders, to issue any or all of the remaining authorized shares of our common stock that are not reserved for issuance and to grant options or other awards to purchase any or all of the shares remaining authorized. The board may issue shares or grant options or awards relating to shares at a price that reflects a discount from the then-current market price of our common stock. The options and awards referred to above can be expected to include provisions requiring us to issue increased numbers of shares of common stock upon exercise or conversion in the event of stock splits, redemptions, mergers or other transactions. If any of these events occur, the exercise of any of the options or warrants described above and any other issuance of shares of common stock will dilute the percentage ownership interests of our current stockholders and may adversely affect the prevailing market price of our common stock.
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A significant number of our shares will be eligible for sale, and their sale could depress the market price of our common stock.
Sales of a significant number of shares of our common stock in the public market could harm the market price of our common stock. Virtually all shares of our common stock may be offered from time to time in the open market, including the shares offered pursuant to this filing. These sales may have a depressive effect on the market for the shares of our common stock. Moreover, additional shares of our common stock, including shares that have been issued in private placements, may be sold from time to time in the open market pursuant to Rule 144. In general, a person who has held restricted shares for a period of one year may, upon filing with the SEC a notification on Form 144, sell into the market common stock in an amount equal to the greater of 1% of the outstanding shares or the average weekly number of shares sold in the last four weeks prior to such sale. Such sales may be repeated at specified intervals. Subject to satisfaction of a two-year holding requirement, non-affiliates of an issuer may make sales under Rule 144 without regard to the volume limitations and any of the restricted shares may be sold by a non-affiliate after they have been held two years. Sales of our common stock by our affiliates are subject to Rule 144.
Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse effect on our business and operating results. In addition, as a consequence of such failure, current and potential stockholders could lose confidence in our financial reporting, this could have an adverse effect on our stock price.
Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we could be subject to regulatory action or other litigation and our operating results could be harmed.
Commencing with our fiscal year ended June 30, 2010, we will be required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires our management to annually assess the effectiveness of our internal controls over financial reporting and, commencing with the fiscal year beginning July 1, 2010, our independent registered public accounting firm to report on these assessments.
During the course of our testing, we may identify deficiencies which we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, if we fail to maintain the adequacy of our internal accounting controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. Failure to achieve and maintain an effective internal control environment could cause us to face regulatory action and also cause investors to lose confidence in our reported financial information, either of which could have an adverse effect on our stock price.
Investors should not anticipate receiving cash dividends on our common stock.
We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings to support operations and to finance expansion and, therefore, we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
We may issue shares of preferred stock without stockholder approval that may adversely affect your rights as a holder of our common stock.
Upon our amending our certificate of incorporation authorizes us to issue up to 25.0 million shares of “blank check” preferred stock with such designations, rights and preferences as may be determined from time to time by our board of directors. Accordingly, our board of directors is empowered, without stockholder approval, to issue a series of preferred stock with rights to receive dividends and distributions upon liquidation in preference to any dividends or distributions upon liquidation to holders of our common stock and with conversion, redemption, voting or other rights which could dilute the economic interest and voting rights of our common stockholders. The issuance of preferred stock could also be used as a method of discouraging, delaying or preventing a change in control of our company or making removal of our management more difficult, which may not be in your interest as holders of common stock.
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Provisions in our articles of incorporation and bylaws and under Nevada law could inhibit a takeover at a premium price.
Our bylaws limit who may call a special meeting of stockholders and establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon at stockholder meetings. Each of these provisions may have the effect to discouraging, delaying or preventing a change in control of our company or making removal of our management more difficult, which may not be in your interest as holders of common stock.
ITEM 1B.
ITEM 1B.
UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
ITEM 2.
PROPERTIES
From January 2009 through June 30, 2009, the Company used the law offices of Rader & Coleman P.L. as its executive office. This was an accommodation to the Company and no rent was paid during this period. Additionally, management has determined the value of the rent to be immaterial to the financial statements taken as a whole. From July 2008 until December 2008, the Company paid a total of $6,000 for office space.
ITEM 3.
ITEM 3.
LEGAL PROCEEDINGS
We are not a party to any material pending legal proceedings and, to the best of our knowledge; no such action by or against us is contemplated, threatened or expected.
ITEM 4.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We did not submit any matters to a vote of our security holders during the fourth quarter of 2009.
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PART II
ITEM 5.
ITEM 5.
MARKET PRICE FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Market Information
In June, 2007, our Board of Directors approved a reverse split of common shares, with a record date of June 6, 2007, which was effective on June 18, 2007, with one (1) new share for every five point one (5.1) shares issued and outstanding on June 6, 2007. There was no change in par value or in the total number of authorized common shares. A whole share will be issued to any shareholders entitled to a fraction of a share.
EHII Common Stock trades on the over-the-counter under the symbol: EGYH.OB. The following sets forth the range of high and low bid quotations for the periods indicated as reported by Pinks Sheets. Such quotations reflect prices between dealers, without retail mark-up, markdown or commission, and may not represent actual transactions and have not been adjusted for stock splits.
We currently have no outstanding stock options or other equity compensation plans.
(b)
Our Stockholders
As of June 30, 2009, there were approximately 180 holders of record of EHII common stock.
(c)
Our Dividend Policy
We have never paid, and do not intend to pay, any cash dividends on our common stock for the foreseeable future. Therefore in all likelihood, an investor in this offering will only realize a profit on his investment, in the short term, if the market price of our common stock increases in value.
(d)
Securities Authorized to be Issued Under our Equity Compensation Plans
We currently do not have any equity compensation plans.
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ITEM 6.
ITEM 6.
SELECTED FINANCIAL DATA
Not applicable.
ITEM 7.
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included in this report.
Overview and History
The Company’s predecessor, Green Energy Corp. was originally organized as a Colorado corporation, referred to in this document as “Old Green Energy”, commenced operations in 2003 as a marketer of a specific gasification technology for commercial applications to produce fuels and chemicals. On November 20, 2003, Old Green Energy filed a Limited Registration Offering Statement under cover of Form RL pursuant to the Colorado Securities Code relating to a proposed offering of up to 1.8 million shares of common stock, which was declared effective by the Colorado Division of Securities on January 21, 2004. The offering, which closed on June 29, 2004, raised $263,850 and sold a total of 527,700 shares in the offering. In December 2006, Old Green Energy recorporated as a Nevada corporation and changed its name to Green Energy Holding Corp.
On December 28, 2008, GEHC entered into a stock purchase agreement to issue 14,370,300 shares to accredited investors for $175,000, giving those outside investors approximately 96.5% controlling interest in the Company. An additional $325,000 was used for legal and accounting fees and expenses, as well as administrative fees and costs. The aggregate cost of the change in control totaled $500,000.
On March 10, 2009, the Company amended the Articles of Incorporation to change its name from Green Energy Holding Corp. to Energy Holdings International, Inc.
Our Business
The Company was originally organized in October 2003 to capitalize on the growing market for alternative fuels and its co-products. The Company acquired a non-exclusive license to a specific technology for the conversion of biomass to synthesis gas (“syngas”). The technology includes the ability to produce a consistent, high-quality syngas product that can be used for energy production or as a building block for other chemical manufacturing processes.
Through the end of calendar 2008, our growth strategy has encompassed a multi-pronged approach which is geared at ultimately developing production levels and lowering production costs, thereby driving profitability.
Following the sale of 96.5% of the Company’s capital stock at the end of calendar 2008, the Company decided to modify its focus, concentrating on acquiring, developing and managing cash producing oil and gas properties in the Middle East, Asia and the Americas, particularly in the middle region of the United States. It aspires to find new, long-term energy solutions that are safe, economically viable and environmentally friendly to enhance the future of countries and economies worldwide. It is responding to international, political, environmental and free market demands for investments in the Independent Power Project (IPP) market with safer, cleaner and more technologically advanced energy sources. The Company is dedicated to the task of providing the best management and advisory services available in the complex arena of international business and project development in oil and gas production and power generation.
Our temporary corporate headquarters is currently located at 2101 N.W. Boca Raton Blvd, Suite 1, Boca Raton, FL 33431, and our telephone number is (561) 445-1050. We do not currently have a website.
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Results of Operations
Net Loss. We incurred a net loss of $180,436, or $0.02 per share for the twelve months ended June 30, 2009, compared to a net loss of $39,488, or $0.04 per share for the twelve months ended June 30, 2008. We had a net loss of $949,455 from inception through June 30, 2009. The increase in net loss for the twelve months ended June 30, 2009, compared to a net loss for the twelve months ended June 30, 2008, results from an increase in operating general and administrative expenses.
Our ability to achieve profitable operations depends on developing revenue through the operation of oil & gas and power generation facilities both domestically and abroad. Our expectations are that we will not begin to show profitable operating results before calendar the end of the calendar year. However, given the uncertainties surrounding the timing of adding new capacity as well as predicting gross margin, we cannot assure you that we will show profitable results at any time.
Revenue. We had $100,000 of revenue for the twelve months ended June 30, 2009, compared to -0- revenues for the same twelve month period ended June 30, 2008. These revenues were generated as a result of EHII being contracted to provide consulting services in connection with a power generation project located in Asia. After signing the contract, the Company and client began discussions regarding a merger of the two entities. The Company has signed a purchase sale agreement and is currently conducting due diligence.
Operating Expenses. We incurred operating expenses of $277,762 for the twelve months ended June 30, 2009, compared to operating expenses of $30,463 for the twelve months ended June 30, 2008. We had operating expenses of $1,041,088 from inception through June 30, 2009. Our operating expenses are comprised primarily of general and administrative expenses. The primary components of general and administrative expenses are the expenses of our corporate office, professional fees, general and administrative expenses. This increase in operating expenses resulted EHII activities in commencing to explore the best ways to implement its modified business goals both domestically and in the Middle East/Asia. EHII’s management has been in active discussions with several potential companies, either to acquire, manage, or joint venture with these entities. However, as of the date of this filing, no definitive agreements or arrangements have been finalized.
Research and Development.
Research and development expenses have been negligible since inception.
Liquidity and Capital Resources
As of June 30, 2009, we had cash, cash equivalents and short-term investments totaling $25,600.
Net cash used for operating activities was $187,920 for the twelve months ended June 30, 2009 compared to operating activities of $1,684 for the twelve months ended June 30, 2008. We anticipate that overhead costs will increase in the near term as we continue to implement our operating strategy.
Cash flows used by investing activities were $-0-for the periods ended June 30, 2009 and 2008.
Cash flows provided by financing activities accounted for $213,463 for the twelve months ended June 30, 2009 compared to financing activities of $-0- for the twelve months ended June 30, 2008. These cash flows were related to the payment of Notes Payable, issuance of common stock, expenses paid by a related party.
We anticipate funding any capital expenditures over the next 12 months through the issuance of equity or debt. We are continuing to evaluate both oil & gas and power generation assets.
We are currently in discussions with several intermediaries, advisors and investors to structure and raise the funds to optimally finance various potential projects. We are evaluating debt and equity placements at the corporate level as well as project specific capital opportunities. At the present time, we have no commitments for any additional financing, and there can be no assurance that, if needed, additional capital will be available to use on commercially acceptable terms or at all. Our failure to raise capital as needed would significantly restrict our growth and hinder out ability to compete. We may need to curtail expenses, and forgo business opportunities. Additional equity financings are likely to be dilutive to holders of our common stock and debt financing, if available, may involve significant payment obligation and covenants that restrict how we operate our business.
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If we are unable to secure funds to finance various potential projects, we may examine other possibilities, including, but not limited to, mergers or acquisitions.
Subsequent Events
In July 2009, the Company entered into an agreement to acquire an international energy company headquartered in Dubai, UAE that focuses on the power generation industry within the MENA and Asian markets The agreement is subject to a number of conditions precedent that have not been satisfied. The Company cannot assure anyone that the transaction will close or if it does, that it will be in a timely manner. The Company executed a six month consulting engagement for the target company during the months of April to September of 2009. This consulting engagement resulted in $100,000 of revenue during the fourth quarter of 2009. The Company received $132,443 during the fourth quarter 2009 of which $32,443 has been classified as Deferred Revenue. The total contract value is $200,000.
We are currently in dialogues with asset owners of power generation plants and oil & gas properties. We believe that any potential acquisitions would likely be financed through either debt or equity investments.
Off-Balance Sheet Arrangements
We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.
Critical Accounting Policies
Our discussion and analysis of results of operations and financial condition are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to provisions for uncollectible accounts receivable, inventories, valuation of intangible assets and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The accounting policies that we follow are set forth in Note 1 to our financial statements as included in this filing. These accounting policies conform to accounting principles generally accepted in the United States, and have been consistently applied in the preparation of the financial statements.
Recently Issued Accounting Pronouncements
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (SFAS 157), “Fair Value Measurements,” which defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. In February 2008, the FASB issued FASB Staff Position (FSP) 157-2, “Effective Date of FASB Statement No. 157,” which defers the effective date of Statement 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. Earlier adoption is permitted, provided the company has not yet issued financial statements, including for interim periods, for that fiscal year.
The company adopted those provisions of SFAS 157 that were unaffected by the delay in 2008. Such adoption has not had a material effect on our consolidated statement of financial position, results of operations or cash flows.
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SFAS No. 157 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, SFAS No. 157 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows.
·
Level 1. Observable inputs such as quoted market prices in active markets.
·
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly:, and
·
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The Company had no assets or liabilities that were measured and recognized at fair value on a non-recurring basis as of June 30, 2009 or 2008, and as such, had no assets or liabilities that fell into the tiers described above.
In February 2007, the FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, including an Amendment of SFAS No. 115”. SFAS 159 permits entities an option to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective of this Statement is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities using different measurement techniques. The fair value measurement provisions are elective and can be applied to individual financial instruments. A business entity shall report unrealized gains and losses on items for which the fair value options have been elected in earnings at each subsequent reporting date. The Company does not expect the adoption of Statements 159 will have a material impact, if any, on the Company’s financial position or results of operations.
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R), “Business Combinations” (“Statement 141(R)”) and Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“Statement 160”). Statements 141(R) and 160 require most identifiable assets, liabilities, noncontrolling interests and goodwill acquired in a business combination to be recorded at “full fair value” and require noncontrolling interests (previously referred to as minority interests) to be reported as a component of equity. Both statements are effective for fiscal years beginning after December 15, 2008. Statement 141(R) will be applied to business combinations occurring after the effective date. Statement 160 will be applied prospectively to all noncontrolling interests, including any that arose before the effective date. The Company does not expect the adoption of Statements 141(R) and 160 will have a material impact, if any, on the Company’s financial position or results of operations.
In February 2008, the FASB issued a FASB Staff Position (FSP) on Accounting for Transfers of Financial Assets and Repurchase Financing Transactions (FSP FAS 140-3). This FSP addresses the issue of whether the transfer of financial assets and the repurchase financing transactions should be viewed as two separate transactions or as one linked transaction. The FSP includes a rebuttable presumption that the two transactions are linked unless the presumption can be overcome by meeting certain criteria. The FSP will be effective for fiscal years beginning after November 15, 2008 and will apply only to original transfers made after that date; early adoption will not be allowed. The Company does not expect the adoption of FSP FAS 140-3 to have a material impact, if any, on its consolidated financial statements.
In March 2008, the Financial Accounting Standards Board (FASB) issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133 (SFAS 161). The SFAS 161 requires companies to provide enhanced disclosures regarding derivative instruments and hedging activities and requires companies to better convey the purpose of derivative use in terms of the risks they intend to manage. Disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect a company’s financial position, financial performance, and cash flows are required. This Statement retains the same scope as SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and is effective for fiscal years and interim periods beginning after November 15, 2008. The Company does not expect the adoption of SFAS No. 161 to have a material impact, if any, on its consolidated financial statements.
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In April 2008, the FASB issued FSP No. 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”). FSP 142-3 amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under FASB Statement No. 142, “Goodwill and Other Intangible Assets”. This new guidance applies prospectively to intangible assets that are acquired individually or with a group of other assets in business combinations and asset acquisitions. FSP 142-3 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. Early adoption is prohibited. The Company does not expect the adoption of FSP 142-3 to have a material impact, if any, on its consolidated financial statements.
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”). SFAS 162 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 (the GAAP hierarchy). SFAS 162 will become effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” The Company does not currently expect the adoption of SFAS 162 to have a material effect on its consolidated results of operations and financial condition.
In May 2008, the FASB issued FSP Accounting Principles Board (“APB”) 14-1 “Accounting for Convertible Debt instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”). FSP APB 14-1 requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008 on a retroactive basis. The Company currently believes the adoption of FSP APB 14-1 will not have a material effect on its consolidated results of operations and financial condition.
EITF 07-5, “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own Stock” will become effective for the Company on May 1, 2009. The Company’s warrants related to its Series B and C Preferred Stock both have reset provisions to the exercise price if the Company issues equity at a price less than the exercise prices. Upon the effective date, the provisions of this EITF will require a reclassification to liability based on the reset feature of the warrant agreements if the Company sells equity at a price below the exercise price of the warrants. The Company does not currently expect the adoption of EITF 07-5 to have a material effect on its consolidated results of operations and financial condition.
ITEM 7A
ITEM 7A
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, EHII is not required to provide this information.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplemental data required by this Item 8 follow the index of financial statements that appears at the end of Part I of this Form 10-K.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Energy Holdings International, Inc. (formerly known as Green Energy Holding Corp.)
Broken Arrow, OK
We have audited the accompanying consolidated balance sheet of Energy Holdings International, Inc. (the “Company”) (a development stage company) as of June 30, 2009 and the related consolidated statements of operations, stockholders' deficit and cash flows for the twelve month period then ended and the period from inception (Oct. 14, 2003) through June 30, 2009. The financial statements for the year ended June 30, 2008 were audited by other auditors whose report expressed an unqualified opinion on those statements. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Energy Holdings International, Inc. as of June 30, 2009 and the results of its operations and cash flows for the period described above in conformity with accounting principles generally accepted in the United States of America.
/s/ M&K CPAS, PLLC
www.mkacpas.com
Houston, Texas
October 7, 2009
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ronald R. Chadwick, P.C.
Certified Public Accountant
2851 South Parker Road
Suite 720
Aurora, Colorado 80014
Phone (303)306-1967
Fax (303)306-1944
Email: rcpc35@hotmail.com
Board of Directors
Green Energy Holding Corp.
Englewood, Colorado
I have audited the accompanying consolidated balance sheet of Green Energy Holding Corp. as of June 30, 2008, and the related consolidated statements of operations, stockholders' equity and cash flows for the year then ended, and for the period from October 14, 2003 (inception of the development stage) through June 30, 2008. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Green Energy Holding Corp. as of June 30, 2008, and the related consolidated statements of operations, stockholders' equity and cash flows for the years then ended, and for the period from October 14, 2003 (inception of the development stage) through June 30, 2008 in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 7 to the financial statements the Company has suffered recurring losses from operations and has a working capital deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 7. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Aurora, Colorado
/s/ Ronald R. Chadwick, P.C.
August 20, 2008
RONALD R. CHADWICK, P.C.
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ENERGY HOLDINGS INTERNATIONAL, INC.
(Formerly Green Energy Holding Corp.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
The accompanying notes are an integral part of the consolidated financial statements.
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ENERGY HOLDINGS INTERNATIONAL, INC.
(Formerly Green Energy Holding Corp.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
The accompanying notes are an integral part of the consolidated financial statements.
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ENERGY HOLDINGS INTERNATIONAL, INC.
(Formerly Green Energy Holding Corp.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
The accompanying notes are an integral part of the consolidated financial statements.
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ENERGY HOLDINGS INTERNATIONAL, INC.
(Formerly Green Energy Holding Corp.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of the consolidated financial statements.
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ENERGY HOLDINGS INTERNATIONAL, INC.
(Formerly Green Energy Holding Corp.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Energy Holdings International, Inc. (the “Company”), was incorporated in the State of Nevada on November 30, 2006 as a successor corporation to Green Energy Corp. which was incorporated in the State of Colorado on October 14, 2003. Green Energy Corp. acquired Green Energy Holding Corp. on December 18, 2006.
On March 10, 2009, the Company amended the Articles of Incorporation to change its name from Green Energy Holding Corp. to Energy Holdings International, Inc.
The Company is a holding corporation currently exploring various opportunities in the energy area. EHII’s management has been in active discussions with several potential companies, either to acquire, manage, or joint venture with these entities. However, as of the date of this filing, no definitive agreements or arrangements have been finalized.
Development stage company
The Company is considered a development stage company, having limited operating revenues during the period presented, as defined by Statement of Financial Accounting Standards (“SFAS”) No. 7. SFAS No. 7 requires companies to report their operations, shareholders deficit and cash flows since inception through the date that revenues are generated from management’s intended operations, among other things. Management has defined inception as October 14, 2003. Since inception, the Company has incurred a net loss of $949,455. Much of this related to consultants and professional fees, as a means to generate working capital. The Company’s working capital has been generated through the sale of common stock. Management has provided financial data since October 14, 2003 “Inception”, in the financial statements.
Fiscal year
The Company employs a fiscal year ending June 30.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents
The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. There were no cash equivalents as of June 30, 2009 or 2008.
Concentration of Credit Risk
Financial instruments and related items, which potentially subject the Company to concentrations of credit risk are cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such investments may be in excess of FDIC insurance limits. As of June 30, 2009, there were no deposits in excess of federally insured limits.
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Net income (loss) per share
The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.
Revenue recognition
Revenue is comprised principally of service and consulting revenue from work performed for customers under master service arrangements. Revenue is recognized over the period of the agreement as it is earned as such policy complies with the following criteria: (i) persuasive evidence of an arrangement exists; (ii) the services have been provided; (iii) the fee is fixed and determinable, (iv) collectability is reasonably assured. In the event that a customer pays up front, deferred revenue is recognized for the amount of the payment in excess of the revenue earned.
Financial instruments
The carrying amounts of the Company’s financial instruments as of June 30, 2009 approximate their respective fair values because of the short-term nature of these instruments. Such instruments consist of cash, accounts payable and accrued expenses.
Stock-Based Compensation
The Company is required to recognize expense of options or similar equity instruments issued to employees using the fair-value-based method of accounting for stock-based payments in compliance with SFAS No. 123(R). “Share-Based Payment” SFAS No. 123(R) covers a wide range of share-based compensation arrangements including share options, restricted share plans, performance -based awards, share appreciation rights, and employee share purchase plans. Application of this pronouncement requires significant judgment regarding the assumptions used in the selected option pricing model, including stock price volatility and employee exercise behavior. Most of these inputs are either highly dependent on the current economic environment at the date of grant or forward-looking over the expected term of the award. As of June 30, 2009, there were no awards of stock-based employee compensation issued or outstanding.
Property and equipment
Property and equipment are recorded at cost and depreciated under the straight line method over each item's estimated useful life. The Company's fixed assets consist of office equipment recorded at cost of $1,120, with offsetting accumulated depreciation at June 30, 2008 and 2009 of $844 and $1,120. Depreciation expense in 2008 and 2009 was $224 and $276, respectively. As of June 30, 2009, the assets were fully depreciated and had a net book value of zero.
Income tax
The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109 (“SFAS 109”). Under SFAS 109 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
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Recently Issued Accounting Pronouncements
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 (SFAS 157), “Fair Value Measurements,” which defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. In February 2008, the FASB issued FASB Staff Position (FSP) 157-2, “Effective Date of FASB Statement No. 157,” which defers the effective date of Statement 157 for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in an entity’s financial statements on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years. Earlier adoption is permitted, provided the company has not yet issued financial statements, including for interim periods, for that fiscal year.
The company adopted those provisions of SFAS 157 that were unaffected by the delay in 2008. Such adoption has not had a material effect on our consolidated statement of financial position, results of operations or cash flows.
SFAS No. 157 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, SFAS No. 157 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows.
·
Level 1. Observable inputs such as quoted market prices in active markets.
·
Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly:, and
·
Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The Company had no assets or liabilities that were measured and recognized at fair value on a non-recurring basis as of June 30, 2009 or 2008, and as such, had no assets or liabilities that fell into the tiers described above.
In February 2007, the FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, including an Amendment of SFAS No. 115”. SFAS 159 permits entities an option to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective of this Statement is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities using different measurement techniques. The fair value measurement provisions are elective and can be applied to individual financial instruments. A business entity shall report unrealized gains and losses on items for which the fair value options have been elected in earnings at each subsequent reporting date. The Company does not expect the adoption of Statements 159 will have a material impact, if any, on the Company’s financial position or results of operations.
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141(R), “Business Combinations” (“Statement 141(R)”) and Financial Accounting Standards No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“Statement 160”). Statements 141(R) and 160 require most identifiable assets, liabilities, noncontrolling interests and goodwill acquired in a business combination to be recorded at “full fair value” and require noncontrolling interests (previously referred to as minority interests) to be reported as a component of equity. Both statements are effective for fiscal years beginning after December 15, 2008. Statement 141(R) will be applied to business combinations occurring after the effective date. Statement 160 will be applied prospectively to all noncontrolling interests, including any that arose before the effective date. The Company does not expect the adoption of Statements 141(R) and 160 will have a material impact, if any, on the Company’s financial position or results of operations.
In February 2008, the FASB issued a FASB Staff Position (FSP) on Accounting for Transfers of Financial Assets and Repurchase Financing Transactions (FSP FAS 140-3). This FSP addresses the issue of whether the transfer of financial assets and the repurchase financing transactions should be viewed as two separate transactions or as one linked transaction. The FSP includes a rebuttable presumption that the two transactions are linked unless the presumption can be overcome by meeting certain criteria. The FSP will be effective for fiscal years beginning after November 15, 2008 and will apply only to original transfers made after that date; early adoption will not be allowed. The Company does not expect the adoption of FSP FAS 140-3 to have a material impact, if any, on its consolidated financial statements.
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In March 2008, the Financial Accounting Standards Board (FASB) issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133 (SFAS 161). The SFAS 161 requires companies to provide enhanced disclosures regarding derivative instruments and hedging activities and requires companies to better convey the purpose of derivative use in terms of the risks they intend to manage. Disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect a company’s financial position, financial performance, and cash flows are required. This Statement retains the same scope as SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and is effective for fiscal years and interim periods beginning after November 15, 2008. The Company does not expect the adoption of SFAS No. 161 to have a material impact, if any, on its consolidated financial statements.
In April 2008, the FASB issued FSP No. 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP 142-3”). FSP 142-3 amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under FASB Statement No. 142, “Goodwill and Other Intangible Assets”. This new guidance applies prospectively to intangible assets that are acquired individually or with a group of other assets in business combinations and asset acquisitions. FSP 142-3 is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. Early adoption is prohibited. The Company does not expect the adoption of FSP 142-3 to have a material impact, if any, on its consolidated financial statements.
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS 162”). SFAS 162 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 (the GAAP hierarchy). SFAS 162 will become effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” The Company does not currently expect the adoption of SFAS 162 to have a material effect on its consolidated results of operations and financial condition.
In May 2008, the FASB issued FSP Accounting Principles Board (“APB”) 14-1 “Accounting for Convertible Debt instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”). FSP APB 14-1 requires the issuer of certain convertible debt instruments that may be settled in cash (or other assets) on conversion to separately account for the liability (debt) and equity (conversion option) components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008 on a retroactive basis. The Company currently believes the adoption of FSP APB 14-1 will not have a material effect on its consolidated results of operations and financial condition.
EITF 07-5, “Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own Stock” will become effective for the Company on May 1, 2009. The Company’s warrants related to its Series B and C Preferred Stock both have reset provisions to the exercise price if the Company issues equity at a price less than the exercise prices. Upon the effective date, the provisions of this EITF will require a reclassification to liability based on the reset feature of the warrant agreements if the Company sells equity at a price below the exercise price of the warrants. The Company does not currently expect the adoption of EITF 07-5 to have a material effect on its consolidated results of operations and financial condition.
NOTE 2. CHANGE OF CONTROL
On December 29, 2008 the Company completed a stock purchase agreement with outside investors, selling the investors 14,370,300 common shares for $175,000 in cash. In addition, current Company shareholders transferred an additional 575,000 common shares to the outside investors, leaving the outside investors with approximately 96.5% of the Company’s issued and outstanding common shares. Pursuant to the terms of the Agreement, immediately following the closing, the Company had no financial obligations to any third parties. The purchase price was negotiated between the parties and has no bearing of the price of the Company’s common stock. The sale of common stock was made to unrelated third parties.
As part of the change of control and recapitalization of the Company, we committed to issuing an additional 11,585,700 shares, which remain in common stock committed as of June 30, 2009.
