10-Q 1 aehiform10q9302008vfinal.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ----------------- FORM 10Q ----------------- (Mark One) X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2008 __ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For the transition from ______ to _______ COMMISSION FILE NUMBER: 000-53451 ALTERNATE ENERGY HOLDINGS, INC. ------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) NEVADA 20-5689191 ---------------------------------- ------------------------------- (STATE OF INCORPORATION) (IRS EMPLOYER ID NUMBER) 911 E. WINDING CREEK DR., SUITE 150, EAGLE, ID 83616 --------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) 208-999-9311 -------------------------- (REGISTRANT'S TELEPHONE NUMBER) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes[__] No[_X_] Indicate by check mark whether the registrant is a large accelerated file, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Large accelerated filer [___] Accelerated filer [___] Non-accelerated filer [___] Smaller reporting company [_X_] (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes[__] No[_X_] Indicate the number of share outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of September 30, 2008, there were 74,703,263 shares of the registrant's common stock issued and outstanding.
TABLE OF CONTENTS PART I - FINANCIAL INFORMATION PAGE Item 1. Financial Statements Balance Sheets - September 30, 2008 (Unaudited) and December 31, 2007 (Audited) 4 Statements of Operations (Unaudited) - Nine and Three months ended September 5 30, 2008 and 2007 and From August 29, 2005 (Inception) to September 30, 2008 Statements of Changes in Shareholders' Equity (Unaudited) - From August 29, 6 2005 (Inception) to September 30, 2008 Statements of Cash Flows (Unaudited) - Nine months ended September 30, 2008 and 10 2007 and From August 29, 2005 (Inception) to September 30, 2008 Notes to the Financial Statements (Unaudited) 11 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 15 Item 3. Quantitative and Qualitative Disclosures About Market Risk - Not Applicable 17 Item 4. Controls and Procedures 18 Item 4T. Controls and Procedures - Not Applicable 18 PART II - OTHER INFORMATION Item 1. