Registration of Securities (General Form) — Form 10
Filing Table of Contents
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1: 10-12G Registration of Securities (General Form) 85 372K
2: EX-3.1 Articles of Incorporation/Organization or By-Laws HTML 6K
3: EX-3.2 Articles of Incorporation/Organization or By-Laws HTML 5K
4: EX-3.3 Articles of Incorporation/Organization or By-Laws HTML 5K
5: EX-3.4 Articles of Incorporation/Organization or By-Laws HTML 5K
6: EX-3.5 Articles of Incorporation/Organization or By-Laws HTML 5K
7: EX-3.6 Articles of Incorporation/Organization or By-Laws HTML 6K
8: EX-3.7 Articles of Incorporation/Organization or By-Laws HTML 6K
9: EX-10.1 Material Contract HTML 7K
10: EX-10.2 Material Contract HTML 6K
11: EX-21 Subsidiaries of the Registrant 1 6K
12: EX-23 Consent of Experts or Counsel 1 7K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities
Exchange Act of 1934
ALTERNATE ENERGY HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Nevada 20-5689191
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State or other jurisdiction of IRS Identification No.
incorporation or organization
911 E. Winding Creek Dr., Suite 150, Eagle, ID 83616
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Address of principal executive offices) (Zip Code)
Issuer's telephone number: (208)939-9311
Securities to be registered under
Section 12(b) of the Act:
Title of each class to be so registered Name of each exchange on
which each class is to be
registered
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Not Applicable Not Applicable
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK
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(Title of class)
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
(Do not check if a
smaller reporting company) [___] Smaller reporting company [_X_]
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TABLE OF CONTENTS
TITLE PAGE NUMBER
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Item 1 BUSINESS 2
Item 1A RISK FACTORS 12
Item 2 FINANCIAL INFORMATION 26
Item 3 PROPERTIES 35
Item 4 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 35
Item 5 DIRECTORS AND EXECUTIVE OFFICERS 37
Item 6 EXECUTIVE COMPENSATION 41
Item 7 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 46
Item 8 LEGAL PROCEEDINGS 47
Item 9 MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON 47
EQUITY AND RELATED STOCKHOLDER MATTERS
Item 10 RECENT SALES OF UNREGISTERED SECURITIES 48
Item 11 DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED 58
Item 12 INDEMNIFICATION OF DIRECTORS AND OFFICERS 58
Item 13 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 59
Item 14 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING 60
AND FINANCIAL DISCLOSURE
Item 15 FINANCIAL STATEMENTS AND EXHIBITS 60
ITEM 1. BUSINESS
GENERAL
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.
ABOUT ALTERNATE ENERGY HOLDINGS, INC.
Alternate Energy Holdings, Inc. (formerly Nussentials Holdings, Inc.,
incorporated in Nevada on July 31, 2001 under the name Corptran Support, Inc.)
is a development stage enterprise focused on the purchase, optimization and
construction of green energy sources - primarily nuclear power plants.
Sunbelt Energy Resources Inc. was incorporated in Florida on August 11, 2005 to
operate in the alternate energy industry and had limited operational activity.
In September 2006, Sunbelt conducted a reverse merger with Nussentials Holdings,
Inc. by exchanging 17,900,000 shares of Sunbelt which represented 100% of its
equity for 21,399,998 shares of common stock of Nussentials 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.
Alternate Energy Holdings, Inc. ("AEHI") was founded by former senior executives
of the utility and finance industries specifically to address the mounting
"energy crisis" affecting the US economy and standard of living today. A key
objective for AEHI is decreasing US dependence on foreign sources of power,
which are progressively proving less reliable and more political in their
influence.
AEHI 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 throughout the United States, specifically Idaho. The
AEHI management has decades of experience in the nuclear industry, power
generation, and facility development. AEHI formed Idaho Energy Complex
Corporation ("IEC"), an Idaho corporation, in March of 2007 as a 100%
wholly-owned subsidiary of AEHI. IEC is the manager of Reactor Land Development,
LLC ("the LLC"), a Delaware limited liability company, which is attempting to
obtain permits for a nuclear facility (hereafter "the Project"). The LLC 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.
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Alternate Energy Holdings, Inc., A Nevada Corporation
! ! !
! ! !
! ! !
Idaho Energy International Reactors, Inc. Energy Neutral, Inc.,
Complex Corporation, A Nevada Corporation An Idaho Corporation
An Idaho Corporation
100% 100% 100%
!
!
!
Reactor Land
Development, LLC,
A Delaware Limited
Liability Company
99%
The common stock of AEHI currently trades on the Pink Sheets as unsolicited
under the symbol "AEHI".
BUSINESS PLAN
GENERAL INFORMATION
Alternate Energy Holdings, Inc ("AEHI") is a corporation founded by former
senior executives of the utility and finance industries specifically to address
the mounting energy crises affecting the United State's economy, standard of
living and national security. AEHI plans to evolve with the growing needs of the
energy market to provide reliable, low cost, large-scale power production on a
national scale. In addition, we will provide demand-side technology to reduce
energy consumption by homes and businesses using renewables and power
management.
AEHI's current holdings consist of the following:
1. INTERNATIONAL REACTORS, INC. ("IRI"), a 100% wholly-owned subsidiary of
AEHI, formed to assist developing countries with power generation, as well
as the production of potable water. Founded in November 2007 and
incorporated in Nevada, IRI seeks to construct commercial nuclear reactors
on oceanfront sites, particularly in Latin America and western-friendly
Middle Eastern countries, in order to co-generate clean energy and
desalinate water. IRI believes advanced nuclear technology can be used to
address these energy needs while simultaneously producing fresh water from
these plants' ocean intake.
2. IDAHO ENERGY COMPLEX ("IEC"), a 100% wholly-owned subsidiary of AEHI, is a
proposed $4.5 billion nuclear/biofuels complex near Mountain Home, Idaho.
1,400 acres have been dedicated to this project, which will provide enough
electricity to power Idaho's growth, as well as generate income through the
sale of power out of state. The facility will feature a new `dry' nuclear
reactor design - meaning that it does not require large amounts of water
piped in for cooling. Additionally, this plant will use its excess heat to
produce biofuels such as ethanol, thereby further reducing its cooling
requirements and giving local farmers a market for their crops and
agricultural waste (dependent on market demand). AEHI has made no contracts
or arrangements for biofuel as of the date of filing this Registration
Statement. It is a concept that AEHI hopes to develop with the reactor in
Idaho.
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3. REACTOR LAND DEVELOPMENT, LLC ("THE LLC"), a 99% owned subsidiary of IEC,
is a Delaware limited liability company. The LLC began operations in
September 2007 with IEC as Manager, 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.
4. ENERGY NEUTRAL, INC. ("ENI"), a 100% wholly-owned subsidiary of AEHI,
assists homeowners, businesses and farmers to operate with minimal or no
reliance on the electrical grid. ENI's primary service consists of
evaluating homes, businesses and farms for conservation and renewable
energy potential; drawing up a plan to attain or approach energy
neutrality; and working with wind, conservation and solar suppliers and
installers to put the products in place. Strong demand is expected from
farmers who must spend large amounts of money to pump water. Solar and wind
energy can be used to make the pumps completely independent or, for greater
reliability, to augment existing electrical grid or gasoline setups.
AEHI's mission is to help address the national energy shortfall and provide
exceptional value for shareholders through the construction of advanced nuclear
and renewable generation capacity. The great national need for energy makes this
an ideal time to enter this market, even given the tight credit markets. As
motor fuel costs continue to rise and emission standards become more stringent,
more people will be seeking to plug all-electric or hybrid-electric cars into
their homes, shifting transportation energy from gas stations to homes and
creating a large demand in the future for electricity as demand for fossil
declines.
AEHI's Board of Directors ("BOD") is comprised of retired executives in the
utilities industry, including Leon Eliason, the former president of two nuclear
utility business units, Kenneth A. Strahm, Sr., the former President of the
Institute of Nuclear Power ("INPO"), Ralph Beedle, the former Senior Vice
President of Nuclear Energy Institute ("NEI") and James Taylor, the former
operating head of the Nuclear Regulatory Commission ("NRC"). Most of the Board
members currently serve on nuclear plant oversight boards and in the capacity of
consultant within the nuclear industry, as well. AEHI will benefit from its
qualified BOD's expertise, as well as professional networking ability - allowing
AEHI to successfully achieve its short- and long-term goals efficiently and
effectively. AEHI's senior management team will oversee the operation of each
private company to ensure it has proper leadership, initial funding and a living
business plan to accomplish each corporation's mission.
INDUSTRY OVERVIEW
As reported by the Nuclear Energy Institute, nuclear energy is the United
States' largest source of emission-free electricity and second largest source of
power. The 104 U.S. nuclear units supply approximately 20% of the electricity
produced in the United States and nearly 80% of the country's emissions-free
energy. Nuclear energy is a chief contributor to national energy security and
nuclear energy is not subject to unreliable weather, climate conditions and/or
unpredictable cost fluctuations. Adding to its reliability, nuclear power plants
are designed to operate continuously for long periods of time.
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Nuclear energy is considered the most "eco-efficient" of all energy sources
because it produces the most electricity in relation to its minimal
environmental impact. Nuclear power plants do not emit harmful gases, require a
relatively small area, do not deplete natural resources (such as fossil fuels).
Resultantly, they cause no significant adverse effects to water, land, habitat,
species and air resources. Leading environmentalists, including the co-founder
of Greenpeace, Dr. Patrick Moore, have endorsed nuclear energy as the only
large-scale, non-emitting, affordable energy source that can address both global
warming and sustainable development.
In the event of an imbalance in operations, the sophisticated safety systems of
U.S. nuclear power plants are designed to shut down automatically well before
any safety margins are exceeded. Unplanned automatic plant shutdowns occur
infrequently. Various improvements in plant maintenance and training programs
have decreased the number of automatic plant shutdowns over the past decade,
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 Nuclear Energy Institute. In 2004, the median
number of unplanned automatic shutdowns was zero.
Security from outside threats is maintained at the highest standards, as well.
After September 11, 2001, the nuclear energy industry substantially enhanced
security at nuclear plants. Security forces at nuclear plants were increased by
one-third to approximately 8,000 officers at the United States' 64 sites.
Additional 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 approaches among the entities. The Nuclear
Regulatory Commission evaluates "force-on-force" drills between security
personnel and contractor adversary teams. Every U.S. plant is tested with mock
adversary drills every three years. Consequently, nuclear energy is the safest,
most reliable and most efficient source of energy in the foreseeable future of
the energy industry.
MARKET OVERVIEW
Currently, the nuclear industry is comprised of 440 nuclear power plants
operating around the world in 31 countries, supplying 16% of the world's
electricity. Twenty-four new nuclear plants are under construction in 8
countries around the globe. The 104 U.S. nuclear units supply 100,125 megawatts,
or approximately 20% of the electricity produced in the U.S. As national energy
prices continue to climb due to environmental concerns, dependence on foreign
providers and cost fluctuations, the need for reliable and economical energy
sources rises significantly.
According to the U.S. Energy Information Agency, energy use nationally is
expected to increase 30% between 2005 and 2030. In Idaho, where we are
developing the Idaho Energy Complex, the demand for energy is clear. Management
believes Idaho needs more power supply for several reasons. In the fall of 2007,
two potential major corporations stated that they could no longer consider
Boise, Idaho as a possible relocation site because the existing utility
structure 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 United States Energy Information
Administration figures. The January 2007 Idaho Energy Plan states that Idaho is
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vulnerable to the economic effects of emissions regulation on the current
imported coal power and relicensing of the state's hydro plants. The report
notes that Idaho imports 80% of its power from fossil fuels and that over $3
billion that Idahoans spend on energy each year leaves the state. In all, AEHI's
proposed Idaho Energy Complex would create enough power for about 1.5 million
homes, or three times the number of homes in Idaho. The excess is sold to the
marketplace, primarily in the West coast.
The recent 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
eighty-twenty (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 and the
industry to provide 100% of the cost of delay (when delays are beyond the
industry's control) during construction and at the start of operations of the
first two new nuclear plants. AEHI plans to take advantage of this directive by
ensuring its construction of a new unit will be one of the first six (6), and
most probably first few new plants to be constructed in the United States. A
plant can have multiple units but in the case of Idaho, AEHI is referring to one
unit at this time.
This national "energy crisis" has had a significant negative impact on the
economy and standard of living at all levels of U.S. society, making the target
market for AEHI ultimately nationwide as AEHI strives to address and alleviate
this growing need. However, AEHI's immediate target market within this
multi-billion dollar industry will be its initial plant's surrounding community
in Idaho. Consequently, AEHI intends to sign a power purchase agreement with a
local distributing company, such as Entergy, Constellation, Pacific Gas &
Electric, Avista and Mid-American. AEHI has not signed any agreements as of the
date of this Registration Statement. The power purchase agreements will be
signed after the NRC has approved the construction of the plant.
Nuclear power is re-emerging as a necessary part of a well-balanced power
generation portfolio. Demand for nuclear plant sites is growing. Stringent
Nuclear Regulatory Commission ("NRC") siting criterion limits the number of
qualified reactor sites. Fourteen companies, including AEHI, have notified the
NRC of their intent to file for construction and operating licenses ("COL") for
34 new units by December 31, 2010. All the proposed sites, except AEHI's Idaho
site, are east of the Rocky Mountains. The value of attractive sites,
particularly in the Western US, is expected to rise because:
o Nuclear generation is profitable.
o Global experience has reduced construction and operating costs.
o Costs of electricity from competitive fossil generation plants are
rising.
o Deregulation of wholesale electric pricing is expected to enable
independently owned nuclear plants to realize the full economic
advantage of low cost nuclear power.
o Nuclear generation has gained public acceptance.
o Nuclear has demonstrated that it is a safe, reliable form of
generation at plants worldwide.
o The federal government supports nuclear deployment by regulatory
changes and tax benefits.
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o There are a limited number of sites that meet licensing, and economic
criteria for a nuclear plant:
o Licensing: low population density, low impact seismic potential
activity, low environmental impact
o Economic/Infrastructure: water availability, ability to serve major
markets through existing transmission, low construction costs, etc.
THE SITE
After a two-year search, AEHI has, through IEC, selected and acquired interests
in a site in Elmore County, Idaho ("Site") for $15,000,000 which is well suited
for licensing, construction and development of a nuclear power reactor. The Site
is:
o Approximately 1,400 acres near Mountain Home, Idaho along the Snake River o
Located near, and has ample rights to a source of water
o In a rural community that is receptive to the development of a nuclear
power plant
o Can be connected to high voltage transmission lines and the western power
grid
o NRC Licensable, according to the preliminary findings of nuclear siting
experts, and the land acquisition closing is subject t to a final favorable
report.
o 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. IEC's rezone application was recently accepted
in the first quarter of 2008 by Elmore County planning and zoning officials.
Approval from the NRC is necessary, and once granted, it will take three years
to begin construction of the plant.
AGREEMENTS AND QUOTES
LAND PURCHASE AGREEMENT
There is an agreement between AEHI and the current Site owner for the purchase
of the land, including water rights (Exhibit 10.1). The agreement will transfer
title to IEC once completed and requires a $15M cash payment. A 10% deposit has
been made and holds the land for up to six months. Remaining funds will be
obtained from the Reactor Land Development, LLC 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.
COMBINED CONSTRUCTION AND OPERATING LICENSE APPLICATION ("COLA") AND WATER
RIGHTS
o Management intends to obtain the conditional use permit form the county
and the COLA from the NRC for the Site using the services of ENERCON or
the reactor supplier consistent with the funds being raised by AEHI.
ENERCON has already been conducting Nuclear Regulatory Commission
pre-COL application activities at the Site, including the preliminary
Site study. A 5% payment will start the COLA.
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o Management has obtained a quote for 6,000 acre feet of water rights
from the Snake River for $6M necessary to cool the reactor.
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THE SCHEDULE:
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YEAR 1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
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2008 Land contract Preliminary site approval Start seed money Begin COLA prep
offering
Complete Complete Complete
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Long lead items
Ordering large
components such as
2009 Raise remaining the reactor vessel Submit COLA to NRC
capital to allow time for
them to be
constructed which
takes years.
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2010
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2011
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2012 NRC Approves COLA
Wind up LLC
Begin Construction
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2013
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2016 Construction Complete Pre-operational Plant Operational
Tests
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BUSINESS STRATEGY
AEHI is preparing to begin the local land use approval process for the Idaho
Energy Complex in late 2008. The rezone hearing for the project is scheduled for
October 8, 2008 in Mountain Home, Idaho. AEHI is in the due diligence phase of
forming a new operating company jointly with another energy company and some
large investors. AEHI will be the majority owner however, the final percentage
has not been determined as of the filing of this Registration Statement. This
new company will result in up to $50 million in funding from a large
international investor in early 2009 to purchase an optioned 1,400-acre site;
continue the local application process; and begin the Nuclear Regulatory
Commission (NRC) process. The NRC process can take up to three years. The other
energy company (to be named soon) and the investors will contribute
international energy leadership and initial funding, while AEHI will contribute
its nuclear expertise and management team.
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AEHI has also been in discussions with the Mexican Energy Ministry (February
2008 through May 2008), which has placed priority on nuclear power to meet its
future energy needs. It is AEHI's goal for IRI to work with the Mexican
government to develop nuclear reactors for power and large-scale water
desalinization. IRI is currently in the early stages of drafting a Memorandum of
Understanding regarding this venture with Mexico.
ENI is actively seeking clients and the AEHI board has chosen Micah Gosney, an
Idaho home builder and artist as president of ENI.
MARKETING/PUBLIC RELATIONS
AEHI has taken the initiative in informing the public, media and investors about
its plans. Web sites have been developed for AEHI
(www.alternateenergyholdings.com), the Idaho Energy Complex
(www.idahoenergycomplex.com) and Energy Neutral (www.energyneutralinc.com).
These sites feature detailed profiles of AEHI's Board of Directors and
management team, as well as industry information, press releases, relationships
and AEHI's goals to highlight the demand for and profitability of AEHI's
services. Furthermore, AEHI has conducted three public informational meetings
about the Idaho Energy Complex (one in May 2007 for the previous reactor in
Owyhee County and two in June 2008 for the current Elmore site). AEHI has also
retained an Idaho public relations agency, Alexander and Associates of Boise,
Idaho, to assist with local information for the media and general public.
PUBLIC COMPANY FUNDING
The public holding company will develop or acquire businesses to help address
our country's energy needs while trying to improve air quality and the impacts
of Global Warming: using stock offerings both public and private placements to
raise the seed money to launch these individual private companies who will then
develop their own business strategies and self sustaining budgets while
providing profits to the holding company, AEHI, in exchange for seed money and
energy leadership expertise.
AEHI's current operating costs to start its subsidiaries is estimated to be
approximately $750,000 per year. That will be reduced when a new company is
formed as it will help fund the Idaho nuclear plant operating costs starting in
December 2008.
INTERNATIONAL REACTORS INCORPORATED (IRI) is currently negotiating a Memorandum
of Understanding with the Mexican government to provide up to three
investor-owned reactors. One of the reactors will be used to operate
desalinization units to pump fresh water from the Sea of Cortez into Arizona
where fresh water is in short supply. This reactor will be funded primarily by
international investors, where there is considerable interest. IRI will own over
50% and intends to operate the facility in a long term power purchase agreement
with CFE (The Mexican national electricity company). AEHI is currently funding
about $10,000 per month to this project.
IDAHO ENERGY COMPLEX, INC. (IEC) is currently planning to raise money to pay for
the IEC development ($15,000,000) through the Reactor Land Development, LLC
private placement to purchase contracted land and water rights to construct
Idaho's first nuclear plant. This plant will use waste heat to produce ethanol
and methane from agricultural products. The strategy is to form a new operating
company, whereby AEHI maintains over 50% ownership, with a strategic partner to
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fund the initial cost of land and an NRC license. Currently, AEHI is negotiating
power purchase agreements and equity ownership for the construction costs with
several major utilities. Further, AEHI has a construction loan letter (Exhibit
10.2) for up to $3.5 billion as a result of the 2005 Energy Act. Considerable
funds of $500,000 were invested by the Company CEO and founder to start AEHI.
ENERGY NEUTRAL, INC. (ENI) is currently making arrangements with suppliers and
builders to provide install wind, solar and load management equipment on homes
and businesses in Idaho. This concept will eliminate home and office energy
bills. It can be added to new homes for no additional costs due to numerous
renewable tax credits and for the costs of a modest new car to existing homes.
ENI is bidding on a large YMCA in December 2008 as one of its first project.
Annual start-up costs are $5,000.00. ENI is expected to start showing cash flow
in the fourth quarter of 2008. This business intends to begin franchising in
2009.
Additionally, AEHI is exploring nuclear plant sites in Colorado, Texas and New
Mexico. AEHI would like to have nuclear energy complexes throughout the Rocky
Mountain region to be able meet power shortage issues on both coasts of the
country. Further, AEHI is exploring the concept of desalinization plants in U.S.
friendly nations in the Middle East
ECONOMIC VIABILITY
The potential profit for the nuclear reactor based initiatives mentioned above
is considerable. Based on third-party data provided by globally recognized
experts, Constellation Energy and UniStar, in the nuclear power industry, each
reactor respectively could potentially generate in excess earnings of $1.1
billion dollars EBITA in the first year of operation and each subsequent year
(assuming no growth). Emissions regulations on fossil plants that are
anticipated to start in the year 2012 in the U.S., Europe and elsewhere may
increase EBITA for each reactor substantially. Based on information from the
McKinsey Global Institute and Synapse Energy Economics, carbon credits could as
much as double EBITA for each reactor (thus, exceeding 2.2 billion dollars
annually). Carbon credits produced by nuclear reactors are over $250 million for
a plant this size today.
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 production cost of $0.0169 per kilowatt
hour (kWh). According to national data from 2007, without carbon tax and
emission reduction, coal has a production cost of $0.025/kWh, natural gas $0.085
cents/kWh, and petroleum $0.095 cents/kWh. However, natural gas, petroleum and
coal prices have increased recently due to the rising prices of fossil fuel.
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Secondary energy sources in the U.S. include hydro (water), wind (only 1% and
low reliability), and solar power - with the following production costs:
o hydro $0.015/kWh,
o wind $0.16/kWh, and
o solar $0.248/kWh.
However, these minor suppliers, while having reduced production costs, are
significantly more limited in their operational efficiency - averaging
approximately 25% capacity factors. While wind and solar are expanding, they are
not suitable base load plants. Coal and hydro have limited expansion ability due
to new environmental concerns. Natural gas produces 60% of the CO2 that the same
size coal plant does and the current costs are over 10 cents per kWh. Nuclear
energy was endorsed by the United Nations study on global warming and the G-8
leadership.
With the demand for cost-effective energy sources in the United States
continuing to increase, as evidenced by 2005's Energy Bill, AEHI anticipates
minimal difficulties from its competition as it works toward its goal of
constructing a new nuclear plant. Federal incentives, mentioned above, are
intended to reduce the inherently greater capital costs of nuclear power.
In addition, ENI has no competition for its initial focus area, Boise, Idaho.
There are few companies providing services to reduce energy demand for home in
offices using renewable tools and technology in the United States.
EMPLOYEES
As of September 30, 2008 AEHI and its subsidiaries had three (3) contracted full
time employees. Eight officers and directors provide certain services dedicated
to current corporate and business development activities. The officers will
devote on a full-time basis and directors will devote on a part-time basis, up
to 10 hours per week.
CAPITAL STRUCTURE
AEHI currently has 150,000,000 shares of common stock, $0.001 par value per
share, authorized by the Company's articles of incorporation. No preferred
shares are authorized.
As of September 15, 2008, the Company had 74,703,293 shares of AEHI common stock
issued and outstanding.
There is a limited public trading market for AEHI common stock which began
trading September 13, 2006. The symbol is "AEHI" and as of September 30, 2008
was shown as "Unsolicited" in the Pink Sheets.
FINANCIAL INFORMATION ABOUT GEOGRAPHIC AREAS
All of the Company's revenues are presently derived from customers within the
United States. All of the Company's assets are currently located in the United
States.
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ADMINISTRATIVE OFFICE
AEHI's principal offices are located at 911 E. Winding Creek Dr., Suite 150,
Eagle, Idaho 83616 and the telephone number is (208) 939-9311; and the fax
number is (208) 939-9260. AEHI currently pays $1,735 as monthly rent for the use
of this office. Once the construction of the Idaho Energy Complex is completed,
the plant will become AEHI's primary facility.
LEGAL PROCEEDINGS
AEHI anticipates that it (including current and future subsidiaries) 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 AEHI cannot assure that their ultimate disposition will not
have a materially adverse effect on AEHI business, financial condition, cash
flows or results of operations. As of September 30, 2008 there is one open legal
proceeding. AEHI has filed a lawsuit in Idaho's 4th District Court against the
director of the Snake River Alliance environmental group over defamatory
statements.
ITEM 1A. RISK FACTORS
FORWARD LOOKING STATEMENTS
This registration statement includes forward-looking statements, including,
without limitation, statements relating to AEHI 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 AEHI 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 AEHI to implement its business strategy; ability to
obtain additional financing; AEHI limited operating history; unknown liabilities
associated with future acquisitions; ability to manage growth; significant
competition; ability to attract and retain talented employees; and future
government regulations; and other factors described in this registration
statement or in other of AEHI filings with the Securities and Exchange
Commission. AEHI is under no obligation, to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
RISK FACTORS
GENERAL BUSINESS RISK FACTORS
DEVELOPMENT STAGE BUSINESS
Alternate Energy Holdings, Inc. commenced operations in August 2005 and is
organized as a corporation under the laws of the State of Nevada. Accordingly,
AEHI has only a limited history upon which an evaluation of its prospects and
future performance can be made. AEHI's proposed operations are subject to all
business risks associated with new enterprises. The likelihood of AEHI's success
must be considered in light of the problems, expenses, difficulties,
complications, and delays frequently encountered in connection with the
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expansion of a business, operation in a competitive industry, and the continued
development of advertising, promotions and a corresponding customer base. There
is a possibility that AEHI could sustain losses in the future. There can be no
assurances that AEHI will even operate profitably.
WE MAY NOT BE ABLE TO IMPLEMENT OUR EXPANSION STRATEGY AS PLANNED OR AT ALL.
We plan 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 may not be 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 "We 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.
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.
DEPENDENCE ON MANAGEMENT
In the early stages of development AEHI's business will be significantly
dependent on AEHI's experienced management team. AEHI's success will be
particularly dependent upon CEO Donald Gillispie. Mr. Gillispie works for AEHI
on a full-time basis. Mr. Gillispie relies on the active support of his
leadership team on a part-time basis of up to 10 hours per week.
DEPENDENCE UPON OUTSIDE CONTRACTORS OR ADVISORS
To supplement the business experience of its officers and directors, AEHI may be
required to employ contractors, accountants, technical experts, appraisers,
attorneys, or other consultants or advisors. AEHI'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 AEHI. In the
event AEHI 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.
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RISKS OF BORROWING
If AEHI 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
AEHI'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
which would be senior to the rights of shareholders of AEHI. A judgment creditor
would have the right to foreclose on any of AEHI's assets resulting in a
material adverse effect on AEHI's business, operating results or financial
condition.
RISK OF NEW VENTURE
AEHI and its subsidiaries are start-up development stage businesses. The Company
does not have any history of earnings. As a development stage company, it will
be subject to all of the difficulties associated with establishing a new
business enterprise, including the following: 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.
LOAN UNCERTAINTY
The Company may need to obtain loans to fund any amounts not funded by private
placement subscriptions. The ability of the Company to obtain future financing,
and the terms of such financing, has not yet been established. The Company does
not have any loan commitments. Interest rates and other terms may also adversely
change.
RELIABILITY OF MARKET DATA
AEHI may have based the market data and certain other information in this
Registration Statement on information supplied by governmental agencies, various
public announcements, filings related to other developments and similar projects
in the area, and other third party sources. AEHI also relied on other sources
that they believe to be reliable. AEHI has not independently verified any market
information, announcements or filings and it is possible that they may not be
accurate in all material respects. Accordingly, you should not rely too greatly
on such data when making your investment decisions and should keep in mind that
market conditions may change at any time for a variety of reasons.
GENERAL ECONOMIC CONDITIONS
The financial success of AEHI 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 AEHI's business. Management believes that the site developed by AEHI
will maintain value long term. Nevertheless, AEHI has no control over these
changes.
-14-
MARKETS
Real estate markets are unpredictable and subject to significant cycles due to
other world market and real influences, and there is no assurance a down time in
the market will not adversely affect AEHI.
FACTORS BEYOND CONTROL OF AEHI
Projects for the acquisition and development of real estate are subject to many
factors which are outside AEHI's control. These factors include general economic
conditions, proximities to utilities and transportation, shortages of labor and
materials and skilled craftsmen and price of materials and competitive products
and the regulation by federal and state governmental authorities.
NEED FOR ADDITIONAL FINANCING
AEHI has limited funds and such funds will not be adequate to carry out the
business plan without borrowing significant funds. The ultimate success of AEHI
may depend upon its ability to raise additional capital. AEHI 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, if available, that they can be
obtained on terms acceptable to AEHI. If not available, AEHI's operations will
be limited to those that can be financed with its modest capital, and it could
fail.
LACK OF REVENUE HISTORY
AEHI was formed in 2006 for the purpose of developing a proposed nuclear
biofuels complex in Idaho. AEHI has never had any revenues. AEHI is not
profitable and the business effort is considered to be in an early development
stage. AEHI 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.
NO ASSURANCE OF SUCCESS OR PROFITABILITY
There is no assurance that AEHI will ever operate profitably. There is no
assurance that it will generate revenues or profits, or that the value of AEHI's
shares will be increased thereby.
LACK OF DIVERSIFICATION
Because of the limited financial resources that AEHI has and due to the nature
of the Project, AEHI will not be able to diversify its operation as discussed in
the document,, immediately. AEHI's inability to immediately diversify its
activities into more than one area will subject AEHI to economic fluctuations
within the nuclear industry and therefore increase the risks associated with
AEHI's operations. AEHI does intend to diversify it operations to other areas,
including biofuels and potable water production, but it cannot provide any
assurances that these activities will happen.
-15-
IF AEHI BORROWS MONEY USING PROPERTY AS COLLATERAL, THE INVESTORS 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 AEHI 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 to
satisfy the amount borrowed for the loan.
SPECIFIC RISK FACTORS RELATED TO NUCLEAR PLANTS
Management expects it is unlikely the Company will be the ultimate owner or
operator of any reactor to be built at any Site. The Company's purpose 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, and employment or
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 that would include nuclear
reactor suppliers and reactor customers (i.e. electric utilities) with and AEHI
participating as the Site and project developers. Management believes the
business is not, therefore, 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
AEHI is subject to the general risks facing the nuclear industry. Because the
industry is closely regulated, AEHI will be required to obtain, and to comply
with, federal, state and local government permits and approvals, particularly
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 may 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:
o Risk of natural disasters, such as earthquakes, floods, volcano eruption,
hurricanes
o Risk of wars, insurrection, revolutions; acts of terrorism o Risk of
inability to obtain or comply with state and local permits
o Risk of inadequate multiple point access to the Site
o Risk of inadequate financial assurances to provide for end of life
decommissioning and decontamination of the Site
o Risk of inability to obtain adequate connection to the transmission grid,
which has economic as well as safety implications
o Risk of inability to assure adequate water supplies for steam and cooling
because AEHI's water rights could be lost because of government action,
extreme drought conditions, or competing economic demands for the water
o Risk of Environmental Objections
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o Risk of substantial changes in Governmental 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 development Project approvals can
be slow, bureaucratic, and may not be as developed or scheduled or accountable
as those for more conventional projects. There can be substantial political
influence asserted against development project approval without the knowledge of
who is behind the opposition, and without 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 (E.G. 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.
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.
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DELAYS ATTRIBUTABLE TO QUEUING AT THE NRC WITH OTHER APPLICATIONS AHEAD OF IEC
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 30-35 new reactors. If these are
all filed in the next 3-5 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 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 US and AEHI may be competing with huge companies
and utilities to get the talent it needs to get its reactor licensed and built.
Also, the US 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 MT. 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 US 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.
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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 AEHI has secured a good
Site. Management believes that AEHI'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 AEHI, 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 AEHI's land. As far as is known as of the date of this
Offering, AEHI does not expect significant competition from other generation
site development projects. In the future, however, AEHI will have no control
over other competitive projects, if such develop.
DELAYS MAY KEEP THE PROJECT FROM QUALIFYING FOR INCENTIVES UNDER THE ENERGY
POLICY ACT OF 2005
Under the Energy Policy Act of 2005, Congress has provided production tax
credits, loan guarantees, and regulatory risk insurance for the first few new
nuclear plants. The Project has a chance to qualify for these, but if the
Project is delayed, or the schedule for other planned nuclear plants
accelerates, the opportunity to get the incentives may be lost.
WEATHER INTERRUPTIONS
Activities of AEHI 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 AEHI to develop
such properties or could increase the costs of construction because of delays.
More stringent air quality restrictions, particularly relating to greenhouse
gasses, could limit potential use of the Site for a coal plant
Even if circumstances prevented development of the Site for a nuclear plant,
management believes it could still be used for a coal plant. However, as public
concern about emissions from coal plants grows, it may be difficult to realize
value from the Site with this alternative strategy.
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SPECIFIC RISKS RELATED TO IEC AND TO THE BIOFUEL INDUSTRY
RISKS RELATED TO BIOFUEL PRODUCTION AND MARKETING
COMPETITION FROM OTHER SOURCES OF FUEL MAY ADVERSELY AFFECT IEC'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 biofuel 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 biofuel, it may be difficult
to market biofuel, which could result in the loss of revenues.
IEC'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 biofuel 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 biofuel
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
biofuel feedstock and any material price increases will adversely affect IEC's
operating performance.
RELIANCE UPON THIRD-PARTIES FOR RAW MATERIAL SUPPLY MAY HINDER IEC'S ABILITY TO
PROFITABLY PRODUCE BIOFUEL.
In addition to being dependent upon the availability and price of feedstock
supply, IEC will be dependent on relationships with third parties, including
feedstock suppliers. Momentum must be successful in establishing feedstock
agreements with third parties. Assuming that IEC can formalize feedstock
purchase contracts, those suppliers could still interrupt IEC's supply by not
meeting their obligations under the contracts. If, because of market conditions,
IEC is forced into a competitive environment for procurement of raw soy oil,
animal fats and other feedstock or IEC is unable to obtain adequate quantities
of feedstock at economical prices, IEC'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 IEC'S ABILITY TO MARKET ITS
BIOFUEL.
Because it is a relatively new product, the research of biofuel 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% biofuel 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
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manufacturers have encouraged the use of biodiesel fuel in their vehicles,
cautionary pronouncements by others may affect IEC'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
biofuel industry.
RISKS RELATED TO BIOFUEL REGULATION AND GOVERNMENTAL ACTION
The biofuels industry relies on federal legislation to create demand for the
biofuels product, which creates an artificial market. If the federal government
ceases to provide incentives for biofuels products, the demand for biodiesel
products will decline.
Much of the existing demand for biofuels 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 IEC. If these rules and regulations were
repealed, the incentive for a substantial portion of IEC's targeted customer
base to purchase biofuel would be eliminated, having a materially adverse effect
on the profitability of IEC.
The biofuel 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 U.S.). 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 IEC.
RISK FACTORS RELATING TO COMPANY
HIGHLY SPECULATIVE NATURE OF INVESTMENT
Due to the highly speculative nature of AEHI'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.
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REPORTING INFORMATION
AEHI is filing this Form 10 Registration to become subject to the reporting
requirements under the Securities and 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 and Exchange Act and the
regulations thereunder. AEHI intends to provide its shareholders with quarterly
reports containing financial information prepared in accordance with generally
accepted accounting principles (unaudited).
LONG TERM NATURE OF 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.
LIMITED LIQUIDITY CASH FLOWS AND CAPITAL RESOURCES
AEHI has minimum liquid assets at September 30, 2008, and will be reliant upon
stock offerings to fund any kind of nuclear operations. The only capital
resources of the AEHI are its common stock.
The monies raised by any private offering may not be sufficient for the
continued proposed operations of AEHI. There is no assurance that additional
monies or financing will be available in the future or, if available, will be at
terms favorable to AEHI. (See "Business Summary")
AEHI 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 AEHI is unsuccessful in repaying such
loans.
AEHI 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.
AEHI 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.
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RISK FACTORS RELATED TO PROPOSED INTERNATIONAL OPERATIONS
THE PROPOSED INTERNATIONAL OPERATIONS OF IRI WILL SUBJECT US TO MATERIAL RISKS
THAT OUR DOMESTIC BUSINESS DOES NOT.
The proposed international operations of IRI will subject us to a number of
risks, including the following:
o maintaining compliance with complex and unfamiliar foreign laws and
regulations;
o 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;
o difficulties and costs of staffing and managing foreign operations;
o difficulties in enforcing agreements and collecting receivables
through foreign legal systems and other relevant legal issues,
including fewer legal protections for intellectual property;
o fluctuations in foreign economies and in the value of foreign
currencies and interest rates; and
o general economic and political conditions in the countries in which we
operate.
Problems or negative developments in any of these areas could adversely impact
IRI'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 U.S. 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
IRI'S FINANCIAL RESULTS. Because AEHI's financial statements are presented in
U.S. dollars, AEHI 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 IRI'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 IRI is successful in
carrying out its international operational plans, AEHI 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 IRI's business, financial condition, results of operations and cash
flows.
-23-
RISK FACTORS RELATED TO COMMON STOCK
THERE ARE LIMITED TRADING MARKETS FOR AEHI'S COMMON STOCK, THEREBY LIMITING A
SHAREHOLDERS' OPPORTUNITY TO SELL SUCH COMMON STOCK.
Currently, only a limited trading market exists for AEHI's common stock. The
common stock trades on the "Pink Sheets" under the symbol "AEHI" The Pink Sheets
are 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 AEHI stock could have a
significant influence over its price at any given time. AEHI cannot assure its
shareholders that a greater market for AEHI's common stock will be sustained.
There is no assurance that AEHI'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 SEC AND FINRA MAY DISCOURAGE THE TRADABILITY
OF AEHI'S SECURITIES.
AEHI is a "penny stock" company. AEHI securities currently trade on the Pink
Sheets 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 AEHI securities constitute "penny stocks"
within the meaning of the rules, the rules would apply to AEHI and to AEHI
securities. The rules will further affect the ability of owners of shares to
sell AEHI 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
-24-
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. AEHI
management is aware of the abuses that have occurred historically in the penny
stock market. Although AEHI 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 AEHI securities.
THE COMPANY WILL PAY NO FORESEEABLE DIVIDENDS IN THE FUTURE.
AEHI has not paid dividends on its common stock and do not ever anticipate
paying such dividends in the foreseeable future.
RULE 144 SALES IN THE FUTURE MAY HAVE A DEPRESSIVE EFFECT ON AEHI STOCK PRICE.
All of the outstanding shares of common stock are held by AEHI 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. AEHI is registering all of its outstanding shares so officers,
directors and affiliates will be able to sell their shares if this Registration
Statement becomes effective. 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.
AEHI INVESTORS MAY SUFFER FUTURE DILUTION DUE TO ISSUANCES OF SHARES FOR VARIOUS
CONSIDERATIONS IN THE FUTURE.
There may be substantial dilution to AEHI shareholders as a result of future
decisions of the Board to issue shares without shareholder approval for cash,
services, or acquisitions.
-25-
AEHI 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 AEHI's common stock is thinly-traded in the Pink Sheets, meaning
that the number of persons interested in purchasing AEHI 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 AEHI
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 AEHI 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 AEHI or purchase or recommend the purchase
of any of AEHI's securities until such time as AEHI becomes more seasoned and
viable. As a consequence, there may be periods of several days or more when
trading activity in AEHI 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. AEHI cannot give you any assurance that a broader or more active public
trading market for AEHI common securities will develop or be sustained, or that
any trading levels will be sustained. Due to these conditions, AEHI 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 AEHI.
AEHI 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 AEHI'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 AEHI
shares may suffer greater declines because of AEHI's price volatility.
The price of AEHI'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 AEHI's control, that may cause AEHI's share price to fluctuate
significantly include, but are not limited to the following:
o Variations in AEHI's quarterly operating results;
o Loss of a key relationship or failure to complete significant
transactions;
o Additions or departures of key personnel; and
o Fluctuations in stock market price and volume.
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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 AEHI 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 AEHI 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 AEHI stock.
ITEM 2. FINANCIAL INFORMATION
The following discussion is intended to provide an analysis of AEHI's financial
condition and should be read in conjunction with AEHI financial statements and
the notes thereto set forth herein. The matters discussed in these sections that
are not historical or current facts deal with potential future circumstances and
developments. AEHI actual results could differ materially from the results
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include those discussed below.
OVERVIEW
AEHI 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 AEHI
management has experience in the nuclear industry, power generation, and
facility development. AEHI formed Idaho Energy Complex Corporation and Reactor
Land Development, LLC was formed as its wholly-owned subsidiary to manage and
finance its business plan to develop a proposed site in Idaho for a reactor. The
LLC 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 (hereafter "the Project").
PLAN OF OPERATIONS
AEHI estimates that the total cost of the Project will be approximately $65
million. The initial $65 million is planned to be raised via the Reactor Land
Development private placement that will convert to 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 other private placement offerings.
While the success of the Project does not depend on financial assistance from
the government, management believes that through 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 billion
over eight years that should be sufficient to cover all operating expenses
during that timeframe. Furthermore, the excess heat from this plant will be used
to produce bio-fuels from local crops and agricultural waste.
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The intended use of the funds for the LLC project is approximately 8% of the
total shown below.
--------------------------------------------- -----------------
$M
--------------------------------------------- -----------------
PAYMENT TO OWNER FOR SITE LAND 15
--------------------------------------------- -----------------
PAYMENT FOR COLA PLUS 10% PRICE
ESCALATION DUE TO DELAYS 37
--------------------------------------------- -----------------
PAYMENTS FOR THIRD PARTY PROJECT
MANAGEMENT AND G&A 7
--------------------------------------------- -----------------
ADDITIONAL WATER RIGHTS 6
--------------------------------------------- -----------------
TOTAL $65M
--------------------------------------------- -----------------
AEHI intends to borrow monies or obtain financing if the Reactor Land
Development private placement does not raise the entire $65 million listed
above.
AEHI 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.
AEHI anticipates using the funds raised in the Offering to pay listed categories
as set forth. AEHI will have complete discretionary control over the actual
utilization of said funds.
Although AEHI reserves the right to reallocate the funds according to field
experience, AEHI 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 AEHI 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.
PROJECT ECONOMICS
AEHI believes that if it is able to raise 65 million dollars, it may develop a
site licensed for construction of the advanced reactor by the end of 2012. AEHI
believes that by acquiring and permitting the proposed site now, its ability to
offer a Site and an NRC license 3 to 4 years sooner than might otherwise be
achievable, will offer additional value to the Idaho site due to earlier power
generation/revenue potential of the site.
-28-
RESULTS OF OPERATIONS FOR YEAR ENDED DECEMBER 31, 2007 COMPARED TO THE YEAR
ENDED DECEMBER 31, 2006
During the years ended December 31, 2007 and 2006, we did not recognize any
revenues from its operational activities.
During the year ended December 31, 2007, we incurred operating expenses of
$4,411,648 compared to $1,395,456 during the year ended December 31, 2006. The
increase of $3,016,192 was a result of an increase in the operational activities
of the Company over the prior year. During the year ended December 31, 2007, we
incurred the following increases in our operational expenses over the prior
year.
DECEMBER 31, DECEMBER 31, INCREASE OR
2006 2007 (DECREASE)
------------ ------------- ------------
Consulting services $90,000 $637,297 $547,297
Marketing services $1,145 $103,875 $102,730
Public relations $5,925 $735,416 $729,491
Legal fees $11,200 $115,637 $104,437
Reactor Land Development,
LLC Expenses $-0- $2,000,157 $2,000,157
During the year ended December 31, 2007, we recognized a net loss of $3,394,200
compared to a net loss of $1,394,711 in the year ended December 31, 2006. The
increase of $1,999,489 in net losses was a result of the $3,016,192 increase in
operational expenses offset by the $1,000,000 non-controlling interest of the
Reactor Land Development, LLC ownership. The Company's basic and diluted loss
per share was $0.10 in 2007 versus a basic and diluted loss per share of $0.06
in 2006.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2008 COMPARED TO THE SIX
MONTHS ENDED JUNE 30, 2007
During the six months ended June 30, 2008 and 2007, we did not recognize any
revenues from our operational activities.
During the six months ended June 30, 2008, we incurred operational expenses of
$2,869,796 compared to $991,408 during the six months ended June 30, 2007. The
increase of $1,878,388 was a result of an increase of $1,273,131 in the expenses
related to shares of common stock issued for services.
-29-
During the six months ended June 30, 2008, we recognized a net loss of
$2,861,157 compared to a net loss of $985,915. The increase of $1,875,242 was a
result of the $1,878,388 increase in operational expenses discussed in the
previous paragraph. During the six months ended June 30, 2008 and 2007, the
Company has net loss per share of $0.05.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2008 COMPARED TO THE
THREE MONTHS ENDED JUNE 30, 2007
During the three months ended June 30, 2008 and 2007, we did not recognize any
revenues from our operations.
During the three months ended June 30, 2008, we incurred operational expenses of
$2,212,174 compared to $304,643 during the three months ended June 30, 2007. The
increase of $1,907,531 is a result of the $1,581,722 increase in the expenses
related to shares of our common stock issued for services.
During the three months ended June 30, 2008, we recognized a net loss of
$2,209,515 compared to $301,917 during the three months ended June 30, 2007. The
increase of $1,907,598 was a result of the increase in operational expenses of
$1,907,531, as discussed in the previous paragraph. During the three months
ended June 30, 2008 and 2007, we had a net loss per share of $0.04 and $0.01,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
From the Company's inception through June 30, 2008, AEHI has funded its
operations primarily from the following sources:
o Equity proceeds through private placements of AEHI securities;
o Revenue generated from operations;
o Loans and lines of credit; and
o Sales of equity investments.
Cash flow from operations has not historically been sufficient to sustain AEHI
operations without the above additional sources of capital. As of June 30, 2008,
the Company had cash and cash equivalents of $421,757.
At June 30, 2008, we had total current assets of $489,757, consisting of cash
and cash equivalents of $421,757, deposits of $58,000 and amounts due from
related parties of $10,000. At June 30, 2008, we had total current liabilities
of $14,603, consisting solely of Accounts Payable.
-30-
GOING CONCERN
Our independent registered public accounting firm has stated in their report
that the Company has recurring operating losses and had negative cash flows from
operations for each of the years ended December 31, 2007 and 2006, and had an
accumulated deficit in the development stage of $4,889,603 at December 31, 2007.
These factors, among others, raise substantial doubt about the Company's ability
to continue as a going concern.
NEED FOR ADDITIONAL FINANCING
AEHI has limited funds and such funds will not be adequate to carry out the
business plan without borrowing significant funds. The ultimate success of AEHI
may depend upon its ability to raise additional capital. AEHI 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, if available, that they can be
obtained on terms acceptable to AEHI. If not available, AEHI's operations will
be limited to those that can be financed with its modest capital, and it could
fail.
FOR THE YEAR ENDED DECEMBER 31, 2007 COMPARED TO THE YEAR ENDED DECEMBER 31,
2006
During the year ended December 31, 2007, we recognized net losses of $3,394,200,
which were adjusted by $1,687,111 in expenses for services paid for by common
stock and a $1,000,000 loss from our variable interest entity. During the year
ended December 31, 2006, there was a $55,000 increase in deposits, a $1,115
decrease in amounts due from related parties and a $33,066 increase in accounts
payable. During the year ended December 31, 2007, net cash used in operations
was $2,727,908.
During the year ended December 31, 2006, we recognized a net loss of $1,394,711,
which was adjusted by $1,318,749 in expenses for service paid with shares of our
common stock. During the year ended December 31, 2006, there was a $21,943
decrease in amounts due from related parties. During the year ended December 31,
2006, net cash used in operations was $54,019.
During the years ended December 31, 2007 and 2006, we did not receive or use
cash in our investing activities.
During the year ended December 31, 2007, we received $2,743,317 from financing
activities. During the year ended December 31, 2007, we received $1,749,359 cash
from the sale of 8,433,536 shares of our common stock. During the year ended
December 31, 2007, we paid back $6,042 to related parties.
During the year ended December 31, 2006, we received $308,041 from financing
activities. During the year ended December 31, 2006, we received $321,999 cash
from the sale of 1,964,000 shares of common stock. During the year ended
December 31, 2006, we purchased 400,000 shares of our common stock for $20,000.
These shares have been accounted for as treasury shares.
-31-
Reactor Land 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 Land Development, LLC's capital
structure as of December 31, 2007. Furthermore, the daily operating decisions of
Reactor Land Development, LLC are made by the members of Alternate Energy
Holdings, Inc.'s management. Under FASB Interpretation No. 46, Reactor Land
Development, LLC is deemed a variable Interest Entity to Alternate Energy
Holding, Inc. and as such Reactor Land Development, LLC's financial information
has been consolidated with Alternate Energy Holdings, Inc. The consolidated
financial statements includes the full operating activities of Reactor Land
Development, LLC, with amounts allocated to Reactor Land Development, LLC
disclosed under "Non-Controlling Interest in Variable Interest Entity" in the
accompanying consolidated income statement. Assets and liabilities of Reactor
Land Development, LLC were $0 and $0, respectively, at December 31, 2007.
FOR THE SIX MONTHS ENDED JUNE 30, 2008 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2007
During the six months ended June 30, 2008, we recognized a net loss of
$2,861,157, which was adjusted by $2,050,771 in expenses connected to the
issuance of shares of common stock for services. During the six months ended
June 30, 2008, we incurred a $3,000 increase in deposits, a $10,000 increase in
amounts due from related parties and an $18,463 decrease in accounts payable.
During the six months ended June 30, 2008, we used $841,849 in operating
activities.
During the six months ended June 30, 2007, we recognized a net loss of $985,915,
which was adjusted by $777,640 in expenses connected to the issuance of shares
of common stock for services. During the six months ended June 30, 2007, we
incurred an increase of $15,800 in accounts payable. During the six months ended
June 30, 2007, we used $192,475 in operating activities.
During the six months ended June 30, 2008 and 2007, we did not use or receive
funds in connection with our investing activities.
During the six months ended June 30, 2008, we received $994,175 from our
financing activities. During the six months ended June 30, 2008 we sold
9,941,750 shares of our common stock in exchange for cash of $994,175 to be used
to support our operations.
During the six months ended June 30, 2007, we received $151,350 from our
financing activities. During the six months ended June 30, 2007, we received
$2,100 in advances from related parties. During the six months ended June 30,
2007, we issued 499,000 shares of our common stock in exchange for cash of
$149,250, which was used to support ongoing operations.
CRITICAL ACCOUNTING POLICIES
AEHI has identified the policies below as critical to AEHI business operations
and the understanding of AEHI 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 AEHI 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
-32-
Financial Statements beginning on page F-8 of this document. Note that the
Company's preparation of this document requires AEHI to make estimates and
assumptions that affect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of AEHI financial
statements, and the reported amounts of revenue and expenses during the
reporting period. There can be no assurance that actual results will not differ
from those estimates.
REVENUE RECOGNITION
AEHI follows very specific and detailed guidelines in measuring revenue;
however, certain judgments may affect the application of AEHI revenue policy.
Revenue results are difficult to predict, and any shortfall in revenue or delay
in recognizing revenue could cause AEHI operating results to vary significantly
from quarter to quarter and could result in future operating losses.
REVENUES FROM BUSINESS DEVELOPMENT SERVICES
Revenue from AEHI business development services may be derived from time and
materials contracts and is recognized as the work is completed. Revenue
recognition for time and materials contracts is not significantly impacted by
judgments and estimates. Within the business development division a small amount
of the work is performed based on fixed price agreements. When this occurs the
projects are generally of a short duration and revenue is recognized when the
project is completed.
RESERVES FOR BAD DEBT
AEHI's policy on reserves for bad debt determines the timing and recognition of
expenses. The Company follows guidelines that reserve based off of historical
and account specific trends; however, certain judgments affect the application
of AEHI bad debt reserve policy. AEHI receivables are recorded net of an
allowance for doubtful accounts which requires management to estimate amounts
due which may not be collected. This estimate requires consideration of general
economic conditions, overall historical trends related to the Company's
collection of receivables, customer specific payment history, and customer
specific factors affecting their ability to pay amounts due. Management
routinely assesses and revises its estimate of the allowance for doubtful
accounts. As June 30, 2008 there were no trade accounts receivable, therefore
there is no provision for bad debt as of this date.
GOODWILL AND INTANGIBLE ASSETS
None: Not applicable.
RECENT ACCOUNTING PRONOUNCEMENTS
In May 2008, the FASB issued FASB Staff Position (FSP) No. APB 14-1 "Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement)" (FSP APB 14-1). FSP APB 14-1 requires the
issuer of certain convertible debt instruments that may be settled in cash (or
other assets) on conversion to separately account for the liability (debt) and
equity (conversion option) components of the instrument in a manner that
-33-
reflects the issuer's non-convertible debt borrowing rate. FSP APB 14-1 is
effective for fiscal years beginning after December 15, 2008 on a retroactive
basis and will be adopted by the Company in the first quarter of fiscal 2009.
The Company does not expect the adoption of FSP APB 14-1 to have a material
effect on its results of operations and financial condition.
In April 2008, the FASB issued FASB Staff Position (FSP) FAS 142-3,
"Determination of the Useful Life of Intangible Assets." This FSP amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible asset under FASB
Statement No. 142, "Goodwill and Other Intangible Assets." The intent of this
FSP is to improve the consistency between the useful life of a recognized
intangible asset under Statement 142 and the period of expected cash flows used
to measure the fair value of the asset under FASB Statement No. 141 (Revised
2007), "Business Combinations," and other U.S. generally accepted accounting
principles (GAAP). This FSP is effective for financial statements issued for
fiscal years beginning after December 15, 2008, and interim periods within those
fiscal years. Early adoption is prohibited. The Company does not expect the
adoption of FAS 142-3 to have a material effect on its results of operations and
financial condition.
In March 2008, the FASB issued Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities--an amendment of FASB Statement No. 133"
(SFAS 161). The Statement requires companies to provide enhanced disclosures
regarding derivative instruments and hedging activities. It requires companies
to better convey the purpose of derivative use in terms of the risks that such
company is intending to manage. Disclosures about (a) how and why an entity uses
derivative instruments, (b) how derivative instruments and related hedged items
are accounted for under SFAS No. 133 and its related interpretations, and (c)
how derivative instruments and related hedged items affect a company's financial
position, financial performance, and cash flows are required. This Statement
retains the same scope as SFAS No. 133 and is effective for fiscal years and
interim periods beginning after November 15, 2008, or January 1, 2009 for the
Company. The Company does not expect the adoption of SFAS 161 to have a material
effect on its results of operations and financial condition.
In February 2008, FASB Staff Position (FSP) FAS No. 157-2, "Effective Date of
FASB Statement No. 157" (FSP No. 157-2) was issued. FSP No. 157-2 defers the
effective date of SFAS No. 157 to fiscal years beginning after December 15,
2008, and interim periods within those fiscal years, for all nonfinancial assets
and liabilities, except those that are recognized or disclosed at fair value in
the financial statements on a recurring basis (at least annually). Examples of
items within the scope of FSP No. 157-2 are nonfinancial assets and nonfinancial
liabilities initially measured at fair value in a business combination (but not
measured at fair value in subsequent periods), and long-lived assets, such as
property, plant and equipment and intangible assets measured at fair value for
an impairment assessment under SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." The partial adoption of SFAS No. 157 on January
1, 2008 with respect to financial assets and financial liabilities recognized or
disclosed at fair value in the financial statements on a recurring basis did not
have a material effect on the Company's consolidated financial statements. The
Company is currently assessing the impact, if any, of SFAS No. 157 relating to
its planned January 1, 2009 adoption of the remainder of the standard.
-34-
In December 2007, the FASB issued SFAS No. 141, "Business Combinations" (revised
2007) (SFAS 141-R), which provides greater consistency in the accounting and
financial reporting of business combinations. It requires the acquiring entity
in a business combination to recognize all assets acquired and liabilities
assumed in the transaction, establishes the acquisition-date fair value as the
measurement objective for all assets acquired and liabilities assumed, and
requires the acquirer to disclose the nature and financial effect of the
business combination. SFAS 141-R is effective for acquisitions in fiscal years
beginning after December 15, 2008, or January 1, 2009 for the Company. The
Company does not expect the adoption of SFAS 141 to have a material effect on
its results of operations and financial condition.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
Consolidated Financial Statements" (SFAS 160). This Statement amends Accounting
Research Bulletin No. 51, "Consolidated Financial Statements," to establish
accounting and reporting standards for the noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is effective
for fiscal years beginning after December 15, 2008, or January 1, 2009 for the
Company. The Company is currently assessing the impact, if any, the adoption
will have on its financial position and results of operations.
On February 15, 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities, including an amendment of FASB
Statement No. 115" (SFAS 159). Under this standard, the Company may elect to
report financial instruments and certain other items at fair value on an
investment-by-investment basis with changes in value reported in earnings. This
election is irrevocable. SFAS 159 provides an opportunity to mitigate volatility
in reported earnings that is caused by measuring hedged assets and liabilities
that were previously required to use a different accounting method than the
related hedging contracts when the complex provisions of SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," hedge accounting
are not met. SFAS 159 is effective for years beginning after November 15, 2007.
Early adoption within 120 days of the beginning of the Company's 2007 fiscal
year is permissible, provided the Company has not yet issued interim financial
statements for 2007 and has adopted SFAS 157, "Fair Value Measurements" (SFAS
157). Adoption of this standard did not have a material effect on its
consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS
No. 157), which clarifies the definition of fair value whenever another standard
requires or permits assets or liabilities to be measured at fair value.
Specifically, the standard clarifies that fair value should be based on the
assumptions market participants would use when pricing the asset or liability,
and establishes a fair value hierarchy that prioritizes the information used to
develop those assumptions. SFAS No. 157 does not expand the use of fair value to
any new circumstances, and must be applied on a prospective basis except in
certain cases. The standard also requires expanded financial statement
disclosures about fair value measurements, including disclosure of the methods
used and the effect on earnings.
-35-
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
AEHI's operations do not employ financial instruments or derivatives which are
market sensitive.
If successful in completing proposed international agreements, AEHI, through
IRI, will generate revenues and incur expenses and liabilities in both U.S.
Dollars and foreign currencies. AEHI has not entered into agreements or
purchased instruments to hedge its exchange rate risks, although it may do so in
the future. If IRI is successful in entering into international markets, results
of operations and financial condition may be negatively affected by changes in
the values of currencies.
ITEM 3. PROPERTIES
AEHI operations are principally located at 911 E. Winding Creek Dr., Suite 150,
Eagle, Idaho 83616. AEHI pays monthly rent or fees for the use of this office
and related facilities of $1,735.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information with respect to the beneficial
ownership of AEHI outstanding common stock by:
o each person who is known by AEHI to be the beneficial owner of five
percent (5%) or more of AEHI common stock;
o AEHI chief executive officer, its other executive officers, and each
director as identified in the "Management -- Executive Compensation"
section; and
o 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 AEHI 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.
The information below is based on the number of shares of AEHI common stock that
AEHI believes was beneficially owned by each person or entity as of September
30, 2008.
-36-
NUMBER OF SHARES OF
NAME AND ADDRESS OF COMMON STOCK PERCENT OF CLASS
BENEFICIAL OWNER (1) BENEFICIALLY OWNED BENEFICIALLY OWNED
-------------------------------------- ------------------- ------------------
Donald Gillispie, President, CEO,
COO & Director 22,300,000(2) 30.42%
Gregory E. Kane, Vice President
& Director 1,000,000 1.34%
John Franz, Vice President & Director 1,000,000 1.34%
Rick J. Bucci, Chief Financial Officer 3,000,000 4.038%
Jennifer Ransom, Vice President of
Administration & Secretary 4,500,000 6.057%
Leon Eliason, Director 1,000,000 1.34%
James M. Taylor, Director 1,000,000 1.34%
Kenneth A. Strahm, Sr., Director 1,000,000 1.34%
Ralph Beedle, Director 1,000,000 1.34%
Taylor Gillispie (3) 4,149,000 5.585%
3440 Union Church Road
Thaxton, VA 24174
All directors and executive
officers as a group (nine persons) 35,800,000 48.555%
(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) 13,500,000 Shares held individually; 8,800,000 held jointly with spouse
(3) Daughter of Donald Gillispie
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 sixty 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
-37-
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 AEHI
believes have a reasonable likelihood of being "in the money" within the next
sixty days.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as to persons who currently serve as
AEHI directors or executive officers, including their ages as of September 30,
2008.
NAME AGE POSITION
---------------------- --- ----------------------------------------------
Donald Gillispie 64 President, CEO, COO and Director
Gregory E. Kane 65 Vice President and Director
John Franz 70 Vice President and Director
Rick J. Bucci 41 Chief Financial Officer
Jennifer Ransom 34 Vice President of Administration and Secretary
Leon Eliason 68 Director
James M. Taylor 73 Director
Kenneth A. Strahm, Sr. 71 Director
Ralph Beedle 68 Director
AEHI officers are elected by the board of directors at the first meeting after
each annual meeting of AEHI shareholders and hold office until their successors
are duly elected and qualified under AEHI bylaws.
The directors named above will serve until the next annual meeting of AEHI'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 AEHI 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 AEHI will devote part-time (up to 10 hours weekly) to AEHI's
affairs and the officers will devote full-time (up to 50 hours weekly) to AEHI.
BIOGRAPHICAL INFORMATION
Management will devote part-time (Directors) and full time (Officers) to the
operations of the Company, and any time spent will be devoted to screening and
assessing and, if warranted, negotiating to acquire business opportunities.
-38-
DONALD GILLISPIE, PRESIDENT, CEO, COO AND DIRECTOR
A past nuclear utility senior executive and current AEHI Chairman, has served as
President and CEO of AEHI 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, GA and a nuclear
operating company, NMC, in Hudson, WI which operated six nuclear power plants
with 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 and has completed the Senior Executive Program at MIT. In addition,
Mr. Gillispie has completed the Navy Nuclear program.
GREG KANE, VICE PRESIDENT AND DIRECTOR
A past nuclear plant manager, has served as Vice President and Board member of
AEHI since September 2006. Mr. Kane is the President of Eagle "I" Nuclear
Assistance, a consulting firm that provides, or has provided, management
consulting to over twenty-five (25) nuclear programs. Mr. Kane has held that
position since 1998. Mr. Kane previously held the position of 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 all aspects of
activities. Mr. Kane has completed the Navy Nuclear Program.
JOHN FRANZ, VICE PRESIDENT AND DIRECTOR
John Franz, a past Vice President of Duane Arnold, a nuclear facility, has
served on the Board of AEHI since February 2007. Since leaving the nuclear
utility, he has been a consultant for 12 nuclear power plants and 2 consulting
firms, including practice INPO Accreditation Boards and membership on Nuclear
Safety Review Boards. Mr. Franz has 36 years of experience in the licensing,
start-up, operation, and management of nuclear power plants. Mr. Franz has
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 AEHI since September 2007. Mr. Bucci has practiced accounting and tax for 19
years; his background includes hotels, construction, real estate development and
banking. Additionally, he has served previously 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).
-39-
JENNIFER RANSOM, 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 and she reports to Chairman and CEO
Donald Gillispie. Ms. Ransom has 15 years of experience in insurance, management
and related fields, she is founder and owner of Ransom Insurance. Prior to
starting Ransom Insurance, she worked as regional sales executive and a senior
underwriter for Amica Insurance Company. Ms. Ransom received a BA 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 AEHI Chairman, has served on the Board of AEHI since September 2006. Mr.
Eliason is a professional in the utilities field, with thirty-three (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.
JAMES M. TAYLOR, DIRECTOR
Mr. Taylor the former Chief Operating Officer of the U.S. Nuclear Regulatory
Commission (NRC) for a period of 10 years, has served on the Board of AEHI since
September 2006. During his career, he was recognized by both Presidents Bush and
Clinton with Presidential Distinguished Executive Rank Awards in 1989 and 1994.
Mr. Taylor additionally held the position of Chief Financial Officer during his
years of NRC employment and has served on Nuclear Safety Oversight Committees at
nine utilities operating nuclear power plants. Mr. Taylor attended the Naval
Academy and received a BS in Marine Engineering and attended MIT where he
obtained an Master of Science in Nuclear.
KENNETH A. STRAHM, SR., DIRECTOR
Mr. Strahm, a past president of the nuclear industry watchdog organization INPO,
has served on the Board of AEHI since September 2006. Prior to his retirement,
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.
-40-
RALPH BEEDLE, DIRECTOR
Mr. Beedle, a past Senior Vice President of the Nuclear Energy Institute, has
served on the Board of AEHI since inception. Mr. Beedle past 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.
ANNUAL MEETING
The annual meeting of AEHI stockholders is expected to be held at a future date
as soon as practicable after the filing of this registration statement. This
will be an annual meeting of stockholders for the election of directors. The
annual meeting will be held at the AEHI's principal office or at such other
place as permitted by the laws of the State of Nevada and on such date as may be
fixed from time to time by resolution of AEHI board of directors.
COMMITTEES OF THE BOARD OF DIRECTORS
AEHI is managed under the direction of its board of directors.
EXECUTIVE COMMITTEE
Members of the AEHI Executive Committee are as follows: Donald Gillispie
(Co-Chairman), Leon Eliason (Co-Chairman), Kenneth A. Strahm, Sr. and Ralph
Beedle.
AUDIT COMMITTEE
AEHI formed an audit committee in March 2007. Members of the AEHI Audit
Committee are as follows: 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, as
amended, which AEHI refers to as the Securities Exchange Act. At least one
member of the committee has accounting or related financial management
expertise.
PREVIOUS "BLANK CHECK" OR "SHELL" COMPANY INVOLVEMENT
Management of AEHI has not been involved in prior private "blank-check" or
"shell" companies.
CONFLICTS OF INTEREST
The officers and directors of AEHI will not devote more than a portion of their
time to the affairs of the Company. There will be occasions when the time
requirements of the AEHI's business conflict with the demands of their other
business and investment activities. Such conflicts may require that AEHI attempt
to employ additional personnel. There is no assurance that the services of such
persons will be available or that they can be obtained upon terms favorable to
AEHI.
-41-
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.
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 6. EXECUTIVE COMPENSATION
The following table sets forth the fact that no officer received a cash salary
during the last three fiscal years. The following table sets forth this
information by AEHI, including salary, bonus and certain other compensation to
the Company's Chief Executive Officer and named executive officers for the past
three fiscal years.
The officers and directors of the Company do not intend to receive cash
remuneration or salaries for their efforts unless and until the Company's
business operations are successful, at which time salaries and other
remuneration will be established by the Board of Directors, as appropriate.
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[Enlarge/Download Table]
SUMMARY EXECUTIVES COMPENSATION TABLE
-------------------- -------- --------- -------- ----------- ------- --------------- ------------ --------------- ----------
-------------------- -------- --------- -------- ----------- ------- --------------- ------------ --------------- ----------
Non-equity Non-qualified
incentive deferred
Stock Option plan compensation All other
Salary Bonus awards awards compensation earnings compensation Total
Name & Position Year ($) ($) ($) ($) ($) ($) ($) ($)
-------------------- -------- --------- -------- ----------- ------- --------------- ------------ --------------- ----------
Donald Gillispie, 2007 0 0 $200,000 0 0 0 $40,023 $240,023
President, CEO and 2006 0 0 $14,800 0 0 0 0 $14,800
COO (1) 2005 0 0 0 0 0 0 0 0
-------------------- -------- --------- -------- ----------- ------- --------------- ------------ --------------- ----------
Gregory E. Kane, 2007 0 0 0 0 0 0 0 0
Vice President 2006 0 0 0 0 0 0 0 0
2005 0 0 0 0 0 0 0 0
-------------------- -------- --------- -------- ----------- ------- --------------- ------------ --------------- ----------
John Franz, Vice 2007 0 0 0 0 0 0 0 0
President 2006 0 0 0 0 0 0 0 0
2005 0 0 0 0 0 0 0 0
-------------------- -------- --------- -------- ----------- ------- --------------- ------------ --------------- ----------
Rick J. Bucci, 2007 0 0 $50,000 0 0 0 0 $50,000
Chief Financial 2006 0 0 0 0 0 0 0 0
Officer (2) 2005 0 0 0 0 0 0 0 0
-------------------- -------- --------- -------- ----------- ------- --------------- ------------ --------------- ----------
Jennifer Ransom,
V.P. of 2007 0 0 $25,000 0 0 0 0 $25,000
Administration and 2006 0 0 0 0 0 0 0 0
Secretary (3) 2005 0 0 0 0 0 0 0 0
-------------------- -------- --------- -------- ----------- ------- --------------- ------------ --------------- ----------
-------------------- -------- --------- -------- ----------- ------- --------------- ------------ --------------- ----------
(1)During the year ended December 31, 2006, Mr. Gillispie received 14,800,000
shares of common stock valued at $.0001 per share for his services. During the
year ended December 31, 2007, Mr. Gillispie received 2,000,000 shares of common
stock valued at $.10 per share as compensation for his services.
(2) During the year ended December 31, 2007, Mr. Bucci received 500,000 shares
of common stock valued at $.10 per share as compensation for his services.
(3) During the year ended December 31, 2007, Ms. Ransom received 250,000 shares
of common stock valued at $.10 per share as compensation for her services.
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
AEHI does not have a stock option plan as of the date of this Registration
Statement. There was no grant of stock options to the Chief Executive Officer
and other named executive officers during the fiscal year ended December 31,
2007 and through June 30, 2008.
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.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The AEHI board of directors in its entirety acts as the compensation committee
for AEHI. Mr. Gillispie is the Chief Executive Officer and Chairman of the
Company.
STOCK OPTION PLAN
The Company intends to adopt an incentive stock option plan pursuant to which
the board of directors may grant options to purchase up to five million shares
of the Company's common stock to key employees, consultants and others. The plan
will provide for the grant of incentive stock options with an exercise price of
not less than the fair market value on the date of the grant as determined by
the board of directors and will expire no later than the tenth anniversary of
the date of grant.
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, 2007:
[Enlarge/Download Table]
-------------- ----------- ----------- ----------- --------------- --------------- ---------------- ---------
-------------- ----------- ----------- ----------- --------------- --------------- ---------------- ---------
Nonqualified
Non-equity deferred
Fees incentive compensation All other
earned or Stock Option plan earnings compensation Total
Name paid in awards ($) awards ($) compensation ($) ($) ($)
cash ($)
($)
-------------- ----------- ----------- ----------- --------------- --------------- ---------------- ---------
Donald $-0- $-0- $-0- $-0- $-0- $-0- $-0-
Gillispie
-------------- ----------- ----------- ----------- --------------- --------------- ---------------- ---------
Gregory E. $-0- $10,000 $-0- $-0- $-0- $-0- $10,000
Kane
-------------- ----------- ----------- ----------- --------------- --------------- ---------------- ---------
John Franz $-0- $20,000 $-0- $-0- $-0- $-0- $20,000
-------------- ----------- ----------- ----------- --------------- --------------- ---------------- ---------
Leon Eliason $-0- $10,000 $-0- $-0- $-0- $-0- $10,000
-------------- ----------- ----------- ----------- --------------- --------------- ---------------- ---------
James M. $-0- $20,000 $-0- $-0- $-0- $-0- $20,000
Taylor
-------------- ----------- ----------- ----------- --------------- --------------- ---------------- ---------
Kenneth A. $-0- $20,000 $-0- $-0- $-0- $-0- $20,000
Strahm, Sr.
-------------- ----------- ----------- ----------- --------------- --------------- ---------------- ---------
Ralph Beedle $-0- $20,000 $-0- $-0- $-0- $-0- $20,000
-------------- ----------- ----------- ----------- --------------- --------------- ---------------- ---------
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LIMITATION ON LIABILITY AND INDEMNIFICATION
AEHI 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. AEHI articles of incorporation contain a provision eliminating
the personal liability of directors to AEHI or AEHI 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. AEHI articles of incorporation do not contain any such
limitation.
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. AEHI articles of incorporation provide
for indemnification of directors, officers, employees, fiduciaries and agents of
AEHI to the full extent permitted by Nevada law.
-45-
AEHI articles of incorporation also provide that AEHI may purchase and maintain
insurance on behalf of any person who is or was a director or officer of AEHI or
who is or was serving at the request of AEHI 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 AEHI 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 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 2006, Mr. Gillispie, an officer and director
of AEHI, received 8,800,000 shares of common stock valued at $.0001 per share
for his services. During the year ended December 31, 2007, Mr. Gillispie
received 6,000,000 shares of common stock valued at $.0001 per share as
compensation for his services.
During the year ended December 31, 2006, Mr. Kane, an officer and director of
AEHI, received 300,000 shares of common stock valued at $.0001 per share for his
services. During the year ended December 31, 2007, Mr. Kane received 200,000
shares of common stock valued at $.0001 per share as compensation for his
services.
During the year ended December 31, 2006, Mr. Franz, an officer and director of
AEHI, received 30,000 shares of common stock valued at $.50 per share for his
services. During the year ended December 31, 2007, Mr. Franz received 350,000
shares of common stock, of which 300,000 shares were valued at $.50 per share
and 50,000 were valued at $.10 per share as compensation for his services.
During the year ended December 31, 2007, Mr. Bucci, an officer of AEHI, received
500,000 shares of common stock valued at $.0001 per share as compensation for
his services.
During the year ended December 31, 2007, Ms. Ransom, an officer of AEHI received
250,000 shares of common stock valued at $.0001 per share as compensation for
her services.
During the year ended December 31, 2007, the following directors of AEHI
received shares in the amounts set forth below:
NUMBER OF SHARES $ VALUE OF SHARES
---------------- -----------------
Mr. Kane 100,000 $10,000
Mr. Franz 200,000 $20,000
Mr. Eliason 100,000 $10,000
Mr. Taylor 200,000 $20,000
Mr. Strahm 200,000 $20,000
Mr. Beedle 200,000 $20,000
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ITEM 8. LEGAL PROCEEDINGS
AEHI anticipates that it (including current and future subsidiaries) 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 AEHI cannot assure that their ultimate disposition will not
have a materially adverse effect on AEHI business, financial condition, cash
flows or results of operations. As of September 25, 2008 there is one open legal
proceeding. AEHI has filed a lawsuit in Idaho's 4th District Court against the
director of the Snake River Alliance environmental group over defamatory
statements.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
There is a limited public trading market for the common stock. The Company's
symbol is "AEHI" on the "Unsolicited" Pink Sheets.
HIGH LOW
---------------- ---- ----
3rd Quarter 2008 $.40 $.08
2nd Quarter 2008 $.21 $.08
1st Quarter 2008 $.43 $.17
HIGH LOW
---------------- ---- ----
4th Quarter 2007 $.50 $.20
3rd Quarter 2007 $1.05 $.25
2nd Quarter 2007 $.76 $.15
1st Quarter 2007 $1.20 $.10
HOLDERS
There are approximately 388 holders of record of AEHI common stock as of
September 15, 2008.
DIVIDEND POLICY
Holders of AEHI common stock are entitled to receive such dividends as may be
declared by AEHI board of directors. AEHI has not declared or paid any dividends
on AEHI common shares and it does not plan on declaring any dividends in the
near future. AEHI currently intends to use all available funds to finance the
operation and expansion of its business.
-47-
SHARES ELIGIBLE FOR FUTURE SALE
AEHI currently has 74,703,293 shares of common stock outstanding as of September
15, 2008. A current shareholder who is an "affiliate" of AEHI, defined in Rule
144 as a person who directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with AEHI will be
required to comply with the resale limitations of Rule 144. Of these shares a
total of 62,903,293 shares have been held for 1 year 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 AEHI. 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 one percent of the outstanding shares of common stock or the average
weekly trading volume during the four 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 two years may sell the
restricted securities under Rule 144 without regard to any of the Rule 144
limitations.
[Enlarge/Download Table]
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
NAME OF SHAREHOLDER NUMBER OF PRICE DATE OF
SHARES PER PURCHASE
PURCHASED SHARE
-------------------------------------------------------------- ----------------- --------------- -----------------
Loveland, William D. 200,000 $0.05 9/9/05
Rant, Alexander 100,000 $0.03 9/26/05
Johns, Samuel J. Trust 100,000 $0.05 10/15/05
Fairleigh, David E. 200,000 $0.05 3/7/06
Alcott, Charles III 100,000 $0.05 3/8/06
Gupta, Sunil, M.D. 100,000 $0.05 3/8/06
Harbour, Robert C. 100,000 $0.05 3/8/06
Taylor, Martha C. 100,000 $0.05 3/9/06
Hale, Lance M. 200,000 $0.05 5/31/06
Hale, Lance M. and Terry L. 100,000 $0.05 6/12/06
Hale, Lance M. & Associates 100,000 $0.05 6/14/06
Adams, John 60 $0.00 9/18/06
Ballard, Don 75 $0.00 9/18/06
Bevan, James A. 32 $0.00 9/18/06
Bryan, David L. 299 $0.00 9/18/06
Campbell, David E. 996 $0.00 9/18/06
Cernan, Gene 150 $0.00 9/18/06
Chapman, Morris 120 $0.00 9/18/06
Csorba, Les 120 $0.00 9/18/06
Dohner, Kathleen A. 4,105 $0.00 9/18/06
Dohner, Lloyd 4,105 $0.00 9/18/06
Duncan, Michael 448 $0.00 9/18/06
Dunn, Monte 60 $0.00 9/18/06
Habilis Financial Corporation 747 $0.00 9/18/06
-48-
Hoaglund, Allyn 329 $0.00 9/18/06
James, Randy 75 $0.00 9/18/06
LYNX Consulting Group, Inc. 1,120 $0.00 9/18/06
Macmorran, Kathryn 2,986 $0.00 9/18/06
Miles, Denny 60 $0.00 9/18/06
Morgan, Dean 8,657 $0.00 9/18/06
Morgan, John 75 $0.00 9/18/06
Nelson, Doug 60 $0.00 9/18/06
Paramount Roofing, Inc. 2,239 $0.00 9/18/06
Phoenix IR Associates, Inc. 747 $0.00 9/18/06
Sapaugh, Donald W. 299 $0.00 9/18/06
Sapaugh, Lauren 60 $0.00 9/18/06
Sapaugh, Tanner Kate 30 $0.00 9/18/06
Tebo, Steve 448 $0.00 9/18/06
Thayer, Paul 598 $0.00 9/18/06
Vickers, Rod 224 $0.00 9/18/06
Vickers, Ron 45 $0.00 9/18/06
Vickers, Tawanda 45 $0.00 9/18/06
Wine, Duncan 105 $0.00 9/18/06
Anderson, Ramona 60 $0.00 9/19/06
Brierpatch, Ltd. 986 $0.00 9/19/06
Carr, Alisha 75 $0.00 9/19/06
Carr, Vicki 746 $0.00 9/19/06
Carr, Vicki 12,314 $0.00 9/19/06
EMIS Software Manufacturers, Inc. 583 $0.00 9/19/06
Holladay, Paul 821 $0.00 9/19/06
IT IS Holdings, Inc. 2,612 $0.00 9/19/06
IT IS Holdings, Inc. 17,279 $0.00 9/19/06
Kirker, Tom & Dawn Kirker JT TEN 150 $0.00 9/19/06
Lande, Neil 135 $0.00 9/19/06
Micro Legal Services, Inc. 2,299 $0.00 9/19/06
Milstead Jr., Charles 2,986 $0.00 9/19/06
Milstead, Charles F. 1,493 $0.00 9/19/06
MLSI, Inc. 165 $0.00 9/19/06
Moddrell, Chester 172 $0.00 9/19/06
National Law Library, Inc. 2,687 $0.00 9/19/06
Purcell, Garrett 75 $0.00 9/19/06
Purcell, Graham 75 $0.00 9/19/06
Rainmaker II Ventures, LTD 16,072 $0.00 9/19/06
Roberts, George 598 $0.00 9/19/06
Smith, Christiana 75 $0.00 9/19/06
Smith, Preston 75 $0.00 9/19/06
Thomas, Kyle 75 $0.00 9/19/06
Thomas, Tim 75 $0.00 9/19/06
Victoria's Own, Inc. 374 $0.00 9/19/06
Wells, CE 38 $0.00 9/19/06
Wiley, Joe 1,493 $0.00 9/19/06
Wilson, Carol 60 $0.00 9/19/06
Beedle, Ralph E. (1) 300,000 $0.05 9/20/06
Eliason, Leon R. (1) 400,000 $0.05 9/20/06
-49-
Gillispie, Donald L. and Martha A. (1) 1,800,000 $0.00 9/20/06
Gillispie, Donald L. and Martha A. (1) 7,000,000 $0.00 9/20/06
Gillispie, Taylor 1,149,999 $0.05 9/20/06
Kane, Gregory E. (1) 400,000 $0.05 9/20/06
LeRoy, Steven L. 1,149,999 $1.01 9/20/06
McCullough, Richard W. 400,000 $0.05 9/20/06
Strahm, Kenneth A., Sr. (1) 300,000 $0.05 9/20/06
Taylor, James M. (1) 300,000 $0.05 9/20/06
Cede & Co. 100,000 $0.00 10/3/06
Martin, Bill 60 $0.00 10/5/06
Raper, Kelly 1,120 $0.00 10/5/06
Cede & Co. 50,000 $0.90 10/13/06
Cede & Co. 50,000 $0.90 10/20/06
Cede & Co. 75 $0.00 10/23/06
Franz, John (1) 20,000 $0.50 10/24/06
Gentle, Bryan 60 $0.00 10/24/06
Rae, Bud 224 $0.00 10/24/06
Pelcher, Timothy 50,000 $0.70 11/2/06
Matteson, Maurice 200,000 $0.65 11/3/06
Overstreet, Mike 1,000 $0.05 11/10/06
Zylstra, Henry & Karen 2,000 $0.50 11/10/06
Solymossy, Joe 40,000 $0.33 11/15/06
Anderson, Erling 2,000 $0.33 11/20/06
Gillispie, Mike 20,000 $0.03 11/20/06
Heck, Paul 5,000 $0.40 11/20/06
Murray, Carol 12,500 $0.80 11/20/06
Curd, Joyce & Otis 1,500 $0.33 11/21/06
Jones, Mike & Dolores 15,000 $0.33 11/22/06
Duffy, Charles 10,000 $0.50 11/25/06
Grant Jr., William G. 10,000 $0.50 11/25/06
Ridgeway, James 11,000 $0.45 11/25/06
Layman, Anthony 20,000 $0.35 11/27/06
Cede & Co. 1,717 $0.00 11/28/06
Lupo, James 3,000 $0.33 11/28/06
Cede & Co. 37,286 $0.00 12/5/06
Stevens, Ed 75 $0.00 12/7/06
Cede & Co. 8,958 $0.00 12/8/06
Gillispie, Donald (1) 4,000,000 $0.10 12/11/06
Gillispie, Taylor 2,000,000 $0.10 12/11/06
Aventura Holdings, Inc. 7,961 $0.00 12/14/06
Anderson, Erling 1,000 $0.33 12/26/06
Franz, John (1) 10,000 $0.50 12/26/06
Layman, Anthony 30,000 $0.35 12/26/06
Cede & Co. 75 $0.00 1/3/07
Cede & Co. 400,000 $0.00 1/4/07
Blair, Chris 10,000 $0.50 1/5/07
Cooley, John 5,000 $0.50 1/5/07
Drucker, Joe 5,000 $0.50 1/5/07
Gillispie, Martha 300,000 $0.00 1/5/07
Jones, David 4,000 $0.31 1/5/07
-50-
Jones, David & Deborah 25,000 $0.50 1/5/07
Mitschele, Elsa 7,000 $0.71 1/5/07
Peschel, James 10,000 $0.50 1/5/07
Ranes, Josh 5,000 $0.50 1/5/07
Saunders, Carolyn H. 2,000 $0.50 1/11/07
Cede & Co. 50,000 $0.00 1/15/07
Clark, John 50,000 $0.50 1/16/07
Lane, Robert 1,120 $0.00 2/5/07
Smith, Ed 10,000 $0.50 2/8/07
Rainmaker Ventures 250,000 $0.50 2/12/07
Cede & Co. 50,000 $0.00 2/26/07
Cede & Co. 150,000 $0.00 2/26/07
Rice, Troy A. & Lisa A. Rice JT TEN 300,000 $0.00 2/26/07
Rainmaker Ventures 70,000 $0.50 2/28/07
Cede & Co. 50,746 $0.00 3/2/07
Franz, John (1) 300,000 $0.50 3/12/07
Martin, Robert 10,000 $0.50 3/12/07
Celebration Ministries 1,493 $0.00 3/26/07
Cede & Co. 70,000 $0.00 3/27/07
Cede & Co. 43,792 $0.00 3/29/07
Cede & Co. 10,000 $0.00 4/10/07
Smith, Donald G. 25,000 $0.40 4/11/07
Cede & Co. 100,000 $0.00 4/12/07
Rainmaker 50,000 $0.25 4/16/07
Carter, John A. Family Trust 40,000 $0.00 5/2/07
Fraser, Charles R. 500 $0.00 5/2/07
Cooley, Tom 22,000 $0.25 5/3/07
Sells, Jason & A. Clapier 20,000 $0.25 5/3/07
Ellsworth, Jack & Linda Family Trust 24,000 $0.25 5/17/07
Young, H. Edwin 165 $0.00 5/22/07
Headrick, John 100,000 $0.25 5/23/07
Headrick, Patricia 40,000 $0.25 5/23/07
Jones, David M. 20,000 $0.25 6/4/07
Jones, M. Michael and Dolores 20,000 $0.25 6/4/07
Mitschele, Elsa 20,000 $0.25 6/4/07
Brodsky, Erika 20,000 $0.25 6/8/07
Brodsky, Karen 10,000 $0.25 6/8/07
Engle, Christopher M. 5,000 $0.20 6/8/07
Evans, Courtney F. 10,000 $0.20 6/8/07
Evans, Floyd Anthony 20,000 $0.25 6/8/07
Hoeschstetter, James L. & Sharon D. 20,000 $0.25 6/8/07
Clark, James and Margaret 50,000 $0.25 6/20/07
Rutherford, William B. & Dorothy M. Rutherford 25,000 $0.20 6/20/07
Howard, Richard D. 10,000 $0.25 6/25/07
Matteson, Lyndon III 100,000 $0.25 6/25/07
Shoshone-Paiute Tribes 250,000 $0.25 6/25/07
Cede & Co. 50,000 $0.00 6/27/07
Cede & Co. 10,000 $0.00 7/2/07
Ellsworth Jr., Jack B. & Linda S. Ellsworth Family Trust 16,000 $0.25 7/2/07
Gillispie, Michael N. 20,000 $0.25 7/2/07
51
Grant Jr., William G. 20,000 $0.25 7/2/07
Martin, Richard B. 4,000 $0.25 7/2/07
Peschel, James M. 20,000 $0.25 7/2/07
Anderson, Erling 4,000 $0.25 7/6/07
Breslin, Kenneth P. 5,000 $0.25 7/6/07
Freund, Ronald C. or Mary K. Inman-Freund 40,000 $0.25 7/6/07
Fujiyoshi, Darrell N. 10,000 $0.25 7/6/07
Hamilton, Martha 24,000 $0.25 7/6/07
Howard, Richard D. 10,000 $0.25 7/6/07
Johncox, William J. 24,000 $0.25 7/6/07
Proffitt, Floyd and/or Linda 20,000 $0.25 7/6/07
Willis, David A. and Regina C. Willis 8,000 $0.25 7/6/07
Badiola, Lori L. or Ben C. 100,000 $0.25 7/11/07
Clapier, J. David or Connie 20,000 $0.25 7/11/07
DeRuyter, Nick J. or Suzanne 400,000 $0.25 7/11/07
Mondloch, Mike 40,000 $0.25 7/11/07
Pruett, Dennis L. or Michelle 60,000 $0.25 7/11/07
Slate, Delmer R. or Michelle 20,000 $0.25 7/11/07
Slate, Ronald G. or Jeanne 20,000 $0.25 7/11/07
Van Es, Dale or Jacobien 40,000 $0.25 7/11/07
Cede & Co. 8,000 $0.00 7/12/07
Johnson Sr., Brian O. & Tad W. Charles TEN ENT 2,000 $0.00 7/12/07
Cede & Co. 2,388 $0.00 7/20/07
Appleby, Bryan or Judy 10,000 $0.25 7/24/07
DeRuyter, Nick J. or Suzanne 400,000 $0.25 7/24/07
Gazzola, Darrel M. or Julie P. 20,000 $0.25 7/24/07
Gillispie, Robert D. or Judith L. 20,000 $0.25 7/24/07
Hatchett, Christian 20,000 $0.25 7/24/07
Sells, Stephen D. or Lois Ann 20,000 $0.25 7/24/07
Spicher, Timothy, Stacey Hieb, Sandra Stubbs, or Carroll Stubbs 20,000 $0.25 7/24/07
Cede & Co. 50,000 $0.00 7/27/07
Nederend Jr., Hans Family Trust 1,000,000 $0.25 7/27/07
Cede & Co. 54,329 $0.00 7/30/07
Clark, Connie 24,000 $0.25 7/31/07
Dykstra, Lyndsey A. 8,000 $0.25 7/31/07
MAU, L.L.P 24,000 $0.25 7/31/07
Cede & Co. 200,000 $0.00 8/1/07
Borah, Mary 20,408 $0.40 8/2/07
Borah, Zach 19,388 $0.40 8/2/07
Cooper, James C. 20,000 $0.40 8/2/07
Heiner, Ryan 20,000 $0.40 8/2/07
Hirsch, Jeff or Gail 20,000 $0.40 8/2/07
Johncox, Martin 4,000 $0.40 8/2/07
Spang, Paul R. and/or Verla R. Robison 20,000 $0.40 8/2/07
Badiola, Lori L. or Ben C. 300,000 $0.40 8/7/07
Borah, Matthew D. 20,400 $0.40 8/7/07
Clapier, J. David or Connie 20,000 $0.40 8/7/07
Cooley, Matthew V. 4,800 $0.40 8/7/07
DeRuyter, Alex J. 100,000 $0.50 8/7/07
DeRuyter, Annelise M. 100,000 $0.50 8/7/07
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DeRuyter, Corrie A. 100,000 $0.50 8/7/07
DeRuyter, Jacob W. 100,000 $0.50 8/7/07
DeRuyter, Nicolaas J. 100,000 $0.50 8/7/07
DeRuyter, Olivia P. 100,000 $0.50 8/7/07
Frerichs, Kendall M. or Richard C. 40,000 $0.40 8/7/07
Frerichs, Scott D. 84,000 $0.40 8/7/07
Harpe, Barbara A. or Larry C. 30,000 $0.40 8/7/07
S 3 Properties LP 400,000 $0.40 8/7/07
Showalter, Caleb B. 8,000 $0.40 8/7/07
Showalter, Sue or Brion 20,000 $0.40 8/7/07
Stone, Mark D. 20,000 $0.40 8/7/07
Van Es, Dale or Jacobien 80,000 $0.40 8/7/07
Wagner, Anne and Michael 40,000 $0.40 8/7/07
Clausen, Douglas T. 40,000 $0.40 8/8/07
Cede & Co. 49,329 $0.00 8/10/07
Adams, Joyce and/or Gary 20,000 $0.40 8/17/07
Aman, Trina and/or Gary 10,000 $0.40 8/17/07
Badiola, John 20,000 $0.40 8/17/07
Bryne, Anne-Marie and/or James Bryne, Jr. 8,000 $0.40 8/17/07
Cooley, Lois and/or Larry 30,000 $0.40 8/17/07
Cooley, Thomas and/or Jan 20,000 $0.40 8/17/07
DeRuyter, Nick and/or Suzanne 200,000 $0.40 8/17/07
Divide Creek PC Pension & Profit Plan 20,000 $0.40 8/17/07
Grohs, Jeffrey 80,000 $0.40 8/17/07
Grohs, Mark 20,000 $0.40 8/17/07
Hill, Leila Jeanne and/or McArthur Hill 40,000 $0.40 8/17/07
Johncox, Martin 4,000 $0.40 8/17/07
Pecchenino, Mark 27,552 $0.40 8/17/07
Rainmaker II Ventures, LTD 500,000 $0.40 8/17/07
Smith, Paula 20,000 $0.40 8/17/07
Van Es, Dale or Jacobien 80,000 $0.40 8/17/07
Van Es, Lyckle 20,000 $0.40 8/17/07
Zook, Amos B. 100,000 $0.40 8/17/07
Cede & Co. 75,000 $0.00 8/22/07
Cede & Co. 62,463 $0.00 8/28/07
Cede & Co. 25,000 $0.00 8/30/07
Beedle, Ralph (1) 200,000 $0.10 9/4/07
Cede & Co. 100,000 $0.00 9/4/07
Eliason, Leon R. (1) 100,000 $0.10 9/4/07
Franz, John (1) 200,000 $0.10 9/4/07
Gillispie, Donald (1) 2,000,000 $0.10 9/4/07
Gillispie, Taylor 1,000,000 $0.10 9/4/07
Johncox, William J. 15,000 $0.40 9/4/07
Kane, Gregory E. (1) 100,000 $0.10 9/4/07
Larmer, Michael R. 15,000 $0.10 9/4/07
Strahm Sr., Kenneth A. (1) 200,000 $0.10 9/4/07
Taylor, James M. (1) 200,000 $0.10 9/4/07
Cede & Co. 100,000 $0.00 9/6/07
Cede & Co. 35,224 $0.00 9/7/07
Cede & Co. 250,000 $0.00 9/7/07
-53-
McConnaughey, Douglas 4,000 $0.25 9/12/07
Bucci, Rick J. (1) 500,000 $0.10 9/13/07
Cede & Co. 500,000 $0.00 9/13/07
Richards Law Office 33,200 $0.40 9/13/07
Cede & Co. 100,000 $0.00 9/24/07
Dickson, Tammy S. and Tony L. 20,000 $0.10 9/24/07
Howard Family Trust 10,000 $0.40 9/24/07
Cede & Co. 12,434 $0.00 10/1/07
Clapier, Connie and J. David 20,000 $0.40 10/11/07
Richards Law Office 16,400 $0.40 10/12/07
Sells, Jason 350,000 $0.40 10/12/07
Agee, Stephen P. 950 $0.00 10/22/07
Haley, Charles R. 100 $0.00 10/22/07
Hankins, Casey 200 $0.00 10/22/07
Harbour, Billy H. 6,650 $0.00 10/22/07
Harbour, Reva D. 100 $0.00 10/22/07
Hoback, Andrew 1,500 $0.00 10/22/07
A & A Development, Inc. 100,000 $0.20 11/5/07
Bucci, Sally M. and Eugene 100,000 $0.20 11/5/07
Cede & Co. 1,194 $0.00 11/5/07
JB Investment GP 2,040 $0.00 11/5/07
Milmoe Consulting Services, Inc. 25,000 $0.20 11/5/07
Wong, Bruce S. 32,000 $0.20 11/5/07
Cede & Co. 75 $0.00 11/7/07
Sparrow, Robert 15,000 $0.00 11/15/07
Whitley, John A. 15,000 $0.00 11/15/07
Cede & Co. 100,000 $0.00 11/21/07
Bauhof, W. Bradley 75,000 $0.20 11/30/07
McConnaughey, Douglas 6,000 $0.20 11/30/07
Ransom, Jennifer R. (1) 250,000 $0.10 11/30/07
Richards Law Office 14,000 $0.20 11/30/07
Schuler, Karl D. 37,500 $0.20 11/30/07
Williams, Thomas E. 75,000 $0.20 11/30/07
Cede & Co. 50,000 $0.00 12/6/07
Cede & Co. 150,000 $0.00 12/7/07
DeRuyter, Nick J. & Suzanne Deruyter JT Ten 2,000,000 $0.10 12/21/07
Franz, John (1) 50,000 $0.10 12/21/07
Johncox, William J. 51,000 $0.10 12/21/07
Richards Law Office 17,500 $0.10 12/21/07
Talbot, John 50,000 $0.10 12/21/07
Wong, Bruce C. 40,000 $0.10 12/21/07
Cede & Co. 195,000 $0.00 1/8/08
Cede & Co. 300,000 $0.00 1/11/08
Cede & Co. 100,000 $0.00 1/15/08
Bowers, Keith E. 50,000 $0.10 1/22/08
Bucci, Christopher J. 100,000 $0.10 1/22/08
Bucci, Eugene 100,000 $0.10 1/22/08
Bucci, Eugene 300,000 $0.10 1/22/08
Bucci, Henry and Nancy 200,000 $0.10 1/22/08
Bucci, Michael J. 50,000 $0.10 1/22/08
-54-
Bucci, Rick J. (1) 500,000 $0.10 1/22/08
Cherry, Jacob Esau 50,000 $0.10 1/22/08
Cooper, James C. 50,000 $0.10 1/22/08
Fears, Robynne Camille 50,000 $0.10 1/22/08
Hoosack, Carl Michael 50,000 $0.10 1/22/08
Johncox, William J. 50,000 $0.10 1/22/08
Khoury, Angelo Joseph 50,000 $0.10 1/22/08
Lubin, Marianne 50,000 $0.10 1/22/08
Pecchenino, Mark 50,000 $0.10 1/22/08
Ransom, Jennifer R. (1) 250,000 $0.10 1/22/08
Richards Law Office 47,250 $0.10 1/22/08
Walton, Danny K. & Janeal Walton 50,000 $0.10 1/22/08
Wong, Bruce S. 40,000 $0.10 1/22/08
Clapier, J. David and Connie Clapier 50,000 $0.10 1/23/08
Corta, John T. 25,000 $0.10 1/23/08
Cuevas, Patricia 10,000 $0.10 1/23/08
Doherty, Mark 300,000 $0.10 1/23/08
Eaton, James A. 10,000 $0.10 1/23/08
Foley, Aaron 50,000 $0.10 1/23/08
Jayo, Richard M. 5,000 $0.10 1/23/08
Kent, James Raymond or Katherine Kent 50,000 $0.10 1/23/08
Lewis, Dave M. 50,000 $0.10 1/23/08
Lieben, Aaron 1,500,000 $0.10 1/23/08
Russow, Robert J. 220,000 $0.10 1/23/08
Sells, Dakota J. 25,000 $0.10 1/23/08
Sells, Jason D. or Angelique Clapier 200,000 $0.10 1/23/08
Van Es, Dale or Jacobien Van Es 50,000 $0.10 1/23/08
Walton, Anna Jean 50,000 $0.10 1/23/08
Walton, Terry Lee 50,000 $0.10 1/23/08
Walton, Tracy and Sherri 100,000 $0.10 1/23/08
Maxwell, Scott Anthony 500,000 $0.10 2/14/08
Lantern Rock Limited Partnership 2,500,000 $0.10 2/25/08
REF Securities & CO., L.P. 500,000 $0.10 2/25/08
Swisher, Jeffrey L. 50,000 $0.10 2/25/08
Maxwell, Scott Anthony 570,750 $0.10 2/26/08
Richards Law Office 50,000 $0.10 2/28/08
Wong, Bruce S. 20,000 $0.10 2/28/08
Cede & Co. 275,000 $0.00 2/29/08
Cede & Co. 17,911 $0.00 3/5/08
Thomas Ryan Corporation 100,000 $0.10 3/5/08
Doss Jr., Thomas G. 10,000 $0.10 3/7/08
Haynes, Angela M. 10,000 $0.10 3/7/08
Philpott, Mike 50,000 $0.10 3/7/08
Cede & Co. 2,956 $0.00 3/11/08
Cede & Co. 12,836 $0.00 3/12/08
Miller, Steven A. 75,000 $0.10 3/14/08
Teague, Lance Edward & Maiya Teague 50,000 $0.10 3/14/08
Cede & Co. 3,981 $0.00 3/18/08
Miller, William T. & Elizabeth S. Miller 50,000 $0.10 3/21/08
Richards Law Office 43,250 $0.10 3/21/08
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Wong, Bruce S. 20,000 $0.10 3/21/08
Kornhauser, Daniel M. 1,500,000 $0.10 3/25/08
Cede & Co. 75 $0.00 3/31/08
Brannin, Joseph P. 50,000 $0.10 4/14/08
Talbot, John 200,000 $0.10 4/14/08
Cede & Co. 100,000 $0.00 4/23/08
Wong, Bruce S. 20,000 $0.10 4/24/08
Tunstall, Graydon A. 50,000 $0.10 5/15/08
Milmoe Consulting Services LLC 36,875 $0.10 5/19/08
Wong, Bruce S. 20,000 $0.10 5/19/08
Gillispie, Donald L. (1) 7,500,000 $0.10 5/21/08
Ransom, Jennifer R. (1) 3,500,000 $0.10 5/21/08
Beedle, Ralph E. (1) 500,000 $0.10 5/27/08
Eliason, Leon R. (1) 500,000 $0.10 5/27/08
Franz, John (1) 500,000 $0.10 5/27/08
Kane, Gregory E. (1) 500,000 $0.10 5/27/08
Ransom, Jennifer R. (1) 500,000 $0.10 5/27/08
Strahm Sr., Kenneth A. (1) 500,000 $0.10 5/27/08
Taylor, James M. (1) 500,000 $0.10 5/27/08
Cede & Co. 300,000 $0.00 5/29/08
Cooper, James C. 130,000 $0.10 6/10/08
Decker, Katherine Y. 50,000 $0.10 6/10/08
Bucci, Rick J. (1) 2,000,000 $0.10 6/11/08
Clapier, Angelique 500,000 $0.10 6/11/08
Clapier, J. David 20,000 $0.10 6/11/08
Cooper, Phyllis L. 100,000 $0.10 6/11/08
Corta, John T. 10,000 $0.10 6/11/08
Sells, Dakota J. 10,000 $0.10 6/11/08
Sells, Jason D. 500,000 $0.10 6/11/08
Sells, Jason D. or Angelique Clapier 1,100,000 $0.10 6/11/08
Young, Scott 10,000 $0.10 6/11/08
Clapier, J. David 5,000 $0.10 6/13/08
Gaviola, Michael 50,000 $0.10 6/13/08
Cummings, William Patrick 50,000 $0.10 6/23/08
McConnaughey, Douglas 10,500 $0.10 6/23/08
Wong, Bruce S. 20,000 $0.10 6/23/08
Milmoe Consulting Services LLC 22,969 $0.10 6/30/08
Pecchenino, Mark 6,873 $0.10 6/30/08
Dickson, Tony L. 80,000 $0.10 7/2/08
Frerichs, Leroy S. 14,000 $0.10 7/2/08
Frerichs, Scott D. 116,000 $0.10 7/2/08
Good News Capital, LLC 500,000 $0.10 7/2/08
Tallman, Orrin and Petra 150,000 $0.10 7/2/08
Luhanto, Pertti 1,119 $0.00 7/7/08
Luhanto, Pertti 26,680 $0.00 7/7/08
Elton, Elliot G. 10,000 $0.10 7/10/08
Groeser, Benjamin R. 60,000 $0.10 7/11/08
Peterman Farms, Inc 100,000 $0.10 7/11/08
Tibbs, James A. and Sally A. 15,000 $0.10 7/16/08
Verner, Christopher and Jamie 10,000 $0.10 7/16/08
-56-
Wong, Bruce S. 250,000 $0.10 7/16/08
Cede & Co. 50,000 $0.00 7/17/08
Johncox, Martin 3,125 $0.10 7/25/08
McConnaughey, Douglas 10,500 $0.10 7/25/08
Clapier, J. David 33,332 $0.15 7/30/08
Frerichs, Scott D. 66,667 $0.15 7/30/08
Mobley, Scott William 33,332 $0.15 7/30/08
Cede & Co. 100,000 $0.00 8/6/08
Bennett, Richard and Cecilia 15,000 $0.10 8/12/08
Milmoe Consulting Services LLC 14,000 $0.10 8/14/08
Cooper, James C. 50,000 $0.20 8/19/08
Sells, Jason D. 82,000 $0.10 8/19/08
Cede & Co. 75,000 $0.00 8/20/08
Cede & Co. 100,000 $0.00 8/20/08
Ungaro, Nicole Christine 10,000 $0.20 8/20/08
Johncox, Martin 2,000 $0.20 8/22/08
McConnaughey, Douglas 30,500 $0.20 8/22/08
Cede & Co. 100,000 $0.00 8/25/08
Stanton, Walker & Company 50,000 $0.20 8/25/08
Cede & Co. 100,000 $0.00 8/26/08
Carter, Victoria Lynn 25,000 $0.20 8/28/08
Choate, David H. 25,000 $0.20 8/28/08
Cede & Co. 420,000 $0.00 9/2/08
Pecchenino, Mark 11,430 $0.20 9/2/08
Milmoe Consulting Services LLC 14,000 $0.20 9/10/08
Pushey, Andria L. and Robert O. Hathaway, II 20,000 $0.25 9/10/08
Stickovich, Lucy and Dale Pushey 25,000 $0.20 9/10/08
Stickovich, Vincent 25,000 $0.20 9/10/08
Hanely, Mike 16,833 $0.15 9/10/08
Brasher, Craig and Rhonda 16,833 $0.15 9/10/08
Carlson, Mike 50,000 $0.15 9/10/2008
-------------------
74,703,293
===================
MATERIAL RELATIONSHIPS
(1) Officer and/or Director of AEHI.
None of the above listed shareholders are registered broker-dealers or are
associates of a registered broker-dealer.
EXEMPTION FROM REGISTRATION CLAIMED
All of the sales by AEHI of its unregistered securities were made by AEHI in
reliance upon Section 4(2) of the Act and/or under Rule 506 of Regulation D. All
of the individuals and/or entities listed above that purchased the unregistered
securities were all known to the Company and its management, through
pre-existing business relationships, as long standing business associates,
friends, and employees. All purchasers were provided access to all material
information, which they requested, and all information necessary to verify such
information and were afforded access to management of the Company in connection
with their purchases. All purchasers of the unregistered securities acquired
-57-
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.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The Company's authorized capital stock consists of 150,000,000 shares of common
stock, $.001 par value per share. As of September 15, 2008, 74,709,293 shares of
AEHI common stock were issued and outstanding. No preferred stock is authorized.
COMMON STOCK
The holders of AEHI common stock are entitled to one vote for each share on all
matters voted on by stockholders, including elections of directors, and, except
as otherwise required by law or provided in any resolution adopted by the
Company's board of directors with respect to any series of preferred stock, the
holders of AEHI common stock possess all voting power. AEHI articles of
incorporation do not provide for cumulative voting in the election of directors.
Subject to any preferential rights of any outstanding series of AEHI preferred
stock created by AEHI board of directors from time to time, the holders of
common stock are entitled to dividends, if any, as may be declared from time to
time by AEHI board of directors from funds available therefore and upon
liquidation are entitled to receive pro rata all assets available for
distribution to such holders. For a more complete discussion of AEHI dividend
policy, please see "Dividend Policy."
The holders of AEHI common stock have no preemptive rights. The rights,
preferences and privileges of holders of common stock are subject to, and may be
adversely affected by, the rights of the holders of shares of any series of
preferred stock which AEHI may designate and issue in the future.
PREFERRED STOCK
No preferred stock is authorized.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for AEHI common stock is OTR, Inc., 1000
Southwest Broadway, Portland, Oregon.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the Company's Articles of Incorporation and By-Laws, the Company may
indemnify an officer or director who is made a party to any proceeding,
including a lawsuit, because of his position, if he acted in good faith and in a
manner he reasonably believed to be in the Company's best interest. No officer
or director may be may be indemnified, however, where the officer or director
acted committed intentional misconduct, fraud, or an intentional violation of
the law.
-58-
The Company may advance expenses incurred in defending a proceeding. To the
extent that the officer or director is successful on the merits in a proceeding
as to which he is to be indemnified, the Company must indemnify him against all
expenses incurred, including attorney's fees. With respect to a derivative
action, indemnity may be made only for expenses actually and reasonably incurred
in defending the proceeding, and if the officer or director is judged liable,
only by a court order. The indemnification is intended to be to the fullest
extent permitted by the laws of the State of Nevada.
Regarding the indemnification for liabilities arising under the Securities Act
of 1933, which may be permitted to officers and directors under Nevada law, the
Company is informed that, in the opinion of the Securities and Exchange
Commission, indemnification is against public policy, as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities is asserted by the Company's officer(s), director(s),
or controlling person(s) in connection with the securities being registered, we
will, unless in the opinion of the Company's legal counsel the matter has been
settled by controlling precedent, submit the question of whether such
indemnification is against public policy to a court of appropriate jurisdiction.
The Company will then be governed by the court's decision.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The audited financial statements of Alternate Energy Holdings, Inc. for the
years ended December 31, 2007 and 2006 appear as pages F-1 through F-11 and
unaudited financial statements for the six months period ended June 30, 2008
appear as pages F-12 through F-23.
-59-
ALTERNATE ENERGY HOLDINGS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
AUDITED
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Alternate Energy Holdings, Inc.
(a development stage enterprise)
We have audited the accompanying consolidated balance sheet of
Alternate Energy Holdings, Inc. as of December 31, 2007, and the related
consolidated income statements, consolidated statements of changes in
stockholders' equity and cash flows for the year ended December 31, 2007.
Alternate Energy Holdings, Inc.'s management is responsible for these financial
statements. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit 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, 2007, and the results of its operations
and its cash flows for the year then ended, 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.
/s/ Rotenberg & Co., LLP
-------------------------
Rochester, New York
July 22, 2008
F-2
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ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2007 AND 2006
ASSETS
2007 2006
---------------------------- --------------------------
CURRENT ASSETS:
Cash and Cash Equivalents $ 269,431 $ 254,022
Deposit 55,000 -
Due from Related Parties - 1,115
---------------------------- --------------------------
Total Current Assets 324,431 255,137
---------------------------- --------------------------
TOTAL ASSETS $324,431 $255,137
============================ ==========================
LIABILITY AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 33,066 $ -
Due to Related Parties - 6,042
---------------------------- --------------------------
Total Current Liability 33,066 6,042
---------------------------- --------------------------
NON-CONTROLLING INTEREST - -
---------------------------- --------------------------
STOCKHOLDERS' EQUITY:
Common Stock, par value $.001, 75,000,000 shares
authorized; 42,715,274 issued and outstanding 42,715 26,416
Additional Paid in Capital 5,158,253 1,738,082
Treasury Stock (20,000) (20,000)
Deficit Accumulated During Development Stage (4,889,603) (1,495,403)
---------------------------- --------------------------
Total Stockholders' Equity 291,365 249,095
---------------------------- --------------------------
TOTAL LIABILITY AND STOCKHOLDERS' EQUITY $ 324,431 $ 255,137
============================ ==========================
The accompanying notes are an integral part of these financial statements.
F-3
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ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED INCOME STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
AND THE PERIOD FROM INCEPTION (AUGUST 29, 2005) THROUGH DECEMBER 31, 2007
YEAR ENDED YEAR ENDED INCEPTION TO
DECEMBER 31 DECEMBER 31 DECEMBER 31
2007 2006 2007
--------------------- -------------------- ------------------
REVENUES $ - $ - $ -
--------------------- -------------------- ------------------
OPERATING EXPENSES:
General and Administrative Expenses 4,411,648 1,395,456 5,907,860
--------------------- -------------------- ------------------
NET LOSS FROM OPERATIONS (4,411,648) (1,395,456) (5,907,860)
--------------------- -------------------- ------------------
OTHER INCOME (EXPENSE)
Interest Income 18,715 1,358 20,137
Gain on Sales of Investments 1,627 - 1,627
Interest Expense (2,894) (613) (3,507)
--------------------- -------------------- ------------------
Total Other Expense 17,448 745 18,257
--------------------- -------------------- ------------------
LOSS BEFORE NON-CONTROLLING INTEREST
IN VARIABLE INTEREST ENTITY (4,394,200) (1,394,711) (5,889,603)
Non-Controlling Interest in Variable Interest Entity 1,000,000 - 1,000,000
--------------------- -------------------- ------------------
Net Loss $ (3,394,200) $ (1,394,711) $ (4,889,603)
===================== ==================== ==================
NET LOSS PER COMMON STOCK $ (0.10) $ (0.06)
--------------------- --------------------
WEIGHTED AVERAGE SHARES OUTSTANDING
34,565,680 21,678,151
--------------------- --------------------
The accompanying notes are an integral part of these financial statements.
F-4
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ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
AND THE PERIOD FROM INCEPTION (AUGUST 29, 2005) THROUGH DECEMBER 31, 2007
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 Receivable:
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
Nussentials Holdings Inc. share-
holders 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
F-5
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ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
AND THE PERIOD FROM INCEPTION (AUGUST 29, 2005) THROUGH DECEMBER 31, 2007
(CONTINUED)
Number of Additional
Price per Common Common Paid in Treasury Net
Share Shares Issued Stock Capital Stock Loss Total
------------- --------------- ------------ --------------- ------------- ------------- ------------
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 to these financial statements.
F-6
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ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
AND THE PERIOD FROM INCEPTION (AUGUST 29, 2005) THROUGH DECEMBER 31, 2007
YEAR ENDED YEAR ENDED INCEPTION TO
DECEMBER 31 DECEMBER 31 DECEMBER 31
2007 2006 2007
--------------------- --------------------- ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (3,394,200) $ (1,394,711) $ (4,889,603)
--------------------- --------------------- ----------------------
Adjustments to reconcile Net Loss to Net Cash
Used by Operating Activities -
Common stock issued for services 1,687,111 1,318,749 3,089,610
Loss from Variable Interest Entity (1,000,000) - (1,000,000)
Change in operating Assets and Liabilities -
Deposits (55,000) - (55,000)
Due from Related Parties 1,115 21,943 40,000
Accounts Payable 33,066 - 33,066
--------------------- --------------------- ----------------------
Total Adjustments 666,292 1,340,692 2,107,676
--------------------- --------------------- ----------------------
Net Cash Used by Operating Activities (2,727,908) (54,019) (2,781,927)
--------------------- --------------------- ----------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Receipt of Cash for Common Stock 1,749,359 321,999 2,071,358
Cash Received from Non-Controlling Members 1,000,000 - 1,000,000
Purchase of Treasury Stock - (20,000) (20,000)
Advances from Related Parties (6,042) 6,042 -
--------------------- --------------------- ----------------------
Net Cash Provided by Financing Activities 2,743,317 308,041 3,051,358
--------------------- --------------------- ----------------------
NET INCREASE IN CASH 15,409 254,022 269,431
CASH - BEGINNING 254,022 - -
--------------------- --------------------- ----------------------
CASH - ENDING $ 269,431 $ 254,022 $ 269,431
===================== ===================== ======================
Supplemental Disclosures:
Cash paid for Income Taxes $ - $ - $ -
===================== ===================== ======================
Cash paid for Interest $ 2,894 $ 613 $ -
===================== ===================== ======================
Non-Cash Investing and Financing Activities:
Receivable for Sale of Common Stock $ - $ - $ 40,000
===================== ===================== ======================
The accompanying notes are an integral part of these financial statements.
F-7
ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Alternate Energy Holdings, Inc., (and its subsidiaries Idaho Energy Complex
Corporation and Reactor Land 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 Nussentials Holdings, Inc. by exchanging 17,900,000
shares of Sunbelt which represented 100% for 21,399,998 shares of common stock
of Nussentials 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 Nussentials Holdings, Inc. majority
shareholder through issuance of 4,252,088 shares of common stock.
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.
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.
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.