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The Company issued 14,185,700 subsequent to June 30, 2009 of which 11,585,700 were related to the Founders Stock Committed listed on the Balance Sheet. The remaining total was issued as additional founder’s compensation. The total number of common shares issued and outstanding as of June 30, 2009 was 29,662,109.
NOTE 3. RELATED PARTY TRANSACTIONS
The Company leased office space from a shareholder under a month-to-month agreement at the rate of $1,000 per month in 2008. Rent expense during the fiscal year ended June 30, 2008 was $12,000, and $6,000 during the fiscal year ended June 30, 2009. The lease agreement was terminated at the time of the acquisition in December 2008.
The Company paid in full a balances of $13,000, which was Related Party Notes Payable. The balance as of June 30, 2009 was zero ($-0-).
As of June 30, 2009, the Company owed $9,323 to a related party who paid expenses on behalf of the company during the fourth quarter.
During the year ended June 30, 2009, a shareholder and related party paid $66,463 of expenses on behalf of the company. These expenses were paid primarily for professional fees related to the change in control discussed in Note 2. Since the shareholder contributed these expenses and did not expect repayment, management has classified the contribution as additional paid in capital as of June 30, 2009.
The Company signed its first consulting contract in March 2009 to provide advisory and engineering expertise for a power generation plant in Asia. This contract was signed with a company whose Managing Director is also a shareholder of Energy Holdings International, Inc, and as such, is a related party transaction. The contract in the amount of $200,000 was for six months of services from April to September 2009. As of June 30, 2009, the Company had received $132,443 and recognized $100,000 of revenue during the fourth quarter of 2009. The remaining balance of $32,443 was recognized as Deferred Revenue on our balance sheet, and will be recognized as earned over the remaining three months of the contract.
EHII entered into an agreement on August 1, 2009 to provide additional consulting services for a related party. The contract has a term of six months and a value of $2,000,000 payable to EHII. The Company received a lump sum payment from the related party of $2,000,000 in August 2009. This revenue will be recognized on a monthly basis at $333,333 per month. EHII will provide advisory and management services related to two power generation plants and a waste management collection and storage company located in the Middle East region.
NOTE 4. INCOME TAXES
Deferred income taxes arise from the temporary differences between financial statement and income tax recognition of net operating losses. These loss carryovers are limited under the Internal Revenue Code should a significant change in ownership occur, which was the case for the company in the year ended June 30, 2009. The Company accounts for income taxes pursuant to SFAS 109.
At June 30, 2008 and 2009 the Company had approximately $762,000 and $90,493 respectively in unused federal net operating loss carryforwards, which begin to expire principally in the year 2024. As noted above and discussed in Note 2, the company had a significant change in control in December 2008 and the net operating loss allowed to be carried forward restarts as of that date. A deferred tax asset for the years ended June 30, 2008 and 2009 of approximately $145,000 and $31,673 respectively resulting from the loss carryforward has been offset by a 100% valuation allowance. The change in the valuation allowance in 2008 and 2009 was approximately $36,000 increase and $113,327 decrease. The net deferred tax asset at June 30, 2009 and 2008 is zero.
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Deferred tax asset and the valuation account follow:
NOTE 5. NOTES PAYABLE
The Company repaid all outstanding notes payable during 2009, which included two notes payables of $13,000 and $15,000 respectively. The Company has no outstanding notes payable as of June 30, 2009.
NOTE 6. STOCKHOLDERS' EQUITY
Common stock
The Company, at June 30, 2008 and 2009, had 100,000,000 shares of authorized common stock, $.001 par value, with 15,476,409 common shares issued and outstanding, as restated for a 1 for 5.1 reverse stock split on June 18 2007, as of June 30, 2009. The Company had 1,106,109 common shares issued and outstanding as of June 30, 2008.
During the year ended June 30, 2009, we issued 14,370,300 shares in exchange for $175,000. These shares were issued in conjuction with the change in control of the company, which is more fully discussed in Note 2.
The Company issued 14,185,700 subsequent to June 30, 2009 of which 11,585,700 were related to the Founders Stock Committed listed on the Balance Sheet. The remaining total was issued as additional founder’s compensation. The total number of common shares issued and outstanding as of June 30, 2009 was 29,662,109.
Preferred stock
The Company at June 30, 2008 and 2009 had 50,000,000 shares of authorized preferred stock, to have such preferences as the Board of Directors may set from time to time, $.001 par value, with no shares issued and outstanding.
Stock options
Non-employee stock options
The Company accounts for non-employee stock options under SFAS 123(R), whereby option costs are recorded based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.
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At the beginning of fiscal year 2007, the Company had 100,000 non-employee stock options outstanding. During fiscal year 2007, the Company granted no additional stock options and no options were exercised. The Company cancelled the 100,000 options in exchange for the issuance to the holder of a note payable for $15,000, leaving a June 30, 2007 year end outstanding balance of no non-employee stock options. The Company had no stock options outstanding in 2009. The Company paid in full the $15,000 payable during fiscal year 2009.
NOTE 7. GOING CONCERN
The audit report issued for the period ended June 30, 2008 included a going concern due to the fact that the Company had suffered recurring losses from operations and had a working capital deficit. It was not until April 2009 that the Company was able to generate revenue from it’s primary operations. Additionally, subsequent to year end, the company signed a consulting contract that resulted in the collection of significant cash, which management believes will sustain the company for a period of at least twelve months.The audit report issued for the period ended June 30, 2009 does not include a going concern.
NOTE 8. CONSULTING REVENUE
The Company signed its first consulting contract in March 2009 to provide advisory and engineering expertise for a power generation plant in Asia. This contract was signed with a company whose Managing Director is also a shareholder of Energy Holdings International, Inc, as discussed in Note 3, Related Party Transactions. The contract in the amount of $200,000 was for six months of services from April to September 2009. As of June 30, 2009, the Company had received $132,443 and recognized $100,000 of revenue during the fourth quarter of 2009. The remaining balance of $32,443 was recognized as Deferred Revenue on our balance sheet, and will be recognized as earned over the remaining three months of the contract.
