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EX-32.1 - ALTERNATE ENERGY HOLDINGS, INC. | v178571_ex32-1.htm |
EX-21.1 - ALTERNATE ENERGY HOLDINGS, INC. | v178571_ex21-1.htm |
EX-14.1 - ALTERNATE ENERGY HOLDINGS, INC. | v178571_ex14-1.htm |
EX-32.2 - ALTERNATE ENERGY HOLDINGS, INC. | v178571_ex32-2.htm |
EX-31.1 - ALTERNATE ENERGY HOLDINGS, INC. | v178571_ex31-1.htm |
EX-31.2 - ALTERNATE ENERGY HOLDINGS, INC. | v178571_ex31-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
x
|
Annual
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 and
|
For
the fiscal year ended December 31, 2009
or
¨
|
Transaction
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
|
For
the transition period from _________ to _____________
Commission
file number: 000-53451
ALTERNATE
ENERGY HOLDINGS, INC.
|
(Exact
name of registrant as specified in its
charter)
|
Nevada
|
20-5689191
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
911
E. Winding Creek Dr., Suite 150, Eagle, Idaho
|
83616
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code: (208)939-9311
Securities
registered pursuant to Section 12(b) of the Act: None
Securities
registered pursuant to Section 12(g) of the Act:
Common
Stock, par value $.001 per share
|
(Title
of class)
|
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes ¨ No
x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes ¨ No
x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No
¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes ¨ No
¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ¨
Indicate
by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of
the Exchange Act. (Check One).
Large
accelerated filer
|
¨
|
Accelerated
filer
|
¨
|
Non-accelerated
filer
|
¨
|
Smaller
reporting company
|
x
|
(Do
not check if a smaller reporting company)
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes ¨ No
x
The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant was approximately $8,678,984 as of
June 30, 2009 (the last business day of the registrant’s most recently
completed second fiscal quarter), based on the average bid and asked price of
such common equity as quoted by the OTC Bulletin Board on such
date.
The
number of shares outstanding of the registrant’s common stock as of March 31,
2010, was 252,361,674 shares.
TABLE
OF CONTENTS
PART
I
|
Page
|
|||
ITEM
1
|
Business
|
1
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||
ITEM
1 A
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Risk
Factors
|
14
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||
ITEM
1 B
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Unresolved
Staff Comments
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26
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||
ITEM
2
|
Properties
|
26
|
||
ITEM
3
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Legal
Proceedings
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26
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||
ITEM
4
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Submission
of Matters to a Vote of Security Holders
|
26
|
||
PART
II
|
||||
ITEM
5
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Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
26
|
||
ITEM
6
|
Selected
Financial Data
|
28
|
||
ITEM
7
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Management’s
Discussion and Analysis of Financial Condition and Results Of
operations
|
28
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||
ITEM
7A
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Quantitative
and Qualitative Disclosures About Market Risk
|
32
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||
ITEM
8
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Financial
Statements and Supplementary Data
|
32
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||
ITEM
9
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Changes
in and Disagreements with Accountants on Accounting and
Financial
|
32
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||
ITEM
9 A
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Controls
and Procedures
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32
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||
ITEM
9 B
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Other
Information
|
33
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||
PART
III
|
||||
ITEM
10
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Directors,
Executive Officers, and Corporate Governance
|
34
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||
ITEM
11
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Executive
Compensation
|
38
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||
ITEM
12
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
41
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||
ITEM
13
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Certain
Relationships and Related Transactions, and Director
Independence
|
43
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||
ITEM
14
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Principal
Accounting Fees and Services
|
43
|
||
PART
IV
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||||
ITEM
15
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Exhibits,
Financial Statement Schedules
|
43
|
||
SIGNATURES
|
45
|
i
PART
I
Item
1. Business
The
following is a summary of some of the information contained in this document.
Unless the context requires otherwise, references in this document to “Alternate
Energy Holdings,” “AEHI,” or the “Company” are to Alternate Energy Holdings,
Inc. and its subsidiaries.
Introduction
Alternate
Energy Holdings, Inc. (“AEHI”, or “the Company”) was incorporated in the State
of Nevada, and is a development stage enterprise engaged in the purchase,
optimization and construction of green energy sources, primarily nuclear power
plants. Alternate
Energy Holdings, Inc. was founded by former senior executives of the utility and
finance industries to effectively address several aspects of the “energy
crisis”: dependency on sources of foreign oil, global depletion of
fossil fuel reserves, renewable energy, global warming and power plant
emissions. The Company went public through a reverse merger in
September of 2006, and its common shares are traded on the OTC Bulletin Board
(“AEHI.BB”). Our corporate offices are at 911 E. Winding Creek Dr., Suite 150,
Eagle, ID 83616. We maintain a website at www.alternateenergyholdings.com,
which is not incorporated in and is not a part of this report.
Alternate
Energy Holdings, Inc. consists of four corporate
entities: International Reactors, Inc., Idaho Energy Complex, Reactor
Land Development, LLC and Energy Neutral, Inc. International Reactors
assists developing countries with power generation as well as the production of
potable water. Idaho Energy Complex was formed to oversee a proposed
$10 billion nuclear project near Payette, Idaho, with a backup site near
Hammett, Idaho. Reactor Land Development is engaged in acquiring land
and water rights, permits and licenses, and plant development
rights. Energy Neutral (visit www.energyneutralinc.com)
assists homeowners, businesses and farmers with reducing energy consumption and
reliance on the electrical grid.
AEHI has
taken the initiative to inform the public, media and investors about future
plans and revenue opportunities. The Company’s websites feature
detailed profiles of AEHI’s Board of Directors and management team, as well as
general industry information, company services, corporate relationships and
recent press releases. Furthermore, AEHI has conducted three public
informational meetings about the Idaho Energy Complex and made numerous
presentations to city councils, chambers of commerce and other civic
groups. AEHI has also retained a Boise, Idaho public relations
agency, Alexander and Associates, to assist with local information for the media
and general public, and has hired a full-time public relations director, a
highly respected former news anchor for a local television station.
Business
Strategy
The
Company intends to service the electric power generation industry by acquiring
and developing nuclear plant sites and obtaining licenses for their construction
and operation throughout the United States. The initial proposed
energy complex (which we refer to as “the Project”) is in the State of
Idaho. The Company is an independent power producer and is in the
process of obtaining permits for the site, which will include one or more
nuclear reactors. The Company plans to meet the growing needs of the
marketplace by providing reliable, low cost, large-scale power production on a
national scale and, in addition, offering emerging demand-side and power
management technologies to reduce energy consumption by homes, and commercial
and agricultural businesses.
The
Company entered the local land use approval process for the Idaho Energy Complex
in the fourth quarter of 2009, and received initial approval from the Payette
County Planning and Zoning Commission in November 2009. After final
local approval, which is expected to be received in the second quarter of 2010,
the approval process of the Nuclear Regulatory Commission (“NRC”) will begin and
may last as long as three years. The Company plans to finance the
Idaho Energy Complex with a combination of secured debt, Federal government loan
guarantees, unsecured debt and equity and equity-linked securities, subject to
future market conditions. Additionally, the Company is exploring
nuclear plant sites in Colorado, Texas and New Mexico. Subject to
market conditions, the Company would ultimately like to develop and own nuclear
energy complexes throughout the Rocky Mountain region to be able meet power
shortage issues on both coasts.
As the
Idaho Project moves through the extensive regulatory approval process, the
Company is developing other revenue opportunities. The Company is
currently working with China National Nuclear Corporation to develop and build a
desalinization reactor to market to developing countries needing potable water
and electricity. The Company plans to begin to market these reactors in the
second quarter of 2010, initially to Western friendly nations in the Middle
East.
The
Company is also working on an agreement to import a technologically advanced
Korean nuclear reactor into the United States for use in its Idaho and other
domestic nuclear sites. If successful, the agreement will provide for
commissions paid to the Company for Korean reactors sold to any North American
nuclear projects. The Company will also sponsor and assist the Korean
company in navigating through the NRC design approval process.
Industry
Overview
According
to the Nuclear Energy Institute (“NEI”), an independent industry organization,
nuclear power plants provide 15% of the world’s electricity and nearly 20% of
the electricity in the United States. As reported by the NEI, nuclear energy is
the United States’ largest source of emission-free electricity and second
largest source of power. At the present time, 436 nuclear power
plants operate in 31 countries. In the United States, 104 nuclear
power plants are in commercial service. On a global basis, the
collective installed-electric-net-capacity of nuclear power plants is 370
gigawatts, or GW.
2
Nuclear
Power Plants as of 2010-01-08
Number
of Reactors in Operation Worldwide
Another
55 plants, with an installed capacity of 51 GW, are under construction in 15
different countries. In addition, on a worldwide basis, 500 plants
are either planned, proposed or under consideration.
3
Number
of Reactors under Construction Worldwide
The last
two power plants built in the United States were the Watts Bar plant, which
began construction in 1973, was completed in 1990, and did not begin commercial
operation until 1996, and the River Bend plant, which was built in 1977 and went
online in 1986. Recently, President Obama announced that his
administration has approved an $8.3 billion loan guarantee to build the first
domestic nuclear power plant at the Southern the Company’s Georgia site in three
decades. The loan guarantee for the new project is to be taken out of
the $54 billion President Obama set aside for nuclear loan guarantees in his
2010 budget, which leaves $46 billion more to be allocated to other nuclear
projects. On February 16, 2010, President Obama said, “… this one
plant will cut carbon pollution by 16 million tons each year when compared to a
similar coal plant. That’s like taking 3.5 million cars off the
road.”
We
believe nuclear energy represents the most “eco-efficient” of all energy sources
because it produces the most electricity in relation to its minimal
environmental impact. In addition, nuclear power plants do not emit
harmful gases, require a relatively small area, do not deplete natural resources
(such as fossil fuels), and effectively mitigate other impacts. As a
result, they cause no adverse effects to water, land, habitat, species or air
resources, rather they improve the habitat per independent
studies).
Additionally, nuclear
power has the lowest production cost and highest capacity factor of the major
sources of electricity. Nuclear is a chief contributor to national
energy security and is not subject to unreliable weather or climate conditions,
unpredictable cost fluctuations, or dependence on foreign
suppliers. Adding to their reliability, nuclear power plants are
designed to operate continuously for long periods of time. They can
run from approximately 540 to 730 days at over 90% reliability before they are
shut down for refueling.
Overall,
worldwide demand for energy is projected to increase 44% between 2006 and 2030,
and as a result there is a renewed interest in nuclear power. A
recent Zogby poll finds 67% of Americans in favor of building new nuclear power
plants and prefer this form of power generation to the presence of coal, natural
gas or oil plants in their communities. NEI polls have found that 84%
of Americans live in close proximity to nuclear power plants favor nuclear
energy, and 90% positively view the plants.
4
We
believe that nuclear power has economic benefits. Economic impact studies show
that construction of a new reactor creates four to five years of jobs for as
many as 5,000 workers, of which 1,000 to 1,500 are direct and indirect permanent
jobs per unit once the plant begins operating. Salaries in the
nuclear industry average about $80,000 per person. Most positions
require only a high school education and some specialized
training. Each plant (unit) creates well over $2.0 billion in gross
domestic product to the local area during construction and over $1.0 billion to
the annual state gross domestic product during operations. In
addition, communities have found that the construction and operation of plants
also improve schools, police and fire services, and medical
facilities.
We
believe that nuclear power is also safe. In the event of an imbalance
in the operations, the sophisticated safety systems of domestic nuclear power
plants are designed to automatically shut down, well before any safety margins
are exceeded. Unscheduled automatic plant shutdowns rarely
occur. Over the years, various improvements in plant maintenance and
training programs have decreased the number of automatic plant shutdowns,
enabling plants to achieve longer continuous runs. Nuclear plants typically
produce power more than 90% of the time, and in August 2007 they posted a 98%
capacity factor, according to the NEI.
The
industry has also undertaken many measures to improve the security of nuclear
power facilities. After the tragic terrorist attack of
September 11, 2001, security forces at U.S. nuclear plants have increased
by one-third, to approximately 8,000 officers. Other incremental
security measures include: extending and fortifying security
perimeters; increasing patrols within security zones; installing new barriers to
protect against vehicle
bombs; installing additional high-tech surveillance
equipment, and strengthening coordination of security efforts with local, state
and federal agencies to integrate their approaches and
responses. Furthermore, the NRC evaluates “force-on-force” drills
between security personnel and contractor teams. Every domestic plant is tested
with mock adversary drills every three years.
Economic
Viability
We
believe that the potential profit for nuclear reactors is
considerable. Based on third-party data provided by globally
recognized experts Constellation Energy and UniStar, each reactor is capable of
annually generating positive earnings before interest, taxes, depreciation and
amortization (“EBITDA”),
assuming no growth. Based on information from
the McKinsey Global Institute and Synapse Energy Economics, carbon credits could
be as much as double the EBITDA for each reactor (thus,
exceeding $2.2 billion annually). Carbon credits produced
by nuclear reactors are over $250 million for a plant this size
today. In addition, more stringent emissions regulations on fossil
fuel plants anticipated to become effective in 2012 in the United States, Europe
and elsewhere may substantially increase EBITDA for each reactor.
Company
Overview
The
Company consists of 4 corporate entities: International Reactors,
Inc., Reactor Land Development, LLC, Energy Neutral, Inc. and Idaho Energy
Complex, Inc.
International
Reactors, Inc.
International
Reactors, a 100% wholly-owned subsidiary of the Company was formed to assist
developing countries with power generation, as well as the production of potable
water. Founded in November 2007 and incorporated in Nevada,
International Reactors seeks to construct commercial nuclear reactors on
oceanfront sites, particularly in Latin America and western-friendly Middle
Eastern countries to co-generate clean energy and desalinate
water. International Reactors believes that advanced nuclear
technology can be used to address electrical energy needs while simultaneously
producing fresh water from ocean intake. The Company is working on an
agreement to produce desalinization reactors in China to market on a worldwide
basis.
5
Idaho
Energy Complex, Inc.
Idaho
Energy, an Idaho corporation and 100% wholly-owned subsidiary of the Company
that was formed in March 2007, is a proposed $10 billion nuclear complex near
Payette, Idaho. Idaho Energy is the manager of Reactor Land, a
Delaware limited liability company that is attempting to obtain permits for the
nuclear facility. Five thousand acres have been dedicated to the
Project, which will provide enough electricity to power Idaho’s growth, as well
as generate income through the sale of power to out-of-state
markets. A secondary site near Hammett, Idaho is also being
considered. The Payette facility will feature a new advanced nuclear
reactor design that does not require large amounts of water for
cooling. Additionally, a plant in Elmore, Idaho will use its excess
heat to produce bio fuels such as ethanol, thereby further reducing its cooling
requirements and providing local farmers with a potential market for their crops
and agricultural waste. The Company plans to build up to six advanced
reactors at Idaho Energy and operate as an Independent Power Production
(“IPP”). The Company has no contracts or made any arrangements for
bio fuel as of the date of this annual report.
Reactor
Land Development, LLC
Reactor
Land, a 99% owned subsidiary of Idaho Energy, is a Delaware limited liability
company. Reactor Land began operations in September 2007, with Idaho
Energy as its manager. Its purpose is to acquire land and water
rights, permits and licenses, development rights and such other properties and
services necessary to develop approved sites in Idaho for one or more nuclear
reactors.
Energy
Neutral, Inc.
Energy
Neutral, a 100% wholly-owned subsidiary of the Company, assists homeowners,
businesses and farmers to operate with minimal or no reliance on the electrical
grid. Energy Neutral’s primary services are: evaluating
homes, businesses and farms for conservation and renewable energy potential;
drafting plans to attain or approach energy neutrality; and working with wind,
conservation and solar suppliers and installers to install products in the
marketplace. Strong demand is anticipated from farmers who must spend large
amounts of money to pump water. Solar and wind energy may be utilized
to make the pumps completely self-sufficient or, for greater reliability, to
augment existing electrical grid or gasoline infrastructure. In
addition, a model home was recently completed in Boise, Idaho to demonstrate a
next-generation “energy neutral” living experience.
According
to the U.S. Energy Information Agency, domestic energy consumption is expected
to increase 30% between 2005 and 2030. In Idaho, which is the site of
the Company’s energy complex, the demand for energy is clear. In the
fall of 2007, two major corporations stated that they could no longer consider
Boise, Idaho as a possible relocation site because the existing utility
infrastructure could not supply sufficient power. At the same time, Idaho ranks
last among the 11 Western states for the number of megawatts it plans to bring
on-line between 2007 and 2011, according to U.S. Energy Information
Administration figures.
The
January 2007 Idaho Energy Plan, which was developed by the Interim Committee on
Energy, Environment and Technology of the Senate and House of Idaho to
investigate the state's energy systems, develop recommendations to achieve
reliable, low-cost energy supply, protect the environment, and promoting
economic growth, states that Idaho is vulnerable to the economic effects of
emissions regulation on the current imported coal power and relicensing of the
state’s hydro plants. The January 2007 Idaho Energy Plan also
notes that Idaho imports 80% of its power from fossil fuel sources and that the
over than $3 billion that Idaho residents spend on energy each year leaves the
state. In all, the proposed Idaho Energy Complex is estimated to
create enough power for about 1.5 million homes, or three times the number of
existing homes in Idaho. The excess power will be sold to the
marketplace, primarily on the West Coast.
6
The
Nuclear Provisions H.R. 6 Energy Policy Act of 2005 has created an ideal market
atmosphere for the development of new plants. The bill provides an
80%/20% loan guarantee for technologies that avoid, reduce or sequester air
emissions, including advanced nuclear plants. Additionally, the
energy bill approved provisions supported by the current administration to
provide 100% of the cost of delays (when delays are beyond the industry’s
control) during construction and at the commencement of
operations. The Company plans to take advantage of prevailing
political sentiment and actively pursues federal loan guarantees for the Idaho
Energy Complex. In his 2010 budget, President Obama set aside $54
billion as nuclear project loan guarantees, but only $8.3 billion of these
guarantees have so far been accessed. Idaho Energy’s management
intends to apply for the maximum amount of guarantees that are available to the
Company under this program.
The
Project - Phase 1
After
three decades, nuclear power is re-emerging as a necessary component of a
well-balanced power generation portfolio. Demand for nuclear plant
sites is growing. Stringent NRC criteria limit the number of
qualified reactor sites. Fourteen companies, including the Company,
have notified the NRC of their intent to file for construction and operating
licenses (“COL”) for 34 new units by the third quarter of 2011. All
the proposed sites, except the Company’s Idaho site and one in Utah, are east of
the Rocky Mountains. We believe the value of attractive sites,
particularly in the Western United States, is expected to rise because of the
following factors:
|
·
|
nuclear
generation is very profitable;
|
|
·
|
global
experience has reduced construction and operating
costs;
|
|
·
|
costs
of electricity from competitive fossil generation plants are rapidly
rising due to emissions problems and market
forces;
|
|
·
|
coal
power plants are no longer a viable option due to global warming
concerns;
|
|
·
|
hydroelectric
power is in decline as plant relicensing becomes more difficult because of
environmental challenges;
|
|
·
|
deregulation
of wholesale electric pricing is expected to enable independently-owned
nuclear plants to realize the full economic advantage of low cost nuclear
power;
|
|
·
|
nuclear
generation has gained public
acceptance;
|
|
·
|
nuclear
generation has demonstrated that it is a safe, reliable form of
electricity generation a worldwide;
|
|
·
|
the
federal government supports nuclear deployment through regulatory changes
and tax benefits;
|
7
|
·
|
there
are a limited number of sites that meet licensing and economic criteria
for a nuclear plant;
|
|
·
|
licensing
criteria involves low population density, low impact seismic potential
activity and low environmental impact;
and
|
|
·
|
economic/infrastructure:
water availability, and ability to serve major markets through existing
transmission, with low construction costs,
etc.
|
The
Site
After a
three-year search, the Company has, through Idaho Energy, located a primary site
(the “Site”) in Payette, Idaho that will cost approximately $15.0 million,
including the acquisition of water rights. This location is well
suited for the licensing, construction and development of a nuclear power
reactor. The Company, through Idaho Energy, has entered into and
executed an agreement to complete the purchase of the site. The
agreement is renewable every 12 months by the parties until the land is approved
for a nuclear plant, at which time the Company will ultimately purchase the
location. In the unlikely event that an approval is not received,
Idaho Energy is not obligated to purchase the land. The features of
the site include:
|
·
|
about
5,000 acres near Payette, Idaho near the Payette
River;
|
|
·
|
located
near, and has ample rights to, a source of
water;
|
|
·
|
a
rural community that is very receptive to the development of a nuclear
power plant;
|
|
·
|
ability
to be connected to high voltage transmission lines and the western power
grid;
|
|
·
|
NRC
licensable according to the preliminary findings of nuclear siting
experts, and a likely final favorable report for the land acquisition
closing; and
|
|
·
|
spacious
enough to accommodate multiple
reactors.
|
The site
for this Project has passed preliminary evaluations by ENERCON, an engineering
firm that grants pre-approval of nuclear plant sites and assists with filing the
NRC application. Idaho Energy’s comprehensive plan change application
was approved in the fourth quarter of 2009 by Payette County planning and zoning
officials. Approval from the NRC is necessary, and combined with the
federal process, will take an estimated three to five years before construction
of the plant commences.
The
Site Development Plan
Converting
approximately 5,000 acres of Idaho farmland into a licensed nuclear reactor site
is a major undertaking. Idaho Energy has commenced the preparatory
stages of the Nuclear Regulatory Commission (NRC) process, which entails local
approval, land and water contacts, and preliminary land evaluations, among other
things, prior to applying for a combined COL for a reactor at the
Site.
Nuclear
Plant Construction Project (Phase 2)
The
Company intends to use a nuclear reactor design that is a Generation 3 Korean
APR 1400 dual unit 2800 MW Light Water Reactor. It contains a hybrid
cooling system that requires minimal amounts of water for
cooling. Management believes that the Generation 3 plant design will
be safe, reliable and economical to build and operate. It is
estimated to produce power for $.02 to $.05 cents per kilowatt-hour, and will be
among the first commercial versions in the Western United
States.
8
Land
Purchase Agreement
There is
an agreement between the Company and the current site owner for the
purchase of the land (the “Land Purchase Agreement”) and a draft agreement for
the water rights and additional land, which is expected to be executed as a
final water rights agreement by the end of March 2010. Once
completed, the agreement will transfer title to Idaho Energy upon constructive
receipt of an approximately $5.0 million cash payment for the land plus $10.0
million for additional land with water rights. The Company
anticipates financing the site acquisition with proceeds from an
offering. The Land Purchase Agreement is subject to satisfactory
completion of the site analysis by ENERCON, and will not be completed until the
land has been fully approved for nuclear plant construction.
Construction
and Operating License Application (“COLA”) and Water Rights
Management
intends to obtain a conditional use permit from Payette County and the COLA from
the Nuclear Regulatory Commission for the site by using either the
services of ENERCON or the reactor supplier. ENERCON has already been conducting
NRC pre-COLA application activities at the site, including the preliminary site
study. A $2.0 million payment will start the
COLA. Furthermore, the Company has obtained a quote of $10.0 million
for additional land with water rights.
Competition
Competition
is intense in the energy market, with the two major sources of power generation
being nuclear and fossil fuel. While nuclear power has high initial
capital costs, it has the lowest production cost and highest capacity factor of
the major sources of electricity, with a production cost of $0.0172 per kilowatt
hour (kWh). According to national data from 2008, without carbon tax
and emission reduction, coal has a production cost of $0.0275/kWh, natural gas
of $0.081 cents/kWh, and petroleum of $0.098 cents/kWh. However,
natural gas, petroleum and coal prices have increased recently due to the rising
prices of fossil fuel and are subject to market price swings.
The
following table, recently developed by the NEI, compares total production costs,
operations and maintenance costs, and fuel costs for generating electricity
among four energy sources: coal, natural gas nuclear and
petroleum. Note that as energy prices have risen, nuclear energy has
become increasingly cost effective in relation to the other
sources.
9
U.S.
Electricity Production Costs and Components
1995 -
2008, in 2008 cents per kWh
Total Production Costs
|
Operations & Maintenance Costs
|
Fuel Costs
|
||||||||||||||||||||||||||||||||||||||
Year
|
Coal
|
Gas
|
Nuclear
|
Petroleum
|
Coal
|
Gas
|
Nuclear
|
Petroleum
|
Coal
|
Gas
|
||||||||||||||||||||||||||||||
1995
|
2.57 | 3.74 | 2.70 | 5.85 | 0.61 | 0.71 | 1.89 | 1.64 | 1.96 | 3.03 | ||||||||||||||||||||||||||||||
1996
|
2.42 | 4.57 | 2.53 | 5.95 | 0.54 | 0.70 | 1.80 | 1.36 | 1.88 | 3.87 | ||||||||||||||||||||||||||||||
1997
|
2.34 | 4.64 | 2.64 | 5.35 | 0.52 | 0.67 | 1.93 | 1.16 | 1.81 | 3.96 | ||||||||||||||||||||||||||||||
1998
|
2.29 | 4.08 | 2.46 | 3.76 | 0.55 | 0.61 | 1.76 | 0.73 | 1.74 | 3.47 | ||||||||||||||||||||||||||||||
1999
|
2.21 | 4.39 | 2.22 | 4.52 | 0.52 | 0.51 | 1.58 | 1.03 | 1.68 | 3.88 | ||||||||||||||||||||||||||||||
2000
|
2.15 | 7.28 | 2.17 | 6.51 | 0.52 | 0.57 | 1.57 | 0.81 | 1.63 | 6.70 | ||||||||||||||||||||||||||||||
2001
|
2.21 | 7.36 | 2.05 | 6.02 | 0.55 | 0.64 | 1.49 | 0.83 | 1.66 | 6.72 | ||||||||||||||||||||||||||||||
2002
|
2.19 | 4.70 | 2.03 | 5.76 | 0.56 | 0.66 | 1.50 | 0.93 | 1.63 | 4.05 | ||||||||||||||||||||||||||||||
2003
|
2.16 | 6.42 | 1.99 | 6.88 | 0.55 | 0.67 | 1.45 | 1.10 | 1.61 | 5.75 | ||||||||||||||||||||||||||||||
2004
|
2.24 | 6.42 | 1.95 | 6.54 | 0.57 | 0.56 | 1.42 | 0.99 | 1.67 | 5.87 | ||||||||||||||||||||||||||||||
2005
|
2.43 | 8.00 | 1.87 | 8.96 | 0.57 | 0.53 | 1.38 | 0.97 | 1.86 | 7.47 | ||||||||||||||||||||||||||||||
2006
|
2.53 | 6.95 | 1.89 | 10.28 | 0.59 | 0.54 | 1.39 | 1.32 | 1.94 | 6.41 | ||||||||||||||||||||||||||||||
2007
|
2.57 | 6.69 | 1.85 | 10.83 | 0.60 | 0.50 | 1.36 | 1.47 | 1.97 | 6.19 | ||||||||||||||||||||||||||||||
2008
|
2.75 | 8.09 | 1.87 | 17.26 | 0.55 | 0.55 | 1.37 | 1.69 | 2.20 | 7.54 |
Secondary
energy sources in the United States include hydro (water), wind (which only
produces 1% and has low reliability), and solar power, with the following
production costs:
|
•
|
Hydro: $0.0175/kWh
|
|
•
|
Wind: $0.145/kWh
|
•
|
Solar: $0.23/kWh
|
These
secondary energy suppliers are minor in scope and are significantly more limited
in their operational efficiency, averaging approximately at 25% capacity. While
wind and solar are expanding, they are not suitable base-load-plants that
requires higher level of reliability because they do not stay connected to the
grids. Coal and hydro have limited expansion ability due to new
environmental concerns. Natural gas produces 60% of the carbon
dioxide as the same size coal plant and the current costs are over 10 cents
kWh. Nuclear energy has been endorsed by the United Nations’ study on
global warming and the G-8 leadership.
With the
continually rising demand for cost-effective energy sources in the United
States, the Company anticipates minimal difficulties from its competition as it
works toward the goal of constructing a new nuclear plant. The
Federal incentives mentioned above are intended to reduce the inherently greater
capital costs of nuclear power.
In
addition, Energy Neutral has no competition for its initial focus area of Boise,
Idaho. There are few companies providing services to reduce energy
demand for homes and offices using renewable tools and technology in the United
States.
10
Financings
and Costs
The
Company will develop or acquire businesses to help address domestic energy needs
while trying to improve air quality and mitigate global warming. The
Company intends to undertake stock offerings in the form of public and private
placements to raise sufficient funds to capitalize its four individual
companies. Each subsidiary of the Company will further develop its
own business strategies and self-sustaining operations and, in turn, upstream
profits to the Company in exchange for capital and energy leadership
expertise.
The
Company estimates the cost of operation for its four corporate subsidiaries will
be approximately $750,000 per year. International Reactors is
presently working to market desalinization reactors in Mexico, South America,
the Middle East and Asia. The first desalinization reactor is being
designed and built in China, where the first customers should be able to sign
contracts this summer. The Company is providing funds of
approximately $25,000 per month to this project.
The
Company plans to raise $81.0 million through a private placement for the initial
development of the Idaho Energy Complex. The funds will be used to
purchase land that is under contract and water rights, and to complete the NRC
approval process. At the time of this annual report, $1.0 million has
been raised through the sale of a unit of Reactor Land. Management
believes that local plant site approval will allow the Company to raise
sufficient additional funds.
The
Company is negotiating power purchase agreements and equity ownership stakes
with several major utilities to finance reactor construction
costs. Further, the Company has executed a construction loan letter
for up to $3.5 billion as a result of the loan guarantee provision of the 2005
Energy Act. Mr. Don Gillispie, the Company’s President and Chief
Executive Officer, has invested $500,000, a considerable amount of personal
funds, to seed the start-up and rollout of the Company’s
businesses.
Corporate
History
The
Company was incorporated in the State of Nevada on July 31, 2001, commenced
operations in August 2005 and is a development stage
enterprise. Subsequently, Sunbelt Energy Resources, Inc. was formed
on August 29, 2005 to operate in the alternate energy
industry. Sunbelt has experienced limited operational
activity. In September 2006, Sunbelt acquired Nussential Holdings,
Inc. by exchanging 17,900,000 shares of Sunbelt for 100% or 21,399,998 shares of
the common stock of Nussential Holdings. As a result of the
acquisition, the shareholders of Sunbelt owned a majority of the voting stock of
Nussentials Holdings, and Sunbelt changed its name to Alternate Energy Holdings,
Inc. The transaction was accounted for as a reverse
merger, whereby Alternate Energy Holdings, Inc. was the
acquirer, which resulted in the recapitalization of Alternate Energy Holdings,
Inc. Simultaneously with the reverse merger, Nussentials
Corporation, a wholly-owned subsidiary of Nussentials Holdings, Inc.,
was transferred to Nussential Holdings, Inc. through issuance of
4,252,088 shares of common stock.
11
Government
Regulation
The
Company is subject to risks associated with governmental regulations and legal
uncertainties. The Company is directly or indirectly, regulated by
several authorities, including the Nuclear Regulatory Commission, Environmental
Protection Agency, Idaho Department of Fish and Game, Idaho Department of
Environmental Quality, Idaho Department of Water Resources and, as a public
company, the Securities and Exchange Commission.
The
Atomic Energy Act of 1954, as amended, is the primary United States law on both
the civilian and the military use of nuclear materials. On the
civilian side, it provides for both the development and regulation of the uses
of nuclear materials and facilities in the United States based on the policy
that “the development, use, and control of atomic energy shall be directed so as
to promote world peace, improve the general welfare, increase the standard of
living, and strengthen free competition in private
enterprise.” The Atomic Energy Act requires civilian uses of
nuclear materials and facilities to be licensed, and empowers the Nuclear
Regulatory Commission (“NRC”) to establish by rule or order, and to enforce,
such standards to govern these uses as “the Commission may deem necessary or
desirable in order to protect health and safety and minimize danger to life or
property.” Commission action under the Atomic Energy Act must conform to the
Atomic Energy Act’s procedural requirements, which include an opportunity for
hearings and Federal judicial review in many instances.
The
Environmental Protection Agency (“EPA”) was formed to protect human health and
safeguard the natural environment, such as air, water and land, upon which life
depends. The EPA’s purpose is to ensure that:
|
·
|
all
Americans are protected from significant risks to human health and the
environment in which they live, learn and
work;
|
|
·
|
national
efforts to reduce environmental risks are based on the best available
scientific information;
|
|
·
|
federal
laws protecting human health and the environment are enforced fairly and
effectively;
|
|
·
|
environmental
protection is an integral consideration in U.S. policies concerning
natural resources, human health, economic growth, energy, transportation,
agriculture, industry, and international trade, and that these factors are
similarly considered in establishing environmental
policy;
|
12
|
·
|
all
parts of society, such as communities, individuals, businesses, and state,
local and tribal governments, have access to accurate information
sufficient to effectively participate in managing human health and
environmental risks;
|
|
·
|
environmental
protection contributes to making our communities and ecosystems diverse,
sustainable and economically productive;
and
|
|
·
|
the
United States plays a leadership role in working with other nations to
protect the global environment.
|
The Idaho
Department of Fish and Game states that “All wildlife, including all wild
animals, wild birds, and fish, within the state of Idaho, is hereby declared to
be the property of the state of Idaho. It shall be preserved,
protected, perpetuated, and managed. It shall be only captured or
taken at such times or places, under such conditions, or by such means, or in
such manner, as will preserve, protect, and perpetuate such wildlife, and
provide for the citizens of this state and, as by law permitted to others,
continued supplies of such wildlife for hunting, fishing and
trapping.”
The Idaho
Department of Environmental Quality (“DEQ”) is a state department created by the
Idaho Environmental Protection and Health Act to ensure clean air, water and
land in the state and protect Idaho citizens from the adverse health impacts of
pollution. As a regulatory agency, DEQ enforces various State
environmental regulations and administers a number of Federal environmental
protection laws including the Clean Air Act, the Clean Water Act, and the
Resource Conservation and Recovery Act. DEQ manages a broad range of
activities including:
|
·
|
assessment
of environmental problems;
|
|
·
|
oversight
of facilities that generate air, water, and hazardous waste
pollution;
|
|
·
|
monitoring
of air and water quality;
|
|
·
|
cleanup
of contaminated sites; and
|
|
·
|
education,
outreach, and technical assistance to businesses, local government
agencies, and interested citizens.
|
DEQ is
committed to working in partnership with local communities, businesses, and
citizens to identify and implement cost-effective environmental
solutions.
The Idaho
Department of Water Resources serves the people of Idaho and protects their
welfare by making sure that water is conserved and available to sustain Idaho’s
economy, ecosystem and the resulting quality of life. The Department provides a
variety of services for the public, such as water rights research, historical
record reproduction of water rights, drillers’ reports, and dam safety
inspections.
Employees
The
Company and its subsidiaries have 15 full-time employees. In
addition, nine officers and directors provide certain services dedicated to
current corporate and business development activities. In the future,
the officers will devote services on a full-time basis and six independent
directors will serve part-time up to ten hours per week. The
Company’s future success will depend in part on our ability to attract, retain
and motivate highly qualified technical and management personnel for whom
competition is intense. The Company’s employees are not represented
by any collective bargaining unit and the Company believes that its relations
with employees and contractors are good.
13
Item
1A. Risk Factors
FORWARD-LOOKING
STATEMENTS
This
document includes forward-looking statements, including, without limitation,
statements relating to the Company’s plans, strategies, objectives,
expectations, intentions and adequacy of resources. These
forward-looking statements involve known and unknown risks, uncertainties, and
other factors that may cause the Company’s actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. These factors include, among others, the following:
ability of the Company to implement its business strategy; ability to
obtain additional financing; the Company’s limited operating history;
unknown liabilities associated with future acquisitions; ability to manage
growth; significant competition; ability to attract and retain talented
employees; future government regulations; and other factors described in this
annual report or in other filings with the Securities and Exchange
Commission. Except as required by federal securities laws, the
Company is under no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.
General
Business Risk Factors
The
Company is a development stage business, with no revenue to date.
The
Company commenced its operations in August 2005, and is organized as a
corporation under the laws of the State of Nevada. The Company has
only a limited history upon which an evaluation of its prospects and future
performance can be made. The Company’s proposed operations are
subject to all business risks associated with new enterprises. The
likelihood of the Company’s success must be considered in light of the problems,
expenses, difficulties, complications and delays frequently encountered in
connection with the expansion of a business in a competitive industry, including
hiring and retaining skilled employees or contractors; licensing, permitting,
and operating problems; competing with established operators; and unanticipated
location issues or design/engineering problems with the
improvements. During the years ended December 31, 2009 and 2008,
the Company did not recognize any revenues from its operational
activities. It is likely that the Company will sustain more losses in
the future. There can be no assurance that the Company will ever
operate profitably.
The Company may not be able to
implement its expansion strategy as planned, or at all.
The
Company plans to grow our business by investing in new plants and pursuing other
business opportunities. Additional financing may be necessary to
implement these expansion strategies, which may not be accessible or available
on acceptable terms. Any expansion may be financed with additional
indebtedness or by issuing additional equity securities, which would further
dilute shareholders’ interests. In addition, as described below under
“the Company may be adversely affected by environmental, health and safety laws,
regulations and liabilities,” federal and state governmental requirements may
substantially increase our costs, which could have a material adverse effect on
our results of operations and financial position. Any expansion plans
may also result in other unanticipated adverse consequences, such as the
diversion of management’s attention from existing operations.
14
Construction
costs associated with expansion may also increase to levels that would make a
new site too expensive to complete or unprofitable to
operate. Contractors, engineering firms, construction firms and
equipment suppliers also receive requests and orders from other companies and,
therefore, it may become hard or impossible to secure their services or products
on a timely basis or on acceptable financial terms. We may suffer significant
delays or cost overruns as a result of a variety of factors, such as shortages
of workers or materials, transportation constraints, adverse weather, unforeseen
difficulties or labor issues, any of which could prevent commencement of
operations as expected at any new facilities.
The
Company’s success depends on its ability to retain key management
personnel.
Our
success depends in large part on our ability to attract and retain highly
qualified management, in particular upon our CEO, Donald Gillispie. Due to the
specialized nature of our business, it may be difficult to locate and hire
qualified personnel. The loss of services of one of our executive
officers or other key personnel, or our failure to attract and retain other
executive officers or key personnel could have a material adverse effect on our
business, operating results and financial condition. Although we have
been successful in planning for and retaining highly capable and qualified
successor management in the past, there can be no assurance that we will be able
to do so in the future.
The
Company depends upon outside contractors and advisors to supplement its
business.
To
supplement the business experience of its officers and directors, the Company
may be required to employ contractors, accountants, technical experts,
appraisers, attorneys, or other consultants or advisors. The Company’s
management, without any input from shareholders, will make the selection of any
such advisors. Furthermore, it is anticipated that such persons may be engaged
on an “as needed” basis without a continuing fiduciary or other obligation to
the Company. In the event the Company considers it necessary to hire outside
contractors or advisors, they may elect to hire persons who are affiliates, if
they are able to provide the required services.
There
are risks of borrowing by the Company.
If the
Company incurs indebtedness, a portion of its cash flow will have to be
dedicated to the payment of principal and interest on such indebtedness. Typical
loan agreements also might contain restrictive covenants, which may impair the
Company’s operating flexibility. Such loan agreements would also
provide for default under certain circumstances, such as failure to meet certain
financial covenants. A default under a loan agreement could result in
the loan becoming immediately due and payable and, if unpaid, a judgment in
favor of such lender whose rights would be senior to those of shareholders of
the Company. A judgment creditor would have the right to foreclose on
any of the Company’s assets resulting in a material adverse effect on the
Company’s business, operating results or financial condition.
There
are uncertainties with loans.
The
Company may need to obtain loans to fund any activities not funded by private
placement subscriptions. The ability of the Company to obtain future
financing, and the terms of such financing have not yet been
established. The Company does not have any loan commitments. Changes
in interest rates and other terms may also have adverse effect on the Company’s
business, operating results or financial condition.
Market
data may not always be reliable.
The
Company may have based the market data and certain other information in this
Form 10K on information supplied by governmental agencies, public announcements,
filings related to other developments and similar projects in the same area, and
other third party sources. The Company also relied on other sources believed to
be reliable. The Company has not independently verified any market
information, announcements or filings, which may not be accurate in all material
respects. Accordingly, investors should not rely on such data when
making investment decisions and should keep in mind that market conditions may
change at any time for a variety of reasons.
15
General
economic conditions materially impact the Company.
The
financial success of the Company may be sensitive to adverse changes in general
economic conditions in the United States and the Western United States, such as
recession, inflation, unemployment, and interest rates. Such changing conditions
could reduce demand in the marketplace for the development of nuclear sites
which is the Company’s business. Management believes that the site
developed by the Company will maintain value long-term. Nevertheless,
the Company has no control over these changes.
Real
estate markets are unpredictable.
Real
estate markets are unpredictable and subject to significant cycling
fluctuations. There is no assurance that a down time in the market will not
adversely affect the Company.
There
are many factors beyond the control of the Company.
Projects
for the acquisition and development of real estate are subject to many factors
which are outside the Company’s control. These factors include: general economic
conditions; proximities to utilities and transportation; shortages of labor and
materials and skilled craftsmen; price of materials and competitive products;
and the regulation by federal and state governmental authorities.
We
may need additional financing in the future, which may reduce the value of our
common stock.
The
Company has limited funds and such funds will not be adequate to carry out the
business plan without borrowing significant funds. The ultimate
success of the Company may depend upon its ability to raise additional capital
and securing substantially more financing. The Company has not
investigated the availability, source, or terms that might govern the
acquisition of additional capital and will not do so until it determines a need
for additional financing. If additional capital is needed, there is
no assurance that funds will be available from any source or can be obtained on
terms acceptable to the Company. If additional funds cannot be secured from
other sources, then the Company’s operations will be limited to those that can
be financed with its modest capital.
The
Company lacks revenue history.
The
Company was formed in 2006 for the purpose of developing a proposed nuclear bio
fuels complex in Idaho. The Company has never had any
revenues. The Company is not profitable and the business effort is
considered to be in an early development stage. The Company must be
regarded as a new or development venture with all of the unforeseen costs,
expenses, problems, risks and difficulties to which such ventures are
subject.
16
There
can be no assurance of success or profitability.
There is
no assurance that the Company will ever operate profitably. There is
no assurance that it will generate revenues or profits, or that the value of the
Company’s shares will be increased.
The
Company lacks diversification.
Because
of the limited financial resources that the Company has and due to the nature of
the Project, the Company will not be able to immediately diversify its
operation. The Company’s inability to immediately diversify its activities into
more than one area will subject the Company to economic fluctuations within the
nuclear industry and increases the risks associated with the Company’s
operations. The Company intends to diversify its operations to other
areas, including bio fuels and potable water production, but it cannot provide
any assurances that these activities will happen.
If
the Company borrows money using property as collateral, shareholders could lose
all of their investment, if the property were to be foreclosed.
The terms
of any loan may require payments to be made under the loan
document. Should the Company fail to satisfy the terms of any loan,
any property pledged to secure such loan may be at risk to foreclosure or other
similar process.
Specific
Risk Factors Related to Nuclear Plants
Management
expects that it is unlikely the Company will be the ultimate owner or operator
of any reactor to be built at any Site. The Company’s business plan
is to develop a site that will be suitable for the construction and operation of
a reactor, which will require $3-4 billion in investment, employment of hundreds
of skilled people, and an operating budget of hundreds of millions per
year. Management believes that it is likely that any reactor at the
Site will be owned and operated by a consortium or joint venture of nuclear
reactor suppliers and reactor customers (i.e., electric utilities), while the
Company participating as the site and project developers. Therefore,
management believes the business is not directly subject to the usual risks of
operating a nuclear reactor.
There
are, however, a number of risks specific to the business of developing a nuclear
site as follows:
Development
of the site is subject to many risk factors that are examined in the NRC
permitting process.
The
Company is subject to the general risks facing the nuclear
industry. Because the industry is closely regulated, the Company will
be required to obtain and comply with federal, state and local government
permits and approvals, particularly those from the Nuclear Regulatory Commission
(NRC). Any of these permits or approvals may be subject to denial,
revocation or modification under various circumstances. Failure to
obtain or comply with the conditions of permits or approvals may adversely
affect the business and subject it to penalties and other
sanctions. Although existing licenses are routinely renewed by the
NRC and state regulators, renewal could be denied or jeopardized by various
factors, including the following:
|
·
|
natural
disasters, such as earthquakes, floods, volcano eruption,
hurricanes;
|
|
·
|
wars,
insurrection, revolutions, acts of
terrorism;
|
|
·
|
inability
to obtain or comply with state and local
permits;
|
|
·
|
inadequate
multiple point access to the
Site;
|
17
|
·
|
inadequate
financial assurances to provide for end of life decommissioning and
decontamination of the Site;
|
|
·
|
inability
to obtain adequate connection to the transmission grid, which has economic
as well as safety implications;
|
|
·
|
inability
to assure adequate water supplies for steam and cooling because the
Company’s water rights could be lost because of government actions,
extreme drought conditions, or competing economic demands for the
supply;
|
|
·
|
environmental
objections; and
|
|
·
|
substantial
changes in Government Regulations due to changes in national government
(i.e., political risks).
|
Nuclear
property ownership and development is subject to substantial additional risks
over conventional development.
For
nuclear projects, the risk of conventional real property development is
heightened because the systems for processing approvals for nuclear development
project can be slow, bureaucratic, and not as well-developed or scheduled as
those for more conventional projects. There can be substantial
political influence asserted against nuclear development project approval
without the knowledge of who is behind the opposition. There is no effective
accountability to the process. Nuclear projects are also subject to
compliance with international safety and nuclear non-proliferation
regimes.
Unforeseen
technical or environmental factors could preclude use of the site for power
generation.
There is
a risk that in the licensing process, further investigation and analysis could
discover facts that would preclude development of the Site as planned such as
unknown and unfavorable geological conditions on Site or endangered species
habitat.
Risk
of unforeseen changes in state or local law or government policy, such as a ban
on nuclear or power plant construction.
Development
investments always carry regulatory risk. Local governments can adopt capricious
and arbitrary and expensive rules for which there is no effective appeal or
remedy which can make a development impractical or unprofitable. The Project
will proceed only if state and local governments issue necessary
permits. Management believes these permits can be obtained, but
existing laws and permit standards may change, and necessary permits may not be
available. There can be political instability that causes projects in
design or development to become unfeasible, or that make the local unattractive
to would be purchasers. For example, local governments could place restrictive
conditions on the Site in permits; impose substantial new taxes or development
fees; or introduce a moratorium on buildings or developments.
18
Delays
attributable to special interest interveners in licensing
proceedings.
In the
1970’s and 1980’s, special interest groups opposed to nuclear plant construction
intervened in federal and state licensing proceedings. They were
sometimes joined by community groups, state and local governmental
agencies. While these opponents were rarely successful on the merits,
the interventions produced delays and regulatory changes that adversely affected
the economics of capital-intensive nuclear construction and led to the
cancellation of several projects. Management is already proactively engaged with
government and interest groups in Idaho to manage this risk.
Delays
attributable to queuing at the NRC with other applications ahead of Idaho Energy
in the licensing process.
The NRC
has had virtually no new reactor licensing activity in the last 25
years. Now there are proposals for as many as 30 to 35 new
reactors. If these are all filed in the next 3 to 5 years, the NRC
may be overwhelmed. Meritorious applicants may have to wait their
turn, with potential adverse impacts on schedule and Project
economics.
Inability
to raise equity capital sufficient to take the project through the licensing
process.
Management
estimates that that cost of obtaining licenses and permits needed for the
Project will total $50.0 million. Delays and unforeseen technical issues could
raise the cost of that process, and additional capital may be required to
complete it. The additional investment and the delay would reduce
investor returns even if all needed permits are eventually issued.
Inability
to acquire materials and technical and professional help.
The NRC
licensing process is highly technical, and a number of reactors will be applying
for licenses in the next three years. Experienced nuclear talent has
become relatively scarce in the United States and the Company may be competing
with huge companies and utilities to get the talent it needs to get its reactor
licensed and built. Also, the domestic nuclear infrastructure has
declined in the last two decades and the talent pool is reduced and certain
long-lead components may be expensive or difficult to obtain on
schedule.
A
nuclear incident anywhere in the world could revive nuclear plant
opponents.
While
there is a global renaissance underway for nuclear energy, its current popular
support could evaporate quickly. It has been 30 years since the Three
Mile Island accident and 20 years since Chernobyl. These events are
gone from the memory of most citizens, but a new incident could reawaken old
fears and raise public opposition. Public opposition could lead to
political opposition and failure of regulatory agencies to grant necessary
permits and licenses.
The
federal government could fail to fulfill its obligation to manage spent fuel at
yucca mountain or elsewhere.
Virtually
all nuclear plants currently store spent fuel at the reactor site. By law, all
spent fuel in the US is the property of the United States
government. After a number of years, it is expected that the spent
fuel, will be transported by the government to the Yucca Mountain long-term
geological depository, or to a reprocessing facility. If the United
States Government fails to fulfill its obligations, uncertainty about spent fuel
management could delay start up of the plant, premature closure, or alternative
plans for on-site storage.
19
Competitive
sites or generation sources could offer electric utilities lower prices, or
regulatory policy could force utilities to buy power from favored alternative
energy sources, regardless of their economics.
Management
believes that the chosen reactor design will be very competitive in a free
market where its competitors are fossil- or renewable-fueled State regulators
may force utilities to buy from renewable or other favored technologies,
locations, or sources, regardless of cost, and to the detriment of the
Project.
There are
alternative sites in the region that could be developed for nuclear
reactors. However, with demand for electric power growing in the
west, the competition is to secure the scarce good sites, and the Company has
secured a good Site. Management believes that the Company’s proposed
property is geologically and demographically well located. However, there is the
possibility that other sites will be developed for nuclear or coal
plants. If, there should be growth of competitive nuclear plants in
the West, margins will drop for the Project. However, all the new
plants that are planned will be needed to provide reliable power for the western
US in the decades to come. Likewise, these competitors could be
better capitalized than the Company, which could give them a significant
advantage with respect to bringing low cost low emission plants on line
sooner.
Competing
development projects could saturate the market and thereby diminish the resale
value of the Company’s land. As of March 31, 2010, the Company does
not expect significant competition from other generation site development
projects. In the future, however, the Company will have no control
over other competitive projects, if such develop.
Weather
interruptions also impact the Company’s business.
Activities
of the Company may be subject to periodic interruptions due to weather
conditions. Weather-imposed restrictions during certain times of the
year on roads accessing properties could adversely affect the ability of the
Company to develop such properties or could increase the costs of construction
because of delays.
Specific
Risks Related to Idaho Energy and to The Biofuel Industry
Competition
from other sources of fuel may adversely affect Idaho Energy’s ability to market
biofuel.
Although
the price of fuel has increased over the last several years and continues to
rise, fuel prices per gallon remain at levels below or equal to the price of
biofuel. In addition, other more cost-efficient domestic alternative fuels may
be developed and displace bio fuel as an environmentally-friendly alternative to
petroleum-based products. If fuel prices do not continue to increase
or a new fuel is developed to compete with bio fuel, it may be difficult to
market bio fuel, which could result in the loss of revenues.
Idaho
Energy’s business in biofuels will be sensitive to feedstock prices, which could
increase production costs and decrease revenues
The
principal raw materials used in the production of bio fuel are commodities that
are subject to substantial price variations due to factors beyond our
control. Commodity prices are determined from minute to minute based
on supply and demand and can be highly volatile. As more producers
enter the bio fuel business, competition for available feedstock supplies is
expected to increase. There can be no assurances that our hedging
activities will effectively insulate us from future commodity price volatility
or that the value of the feedstock we use will not exceed the value of the
electricity we generate. In the event that we are unable to pass
increases in the price of raw materials to our customers, our operating results
will suffer. We cannot predict the future price of our bio fuel
feedstock and any material price increases will adversely affect Idaho Energy’s
operating performance.
20
Reliance
upon third parties for raw material supply may hinder Idaho Energy’s ability to
profitably produce biofuel.
In
addition to being dependent upon the availability and price of feedstock supply,
Idaho Energy will be dependent on relationships with third parties, including
feedstock suppliers. Momentum must be successful in establishing
feedstock agreements with third parties. Assuming that Idaho Energy
can formalize feedstock purchase contracts, those suppliers could still
interrupt Idaho Energy’s supply by not meeting their obligations under the
contracts. If, because of market conditions, Idaho Energy is forced into a
competitive environment or procurement of raw soy oil, animal fats and other
feedstock or Idaho Energy is unable to obtain adequate quantities of feedstock
at economical prices, Idaho Energy’s business model could be unsustainable
resulting in a significant reduction in the results of operations.
Automobile
manufacturers and other industry groups have expressed reservations regarding
the use of biofuel, which could affect Idaho Energy’s ability to market its
biofuel.
Because
it is a relatively new product, the research of bio fuel use in automobiles and
its effect on the environment is ongoing. Some industry groups and
standards, including the World Wide Fuel Charter, have recommended that blends
of no more than 5% bio fuel be used for automobile fuel due to concerns about
fuel quality, engine performance problems and possible detrimental effects of
biodiesel on rubber components and other parts of the
engine. Although some manufacturers have encouraged the use of
biodiesel fuel in their vehicles, cautionary pronouncements by others may affect
Idaho Energy’s ability to market its product. In addition, studies have shown
that nitrogen oxide emissions from pure biodiesel increase by
10%. Nitrogen oxide is the chief contributor to ozone or smog. New
engine technology is available and is being implemented to eliminate this
problem. However, these emissions may decrease the appeal of our product to
environmental groups and agencies who have been historic supporters of the bio
fuels industry.
There
are risks related to biofuel regulation and governmental action.
The bio
fuels industry relies on federal legislation to create demand for the bio fuels
product, which creates an artificial market. If the federal government ceases to
provide incentives for bio fuel products, the demand for biodiesel products will
decline.
Much of
the existing demand for bio fuels is a result of the need of certain entities to
comply with the requirements of the Energy Policy Act of 1992 (and amendments
thereto) and clean air regulations promulgated by the EPA. We can give no
assurances that these rules and regulations will continue to remain in effect
throughout the lifetime of Idaho Energy. If these rules and regulations were
repealed, the incentive for a substantial portion of Idaho Energy’s targeted
customer base to purchase bio fuel would be eliminated, having a materially
adverse effect on the profitability of Idaho Energy.
The bio
fuel industry is subject to federal, state, and local government regulations,
including those relating to the certification of manufacturing and product,
taxes on fuel, as well as transportation, emissions, environmental, building,
and zoning requirements. Also, we will be subject to laws governing
our relationships with employees, such as minimum wage requirements, overtime,
working conditions, and work permit requirements (including the Immigration and
Nationality Act of 1990, which requires employers to ask employees to present
certain original documents to establish their identity and employment
eligibility and to verify on INS Form I-9 that they are eligible to be employed
in the United States. The failure to comply with such laws, obtain or
retain certification, permit or license approvals, or an increase in the minimum
wage rate, employee benefit costs, or other costs associated with employees
could have an adverse affect upon Idaho Energy.
21
Risk
Factors Relating to Company
Investing
in the Company is a highly speculative investment.
Due to
the highly speculative nature of the Company’s business, investors should not
invest unless they can financially bear the loss of their entire
investment. Investment should, therefore, be limited to that portion
of discretionary funds not needed for normal living purposes or for reserves for
disability and retirement.
The
Company is subject to the reporting requirements of the federal securities
laws.
The
Company is subject to the reporting requirements under the Securities Exchange
Act of 1934. As a result, shareholders will have ready access to the information
required to be reported by publicly held companies under the Securities Exchange
Act and the regulations hereunder. The Company intends to provide its
shareholders with quarterly reports containing financial information prepared in
accordance with generally accepted accounting principles
(unaudited).
This
may be a long term investment.
An
investment in the shares may be long term and illiquid. A limited
market exists for the Shares. Accordingly, purchasers of shares must
be willing and able to bear the economic risk of their investment for an
indefinite period of time. It is likely that investors will not be
able to liquidate their investment in the event of an emergency.
The
Company has limited liquidity, cash flow and capital resources.
The
Company had minimum liquid assets as of December 31, 2009, and will be reliant
upon stock offerings to fund any kind of nuclear operations. The only
capital resources of the Company are its common stock. The monies raised by any
private offering may not be sufficient for the continued proposed operations of
the Company. There is no assurance that additional monies or
financing will be available in the future or, if available, will be at terms
favorable to the Company. The Company may borrow money to finance its
future operations, although it does not currently contemplate doing so. Any such
borrowing will increase the risk of loss to the investor in the event that the
Company is unsuccessful in repaying such loans. The Company has achieved no cash
flows to date, and management foresees limited cash flows until any property it
permits and acquires is sold, leased, or the asset is merged into an entity that
will finance, own and operate reactors at the Site.
The
Company is a holding company and there are limitations on its ability to receive
distributions from its subsidiaries.
We
conduct all of our operations through subsidiaries and are dependent upon
dividends or other intercompany transfers of funds from our subsidiaries to meet
our obligations. Moreover, some of our subsidiaries are
currently, or are expected in the future to be, limited in their ability to pay
dividends or make distributions to us by the terms of their financing
agreements.
22
Risk
Factors Related to Proposed International Operations
The
proposed international operations of International Reactors will subject us to
material risks that our domestic business does not
The
proposed international operations of International Reactors will subject us to a
number of risks, including the following:
|
•
|
maintaining
compliance with complex and unfamiliar foreign laws and
regulations;
|
|
•
|
maintaining
compliance with U.S. laws applicable to the operation of
foreign subsidiaries, most particularly the Foreign Corrupt Practices Act
which, in some countries in which we do or may seek to do business, may
prohibit activities by our foreign subsidiaries that are accepted and
legal practices in those countries;
|
|
•
|
difficulties
and costs of staffing and managing foreign
operations;
|
|
•
|
difficulties
in enforcing agreements and collecting receivables through foreign legal
systems and other relevant legal
issues;
|
|
•
|
including
fewer legal protections for intellectual
property;
|
|
•
|
fluctuations
in foreign economies and in the value of foreign currencies and interest
rates; and
|
|
•
|
general
economic and political conditions in the countries in which we
operate.
|
Problems
or negative developments in any of these areas could adversely impact
International Reactors’s business, financial condition or results of
operations. Furthermore, the integration of our non-U.S. businesses
may require additional licenses or approvals from the United States government
or other non-U.S. jurisdictions, which could result in delays or constraints on
our integration plans.
Fluctuations
in currency exchange rates could materially and adversely impact International
Reactors’s financial results.
Because
the Company’s financial statements are presented in U.S. dollars, the Company
will be required to translate revenues, income and expenses, as well as assets
and liabilities, into U.S. dollars at exchange rates in effect during or at the
end of each reporting period if we are able to successfully carry out
International Reactors’s plans for international
operations. Therefore, increases or decreases in the value of the
U.S. dollar against these other currencies will affect our net operating
revenues, our operating income and the value of balance sheet items denominated
in foreign currencies, even if those values have not changed in the original
currencies. In the future, if International Reactors is successful in
carrying out its international operational plans, the Company may implement
additional currency hedges intended to reduce our exposure to changes in foreign
currency exchange rates; however, hedging strategies may not be
successful. As a result, fluctuations in foreign currency, exchange rates, could
materially and adversely affect International Reactors’s business, financial
condition, results of operations and cash flows.
23
Risk
Factors Related to Common Stock
There
are limited trading markets for the Company’s common stock, thereby limiting a
shareholder’s opportunity to sell such common stock.
Currently,
only a limited trading market exists for the Company’s common
stock. The common stock is quoted on the OTC Bulletin Board under the
symbol “AEHI.OB.” The OTC Bulletin Board is a limited market and
subject to substantial restrictions and limitations in comparison to the Nasdaq
system. Any broker/dealer that makes a market in the Company’s stock
or other person that buys or sells the Company stock could have a significant
influence over its price at any given time. The Company cannot assure
its shareholders that a greater market for the Company’s common stock will be
sustained. There is no assurance that the Company’s common stock will
have any greater liquidity than shares that do not trade on a public
market. A shareholder may be required to retain their shares for an
indefinite period of time, and may not be able to liquidate their shares in the
event of an emergency or for any other reasons.
The
regulation of penny stocks by the SEC and FINRA may discourage the tradability
of the Company’s securities.
The
Company is a “penny stock” company. The Company securities currently
trade on the OTCBB and will be subject to a Securities and
Exchange Commission rule that imposes special sales
practice requirements upon broker-dealers who sell such securities to
persons other than established customers or accredited investors. For
purposes of the rule, the phrase “accredited investors” means, in
general terms, institutions with assets in excess of $5,000,000, or individuals
having a net worth in excess of $1,000,000
or having an annual
income that exceeds $200,000 (or that, when combined with
a spouse’s income, exceeds $300,000). For transactions covered by the
rule, the broker-dealer must make a special suitability determination for the
purchaser and receive the purchaser’s written agreement to the transaction prior
to the sale. Effectively, this discourages broker-dealers from
executing trades in penny stocks. Consequently, the rule will affect
the ability of purchasers in this offering to sell their securities in any
market that might develop therefore because it imposes additional regulatory
burdens on penny stock transactions. In addition, the Securities and Exchange
Commission has adopted a number of rules to regulate “penny stocks”. Such rules
include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9
under the Securities and Exchange Act of 1934, as
amended. Because the Company’s securities constitute “penny stocks”
within the meaning of the rules, the rules would apply to the Company and to the
Company securities. The rules will further affect the ability of
owners of shares to sell the Company securities in any market that might develop
for them because it imposes additional regulatory burdens on penny stock
transactions. Shareholders should be aware that, according to Securities and
Exchange Commission, the market for penny stocks has suffered in recent years
from patterns of fraud and abuse. Such patterns include (i) control of the
market for the security by one or a
few broker-dealers that are often related to the promoter
or issuer; (ii) manipulation of prices through prearranged matching
of purchases and sales and false and misleading press releases; (iii) “boiler
room” practices involving high-pressure sales tactics and
unrealistic price projections by inexperienced sales persons; (iv)
excessive and undisclosed bid-ask differentials and markups by
selling broker-dealers; and (v) the wholesale dumping of the same securities by
promoters and broker-dealers after prices have
been manipulated to a
desired consequent investor losses. The Company
management is aware of the abuses that have occurred historically in the penny
stock market. Although the Company does not expect to be in a
position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established
with respect to the Company securities.
The
Company will pay no foreseeable dividends in the future.
The
Company has not paid dividends on its common stock and does not anticipate
paying such dividends in the foreseeable future.
24
Rule
144 sales in the future may have a depressive effect on the Company’s stock
price.
All of
the outstanding shares of common stock are held by the Company present officers,
directors, and affiliate stockholders as “restricted securities” within the
meaning of Rule 144 under the Securities Act of 1933, as amended. As
restricted Shares, these shares may be resold only pursuant to an effective
registration statement or under the requirements of Rule 144 or other applicable
exemptions from registration under the Act and as required under applicable
state securities laws. Rule 144 provides in essence that a
person who has held restricted securities for six months
may, under certain conditions, sell every three months, in brokerage
transactions, a number of shares that does not exceed the greater of 1.0% of a
company’s outstanding common stock or the average weekly trading volume during
the four calendar weeks prior to the sale. There is no limit on the amount of
restricted securities that may be sold by a non-affiliate after the owner has
held the restricted securities for a period of two years. A sale
under Rule 144 or under any other exemption from the Act, if available, or
pursuant to subsequent registration of shares of common stock of present
stockholders, may have a depressive effect upon the price of the common stock in
any market that may develop.
The
Company’s investors may suffer future dilution due to issuances of shares for
various considerations in the future.
There may
be substantial dilution to the Company any shareholders as a result of future
decisions of the Board to issue shares without shareholder approval for cash,
services, or acquisitions.
The
Company’s stock will in all likelihood be thinly traded and as a result an
investor may be unable to sell at or near ask prices or at all if the investor
needs to liquidate shares.
The
shares of the Company’s common stock is traded in the OTCBB, meaning that the
number of persons interested in purchasing the Company common shares at or near
ask prices at any given time may be relatively small or
non-existent. This situation is attributable to a number of factors,
including the fact that the Company is a small company which is relatively
unknown to stock analysts, stock brokers, institutional investors and others in
the investment community that generate or influence sales volume, and that even
if the Company came to the attention of such persons, they tend to
be risk-averse and would be reluctant to follow an unproven, early
stage company such as the Company or purchase or recommend the purchase of any
of the Company’s securities until such time as the Company becomes more seasoned
and viable. As a consequence, there may be periods of several days or
more when trading activity in the Company securities is minimal or non-existent,
as compared to a seasoned issuer which has a large and steady volume of trading
activity that will generally support continuous sales without an adverse effect
on securities price. The Company cannot give you any assurance that a
broader or more active public trading market for the Company common securities
will develop or be sustained, or that any trading levels will be
sustained. Due to these conditions, the Company can give investors no
assurance that they will be able to sell their shares at or near ask prices or
at all if the investor needs money or otherwise desires to liquidate the
securities of the Company.
The
Company’s common stock may be volatile, which substantially increases the risk
that the investor may not be able to sell their securities at or above the price
that the investor paid for the security.
Because
of the limited trading market for the Company’s common stock and because of the
possible price volatility, the investor may not be able to sell its shares of
common stock when the investor desires to do so. The inability to
sell the investors securities in a rapidly declining market may substantially
increase the risk of loss because of such illiquidity and because the price for
the Company shares may suffer greater declines because of the Company’s price
volatility.
The price
of the Company’s common stock that will prevail in the market may be higher or
lower than the price the investor may pay. Certain factors, some of which are
beyond the Company’s control, that may cause the Company’s share price to
fluctuate significantly include, but are not limited to the
following:
|
·
|
variations
in the Company’s quarterly operating
results;
|
25
|
·
|
loss
of a key relationship or failure to complete significant
transactions;
|
|
·
|
additions
or departures of key personnel; and
|
|
·
|
fluctuations
in stock market price and volume.
|
Additionally,
in recent years the stock market in general, and the over-the-counter markets in
particular, have experienced extreme price and volume
fluctuations. In some cases, these fluctuations are unrelated or
disproportionate to the operating performance of the underlying
company. These market and industry factors may materially and
adversely affect the Company stock price, regardless of its operating
performance. In the past, class action litigation often has been
brought against companies following periods of volatility in the market price of
those companies common stock. If the Company becomes involved in this type of
litigation in the future, it could result in substantial costs and diversion of
management attention and resources, which could have a further negative effect
on the investors’ investment in the Company stock.
Item
1B. Unresolved Staff Comments
Not
applicable.
Item
2. Properties
The
Company’s operations are principally located at 911 E. Winding Creek Dr., Suite
150, Eagle, Idaho 83616. The Company currently pays $1,300 as monthly
rent for the use of this office. Once the construction of the Idaho Energy
Complex is completed, the plant will become the Company’s primary
facility.
Item
3. Legal Proceedings
The
Company is not currently a party to any pending or threatened legal
proceedings
The
Company anticipates that it will from time to time become subject to claims and
legal proceedings arising in the ordinary course
of business. It is not feasible to predict the outcome of
any such proceedings and the Company cannot assure that their ultimate
disposition will not have a materially adverse effect on the Company business,
financial condition, cash flows or results of operations.
Item
4.(Removed and Reserved)
PART
II
Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Market
Information
There is
a limited public trading market for the Company’s common stock. The
Company’s trading symbol is AEHI.OB, as quoted by the OTC Bulletin
Board.
The
following table sets forth the range of high and low bid quotations for the
registrant’s common stock as reported on the OTC Bulletin Board. The quotations
represent inter-dealer prices without retail markup, markdown or commission, and
may not necessarily represent actual transactions.
26
QUARTER ENDED
|
HIGH
|
LOW
|
||||||
December
31, 2009
|
$ | 0.15 | $ | 0.05 | ||||
September
30, 2009
|
$ | 0.22 | $ | 0.08 | ||||
June
30, 2009
|
$ | 0.25 | $ | 0.02 | ||||
March
31, 2009
|
$ | 0.10 | $ | 0.01 | ||||
December
31, 2008
|
$ | 0.25 | $ | 0.09 | ||||
September
30, 2008
|
$ | 0.40 | $ | 0.08 | ||||
June
30, 2008
|
$ | 0.21 | $ | 0.08 | ||||
March
31, 2008
|
$ | 0.43 | $ | 0.17 |
Holders
There
were approximately 785 holders of record of the Company’s common stock as of
March 31, 2010.
Dividend
Policy
Holders
of the Company’s common stock are entitled to receive such dividends as may be
declared by the Company’s board of directors. The Company has not declared or
paid any dividends on the Company common stock and it does not plan on declaring
any dividends in the near future. The Company currently intends to
use all available funds to finance the operation and expansion of its
business.
Shares
Eligible for Future Sale
The
Company currently has 252,361,674 shares of common stock outstanding as of March
31, 2010. A current shareholder who is an “affiliate” of the Company,
defined in Rule 144 as a person who directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with the Company will be required to comply with the resale limitations
of Rule 144. Of these shares, a total of 39,407,040 shares have been held for
six months or more and are eligible for resale under Rule 144. Sales by
affiliates will be subject to the volume and other limitations of Rule 144,
including certain restrictions regarding the manner of sale, notice
requirements, and the availability of current public information about the
Company. The volume limitations generally permit an affiliate to sell, within
any three-month period, a number of shares that does not exceed the greater of
1% of the outstanding shares of common stock or the average weekly trading
volume during the 4 calendar weeks preceding his sale. A person who ceases to be
an affiliate at least three months before the sale of restricted securities
beneficially owned for at least six months may sell the restricted securities
under Rule 144 without regard to any of the Rule 144 limitations.
Recent
Sales of Unregistered Securities
We made
the following unregistered sales of its securities from October 1, 2009 through
December 31, 2009.
Date
|
Title
of Security
|
Number
of Shares
|
Amount
|
Consideration
|
Class
of Purchaser
|
||||||||
10/26/2009
|
Common
Stock
|
50,000 | $ | 2,500.00 |
Services
|
Business
Associates
|
|||||||
10/26/2009
|
Common
Stock
|
848,150 | $ | 42,407.50 |
Cash
|
Business
Associates
|
|||||||
10/31/2009
|
Common
Stock
|
2,660,850 | $ | 133,042.50 |
Cash
|
Business
Associates
|
|||||||
11/3/2009
|
Common
Stock
|
29,100 | $ | 1,455.00 |
Services
|
Business
Associates
|
|||||||
11/19/2009
|
Common
Stock
|
307,000 | $ | 15,350.00 |
Services
|
Business
Associates
|
|||||||
11/19/2009
|
Common
Stock
|
1,454,700 | $ | 72,735.00 |
Cash
|
Business
Associates
|
|||||||
11/25/2009
|
Common
Stock
|
1,359,000 | $ | 67,950.00 |
Cash
|
Business
Associates
|
|||||||
11/25/2009
|
Common
Stock
|
105,480 | $ | 5,274.00 |
Services
|
Business
Associates
|
|||||||
11/30/2009
|
Common
Stock
|
2,525,000 | $ | 126,250.00 |
Cash
|
Business
Associates
|
|||||||
12/4/2009
|
Common
Stock
|
610,000 | $ | 30,500.00 |
Cash
|
Business
Associates
|
|||||||
12/4/2009
|
Common
Stock
|
224,460 | $ | 11,223.00 |
Services
|
Business
Associates
|
|||||||
12/7/2009
|
Common
Stock
|
26,000 | $ | 1,300.00 |
Cash
|
Business
Associates
|
|||||||
12/7/2009
|
Common
Stock
|
2,500 | $ | 125.00 |
Services
|
Business
Associates
|
|||||||
12/10/2009
|
Common
Stock
|
224,000 | $ | 11,200.00 |
Cash
|
Business
Associates
|
|||||||
12/10/2009
|
Common
Stock
|
500,000 | $ | 25,000.00 |
Services
|
Business
Associates
|
|||||||
12/11/2009
|
Common
Stock
|
50,000 | $ | 2,500.00 |
Cash
|
Business
Associates
|
|||||||
12/18/2009
|
Common
Stock
|
1,192,860 | $ | 59,643.00 |
Services
|
Business
Associates
|
|||||||
12/22/2009
|
Common
Stock
|
1,130,493 | $ | 56,524.65 |
Cash
|
Business
Associates
|
|||||||
12/22/2009
|
Common
Stock
|
250,000 | $ | 12,500.00 |
Services
|
Business
Associates
|
|||||||
12/30/2009
|
Common
Stock
|
6,163,290 | $ | 308,164.50 |
Cash
|
Business
Associates
|
|||||||
12/30/2009
|
Common
Stock
|
1,744,580 | $ | 87,229.00 |
Services
|
Business
Associates
|
|||||||
12/31/2009
|
Common
Stock
|
1,273,453 | $ | 63,672.65 |
Cash
|
Business
Associates
|
27
Exemption
from Registration Claimed
All of
the sales by the Company of its unregistered securities were made in reliance
upon Section 4(2) of the Securities Act of 1933, as amended. The
entity listed above that purchased the unregistered securities was an existing
shareholder, known to the Company and its management, through pre-existing
business relationships, as a long standing business associates. The entity was
provided access to all material information, which it requested, and all
information necessary to verify such information and was afforded access to the
Company’s management in connection with the purchases. The purchaser
of the unregistered securities acquired such securities for investment and not
with a view toward distribution, acknowledging such intent to the
Company. All certificates or agreements representing such securities
that were issued contained restrictive legends, prohibiting further transfer of
the certificates or agreements representing such securities, without such
securities either being first registered or otherwise exempt
from registration in any further resale or disposition.
Issuer
Purchases of Equity Securities
The
Company did not repurchase any shares of its common stock during the quarter
ended December 31, 2009.
Item 6.
|
Selected
Financial Data
|
Not
applicable.
Item 7.
|
Management’s
Discussion and Analysis of Financial condition and results of
Operations
|
Overview
The
Company is in the business of serving the electric power generation industry by
acquiring and developing nuclear plant sites and obtaining licenses for their
construction and operation through its operating subsidiaries. The
Company’s management has experience in the nuclear industry, power generation,
and facility development. The Company formed Idaho Energy Complex and
Reactor Land as its subsidiaries to manage and finance its business plan to
develop a proposed site in Idaho for a reactor. Reactor Land began operations in
September 2007, with the purpose of acquiring land and water rights, permits and
licenses, development, rights and such other property and services necessary to
develop an energy complex in Idaho including one or more nuclear reactors
(referred to as the “Project”). In October 2009, the Company’s Energy Neutral
division began construction on a model home to demonstrate that a
competitively-priced and energy cost efficient home can be constructed using
renewals. The model home is complete and the Company will soon introduce its
unique energy saving features to a range of potential users. The Company intends
to use this model to market its energy neutral (trademark applied for) packages
and a new energy neutral subdivision in Idaho. We also are introducing
franchises in June 2010 as noted on our website. International Reactors, a 100%
wholly-owned subsidiary of the Company was formed to assist developing countries
with power generation, as well as the production of potable
water. Founded in November 2007 and incorporated in Nevada,
International Reactors seeks to construct commercial nuclear reactors on
oceanfront sites, particularly in Latin America and western-friendly Middle
Eastern countries to co-generate clean energy and desalinate
water. International Reactors believes that advanced nuclear
technology can be used to address electrical energy needs while simultaneously
producing fresh water from ocean intake. The Company is working on an
agreement to produce desalinization reactors in China to market on a worldwide
basis.
28
Plan
of Operations
The
Company estimates that the total cost of the Project will be approximately $81.0
million. The initial $81.0 million is planned to be raised through
the Reactor Land private placement, which shall result in the
investor receiving in the aggregate approximately 10% ownership in the first
reactor unit in the form of common stock. Any shortfall will have to
be funded through such things as debt financing, cost-sharing by contractors and
suppliers, or public offering.
While the
success of the Project does not depend on financial assistance from the
government, management believes that based on the 2005 Energy Policy Act, the
Project may be eligible for an 80% Federal loan guarantee for the construction
of new nuclear facilities, and an applicable Federal tax credit of $1.0 billion
over eight years, which should be sufficient to cover all
operating expenses during that timeframe. Furthermore, the excess
heat from this plant will be used to produce biofuels from local crops and
agricultural waste.
The
intended use of the funds for the Reactor Land project is approximately 8% of
the total shown below:
In millions ($)
|
||||
Payment
to owner for site land
|
5 | |||
Payment
for COLA plus 10% price escalation due to delays
|
50 | |||
Payments
for third party project management and G&A
|
15 | |||
Additional
water rights
|
11 | |||
Total
|
$ | 81.0 |
The
Company intends to have a public offering or obtain financing if the Reactor
Land Development private placement does not raise the entire $81.0 million
listed above. The Company may adjust the budget categories in the
execution of its permitting and development plans. None of the line
items is to be considered fixed or unchangeable.
Although
the Company reserves the right to reallocate the funds according to field
experience, the Company believes that the net proceeds from the planned offering
will be sufficient to fund its initial capital requirements for the next year
for operations. The foregoing assumes the offering will be fully
subscribed, but there can be no assurance the Company will not require
additional funds if unforeseen issues arise. Any additional required
funds over the maximum offering amount will need to be financed as a
loan. The availability and terms of any future financing will depend
on market and other conditions. The amount of proceeds and uses are based upon
the projections by management, which may also change according to unforeseen
future events and market changes. There are no commitments for loans
as of this date.
In the
continuance of the Company’s business operations it does not intend to purchase
or sell any significant assets and the Company does not expect a significant
change in the number of its employees.
In
addition, the United States and the global business community is experiencing
severe instability in the commercial and
investment banking systems which is likely to continue to
have far-reaching effects on the economic activities in the country
for an indeterminable period. The long-term impact on the United
States economy and the Company’s operating activities and its ability to raise
capital cannot be predicted at this time, but could be
substantial.
29
Project
Economics
The
Company believes that if it is able to raise $81.0 million, it may develop a
site licensed for construction of the advanced reactor by the end of 2013. The
Company believes that by acquiring and obtaining the required permits
and approvals for the proposed site now, it will be able to offer a site and an
NRC license 3 to 4 years sooner than
might otherwise be achievable, which will
offer additional value to the Idaho site due to earlier power
generation/revenue potential of the site.
Results
of Operations
Year
Ended December 31, 2009 Compared To Year Ended December 31, 2008
During
the years ended December 31, 2009 and 2008, the Company did not recognize any
revenues from its operational activities. During the year ended
December 31, 2009, the company
incurred operating expenses of $2,383,241 compared to
$3,832,452 during the year ended December 31, 2008. The decrease of
$1,449,211 was a result of a decrease in the operational activities of the
Company over the prior year. During the year
ended December 31, 2009, the company incurred
the following changes in our operational
expenses over the prior year.
DECEMBER 31,
|
DECEMBER 31,
|
INCREASE OR
|
||||||||||
2009
|
2008
|
(DECREASE)
|
||||||||||
Consulting
services
|
$ | 567,763 | $ | 862,517 | $ | (294,754 | ) | |||||
Marketing
services
|
$ | 50,712 | $ | 105,425 | $ | (54,713 | ) | |||||
Public
relations
|
$ | 133,340 | $ | 64,011 | $ | 69,329 | ||||||
Legal
fees
|
$ | 101,178 | $ | 58,309 | $ | 42,869 | ||||||
Board
and Officer Services
|
$ | 922,500 | $ | 2,001,000 | $ | (1,078,500 | ) |
During
the year ended December 31, 2009, the Company recognized a net loss of
$2,377,568 compared to a net loss of $3,820,601 in the year
ended December 31, 2008. The decrease of $1,443,033
in net losses was a result of the $1,449,211 decrease in
operational expenses. The Company’s basic and diluted loss
per share was $0.02 in 2009 versus a basic and diluted loss per share of $0.06
in 2008.
Liquidity
At
December 31, 2009, the Company had cash and cash equivalents of $597,577 and
total current assets of $708,797 and current liabilities of $5,472, and current
assets exceed current liabilities by $703,325.
Net cash
used in operating activities during the year ended December 31, 2009 was
$975,267 compared to net cash used in operating activities during the year ended
December 31, 2008 of $1,263,267.
During
the year ended December 31, 2009, the net cash used by operations
represented $2,434,158 adjusted for certain non-cash items consisting of
stock for services and for a
contract option fee totaling $1,458,891. During the year ended December
31, 2008, the net cash used by operations represented $3,850,825, adjusted
certain non-cash items consisting of stock issued for services of
$2,587,558.
During
the years ended December 31, 2009 and 2008, the Company did not receive or use
cash in its investing activities.
30
During
the year ended December 31, 2009, the Company received $1,460,325 from its
financing activities. During the year ended December 31, 2008, the
Company received $1,106,355 from its financing activities.
During
the year ended December 31, 2009, the Company received cash of $1,460,325 from
the sale of 29,180,536 shares of its restricted common stock. During
the year ended December 31, 2008, the Company received $1,106,355 from the sale
of 10,709,717 shares of its restricted common stock.
During
the year ended December 31, 2009, the Company issued 28,282,532
shares of its restricted common stock in exchange for services of 1,433,891.
During 2009, The Company issued 500,000 shares of its restricted common stock
value at $25,000 for a contract option fee. Of such shares,
18,450,000 shares were issued to officers and directors for services of $
$922,500.
During
the year ended December 31, 2008, the Company issued 24,762,049 shares of its
restricted common stock in exchange for services of $2,587,558. Of
such shares, 19,750,000 shares were issued to officers and directors for
services of $1,975,000.
At
December 31, 2009, the Company had a $100,000 deposit held in the escrow with
Perkins Coie to fund a potential joint venture project to
develop and manufacture a hybrid engine in China.
At December 31, 2008, the Company
had a $55,000 deposit with Cobblestone
Financial Group and Silver Leaf Companies for
potential future financing and funding.
Going
Concern
Alternate
Energy Holdings, Inc’s financial statements have been presented on the basis
that it is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The
Company has an accumulated deficit of $11,087,772 at December 31,
2009.
The
Company’s continued existence is dependent upon its ability to raise capital or
to successfully market and sell its products. The financial
statements do not include any adjustments that might be necessary should the
Company be unable to continue as a going concern.
Critical
Accounting Policies
The
Company has identified the policies below as critical to the Company business
operations and the understanding of the Company results from
operations. The impact and any associated risks related to these
policies on the Company’s business operations is discussed throughout
Management’s Discussion and Analysis of Financial Conditions and Results of
Operations where such policies affect the Company’s reported and expected
financial results. For a detailed discussion on the application of
these and other accounting policies, see Note 1 in the Notes to the Consolidated
Financial Statements beginning on page F-6 for the years ended December 31, 2009
and 2008. Note that the Company’s preparation of this document requires the
Company to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the Company’s financial statements, and the reported amounts of expenses
during the reporting periods.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect reported amounts of assets, liabilities,
revenues and expenses and the and disclosures of contingent assets and
liabilities. Accordingly, actual results could differ from those estimates. It
is management’s opinion that all adjustments necessary for the fair statement of
the results for the interim period have been made. All adjustments are of normal
recurring nature or a description of the nature and amount of any adjustments
other than normal recurring adjustments.
31
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents. Cash equivalents are
stated at cost, which approximates fair value. The Federal Deposit Insurance
Corporation insures up to $250,000 balances at December 31, 2009 and
2008. The uninsured balances at December 31, 2009 and 2008 were
$347,577 and $0, respectively.
Stock-Based
Compensation
The
Company’s non-employees, share-based expense is recorded in accordance with FASB
ASC 505-50 (Prior authoritative with Emerging Issues Task Force No. 96-18,
“Accounting for Equity Instruments That are Issued to Other than Employees for
Acquisition, or in Conjunction with Selling, Goods or Services.”) The
Company has not issued any stock options or stock warrants since its inception
through December 31, 2009.
Recently-Issued
Accounting Pronouncements
The
Company does not expect the adoption of any recently issued accounting
pronouncements to have a significant impact on their financial position, results
of operations, or cash flow.
Item
7A. Quantitative and Qualitative Disclosures about Market Risk
The
Company’s operations do not employ financial instruments or derivatives which
are market sensitive. Short term funds are held in non-interest bearing accounts
and funds held for longer periods are placed in interest bearing
accounts. Large amounts of funds, if available, will be distributed
among multiple financial institutions to reduce risk of loss. Our cash holdings
do not generate interest income.
Item 8.
|
Financial
Statements and Supplementary Data
|
The
Audited Financial Statements that constitute Item 8 are attached at the end of
this Annual Report from page F2 to F12. An Index to the Financial
Statements is also included on page F-1 of this Annual Report.
Item 9.
|
Changes
In and Disagreements with Accountants on Accounting and Financial
Disclosure
|
On
October 1, 2009, the Company received notice that its
current auditors, Rotenberg and
Co., LLP, had resigned in
connection with their merger with EFP
Group. The Company has engaged the new firm resulting from the
merger, EFP Rotenberg, LLP, to continue as the Company's independent registered
public accounting firm. The Company reported the event in a Form 8-K
filed on October 15, 2009, which is incorporated herein by reference as an
exhibit.
Item
9A. Controls And Procedures
Management’s
Annual Report on Internal Control over Financial Reporting
The
Company maintains a system of disclosure controls and
procedures that are designed for the purposes of ensuring that
information required to be disclosed in our SEC reports is
recorded, processed, summarized, and reported within the
time periods specified in the SEC rules and forms, and that such
information is accumulated and communicated to our
management, including the Chief Executive Officer as appropriate to
allow timely decisions regarding required disclosure.
32
Management, after evaluating the effectiveness of
the Company’s disclosure
controls and procedures as defined
in Exchange Act Rules 13a-14(c) as
of December 31, 2009
(the “Evaluation Date”) concluded that as of
the Evaluation Date, the Company’s disclosure controls and procedures
were effective to ensure that material information relating to the Company would
be made known to them by individuals within those
entities, particularly during the period in which this annual report
was being prepared and that information required to be
disclosed in our SEC reports is
recorded, processed, summarized, and reported within the
time periods specified in the SEC’s rules and forms.
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our
internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. Our internal control
over financial reporting includes those policies and procedures
that:
(1)
|
pertain
to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of our
assets;
|
(2)
|
provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with
generally accepted accounting principles, and that our receipts and
expenditures are being made only in accordance with authorizations of our
management and directors; and
|
(3)
|
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of our assets that
could have a material effect on our financial
statements.
|
Management’s
assessment of the effectiveness of the registrant’s internal control over
financial reporting is as of the year ended December 31, 2009. We believe that
internal control over financial reporting is effective. We have not identified
any, current material weaknesses considering the nature and extent of our
current operations and any risks or errors in financial reporting under current
operations.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company
to provide only management’s report in this annual report.
There was
no change in our internal control over financial reporting that occurred during
the fiscal quarter ended December 31, 2009, that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
Item
9B. Other Information
Not
applicable.
33
PART
III
Item
10. Directors, Executive Officers and Corporate
Governance
The
following table sets forth information as to persons who currently serve as the
Company directors or executive officers, including their ages, as of March 26,
2010.
NAME
|
AGE
|
POSITION
|
||
Donald
Gillispie
|
66
|
President,
Chief Executive Officer, Chief Operating Officer and
Chairman
|
||
Gregory
E. Kane
|
67
|
Vice
President and Director
|
||
John
Franz
|
71
|
Vice
President and Director
|
||
Rick
J. Bucci
|
43
|
Vice
President and Chief Financial Officer
|
||
Jennifer
Ransom
|
35
|
Senior
Vice President and Secretary
|
||
Leon
Eliason
|
69
|
Director
|
||
Kenneth
A. Strahm Sr.
|
72
|
Director
|
||
Ralph
Beedle
|
70
|
Director
|
||
Mike
Sellman(1)
|
62
|
Director
|
(1) Mr.
Mike Sellman was appointed as director by the board of directors on May 28,
2009.
The
Company’s officers are elected by the board of directors at the first meeting
after each annual meeting of the Company’s shareholders and hold office until
their successors are duly elected and qualified under the Company’s
bylaws.
The
directors named above will serve until the next annual meeting of the Company’s
stockholders. Thereafter, directors will be elected for one-year
terms at the annual stockholders’ meeting. Officers will hold their positions at
the pleasure of the board of directors absent any employment
agreement. There is no arrangement or understanding between the
directors and officers of the Company and any other person pursuant to which any
director or officer was or is to be selected as a director or officer. The
directors of the Company devote part-time to the business affairs and the
officers devote full-time to the business.
Biographical
Information
Donald
Gillispie, President, Chief Executive Officer, Chief Operating Officer and
Chairman
A past
nuclear utility senior executive and current Chairman, Mr. Gillispie has served
as President and Chief Executive Officer of the Company since
inception. Mr. Gillispie has been the owner of Grace Glens Consulting
since 2002, a technical management consulting company, which advises senior
utility executives on managing commercial nuclear power companies, and other
non-nuclear organizations. Mr. Gillispie helped start up a
technical management consulting business, INPO, in
Atlanta, Georgia and a nuclear operating company, NMC, in
Hudson, Wisconsin, which operated six nuclear power plants, with approximately
5,000 employees. Mr. Gillispie served as a director for Boston
Edison. Mr. Gillispie has a Bachelor of Science
in Electrical Engineering from Clemson University. He
completed the Senior Executive Program at the Massachusetts Institute of
Technology. In addition, Mr. Gillispie completed the Navy
Nuclear program.
Greg
Kane, Vice President and Director
A past
nuclear plant manager, Mr. Kane has served as Vice President and Board member of
the Company since September 2006. Mr. Kane is the President of Eagle
“I” Nuclear Assistance, a consulting firm that has provided management
consulting to over 25 nuclear programs. Mr. Kane has held that
position since 1998. Mr. Kane was previously the General Manager at
Virginia Power’s twin unit PWR North Anna Nuclear Plant, where he was
responsible for safe operation and budgeting of the station in the all aspects
of operations. Mr. Kane has completed the Navy Nuclear Program.
34
John
Franz, Vice President and Director
John
Franz, a past Vice President of Duane Arnold, a nuclear facility, has served on
the board of the Company since February 2007. Since leaving the
nuclear facility, he has worked as a consultant for 12 nuclear power plants and
2 consulting firms. Mr. Franz has 36 years of experience in the
licensing, development, operation and management of nuclear power
plants. Mr. Franz received his Bachelor of Science degree in
Mechanical Engineering from Drexel University.
Rick
J. Bucci, Chief Financial Officer
Mr.
Bucci, a certified public Accountant, has served as Chief Financial Officer of
the Company since September 2007. Mr. Bucci has 21 years of
experience in the field of accounting and tax in various industries such as
hospitality, construction, real estate development and
banking. Additionally, he served as CFO of two corporations, Veterans
Outreach Center and Finger Lakes Family Care, Inc. His experience includes tax
planning and preparation, audit services, financial statement preparation and
presentation, bank financing and various consulting engagements. Mr.
Bucci currently owns and operates a Certified Public Accounting firm, Rick J.
Bucci, CPA, which is licensed to practice public accounting in New York State
and has over 350 clients. He attended the State University of New
York at Geneseo (1984 through 1988).
Jennifer
Ransom, Senior Vice President of Administration and Corporate
Secretary
Ms.
Ransom became Vice President of Administration and Corporate Secretary in May
2008. Ms. Ransom is responsible for all administration, human resources and
accounting, and restricted stock sales. Ms. Ransom has 15 years of
experience in insurance, management and related fields. She is the founder and
owner of Ransom Insurance. Prior to starting Ransom Insurance, she
worked as regional sales executive and a senior underwriter for Amica
Insurance. Ms. Ransom received a B.A. degree in Business Management
in 1998 from Glendale University.
Leon
Eliason, Director
A past
President of two nuclear utility business units, NSP and PSE&G, and former
Chairman of the Company, Mr.Eliason has served on the Board of the Company since
September 2006. Mr. Eliason is a professional in the utilities field, with 33
years of experience in operations, maintenance, engineering, and management of
Nuclear, Fossil, Solar, and Hydro Power Plants. He served as
President of the Nuclear Business Unit and Chief Nuclear Officer for Public
Service Electric and Gas, Newark New Jersey, where he was responsible
for all operational and support activities including fuel, technical support,
business planning, and financial support for two generating
stations. Mr. Eliason has a Bachelor of Science degree in Mechanical
Engineering from the South Dakota School of Mines and Technology.
Kenneth
A. Strahm, Sr., Director
Mr.
Strahm, a past president of the nuclear industry watchdog organization INPO, has
served on the Board of the Company since September 2006. Mr. Strahm
was employed by the Institute of Nuclear Power Operations (INPO) in Atlanta,
Georgia, where he served as the Director of the National Academy for
Nuclear Training and later as President of the
Institute. Mr. Strahm attended the Naval Academy where he received a
BS in Marine Engineering. He also attended the Naval Post Graduate School and
obtained an MBA.
35
Ralph
Beedle, Director
Mr.
Beedle, a past Senior Vice President of the Nuclear Energy Institute, has served
on the Board of the Company since inception. Mr. Beedle was the
Senior Vice President and Chief Nuclear Officer of the Nuclear Energy Institute,
where (in addition to his operational management duties) he interacted regularly
with the U. S. Nuclear Regulatory Commission and other federal agencies, as well
as members of Congress. Mr. Beedle attended the US Naval Academy and
obtained a BS in Marine Engineering.
Mike
Sellman, Director
Mr.
Sellman has served on the Board of the Company since May 28,
2009. Mr. Sellman began his career designing reactor cores for
Admiral Rickover’s Nuclear Navy and then moved to commercial nuclear
power. He progressed from plant manager at Prairie Island Nuclear
Plant to General Manager or Site VP at ANO, River Bend and Waterford Nuclear
Stations, President of Maine Yankee Power the Company, Chief Nuclear Officer of
Wisconsin Electric the Company and finally President and CEO of the
Nuclear Management, which operated eight nuclear stations in the
mid-west. He has served on the boards of all of the nuclear
industries key organizations; Institute of Nuclear Power Operations, Nuclear
Energy Institute and American Nuclear Society among others. He also
consults internationally and to Idaho National Laboratory.
Code
of Ethics
The
Company has adopted a Code of Ethics that applies to all of its directors,
officers and employees. The Code of Ethics is filed as an exhibit to this Form
10-K. The Company will provide to any person without charge, upon
request to the Company at its office, a copy of the Code of Ethics. Any waiver
of the provisions of the Code of Ethics for executive officers and directors may
be made only by the Audit Committee and, in the case of a waiver for members of
the Audit Committee, by the Board of Directors. Any such waivers will
be promptly disclosed to our shareholders.
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) of the Exchange Act requires a reporting company’s executive officers,
directors and persons who own more than 10% of a registered class of the
company’s equity securities (“Reporting Person”) to report ownership and changes
in ownership with the SEC on Form 3, 4 and 5.
Based
solely upon a review of Forms 3 and 4 and amendments thereto furnished to the
Company during the fiscal year ended December 31, 2009, and Forms 5 and
amendments thereto furnished to the Company with respect to the fiscal year
ended December 31, 2009, the Company has determined that the following Reporting
Persons have failed to comply with the Section 16(a) of the Exchange Act on a
timely basis.
Donald
Gillipsie, president, Chief Executive Officer, Chief Operating Officer and
Chairman of the Company, did not file a Form 5 on the timely-basis, with respect
to the common shares awarded to him as compensation, and shares distributed to
his ex-spouse from a jointly owned account, in the fiscal year ended December
31, 2009.
Gregory
E. Kane, Vice President and Director of the Company, did not file a form 5 on a
timely-basis, with respect to the common shares awarded to him in the fiscal
year ended December 31, 2009.
36
John
Franz, Vice President and Director of the Company, did not file a form 5 on a
timely-basis, with respect to the common shares awarded to him in the fiscal
year ended December 31, 2009.
Rick J.
Bucci, Vice President and Chief Financial Officer of the company, did not file a
form 5 on a timely-basis, with respect to the common shares awarded to him as
compensation in the fiscal year ended December 31, 2009.
Jennifer
Ransom, Senior Vice President and Secretary, did not file a form 5 on a
timely-basis, with respect to the common shares awarded to him as compensation
in the fiscal year ended December 31, 2009.
Leon
Eliason, Director of the Company, did not file a form 5 on a timely-basis, with
respect to the common shares awarded to him as compensation in the fiscal year
ended December 31, 2009.
Kenneth
A. Strahm Sr., Director of the Company, did not file a form 5 on a timely-basis,
with respect to the common shares awarded to him as compensation in the fiscal
year ended December 31, 2009.
Ralph
Beedle, Director of the Company, did not file a form 5 on a timely-basis, with
respect to the common shares awarded to him as compensation in the fiscal year
ended December 31, 2009.
Mike
Sellman, Director of the company, did not file a form 3 when he initially became
a Reporting Person of the Company.
Committees
of the Board of Directors
The
Company is managed under the direction of its board of directors.
Executive
Committee
Members
of the Company’s Executive Committee are Donald Gillispie (Co-Chairman), Leon
Eliason (Co-Chairman), Kenneth A. Strahm, Sr. and Ralph Beedle.
Audit
Committee
The
Company formed an audit committee in March 2007. Members of the Audit
Committee are Ralph Beedle (Chairman), Gregory E. Kane and John
Franz. The audit committee is comprised solely of directors who are
independent and financially literate, as required by the Securities Exchange Act
of 1934. At least one member of the committee has
accounting or related financial management expertise.
Previous
“Blank Check” or “Shell” Involvement
Management
of the Company has not been involved in prior private “blank-check” or “shell”
companies.
Conflicts
of Interest – General
Certain
of the officers and directors of the Company may be directors and/or principal
shareholders of other companies and, therefore, could face conflicts of interest
with respect to potential acquisitions. In addition, officers and
directors of the Company may in the future participate in business ventures,
which could be deemed to compete directly with the Company. Additional conflicts
of interest and non-arms length transactions may also arise in the future in the
event the Company’s officers or directors are involved in the management of any
firm with which the Company transacts business. The Company’s Board of Directors
has adopted a policy that the Company will not seek a merger with, or
acquisition of, any entity in which management serve as officers or directors,
or in which they or their family members own or hold a controlling ownership
interest. Although the Board of Directors could elect to change this policy, the
Board of Directors has no present intention to do so. In addition, if
the Company and other companies with which the Company’s officers and directors
are affiliated both desire to take advantage of a potential business
opportunity, then the Board of Directors has agreed that said opportunity should
be available to each such company in the order in which such companies
registered or became current in the filing of annual reports under the Exchange
Act subsequent to January 1, 1997.
37
The
Company’s officers and directors may actively negotiate or otherwise consent to
the purchase of a portion of their common stock as a condition to, or in
connection with, a proposed merger or acquisition transaction. It is anticipated
that a substantial premium over the initial cost of such
shares may be paid by the purchaser in conjunction with any sale of
shares by the Company’s officers and directors which is made as a condition to,
or in connection with, a proposed merger or
acquisition transaction. The fact that a
substantial premium may be paid to the Company’s officers
and directors to acquire their shares creates a potential conflict of
interest for them in satisfying their fiduciary duties to the Company and its
other shareholders. Even though such a sale could result in a
substantial profit to them, they would be legally required to make
the decision based upon the best interests of the Company
and the Company’s other shareholders, rather than their own personal pecuniary
benefit.
Item
11. Executive Compensation
The
following table sets forth the compensation (including salary, bonus, and
certain other compensation) paid to the officers during the fiscal years ended
December 31, 2009 and 2008.
Summary
Executives Compensation Table
|
||||||||||||||||||||||||||||||||||
Year
|
Salary
($)
|
Bonus
($)
|
Stock
awards
($)
|
Option
awards
($)
|
Non-equity
incentive plan
compensa-tion
($)
|
Nonqualified
deferred
compensation
earnings
($)
|
All
other
compensation
($)
|
Total
($)
|
||||||||||||||||||||||||||
Donald
Gillispie,
President
CEO, COO and
Director
|
2009
|
$ | 0 | $ | 0 | $ | 500,000 | $ | 0 | $ | 0 | $ | 0 | $ | 133,000 | $ | 633,000 | |||||||||||||||||
2008
|
|
$ | 0 | $ | 0 | $ | 750,000 | $ | 0 | $ | 0 | $ | 0 | $ | 120,000 | $ | 870,000 | |||||||||||||||||
Rick
J. Bucci,
Vice
President and
Chief
Financial Officer
|
2009
|
$ | 0 | $ | 0 | $ | 100,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 100,000 | |||||||||||||||||
2008
|
$ | 0 | $ | 0 | $ | 350,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 350,000 | ||||||||||||||||||
Jennifer
Ransom,
Senior
Vice President
and
Secretary
|
2009
|
$ | 0 | $ | 0 | $ | 150,000 | $ | 0 | $ | 0 | $ | 0 | $ | 130,000 | $ | 280,000 | |||||||||||||||||
2008
|
$ | 0 | $ | 0 | $ | 575,000 | $ | 0 | $ | 0 | $ | 0 | $ | 60,000 | $ | 635,000 |
38
(1)
|
During
the year ended December 31, 2008, Mr.Gillispie received 7,500,000 shares
of common stock valued at $0.10 per share as compensation for his
services; and $120,000 of other compensation consisted of expense
allotment for travel, auto, Idaho living expenses,
entertainment. During the year ended December 31, 2009,
Mr.Gillispie received 10,000,000 shares of common stock valued at $0.05
per share as compensation for his services; and $133,000 of
other compensation consisted of expense allotment
for travel, auto, Idaho living expenses,
entertainment.
|
(2)
|
During
the year ended December 31, 2008, Mr. Bucci received 3,500,000 shares of
common stock valued at $0.10 per share as compensation for his
services. During the year ended December 31, 2009, Mr. Bucci
received 2,000,000 shares of common stock valued at $0.05 per share as
compensation for his services.
|
(3)
|
During
the year ended December 31, 2008, Ms. Ransom received 5,750,000 shares of
common stock valued at $0.10 per share as compensation for her services;
and $60,000 of other compensation consisted of expense allotment, travel,
auto and entertainment. During the year ended December 31,
2009, Ms. Ransom received 3,000,000 shares of common stock valued at $0.05
per share as compensation for her services; and $130,000 of other
compensation consisted of expense allotment, travel, auto and
entertainment.
|
Option/SAR
Grants in the Last Fiscal Year
The
Company does not have a stock option plan as of the date of this annual
report. There was no grant of stock options to the Chief Executive
Officer and other named executive officers during the fiscal years ended
December 31, 2009, 2008 and 2007.
Employment
Agreements and Termination of Employment and Change-In-Control
Arrangements
None of
the Company’s officers, directors, advisors, or key employees is currently party
to employment agreements with the Company. The Company has no pension, health,
annuity, bonus, insurance, stock options, profit sharing or similar benefit
plans; however, the Company may adopt such plans in the future. There
are presently no personal benefits available for directors, officers, or
employees of the Company.
Compensation
Committee Interlocks and Insider Participation
The
Company’s board of directors acts in its entirety as the compensation committee
for the Company. Mr. Gillispie is the Chief Executive Officer and
Chairman of the Company.
39
Director
Compensation
The
Company does not pay any directors fees for meeting attendance. An
Audit Committee has been established; however no compensation has been paid for
this function to date.
The
following table sets forth certain information concerning compensation paid to
the Company’s directors during the year ended December 31, 2009:
Name
|
Fees
earned or paid in cash
($)
|
Stock
awards
($)
|
Option
awards
($)
|
Non-equity
incentive plan
compensation
($)
|
Nonqualified
deferred
compensation
earnings
($)
|
All
other compensation
($)
|
Total
($)
|
|||||||||||||||||||||
John
Franz
|
$ | 0 | $ | 47,500 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 47,500 | ||||||||||||||
Kenneth
Strahm
|
$ | 0 | $ | 25,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 25,000 | ||||||||||||||
Ralph
Beedle
|
$ | 0 | $ | 25,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 25,000 | ||||||||||||||
Gregory
Kane
|
$ | 0 | $ | 25,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 25,000 | ||||||||||||||
Leon
Eliason
|
$ | 0 | $ | 25,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 25,000 | ||||||||||||||
Mike
Sellman
|
$ | 0 | $ | 25,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 25,000 |
(1)
|
During
the year ended December 31, 2009, the above directors received shares of
the Company’s common stock valued at $0.05 per share for their services as
directors.
|
Limitation
on Liability and Indemnification
The
Company is a Nevada corporation. The Nevada Revised Statutes (NRS)
provides that the articles of incorporation of a Nevada corporation may contain
a provision eliminating or limiting the personal liability of a director to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except that any such provision may not eliminate or limit
the liability of a director (i) for any breach of the director’s duty of loyalty
to the corporation or its shareholders, (ii) acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
acts specified in Section 78 (concerning unlawful distributions), or (iv) any
transaction from which a director directly or indirectly derived an improper
personal benefit. The Company’s articles of incorporation contain a provision
eliminating the personal liability of directors to the Company or the Company
shareholders for monetary damages to the fullest extent provided by the
NRS.
The NRS
provides that a Nevada corporation must indemnify a person who was wholly
successful, on the merits or otherwise, in defense of any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal (a
“Proceeding”), in which he or she was a party because the person is or was a
director, against reasonable expenses incurred by him or her in connection with
the Proceeding, unless such indemnity is limited by the corporation’s articles
of incorporation. The Company’s articles of incorporation do not contain any
such limitation.
40
The NRS
provides that a Nevada corporation may indemnify a person made a party to a
Proceeding because the person is or was a director against any obligation
incurred with respect to a Proceeding to pay a judgment, settlement, penalty,
fine (including an excise tax assessed with respect to an employee benefit plan)
or reasonable expenses incurred in the Proceeding if the person conducted
himself or herself in good faith and the person reasonably believed, in the case
of conduct in an official capacity with the corporation, that the person’s
conduct was in the corporation’s best interests and, in all other cases, his or
her conduct was at least not opposed to the corporation’s best interests and,
with respect to any criminal proceedings, the person had no reasonable cause to
believe that his or her conduct was unlawful. The Company’s articles
of incorporation and bylaws allow for such indemnification. A corporation may
not indemnify a director in connection with any Proceeding by or in the right of
the corporation in which the director was adjudged liable to the corporation or,
in connection with any other Proceeding charging that the director derived an
improper personal benefit, whether or not involving actions in an official
capacity, in which Proceeding the director was judged liable on the basis that
he or she derived an improper personal benefit. Any indemnification permitted in
connection with a Proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with such Proceeding.
The NRS,
unless otherwise provided in the articles of incorporation, a Nevada corporation
may indemnify an officer, employee, fiduciary, or agent of the corporation to
the same extent as a director and may indemnify such a person who is not a
director to a greater extent, if not inconsistent with public policy and if
provided for by its bylaws, general or specific action of its board of directors
or shareholders, or contract. The Company’s articles of incorporation
provide for indemnification of directors, officers, employees, fiduciaries and
agents of the Company to the full extent permitted by Nevada law.
The
Company’s articles of incorporation also provide that the Company may purchase
and maintain insurance on behalf of any person who is or was a director or
officer of the Company or who is or was serving at the request of the Company as
a director, officer or agent of another enterprise against any liability
asserted against him or her and incurred by him or her in any such capacity or
arising out of his or her status as such, whether or not the Company would have
the power to indemnify him or her against such liability.
Equity
Compensation Plan Information
The
Company has not established an equity compensation plan or Incentive Stock
Option Plan.
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
The
following table sets forth information with respect to the beneficial ownership
of the Company outstanding common stock by:
|
•
|
each
person who is known by the Company to be the beneficial owner of 5% or
more of the Company’s common stock;
|
|
•
|
The
Company’s chief executive officer, its other executive
officers, and each director as identified in the “Management
Executive Compensation” section;
and
|
|
•
|
all
of the Company’s directors and executive officers as a
group.
|
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. Shares of common stock and options, warrants and
convertible securities that are currently exercisable or convertible within 60
days of the date of this document into shares of the Company’s common stock are
deemed to be outstanding and to be beneficially owned by the person holding the
options, warrants or convertible securities for the purpose of computing the
percentage ownership of the person, but are not treated as outstanding for the
purpose of computing the percentage ownership of any other
person.
41
The
information below is based on the number of shares of the Company’s common stock
that the Company believes was beneficially owned by each person or entity as of
March 31, 2010.
Name and Address of Beneficial Owner(1)
|
Number of Common Stock
Beneficially Owned(2)
|
Percent of Class
Beneficially Owned
|
||||||
Donald
Gillispie, President, CEO, COO and
Director
|
39,600,000 | 15.70 | % | |||||
Gregory
E. Kane, Vice President and Director
|
2,500,000 | 1.00 | % | |||||
John
Franz, Vice President and Director
|
3,080,000 | 1.22 | % | |||||
Rick J. Bucci, Vice
President and Chief Financial Officer(3)
|
13,004,726 | 5.15 | % | |||||
Jennifer
Ransom, Senior Vice President and Secretary
|
17,000,000 | 6.74 | % | |||||
Leon
Eliason, Director
|
2,500,000 | 1.00 | % | |||||
Kenneth
A. Strahm, Sr., Director
|
2,500,000 | 1.00 | % | |||||
Ralph
Beedle, Director
|
2,500,000 | 1.00 | % | |||||
Mike
Sellman
|
1,500,000 | 0.60 | % | |||||
All
directors and executive officers as a group (9 persons)
|
84,184,726 | 33.36 | % |
(1)
|
Except
as noted above the business address for all listed individuals or entities
is 911 E. Winding Creek Dr., Suite 150, Eagle, ID
83616.
|
(2)
|
On
March 31, 2010, the Company had 247,638,326 shares
of its common stock available for issuance and 252,361,674 shares
outstanding.
|
(3)
|
13,000,000
Shares held directly; 4,726 held indirectly through
spouse.
|
Rule
13d-3 under the Securities Exchange Act of 1934 governs the determination of
beneficial ownership of securities. That rule provides that a
beneficial owner of a security includes any person who directly or indirectly
has or shares voting power and/or investment power with respect to such
security. Rule 13d-3 also provides that a beneficial owner of a
security includes any person who has the right to acquire beneficial ownership
of such security within 60 days, including through the exercise of any option,
warrant or conversion of a security. Any securities not outstanding
which are subject to such options, warrants or conversion privileges are deemed
to be outstanding for the purpose of computing the percentage of outstanding
securities of the class owned by such person. Those securities are
not deemed to be outstanding for the purpose of computing the percentage of the
class owned by any other person. Included in this table are only
those derivative securities with exercise prices that the Company believes have
a reasonable likelihood of being “in the money” within the next 60
days.
42
Item
13. Certain Relationships and Related Transactions
Not
Applicable.
Item
14. Principal Accounting Fees and Services
EFP
Rotenberg, LLP is the Company’s principal auditing accountant firm. The
Company’s Board of Directors has considered whether the provisions of audit
services are compatible with maintaining Rotenberg’s independence.
The
following table represents aggregate fees billed to the Company for the years
ended December 31, 2009 by EFP Rotenberg, LLP and December 31, 2008 by
Rotenberg, CPA’s, respectively.
Year Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Audit
Fees
|
$ | 24,300 | $ | 26,000 | ||||
Audit-related
Fees
|
$ | 0 | $ | 0 | ||||
Tax
Fees
|
$ | 0 | $ | 0 | ||||
All
Other Fees
|
$ | 0 | $ | 0 | ||||
Total
Fees
|
$ | $24,300 | $ | 26,000 | ||||
All
audit work was performed by the auditors’ full-time
employees.
|
PART
IV
Item
15. Exhibits, Financial Statement Schedules
The
following is a complete list of exhibits filed as part of this Form
10K. Exhibit number corresponds to the numbers in the Exhibit table
of Item 601 of Regulation S-K.
(a) Audited
financial statements for years ended December 31, 2009 and 2008, and the period
from inception up to December 31, 2009, attached hereto from F-1 to
F-12.
(b)
EXHIBIT NO.
|
DESCRIPTION
|
|
3.1
|
Articles
of Incorporation of CorpTran Support, Inc. - 7/31/01 (1)
|
|
3.2
|
Certificate
of Amendment - CorpTran Support, Inc. - 10/13/04(Stock amount changed to
75,000,000 @ $.001) (1)
|
|
3.3
|
Certificate
of Amendment - Name change to dRx, Inc. - 12/15/04 (1)
|
|
3.4
|
Certificate
of Amendment - Name change to Nussentials Holding, Inc. - 6/24/05 (1)
|
|
3.5
|
Certificate
of Amendment - Name change to Alternate Energy Holdings, Inc. - 9/13/06
(1)
|
|
3.6
|
Certificate
of Amendment - Alternate Energy Holdings, Inc. - 8/19/08 (Stock amount
changed to 150,000,000 @ $.001) (1)
|
|
3.7
|
Bylaws
of CorpTran Support, Inc. (1)
|
43
10.1
|
Land
Purchase Agreement (1)
|
|
10.2
|
Construction
Loan Letter (1)
|
|
10.3
|
Agreement
to cooperate in the development of Joint
Venture Agreement with the Nuclear Power Institute of China. -12/12/09
(2)
|
|
14.1
|
Code
of Ethics
|
|
16
|
Changes
in Registrant's Certifying Accountant – 10/01/09 (3)
|
|
21.1
|
List
of Subsidiaries
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act
|
|
32.1
|
Certification
of Principal Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act
|
|
32.2
|
|
Certification
of Principal Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act
|
(1)
|
Incorporated
by reference from the exhibits included in the Company’s Form
10-12(g) filed with
the Securities and Exchange Commission (www.sec.gov), dated
October 1, 2008. A copy can be provided by
mail, free of charge, by sending a written request
to Alternate Energy Holdings, Inc., 911
E. Winding Creek Dr., Suite 150, Eagle, ID
83616.
|
(2)
|
Incorporated
by reference from the exhibits included in the Company’s Form
8-K filed with
the Securities and Exchange Commission (www.sec.gov), dated
December 17, 2009. A copy can be provided by mail, free of
charge, by sending a written request to
Alternate Energy Holdings, Inc., 911 E.
Winding Creek Dr., Suite 150, Eagle, ID
83616.
|
(3)
|
Incorporated
by reference from the exhibits included in the Company’s Form
8-K filed with
the Securities and Exchange Commission (www.sec.gov), dated
October 10, 2009. A copy can be provided by mail, free of
charge, by sending a written request to
Alternate Energy Holdings, Inc., 911 E.
Winding Creek Dr., Suite 150, Eagle, ID
83616.
|
44
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Alternate
Energy Holdings, Inc.
|
||||
By:
|
/s/ Donald
L. Gillispie
|
Dated:
March 31, 2010
|
||
Donald
L. Gillispie
|
||||
President, Chief
Executive Officer and Director
|
||||
(principal
executive officer)
|
||||
By:
|
/s/ Rick
J. Bucci
|
|
Dated:
March 31, 2010
|
|
Rick
J. Bucci
|
||||
Vice-President
and Chief Financial Officer
|
||||
(principal
executive officer)
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
/s/ Donald
L. Gillispie
|
Dated:
March 31, 2010
|
||
Donald
L. Gillispie, President, CEO, COO and Director
|
|||
/s/ Gregory E. Kane
|
Dated:
March 31, 2010
|
||
Gregory
E. Kane, Vice President and Director
|
|||
/s/ John Franz
|
Dated:
March 31, 2010
|
||
John
Franz, Vice President and Director
|
|||
/s/ Leon Eliason
|
Dated:
March 31, 2010
|
||
Leon
Eliason, Director
|
|||
/s/ Kenneth A. Strahm, Sr.
|
Dated:
March 31, 2010
|
||
Kenneth
A. Strahm, Sr., Director
|
|||
/s/ Ralph Beedle
|
Dated:
March 31, 2010
|
||
Ralph
Beedle, Director
|
|||
/s/ Mike Sellman
|
Dated:
March 31, 2010
|
||
Mike
Sellman, Director
|
|
45
Alternate Energy Holdings,
Inc.
Index to Consolidated Financial
Statements
—INDEX—
Page(s)
|
||
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|
Consolidated
Financial Statements:
|
||
Balance
Sheets
|
||
December
31, 2009 and 2008
|
F-3
|
|
Income
Statements
|
||
Years
ended December 31, 2009 and 2008, and
the
period from inception (August 29, 2005) through December 31,
2009
|
F-4
|
|
Statements
of Changes in Stockholders’ Equity
|
||
The
period from inception (August 29, 2005) through December 31,
2009
|
F-5
– F-6
|
|
Statements
of Cash Flows
|
||
Years
ended December 31, 2009 and 2008, and
the
period from inception (August 29, 2005) through December 31,
2009
|
F-7
|
|
Notes
to Consolidated Financial Statements
|
|
F-8
– F-12
|
F-1
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and
Stockholders
of Alternate Energy Holdings, Inc
(a
development stage company)
As
successor by merger, effective October 1, 2009, to the registered public
accounting firm Rotenberg & Co., LLP, we have audited the accompanying
consolidated balance sheets of Alternate Energy Holdings, Inc (a development
stage company) as of December 31, 2009 and 2008, and the related consolidated
statements of income, change in stockholders’ equity, and cash flows for each of
the years in the two-year period ended December 31, 2009 and for the
period from inception (August 29, 2005) through December 31, 2009. Alternate
Energy Holdings, Inc’s management is responsible for these consolidated
financial statements. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We
conducted our audits in accordance with the 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 also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide 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 Alternate Energy Holdings,
Inc as of December 31, 2009 and 2008, and the results of its operations and its
cash flows for each of the years in the two-year period ended
December 31, 2009 and for the period from Inception (August 29, 2005) through
December 31, 2009, 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 5 to the
consolidated financial statements, the Company's significant operating losses
raise substantial doubt about its ability to continue as a going concern. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
EFP
Rotenberg, LLP
Rochester,
New York
March 31,
2010
F-2
Balance
Sheet
ALTERNATE
ENERGY HOLDINGS, INC.
(A
Development Stage Company)
CONSOLIDATED
BALANCE SHEETS
DECEMBER
31, 2009 AND 2008
2009
|
2008
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
and Cash Equivalents
|
$ | 597,577 | $ | 112,519 | ||||
Deposit
|
100,000 | 55,000 | ||||||
Prepaid
Expenses
|
11,220 | 26,417 | ||||||
Total
Current Assets
|
708,797 | 193,936 | ||||||
OTHER
ASSET
|
||||||||
Security
Deposit
|
3,000 | 3,000 | ||||||
TOTAL
ASSETS
|
$ | 711,797 | $ | 196,936 | ||||
LIABILITY AND STOCKHOLDERS'
EQUITY
|
||||||||
CURRENT
LIABILITY
|
||||||||
Accounts
Payable
|
$ | 5,472 | $ | 32,259 | ||||
Total
Current Liability
|
5,472 | 32,259 | ||||||
STOCKHOLDERS'
EQUITY:
|
||||||||
Common
Stock, par value $.001, 150,000,000 shares authorized; 136,150,108 issued
and 135,750,108 outstanding and 78,187,040 issued and 77,787,040
outstanding, respectively
|
136,150 | 78,187 | ||||||
Additional
Paid in Capital
|
11,677,947 | 8,816,694 | ||||||
Treasury
Stock (400,000 shares at cost)
|
(20,000 | ) | (20,000 | ) | ||||
Deficit
Accumulated During Development Stage
|
(11,087,772 | ) | (8,710,204 | ) | ||||
Total
Stockholders' Equity
|
706,325 | 164,677 | ||||||
TOTAL
LIABILITY AND STOCKHOLDERS' EQUITY
|
$ | 711,797 | $ | 196,936 |
The
accompanying notes are an integral part of these consolidated financial
statements.
F-3
Income
Statements
ALTERNATE
ENERGY HOLDINGS, INC.
(A
Development Stage Company)
CONSOLIDATED
INCOME STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008
AND
THE PERIOD FROM INCEPTION (AUGUST 29, 2005) THROUGH DECEMBER 31,
2009
Year Ended
|
Year Ended
|
Inception to
|
||||||||||
December 31
|
December 31
|
December 31
|
||||||||||
2009
|
2008
|
2009
|
||||||||||
REVENUES
|
$ | - | $ | - | $ | - | ||||||
OPERATING
EXPENSES:
|
||||||||||||
General
and Administrative Expenses
|
2,383,241 | 3,832,452 | 12,123,553 | |||||||||
NET
LOSS FROM OPERATIONS
|
(2,383,241 | ) | (3,832,452 | ) | (12,123,553 | ) | ||||||
OTHER
INCOME (EXPENSE)
|
||||||||||||
Interest
Income
|
194 | 11,856 | 32,187 | |||||||||
Miscellaneous
Income
|
5,479 | - | 5,479 | |||||||||
Gain
on Sales of Investments
|
- | - | 1,627 | |||||||||
Interest
Expense
|
- | (5 | ) | (3,512 | ) | |||||||
Total
Other Income
|
5,673 | 11,851 | 35,781 | |||||||||
LOSS
BEFORE NON-CONTROLLING INTEREST IN VARIABLE INTEREST
ENTITY
|
(2,377,568 | ) | (3,820,601 | ) | (12,087,772 | ) | ||||||
Non-Controlling
Interest in Variable Interest Entity
|
- | - | 1,000,000 | |||||||||
Net
Loss
|
$ | (2,377,568 | ) | $ | (3,820,601 | ) | $ | (11,087,772 | ) | |||
BASIC
AND DILUTED
|
||||||||||||
NET
LOSS PER COMMON STOCK
|
$ | (0.02 | ) | $ | (0.06 | ) | ||||||
WEIGHTED
AVERAGE SHARES OUTSTANDING
|
101,977,926 | 65,568,159 |
The
accompanying notes are an integral part of these consolidated financial
statements.
F-4
Statements
of Changes in Stockholders’ Equity
ALTERNATE
ENERGY HOLDINGS, INC.
(A
Development Stage Company)
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008
AND
THE PERIOD FROM INCEPTION (AUGUST 29, 2005) THROUGH DECEMBER 31,
2009
Number of
|
Additional
|
|||||||||||||||||||||||||||
Price per
|
Common
|
Common
|
Paid in
|
Treasury
|
Net
|
|||||||||||||||||||||||
Share
|
Shares Issued
|
Stock
|
Capital
|
Stock
|
Loss
|
Total
|
||||||||||||||||||||||
Founder
Shares issued August 29, 2005
|
0.00 | 14,800,000 | $ | 14,800 | $ | (14,800 | ) | $ | - | $ | - | $ | - | |||||||||||||||
Issuance
of Common Stock for Services
|
||||||||||||||||||||||||||||
October
|
0.05 | 3,249,999 | 3,250 | 54,250 | - | - | 57,500 | |||||||||||||||||||||
Amortization
of common stock for services
|
||||||||||||||||||||||||||||
October
|
- | - | 8,750 | - | - | 8,750 | ||||||||||||||||||||||
November
|
- | - | 8,750 | - | - | 8,750 | ||||||||||||||||||||||
December
|
- | - | 8,750 | - | - | 8,750 | ||||||||||||||||||||||
Issuance
of Common Stock for Payables:
|
||||||||||||||||||||||||||||
September
|
0.04 | 600,000 | 600 | 24,400 | - | - | 25,000 | |||||||||||||||||||||
November
|
0.05 | 300,000 | 300 | 14,700 | - | - | 15,000 | |||||||||||||||||||||
Net
Loss
|
- | - | - | - | (100,692 | ) | (100,692 | ) | ||||||||||||||||||||
Balances,
December 31, 2005
|
18,949,999 | 18,950 | 104,800 | - | (100,692 | ) | 23,058 | |||||||||||||||||||||
Nussential
Holdings Inc. shareholders prior to merger
|
0.00 | 4,252,088 | 4,252 | (4,252 | ) | - | - | - | ||||||||||||||||||||
Issuance
of Common Stock for Services
|
||||||||||||||||||||||||||||
September
|
1.01 | 1,149,999 | 1,150 | 1,157,599 | - | - | 1,158,749 | |||||||||||||||||||||
November
|
0.90 | 100,000 | 100 | 89,900 | - | - | 90,000 | |||||||||||||||||||||
Amortization
of common stock for services
|
||||||||||||||||||||||||||||
January
|
- | - | 8,750 | - | - | 8,750 | ||||||||||||||||||||||
February
|
- | - | 8,750 | - | - | 8,750 | ||||||||||||||||||||||
March
|
- | - | 8,750 | - | - | 8,750 | ||||||||||||||||||||||
April
|
- | - | 8,750 | - | - | 8,750 | ||||||||||||||||||||||
May
|
- | - | 8,750 | - | - | 8,750 | ||||||||||||||||||||||
June
|
- | - | 8,750 | - | - | 8,750 | ||||||||||||||||||||||
July
|
- | - | 8,750 | - | - | 8,750 | ||||||||||||||||||||||
August
|
- | - | 8,750 | - | - | 8,750 | ||||||||||||||||||||||
Issuance
of Common Stock for Cash
|
||||||||||||||||||||||||||||
March
|
0.05 | 1,000,000 | 1,000 | 49,000 | - | - | 50,000 | |||||||||||||||||||||
May
|
0.05 | 400,000 | 400 | 19,600 | - | - | 20,000 | |||||||||||||||||||||
June
|
0.05 | 100,000 | 100 | 4,900 | - | - | 5,000 | |||||||||||||||||||||
October
|
0.65 | 273,000 | 273 | 176,227 | - | - | 176,500 | |||||||||||||||||||||
November
|
0.33 | 116,000 | 116 | 38,550 | - | - | 38,666 | |||||||||||||||||||||
December
|
0.42 | 75,000 | 75 | 31,758 | - | - | 31,833 | |||||||||||||||||||||
Purchase
of Treasury Stock
|
- | - | - | (20,000 | ) | - | (20,000 | ) | ||||||||||||||||||||
Net
Loss
|
- | - | - | - | (1,394,711 | ) | (1,394,711 | ) | ||||||||||||||||||||
Balances,
December 31, 2006
|
26,416,086 | 26,416 | 1,738,082 | (20,000 | ) | (1,495,403 | ) | 249,095 | ||||||||||||||||||||
Issuance
of Common Stock for Services
|
||||||||||||||||||||||||||||
February
|
0.50 | 920,000 | 920 | 459,080 | - | - | 460,000 | |||||||||||||||||||||
March
|
0.50 | 300,000 | 300 | 149,700 | - | - | 150,000 | |||||||||||||||||||||
April
|
0.25 | 100,000 | 100 | 24,900 | - | - | 25,000 | |||||||||||||||||||||
June
|
0.25 | 550,000 | 550 | 136,950 | - | - | 137,500 | |||||||||||||||||||||
August
|
0.40 | 531,552 | 532 | 212,089 | - | - | 212,621 | |||||||||||||||||||||
September
|
0.11 | 4,583,200 | 4,583 | 478,697 | - | - | 483,280 | |||||||||||||||||||||
October
|
0.40 | 366,400 | 366 | 146,194 | - | - | 146,560 | |||||||||||||||||||||
November
|
0.15 | 457,000 | 457 | 65,943 | - | - | 66,400 | |||||||||||||||||||||
December
|
0.10 | 57,500 | 58 | 5,692 | - | - | 5,750 | |||||||||||||||||||||
Issuance
of Common Stock for Cash
|
||||||||||||||||||||||||||||
January
|
0.53 | 23,000 | 23 | 12,227 | - | - | 12,250 | |||||||||||||||||||||
February
|
0.50 | 55,000 | 55 | 27,445 | - | - | 27,500 | |||||||||||||||||||||
March
|
0.50 | 10,000 | 10 | 4,990 | - | - | 5,000 | |||||||||||||||||||||
April
|
0.40 | 25,000 | 25 | 9,975 | - | - | 10,000 | |||||||||||||||||||||
May
|
0.25 | 206,000 | 206 | 51,294 | - | - | 51,500 | |||||||||||||||||||||
June
|
0.24 | 180,000 | 180 | 42,820 | - | - | 43,000 | |||||||||||||||||||||
July
|
0.25 | 2,591,000 | 2,591 | 645,159 | - | - | 647,750 | |||||||||||||||||||||
August
|
0.25 | 2,521,036 | 2,521 | 626,238 | - | - | 628,759 | |||||||||||||||||||||
September
|
0.25 | 64,000 | 64 | 15,936 | - | - | 16,000 | |||||||||||||||||||||
October
|
0.25 | 20,000 | 20 | 4,980 | - | - | 5,000 | |||||||||||||||||||||
November
|
0.20 | 287,500 | 287 | 57,213 | - | - | 57,500 | |||||||||||||||||||||
December
|
0.10 | 2,451,000 | 2,451 | 242,649 | - | - | 245,100 | |||||||||||||||||||||
Net
Loss
|
- | - | - | - | (3,394,200 | ) | (3,394,200 | ) | ||||||||||||||||||||
Balances,
December 31, 2007
|
42,715,274 | $ | 42,715 | $ | 5,158,253 | $ | (20,000 | ) | $ | (4,889,603 | ) | $ | 291,365 |
The
accompanying notes are an integral part of these consolidated financial
statements.
F-5
Statements
of Changes in Stockholders’ Equity (continued)
ALTERNATE
ENERGY HOLDINGS, INC.
(A
Development Stage Company)
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008
AND
THE PERIOD FROM INCEPTION (AUGUST 29, 2005) THROUGH DECEMBER 31,
2009
Number of
|
Additional
|
|||||||||||||||||||||||||||
Price per
|
Common
|
Common
|
Paid in
|
Treasury
|
Net
|
|||||||||||||||||||||||
Share
|
Shares Issued
|
Stock
|
Capital
|
Stock
|
Loss
|
Total
|
||||||||||||||||||||||
Issuance
of Common Stock for Services
|
||||||||||||||||||||||||||||
January
|
0.10 | 1,312,250 | 1,312 | 129,913 | - | - | 131,225 | |||||||||||||||||||||
February
|
0.10 | 70,000 | 70 | 6,930 | - | - | 7,000 | |||||||||||||||||||||
March
|
0.10 | 183,250 | 183 | 18,142 | - | - | 18,325 | |||||||||||||||||||||
April
|
0.10 | 20,000 | 20 | 1,980 | - | - | 2,000 | |||||||||||||||||||||
May
|
0.10 | 14,556,875 | 14,557 | 1,441,131 | - | - | 1,455,688 | |||||||||||||||||||||
June
|
0.10 | 4,365,342 | 4,365 | 432,169 | - | - | 436,534 | |||||||||||||||||||||
July
|
0.20 | 798,625 | 798 | 158,927 | - | - | 159,725 | |||||||||||||||||||||
August
|
0.20 | 71,500 | 72 | 14,228 | - | - | 14,300 | |||||||||||||||||||||
September
|
0.20 | 25,430 | 25 | 5,061 | - | - | 5,086 | |||||||||||||||||||||
October
|
0.20 | 207,147 | 207 | 41,222 | - | - | 41,429 | |||||||||||||||||||||
November
|
0.20 | 10,853 | 11 | 2,160 | 2,171 | |||||||||||||||||||||||
December
|
0.10 | 3,140,777 | 3,141 | 310,934 | 314,075 | |||||||||||||||||||||||
Issuance
of Common Stock for Cash
|
- | |||||||||||||||||||||||||||
January
|
0.10 | 7,720,000 | 7,720 | 764,280 | - | - | 772,000 | |||||||||||||||||||||
February
|
0.10 | 1,120,750 | 1,121 | 110,954 | - | - | 112,075 | |||||||||||||||||||||
March
|
0.10 | 225,000 | 225 | 22,275 | - | - | 22,500 | |||||||||||||||||||||
April
|
0.10 | 250,000 | 250 | 24,750 | - | - | 25,000 | |||||||||||||||||||||
May
|
0.10 | 50,000 | 50 | 4,950 | - | - | 5,000 | |||||||||||||||||||||
June
|
0.10 | 576,000 | 576 | 57,024 | - | - | 57,600 | |||||||||||||||||||||
July
|
0.10 | 307,301 | 308 | 31,072 | - | - | 31,380 | |||||||||||||||||||||
August
|
0.15 | 182,000 | 182 | 28,018 | - | - | 28,200 | |||||||||||||||||||||
September
|
0.20 | 153,666 | 154 | 39,946 | - | - | 40,100 | |||||||||||||||||||||
December
|
0.10 | 125,000 | 125 | 12,375 | - | - | 12,500 | |||||||||||||||||||||
Net
Loss
|
- | - | - | - | (3,820,601 | ) | (3,820,601 | ) | ||||||||||||||||||||
Balances,
December 31, 2008
|
78,187,040 | 78,187 | 8,816,694 | (20,000 | ) | (8,710,204 | ) | 164,677 | ||||||||||||||||||||
Issuance
of Common Stock for Services
|
||||||||||||||||||||||||||||
January
|
0.10 | 395,290 | 395 | 39,134 | - | - | 39,529 | |||||||||||||||||||||
March
|
0.05 | 138,065 | 138 | 6,765 | - | - | 6,903 | |||||||||||||||||||||
April
|
0.05 | 18,425,000 | 18,425 | 902,825 | - | - | 921,250 | |||||||||||||||||||||
May
|
0.05 | 945,400 | 945 | 46,325 | - | - | 47,270 | |||||||||||||||||||||
June
|
0.05 | 718,500 | 719 | 35,206 | - | - | 35,925 | |||||||||||||||||||||
July
|
0.05 | 755,000 | 755 | 36,995 | - | - | 37,750 | |||||||||||||||||||||
August
|
0.05 | 1,567,957 | 1,568 | 76,830 | - | - | 78,398 | |||||||||||||||||||||
September
|
0.05 | 1,431,340 | 1,431 | 70,136 | - | - | 71,567 | |||||||||||||||||||||
October
|
0.05 | 50,000 | 50 | 2,450 | - | - | 2,500 | |||||||||||||||||||||
November
|
0.05 | 441,580 | 442 | 21,637 | - | - | 22,079 | |||||||||||||||||||||
December
|
0.05 | 3,914,400 | 3,915 | 191,805 | - | - | 195,720 | |||||||||||||||||||||
Issuance of Common Stock for Contract Option Fee | ||||||||||||||||||||||||||||
December
|
0.05 | 500,000 | 500 | 24,500 | - | - | 25,000 | |||||||||||||||||||||
Issuance
of Common Stock for Cash
|
||||||||||||||||||||||||||||
January
|
0.10 | 25,000 | 25 | 2,475 | - | - | 2,500 | |||||||||||||||||||||
February
|
0.05 | 800,000 | 800 | 39,200 | - | - | 40,000 | |||||||||||||||||||||
March
|
0.05 | 330,600 | 330 | 16,200 | - | - | 16,530 | |||||||||||||||||||||
April
|
0.05 | 1,745,000 | 1,745 | 85,505 | - | - | 87,250 | |||||||||||||||||||||
May
|
0.05 | 700,000 | 700 | 34,300 | - | - | 35,000 | |||||||||||||||||||||
June
|
0.05 | 4,345,000 | 4,345 | 212,905 | - | - | 217,250 | |||||||||||||||||||||
August
|
0.05 | 440,000 | 440 | 21,560 | - | - | 22,000 | |||||||||||||||||||||
September
|
0.05 | 2,470,000 | 2,470 | 121,030 | - | - | 123,500 | |||||||||||||||||||||
October
|
0.05 | 3,509,000 | 3,509 | 171,941 | - | - | 175,450 | |||||||||||||||||||||
November
|
0.05 | 5,338,700 | 5,339 | 261,596 | - | - | 266,935 | |||||||||||||||||||||
December
|
0.05 |
8,977,236
|
8,977 | 439,933 | - | - | 448,910 | |||||||||||||||||||||
Net
Loss
|
- | - | - | - | (2,377,568 | ) | (2,377,568 | ) | ||||||||||||||||||||
Balances,
December 31, 2009
|
136,150,108 | 136,150 | 11,677,947 | (20,000 | ) | (11,087,772 | ) | 706,325 |
The
accompanying notes are an integral part of these consolidated financial
statements.
F-6
Statement
of Cash Flow
ALTERNATE
ENERGY HOLDINGS, INC.
(A
Development Stage Company)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008
AND
THE PERIOD FROM INCEPTION (AUGUST 29, 2005) THROUGH DECEMBER 31,
2009
Year Ended
|
Year Ended
|
Inception to
|
||||||||||
December 31
|
December 31
|
December 31,
|
||||||||||
2009
|
2008
|
2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
Loss
|
$ | (2,377,568 | ) | $ | (3,820,601 | ) | $ | (11,087,772 | ) | |||
Adjustments
to reconcile Net Loss to Net Cash Used by Operating Activities
-
|
||||||||||||
Common
Stock Issued for Services
|
1,433,891 | 2,587,558 | 7,151,059 | |||||||||
Common
Stock Issued for Contract Option Fee
|
25,000 | 0 | 25,000 | |||||||||
Loss
from Variable Interest Entity
|
- | - | (1,000,000 | ) | ||||||||
Change
in operating Assets and Liabilities -
|
||||||||||||
Deposits
|
(45,000 | ) | - | (100,000 | ) | |||||||
Prepaid
Expenses
|
15,197 | (26,417 | ) | (11,220 | ) | |||||||
Security
Deposits
|
- | (3,000 | ) | (3,000 | ) | |||||||
Accounts
Payable
|
(26,787 | ) | (807 | ) | 5,472 | |||||||
Total
Adjustments
|
1,402,301 | 2,557,334 | 6,067,311 | |||||||||
Net
Cash Used by Operating Activities
|
(975,267 | ) | (1,263,267 | ) | (5,020,461 | ) | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Receipt
of Cash for Common Stock
|
1,460,325 | 1,106,355 | 4,638,038 | |||||||||
Cash
Received from Non-Controlling Members
|
- | - | 1,000,000 | |||||||||
Purchase
of Treasury Stock
|
- | - | (20,000 | ) | ||||||||
Due
to Officer
|
- | - | - | |||||||||
Net
Cash Provided by Financing Activities
|
1,460,325 | 1,106,355 | 5,618,038 | |||||||||
NET
INCREASE (DECREASE) IN CASH
|
485,058 | (156,912 | ) | 597,577 | ||||||||
CASH
- BEGINNING
|
112,519 | 269,431 | - | |||||||||
CASH
- ENDING
|
$ | 597,577 | $ | 112,519 | $ | 597,577 | ||||||
Supplemental
Disclosures:
|
||||||||||||
Cash
paid for Income Taxes
|
$ | - | $ | - | $ | - | ||||||
Cash
paid for Interest
|
$ | - | $ | - | $ | 3,512 |
The
accompanying notes are an integral part of these consolidated financial
statements.
F-7
ALTERNATE
ENERGY HOLDINGS, INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description
of Business
Alternate
Energy Holdings, Inc., (and its subsidiaries Idaho Energy Complex Corporation,
International Reactors, Inc. and Reactor Development, LLC) formerly Nussentials
Holdings Inc., is a development stage enterprise focused on the purchase,
optimization and construction of green energy sources – primary nuclear power
plants.
Sunbelt
Energy Resources Inc. was formed on August 29, 2005 to operate in the alternate
energy industry and has limited operational activity. In September
2006, Sunbelt acquired Nussential Holdings, Inc. by exchanging 17,900,000 shares
of Sunbelt which represented 100% for 21,399,998 shares of common stock of
Nussential Holdings Inc. As a result of the acquisition, the
shareholders of Sunbelt owned a majority of the voting stock of Nussentials
Holdings, Inc. which changed its name to Alternate Energy Holdings,
Inc. The merger has been accounted for as a reverse merger whereby
Alternate Energy Holdings, Inc. is the accounting acquirer resulting in a
recapitalization of Alternate Energy Holdings, Inc.’s equity. In
connection with and simultaneous to the reverse merger, Nussentials Corporation,
a wholly owned subsidiary of Nussentials Holdings Inc. was transferred to
Nussential Holdings, Inc. majority shareholder through issuance of 4,252,088
shares of common stock.
Use of
Estimates
The
preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect reported
amounts of assets, liabilities, revenues and expenses and the and disclosures of
contingent assets and liabilities. Accordingly, actual results
could differ from those estimates.
F-8
ALTERNATE
ENERGY HOLDINGS, INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Cash and Cash
Equivalents
Alternate
Energy Holdings, Inc. considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. Cash
equivalents are stated at cost, which approximates fair value. The Federal
Deposit Insurance Corporation insures up to $250,000 balances at December 31,
2009 and 2008. The uninsured balances at December 31, 2009 and
2008 were $347,577 and $ -0-, respectively.
Basic and Diluted Net Loss
per Share
Basic and
diluted net loss per share calculations are presented in accordance with FASB
ASC 260-10 (Prior authoritative literature FAS 128 “Earning per Share”), and are
calculated on the basis of the weighted average number of common shares
outstanding during the year. They include the dilutive effect of
common stock equivalents in years with net income. Basic and diluted
net loss per share is the same due to the absence of common stock
equivalents.
Stock Based
Compensation
Alternate
Energy Holdings, Inc.’s non-employees, share-based expense is recorded in
accordance with FASB ASC 505-50 (Prior authoritative with Emerging Issues Task
Force No. 96-18, “Accounting for Equity Instruments That are Issued to Other
than Employees for Acquisition, or in Conjunction with Selling, Goods or
Services.”) Alternate Energy Holdings, Inc. has not issued any stock
options or stock warrants since its inception through December 31,
2009.
For the
year ended December 31, 2009 and 2008, 18,450,000 and 17,050,000 shares of
restricted stock were issued for officer/board services,
respectively.
F-9
ALTERNATE
ENERGY HOLDINGS, INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
Recently Issued Accounting
Pronouncements
Alternate
Energy Holdings, Inc. does not expect the adoption of any recently issued
accounting pronouncements to have a significant impact on their financial
position, results of operations, or cash flow.
NOTE
2 - INCOME TAXES
Alternate
Energy Holdings, Inc. uses the liability method, where deferred tax assets and
liabilities are determined based on the expected future tax consequences of
temporary differences between the carrying amounts of assets and liabilities for
financial and income tax reporting purposes. Alternate Energy
Holdings, Inc. incurred net losses in the year ending December 31, 2009 and 2008
and therefore, has no tax liability. The deferred tax asset generated
by the carry-forward is approximately $ 6,066,678 at December 31, 2009 and will
expire in 2029.
Components
of deferred tax assets at December 31, 2009 are as follows:
Deferred
tax asset – net operating loss
|
||||
Carry-forwards
|
$ | 6,066,678 | ||
Valuation
Allowance
|
(6,066,678 | ) | ||
Net
deferred tax asset
|
$ | -0- |
The
Company has adopted ASC 740-10 “Income Taxes”, (Prior Authoritative Literature:
FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes on
January 1, 2008”). As a result of the assessment the Company has recognized no
material tax adjustments to the unrecognized tax benefits. At the
adoption date of January 1, 2008 and as of December 31, 2009, the Company has no
unrecognized tax benefits. By statue, tax years ending December 31,
2009 through 2007 remain open to examination by the major taxing jurisdictions
to which the Company is subject.
The
reconciliation of the effective income tax rate of the Company to the statutory
income tax rate for the fiscal year ended on December 31, 2009 and 2008 is as
follows:
2009
|
2008
|
|||||||
Federal
Income Tax Rate
|
34 | % | 34 | % | ||||
State
Income Tax Rate
|
0 | % | 0 | % | ||||
Increase
in Valuation Allowance
|
(34 | %) | (34 | %) | ||||
Effective
Tax Rate
|
0 | % | 0 | % |
NOTE
3 - COMMON STOCK
During
2006, Alternate Energy Holdings, Inc.
|
-
|
Issued
4,252,088 shares of common stock to the Nussential Holdings shareholders
in the reverse merger – See Note 1 for the
details.
|
|
-
|
Issued
1,249,999 shares of common stock valued at $ 1,318,749 for
services.
|
|
-
|
Issued
1,964,000 shares of common stock for cash received in the amount of $
321,999.
|
|
-
|
Purchase
400,000 shares of treasury stock for cash in the amount of $
20,000.
|
During
2007, Alternate Energy Holdings, Inc.
|
-
|
Issued
7,865,652 shares of common stock valued at $ 1,687,111 for
services.
|
|
-
|
Issued
8,433,536 shares of common stock for cash received in the amount of $
1,749,359.
|
During
2008, Alternate Energy Holdings, Inc.
|
-
|
Issued
24,762,049 shares of common stock valued at $ 2,587,558 for
services.
|
|
-
|
Issued
10,709,717 shares of common stock for cash received in the amount
of
|
$
1,106,355.
F-10
ALTERNATE
ENERGY HOLDINGS, INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
3 - COMMON STOCK - continued
During
2009, Alternate Energy Holdings, Inc.
|
-
|
Issued
28,282,532 shares
of common stock valued at $ 1,433,891 for services.
|
- | Issued 500,000 shares of common stock valued at $25,000 for a contract option fee. |
|
-
|
Issued
29,180,536 shares of common stock for cash received in the amount of
$1,460,325.
|
NOTE
4 - COMMITMENTS
Alternate
Energy Holdings, Inc leases its office space under a one-year lease and on a
month-to-month basis under another lease. The one year lease is dated June 9,
2009 and expires August 2010. Rent expense for the years ending December 31,
2009 and 2008 was $ 51,595 and $ 39,624, respectively. The
following is a schedule of future minimum payments under the operating lease for
the year ended December 31, 2009:
For the year Ended
|
||||
December
31, 2010
|
$ | 9,760 |
Alternate Energy Holdings, Inc. has entered into contract dated
December 11, 2009 to purchase land in Idaho. This option holds the contract open
until December 18, 2010.
NOTE
5 - GOING CONCERN
Alternate
Energy Holdings, Inc’s consolidated financial statements have been
presented on the basis that it is a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. The Company has an accumulated deficit of $11,087,772 at
December 31, 2009.
The
Company’s continued existence is dependent upon its ability to raise capital or
to successfully market and sell its products. The financial
statements do not include any adjustments that might be necessary should the
Company be unable to continue as a going concern.
NOTE
6 - VARIABLE INTEREST ENTITY
FASB ASC
810 (Prior authoritative literature FASB Interpretation No. 46 “Consolidation of
Variable Interest Entities”) requires consolidation of certain entities in which
equity investors do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entity to finance its
activities without additional subordinated financial support from other parties.
Reactor Development, LLC was formed for the purpose of developing and managing
an energy complex. Alternate Energy Holdings, Inc. invested $1,000,000 which
represents approximately 50% of Reactor Development LLC’s capital structure as
of December 31, 2007. Furthermore, the daily operating decisions of
Reactor Development, LLC are made by the members of Alternate Energy Holdings,
Inc.’s management. Under FASB ASC 810 (Prior authoritative literature
FASB Interpretation No. 46 “Consolidation of Variable Interest Entities”)
Reactor Development, LLC is deemed a variable Interest Entity to Alternate
Energy Holding, Inc. and as such Reactor Development, LLC’s financial
information has been consolidated with Alternate Energy Holdings,
Inc.
F-11
ALTERNATE
ENERGY HOLDINGS, INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
6 - VARIABLE INTEREST ENTITY – continued
The
consolidated financial statements includes the full operating activities of
Reactor Development, LLC, with amounts allocated to Reactor Development, LLC
disclosed under “Non-Controlling Interest in Variable Interest Entity” in the
accompanying consolidated income statement. Assets and liabilities of
Reactor Development, LLC were $ -0- and $ -0-, respectively, at December 31,
2009 and December 31, 2008, respectively.
NOTE
7 - DEPOSIT
Deposit
represents monies held in escrow for a potential joint venture project that will
develop and manufacture a hybrid engine in China.
NOTE
8 - SUBSEQUENT EVENTS
January
1, 2010 through March 26, 2010, the total number of stock authorized that may by
issued by the corporation was increased to 500,000,000 shares of common stock
and 91,820,040 shares of additional stock were issued for cash and services
during that period. The
Deposit held in escrow was converted to a note receivable in January 2010. The
note receivable
states that interest will accrue at a rate of 5% on the $100,000 and
is due in July 2010. The note is secured by 1,000,000 shares of Moller
International, Inc common stock.
F-12