F-8
ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
BASIC AND DILUTED NET LOSS PER SHARE
Basic and diluted net loss per share calculations are presented in accordance
with Financial Accounting Standards Statement 128, 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. adopted SFAS No. 123(R), at inception. SFAS
123(R) requires all share-based compensation to employees, including stock
options, to be expensed based on their fair market value over the required award
service period. Alternate Energy Holdings, Inc. uses the straight line method to
recognize compensation expense related to share-based payments. For Alternate
Energy Holdings, Inc.'s non-employees, share-based expense is recorded in
accordance 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, 2007.
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 fiscal 2007 and 2006 years and therefore,
has no tax liability. The deferred tax asset generated by the carry-forward is
approximately $ 1,414,754 at December 31, 2007 and will expire 20 years in 2027.
Components of deferred tax assets at December 31, 2007 are as follows:
Deferred tax asset - net operating loss
Carry-forwards $ 1,414,754
Valuation Allowance (1,414,754)
------------
Net deferred tax asset $ 0
============
F-9
ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - COMMON STOCK
During 2006, Alternate Energy Holdings, Inc.
- Issued 4,252,088 shares of common stock to the Nussentials 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.
NOTE 4 - COMMITMENTS
Alternate Energy Holdings, Inc leases its office space on a month-to-month basis
per a verbal agreement. Rent Expense for 2007 and 2006 was $ 1,800 and $ -0-,
respectively.
NOTE 5 - GOING CONCERN
Alternate Energy Holdings, Inc 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 $ 4,889,603 at December 31, 2007.
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 Interpretation No. 46 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 Land 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 Land Development, LLC's capital
structure as of December 31, 2007. Furthermore, the daily operating decisions of
Reactor Land Development, LLC are made by the members of Alternate Energy
Holdings, Inc.'s management. Under FASB Interpretation No. 46, Reactor Land
Development, LLC is deemed a variable Interest Entity to Alternate Energy
Holding, Inc. and as such Reactor Land Development, LLC's financial information
has been consolidated with Alternate Energy Holdings, Inc.
F-10
ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - VARIABLE INTEREST ENTITY - CONTINUED
The consolidated financial statements includes the full operating activities of
Reactor Land Development, LLC, with amounts allocated to Reactor Land
Development, LLC disclosed under "Non-Controlling Interest in Variable Interest
Entity" in the accompanying consolidated income statement. Assets and
liabilities of Reactor Land Development, LLC were $0 and $0, respectively, at
December 31, 2007.
F-11
ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
JUNE 30, 2008 UNAUDITED FINANCIAL STATEMENTS
(UNAUDITED)
F-12
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ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS - UNAUDITED
ASSETS
(UNAUDITED) AUDITED
JUNE 30, DECEMBER 31,
2008 2007
---------------- -------------
CURRENT ASSETS:
Cash and Cash Equivalents $ 421,757 $ 269,431
Deposits 58,000 55,000
Due from Related Parties 10,000 -
---------------- -------------
Total Current Assets 489,757 324,431
---------------- -------------
TOTAL ASSETS $ 489,757 $ 324,431
================ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 14,603 33,066
Due to Related Parties - -
---------------- -------------
Total Current Liabilities
14,603 33,066
---------------- -------------
STOCKHOLDERS' EQUITY:
Common Stock, par value $.001, 75,000,000 shares
authorized; 73,164,741 and 42,715,274 shares issued
and outstanding, on June 30, 2008 and December 31,
2007, respectively 73,164 42,715
Additional Paid in Capital 8,172,751 5,158,253
Treasury Stock (20,000) (20,000)
Deficit Accumulated During Development Stage (7,750,761) (4,889,603)
---------------- -------------
Total Stockholders' Equity 475,154 291,365
---------------- -------------
TOTAL LIABILITY AND STOCKHOLDERS'
EQUITY $ 489,757 $ 324,431
================ =============
The accompanying notes are an integral part of these consolidated financial statements.
F-13
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ALTERNATE ENERGY HOLDINGS, INC.
CONSOLIDATED INCOME STATEMENTS - UNAUDITED
(A DEVELOPMENT STAGE COMPANY)
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2008
AND THE PERIOD FROM INCEPTION (AUGUST 29, 2005) THROUGH JUNE 30, 2008
THREE MONTHS SIX MONTHS
ENDED ENDED INCEPTION TO
JUNE 30, JUNE 30, JUNE 30,
2008 2008 2008
--------------- --------------- ----------------
REVENUES $ - $ - $ -
--------------- --------------- ----------------
OPERATING EXPENSES:
General and Administrative Expenses 2,212,174 2,869,796 8,777,656
--------------- --------------- ----------------
NET LOSS FROM OPERATIONS (2,212,174) (2,869,796) (8,777,656)
--------------- --------------- ----------------
OTHER INCOME (EXPENSE)
Interest Income 2,659 8,639 28,776
Gain on Sales of Investments - - 1,626
Interest Expense - - (3,507)
--------------- --------------- ----------------
Total Other Expense 2,659 8,639 26,895
--------------- --------------- ----------------
LOSS BEFORE NON-CONTROLLING INTEREST
IN VARIABLE INTEREST ENTITY (2,209,515) (2,861,157) (8,750,761)
Non-Controlling Interest in Variable Interest Entity - - 1,000,000
--------------- --------------- ----------------
Net Loss $ (2,209,515) $ (2,861,157) $ (7,750,761)
=============== =============== ================
NET LOSS PER COMMON STOCK $ (0.04) $ (0.05)
--------------- ---------------
WEIGHTED AVERAGE SHARES OUTSTANDING 63,037,633 57,940,008
--------------- ---------------
The accompanying notes are an integral part of these consolidated financial statements.
F-14
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ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED INCOME STATEMENTS - UNAUDITED
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2007
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
2007 2007
----------------- ---------------
REVENUES $ - $ -
----------------- ---------------
OPERATING EXPENSES:
General and Administrative Expenses 304,643 991,408
----------------- ---------------
NET LOSS FROM OPERATIONS (304,643) (991,408)
----------------- ---------------
OTHER INCOME (EXPENSE)
Interest Income 2,726 5,493
Gain on Sales of Investments - -
Interest Expense - -
----------------- ---------------
Total Other Expense 2,726 5,493
----------------- ---------------
LOSS BEFORE NON-CONTROLLING INTEREST
IN VARIABLE INTEREST ENTITY (301,917) (985,915)
Non-Controlling Interest in Variable Interest Entity - -
----------------- ---------------
Net Loss $ (301,917) $ (985,915)
================= ===============
NET LOSS PER COMMON STOCK $ (0.01) $ (0.05)
----------------- ---------------
WEIGHTED AVERAGE SHARES OUTSTANDING 34,565,680 21,678,151
----------------- ---------------
The accompanying notes are an integral part of these consolidated financial statements.
F-15
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ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED
FOR THE PERIOD FROM INCEPTION (AUGUST 29, 2005) THROUGH JUNE 30, 2008
PRICE NUMBER OF ADDITIONAL
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 Receivable:
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
Nussentials 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)
--------- ------------- ---------- ---------------- ---------- ----------- ----------
F-16
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ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED
AND THE PERIOD FROM INCEPTION (AUGUST 29, 2005) THROUGH JUNE 30, 2008 (CONTINUED)
PRICE NUMBER OF ADDITIONAL
PER COMMON COMMON PAID IN TREASURY NET
SHARE SHARES ISSUED STOCK CAPITAL STOCK LOSS TOTAL
--------- ------------ ---------- ------------- ---------- ----------- -----------
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
--------- ------------ ---------- ------------- ---------- ----------- -----------
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
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
Net Loss - - - - (2,861,158) (2,861,158)
--------- ------------ ---------- ------------- ---------- ----------- -----------
Balances, June 30, 2008 73,164,741 $ 73,164 $ 8,172,751 $ (20,000) $(7,750,761) $ 475,154
========= ============ ========== ============= ========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
F-17
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ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
AND THE PERIOD FROM INCEPTION (AUGUST 29, 2005) THROUGH JUNE 30, 2008
SIX MONTHS SIX MONTHS
ENDED ENDED INCEPTION TO
JUNE 30, JUNE 30, JUNE 30,
2008 2007 2008
------------- ----------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (2,861,157) $ (985,915) $ (7,750,761)
------------- ----------- -------------
Adjustments to reconcile Net Loss to Net Cash
Used by Operating Activities -
Common stock issued for services 2,050,771 777,640 5,140,382
Loss from Variable Interest - - (1,000,000)
Change in operating Assets and Liabilities -
Deposits (3,000) - (58,000)
Due from Related Parties (10,000) - 30,000
Accounts Payable (18,463) 15,800 14,603
------------- ----------- -------------
Total Adjustments 2,019,308 793,440 4,126,985
------------- ----------- -------------
Net Cash Used by Operating Activities (841,849) (192,475) (3,623,776)
------------- ----------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Receipt of Cash for Common Stock 994,175 149,250 3,065,533
Cash Received from Non-Controlling Members - - 1,000,000
Purchase of Treasury Stock - - (20,000)
Advances from Related Parties - 2,100 -
------------- ----------- -------------
Net Cash Provided by Financing Activities 994,175 151,350 4,045,533
------------- ----------- -------------
NET (DECREASE) INCREASE IN CASH 152,326 (41,125) 421,757
CASH - BEGINNING
269,431 254,022 -
------------- ----------- -------------
CASH - ENDING $ 421,757 $ 212,897 $ 421,757
============= =========== =============
Supplemental Disclosures:
Cash paid for Interest $ - $ - $ 3,507
============= =========== =============
Non-Cash Investing and Financing Activities:
Receivable for Sale of Common Stock $ - $ - $ 40,000
============= =========== =============
The accompanying notes are an integral part of these consolidated financial statements.
F-18
ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Alternate Energy Holdings, Inc., (and its subsidiaries Idaho Energy Complex
Corporation and Reactor Land 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 Nussentials Holdings, Inc. by exchanging 17,900,000
shares of Sunbelt which represented 100% for 21,399,998 shares of common stock
of Nussentials 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 Nussentials Holdings, Inc. majority
shareholder through issuance of 4,252,088 shares of common stock.
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.
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.
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
F-19
ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
BASIC AND DILUTED NET LOSS PER SHARE
Basic and diluted net loss per share calculations are presented in accordance
with Financial Accounting Standards Statement 128, 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. adopted SFAS No. 123(R), at inception. SFAS
123(R) requires all share-based compensation to employees, including stock
options, to be expensed based on their fair market value over the required award
service period. Alternate Energy Holding, Inc. uses the straight line method to
recognize compensation expense related to share-based payments. For Alternate
Energy Holdings, Inc.'s non-employees, share-based expense is recorded in
accordance 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
June 30, 2008.
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 six months ending June 30, 2008 and
2007 and therefore, has no tax liability. The deferred tax asset generated by
the carry-forward is approximately $ 2,635,259 at June 30, 2008 and will expire
20 years in 2028. Components of deferred tax assets at June 30, 2008 are as
follows:
Deferred tax asset - net operating loss
Carry-forwards $ 2,635,259
Valuation Allowance (2,635,259)
------------
Net deferred tax asset $ 0
============
F-20
ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
NOTE 3 - COMMON STOCK
During the year ended December 31, 2006, the Company
- Issued 4,252,088 shares of common stock to the Nussentials 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 the year ended December 31, 2007, the Company
- 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 the six months ended June 30, 2008, the Company
- Issued 20,507,717 shares of common stock valued at $2,050,772 for
services.
- Issued 9,941,750 shares of common stock for cash received in the
amount of $994,175.
NOTE 4 - COMMITMENTS
Alternate Energy Holdings, Inc lease it office space on a month-to-month basis
per a verbal agreement. Rent Expense for the six months ending June 30, 2008 and
2007 was $1,800 and $0, respectively.
NOTE 5 - GOING CONCERN
Alternate Energy Holdings, Inc 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 $7,750,761 at June 30, 2008.
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 Interpretation No. 46 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 Land 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 Land Development, LLC's capital
structure as of December 31, 2007.
F-21
ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
NOTE 6 - VARIABLE INTEREST ENTITY - CONTINUED
Furthermore, the daily operating decisions of Reactor Land Development, LLC are
made by the members of Alternate Energy Holdings, Inc.'s management. Under FASB
Interpretation No. 46, Reactor Land Development, LLC is deemed a variable
Interest Entity to Alternate Energy Holding, Inc. and as such Reactor Land
Development, LLC's financial information has been consolidated with Alternate
Energy Holdings, Inc. The consolidated financial statements includes the full
operating activities of Reactor Land Development, LLC, with amounts allocated to
Reactor Land Development, LLC disclosed under "Non-Controlling Interest in
Variable Interest Entity" in the accompanying consolidated income statement.
Assets and liabilities of Reactor Land Development, LLC were $ -0- and $ -0-,
respectively, at June 30, 2008 and 2007, respectively.
NOTE 7 - RECENTLY ISSUED ACCOUNTING STANDARDS
In December 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 160, "Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51". SFAS 160
establishes accounting and reporting standards for the noncontrolling interest
in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 is
effective for fiscal years, and interim periods within those fiscal years,
beginnings on or after December 15, 2008. As such, the Company is required to
adopt these provisions at the beginning of the fiscal year ended December 31,
2009. The Company is currently evaluating the impact of SFAS 160 on its
consolidated financial statements but does not expect it to have a material
effect.
In March 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
161, "Disclosures about Derivative Instruments and Hedging Activities - an
amendment of FASB statement No. 133". SFAS 161 requires enhanced disclosures
about an entity's derivative and hedging activities. SFAS 161 is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008 with early application encouraged. As such, the Company is
required to adopt these provisions at the beginning of the fiscal year ended
December 31, 2009. The Company is currently evaluating the impact of SFAS 161 on
its consolidated financial statements but does not expect it to have a material
effect.
F-22
ALTERNATE ENERGY HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
NOTE 7 - RECENTLY ISSUED ACCOUNTING STANDARDS - CONTINUED
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS 162
identifies the sources of accounting principles and the framework for selecting
the principles used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles (GAAP) in the United States. SFAS 162 is
effective 60 days following the SEC's approval of the Public Company Accounting
Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles. The Company is
currently evaluating the impact of SFAS 162 on its consolidated financial
statements but does not expect it to have a material effect.
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS No.
163, "Accounting for Financial Guarantee Insurance Contracts - an interpretation
of FASB statement No. 60. SFAS 163 interprets Statement 60 and amends existing
accounting pronouncements to clarify their application to the financial
guarantee insurance contracts included within the scope of that statement. SFAS
16 is effective for financial statements issued for fiscal years beginning after
December 15, 2008 and interim periods within those fiscal years. As such, the
Company is required to adopt these provisions at the beginning of the fiscal
year ended December 31, 2009. The Company is currently evaluating the impact of
SFAS 163 on its consolidated financial statements but does not expect it to have
a material effect.
F-23
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) Audited financial statements for years ended December 31, 2007 and
2006
Unaudited financial statements for the six months period ended June
30, 2008
[Enlarge/Download Table]
(b) EXHIBIT NO. DESCRIPTION
----------- -----------
3.1 Articles of Incorporation of CorpTran Support, Inc. - 7/31/01
3.2 Certificate of Amendment - CorpTran Support, Inc. - 10/13/04
(Stock amount changed to 75,000,000 @ $.001)
3.3 Certificate of Amendment - Name change to dRx, Inc. - 12/15/04
3.4 Certificate of Amendment - Name change to Nussentials Holding, Inc. - 6/24/05
3.5 Certificate of Amendment - Name change to Alternate Energy Holdings, Inc. - 9/13/06
3.6 Certificate of Amendment - Alternate Energy Holdings, Inc. - 8/19/08 (Stock amount
changed to 150,000,000 @ $.001)
3.7 Bylaws of CorpTran Support, Inc.
10.1 Land Purchase Agreement
10.2 Construction Loan Letter
21.1 List of Subsidiaries of Alternate Energy Holdings, Inc.
23.1 Consent of Independent Registered Public Accounting Firm
-60-
SIGNATURES:
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: October 1, 2008
ALTERNATE ENERGY HOLDINGS, INC.
/s/Donald Gillispie
--------------------------------------------------
Donald Gillispie, President, CEO, COO and Director
/s/Gregory E. Kane
--------------------------------------------------
Gregory E. Kane, Vice President and Director
/s/John Franz
--------------------------------------------------
John Franz, Vice President and Director
/s/Rick J. Bucci
--------------------------------------------------
Rick J. Bucci, Chief Financial Officer
/s/Jennifer Ransom
--------------------------------------------------
Jennifer Ransom, Vice President of
Administration and Corporate Secretary
/s/Leon Eliason
--------------------------------------------------
Leon Eliason, Director
/s/James M. Taylor
--------------------------------------------------
James M. Taylor, Director
/s/Kenneth A. Strahm, Sr.
--------------------------------------------------
Kenneth A. Strahm, Sr., Director
/s/Ralph Beedle
--------------------------------------------------
Ralph Beedle, Director
-61-
Dates Referenced Herein and Documents Incorporated by Reference
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