After signing the contract, EHII and the client recognized potential synergies of working together and have signed a purchase sale agreement on July 4, 2009, which is discussed in the Subsequent Events footnote below. The Company intends to finalize the transaction during November of 2009. EHII intends to continue providing consulting services and to successful acquire energy assets to move forward with our strategy and out of the development stage.
NOTE 9. SUBSEQUENT EVENTS
In July 2009, the Company entered into an agreement to acquire an international energy company headquartered in Dubai, UAE that focuses on the power generation industry within the MENA and Asian markets The agreement is subject to a number of conditions precedent that have not been satisfied. The Company cannot assure anyone that the transaction will close or if it does, that it will be in a timely manner. The Company executed a six month consulting engagement for the target company during the months of April to September of 2009. This consulting engagement resulted in $100,000 of revenue during the fourth quarter of 2009. The Company received $132,443 during the fourth quarter 2009 of which $32,443 has been classified as Deferred Revenue. The total contract value is $200,000.
We are currently in dialogues with asset owners of power generation plants and oil & gas properties. We believe that any potential acquisitions would likely be financed through either debt or equity investments.
The Company issued 14,185,700 subsequent to June 30, 2009 of which 11,585,700 were related to the Founders Stock Committed listed on the Balance Sheet. The remaining total was issued as additional founder’s compensation. The total number of common shares issued and outstanding as of June 30, 2009 was 29,662,109.
EHII entered into an agreement on August 1, 2009 to provide additional consulting services for a related party. The contract has a term of six months and a value of $2,000,000 payable to EHII. The Company received a lump sum payment from the related party of $2,000,000 in August 2009. This revenue will be recognized on a monthly basis at $333,333 per month. EHII will provide advisory and management services related to two power generation plants and a waste management collection and storage company located in the Middle East region.
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ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
On February 24, 2009, Green Energy Holding Corp (Green Energy). notified Ronald R. Chadwick P.C. (RCPC) that Green Energy was dismissing RCHC as its independent registered public accounting firm of Green Energy Holding Corp. The decision to dismiss RCPC was ratified by Green Energy’s Board of Directors.
RCPC’s dismissal follows Green Energy’s filing of its annual report on Form 10-Q for the quarter ended December 31, 2008, which report did not contain any adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles.
For the fiscal years ended June 30, 2007 and June 30, 2008 and through the date of this Form 8-K, there have been no disagreements with RCPC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which disagreements, if not resolved to RCPC’s satisfaction, would have caused it to make references thereto in its report on Green Energy’s financial statements as of and for the fiscal years ended June 30, 2007 and June 30, 2008.
None of the reportable events described in Item 304(a)(1)(iv) of Regulation S-B occurred during the fiscal years ended June 30, 2008 and June 30, 2007, and through the date of this Form 8-K.
Green Energy provided RCPC with a copy of this Current Report on Form 8-K before it was filed and requested that he furnish us a letter, addressed to the Securities and Exchange Commission, stating whether they agree with the information disclosed in this Current Report. A copy of the letter dated February 24, 2009, furnished by RCPC in response to that request is filed as Exhibit 16.1.
Effective February 18, 2009, the accounting firm of M&K CPAs (“M&K”) was appointed as Energy Holding International, Inc.’s (formerly known as. Green Energy) independent registered public accounting firm. M&K reported on EHIIs consolidated statements of financial condition as of June 30, 2009 and the statement of operations, changes in stockholders’ equity and cash flows for the same fiscal period. M&K also performed a review of the unaudited quarterly financial statements that was included in EHII’s quarterly reports on Form 10-Q, ended March 31, 2009. EHII’s Board of Directors approved retaining M&K as EHII’s new independent registered public accounting firm.
During the fiscal years ended June 30, 2008 and June 30, 2007 and the subsequent interim period prior to M&K’S engagement, EHII (f.k.a. Green Energy) has not engaged M&K as either the principal accountant to audit EHII’s financial statements, or as an independent registered public accounting firm to audit any of EHII’s significant subsidiaries and on whom M&K is expected to express reliance in its report. Additionally, neither EHII nor someone on its behalf consulted with M&K regarding either
(i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit option that might be rendered on Green Energy’s financial statements, or
(ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-B and the related instructions thereto) or a reportable item (as described in Item 304(a)(1)(iv)), during Green Energy’s two most recent fiscal years or any subsequent interim period.
ITEM 9A.
ITEM 9A.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports made pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). is recorded, processed, summarized and reported within the timelines specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
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As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the fiscal year covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of period covered by this report in timely alerting them to material information relating to Energy Holdings International, Inc. required to be disclosed in our periodic reports with the Securities and Exchange Commission.
Management’s Annual Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.
Management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our internal control over financial reporting as of June 30, 2009 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, because of the Company’s limited resources and limited number of employees, management concluded that, as of June 30, 2009, our internal control over financial reporting is not effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the U.S. generally accepted accounting principles.
At this time, management is still formulating a response to the control weaknesses identified. Part of management’s response will be to hire additional staff in the accounting and financial reporting area to increase our technical competence and ensure we have proper segregation of duties.
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
Changes in internal controls
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15d-15 under the Exchange Act that occurred during the year ended June 30, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
ITEM 9B.
OTHER INFORMATION
None
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PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Directors and Executive Officers
The following tables set forth information regarding the Company’s current executive officers and directors and the proposed executive officers and directors of the Company:
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Term of Office
Our Company’s directors are appointed for one-year term to hold office until the next annual general meeting of the Company’s stockholders or until removed from office according to our bylaws and the provisions of the Nevada Revised Statutes.
The Company’s officers are appointed by the Company’s Board of Directors and hold office until they resign or are removed.
Legal Proceedings Involving Directors, Executive Officers and Certain Beneficial Owners.
The Company is not aware of any executive officer or director having been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending. Additionally, the Company is not aware of any pending legal proceedings in which any of its executive officers or directors is a party
Family Relationships
There are no family relationships between our officers and directors. Each director is elected at our annual meeting of stockholders and holds office until the next annual meeting of stockholders, or until his successor is elected and qualified.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% stockholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. Based on our review of the copies of such forms received by us, and to the best of our knowledge, all executive officers, directors and persons holding greater than 10% of our issued and outstanding stock have filed the required reports in a timely manner during fiscal year ended June 30, 2009 with the exception of (a) Richard Hildebrand, who has not filed a Form 5 upon his resignation as a director; (b) Dennis Murphy, who have not filed a Form 5 upon his resignation as a director; (c) Fahad BuNuhayah, Rafic Koussa, Khalid and Jalal Alghani, each of whom was delinquent in the filing of their respective Form 3s; and (d) John Adair, who was delinquent in filing his Form 4. With the exception of Messrs Hildebrand and Murphy, all filing have subsequently been made with the SEC.
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Code of Ethics and Business Conduct
EHII has not yet adopted a code of ethics applicable to our chief executive officer, who is our principal executive officer, our chief financial officer, principal accounting officer or controller or persons performing similar functions. EHII has not adopted a code because there recently was a change in control of the Company and new directors were appointed in September 2009. The Board of Directors intends to adopt a Code of Ethics in the near future, which will be filed with the Securities and Exchange Commission.
Directors Independence
The Company’s common stock is quoted on the OTC Bulletin Board interdealer quotation system, which does not have director independence requirements. Under NASDAQ Rule 4200(a)(15), a director is not considered to be independent if he or she is also or has been an executive officer or employee of the corporation. As such, currently none of the Company’s directors are classified as independent directors under this definition.
Committees of the Company’s Board of Directors.
We currently do not have standing audit, nominating or compensation committees of its Board of Directors. Currently our entire Board performs these functions. The Company does not have charters for any of the above committees.
Meetings of Directors
There were no meetings of the Board of Directors during the last full fiscal year and all actions taken by the Board of Directors were taken by consent resolution. The Company did not hold an annual meeting of the Company’s security holders during the prior fiscal year and does not have a policy requiring attendance by members of the Board of Directors.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
Compensation of Executive Officers and Directors
John W. Adair, our Chief Executive Officer, received total compensation of $50,000 for the period of January through June 30, 2009. The Company has a consulting employment contract with Mr. Adair for $10,000 per month.
Outstanding Equity Awards at Fiscal Year-End
We did not grant any equity awards since inception.
Employment Contracts
The Company currently has had no employment contracts, termination of employment or change-in-control arrangements with any of our executive officers or directors.
Director Compensation
We currently have no formal plan for compensating our directors for their services in their capacity as directors.
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ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
At October 12, 2009, we had 29,662,109 shares of our common stock issued and outstanding. The following table sets forth information regarding the beneficial ownership of our common stock as of October 12, 2009, by:
•
each person known by us to be the beneficial owner of more than 5% of our common stock;
•
each of our directors;
•
each of our named executive officers; and
•
our named executive officers, directors and director nominees as a group.
Unless otherwise indicated, the business address of each person listed is in care of Rader & Coleman, P.L., 2101 N.W. Boca Raton Blvd, Suite 1, Boca Raton, FL 33496. The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of that date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse.
_______________
(1)
Mr. Alghani’s shareholdings include (a) 3.2 million shares held individually; and (b) 1.0 million shares held each by (A) MENA Investment Trust and (B) GCC Trust. Mr. Alghani is the principal of these two trusts.
(2)
Mr. Sunaid’s address is P.O. Box 17605, Riyadh, Kingdom of Saudi Arabia 114934.
(3)
Mr. Bu-Nuhayah’s address is P.O. Box 86602, Riyadh, Kingdom of Saudi Arabia 11632
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
None.
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ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Audit Fees
The aggregate fees billed by our principal accountant for the audit of our annual financial statements, review of financial statements included in the quarterly reports and other fees that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal years ended June 30, 2009 and 2008 were $5,000 and $8,500, respectively.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
The Company currently does not have a designated Audit Committee, and accordingly, the Company’s Board of Directors’ policy is to pre-approve all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent auditors and management are required to periodically report to the Company’s Board of Directors regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. The Board of Directors may also pre-approve particular services on a case-by-case basis.
ITEM 15.
ITEM 15.
EXHIBITS and FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of this report:
(1) Financial Statements
Reference is made to the Index to Consolidated Financial Statements of Energy Holdings International, Inc. under Item 8 of Part II hereof.
(2) Consolidated Financial Statement Schedules
(i) Report Of Independent Registered Public Accounting Firm on Financial Statement Schedule:
M&K CPAs, PLLC, as of June 30, 2009 and the year then ended.
Ronald R. Chadwick, P.C., as of June 30, 2008 and the year then ended.
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(3) Exhibits
* Included in this filing.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the Company caused this Registration Statement to be signed on its behalf by the undersigned thereunto duly authorized.
IWT TESORO CORPORATION
By:
/s/ John Adair
John Adair, President
Date: October 12, 2009
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints John W. Adair, Jalal Alghani and Gayle Coleman, and each of them individually, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, including among other things, all amendments thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them individually, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.
/s/ John Adair
October 12, 2009
John Adair, Principal Executive Officer
/s/ Jalal Alghani
October 12, 2009
Jalal Alghani, Principal Financial Officer
/s/ John Adair
October 12, 2009
John Adair, Director
/s/ Khalid Al Sunaid
October 12, 2009
Khalid Al Sunaid
/s/ HH Prince Bader Al Saud
October 12, 2009
HH Prince Bader Al Saud
/s/ Fahad BuNuhayah
October 12, 2009
Fahad BuNuhayah
/s/ Rafic Koussa
October 12, 2009
Rafic Koussa
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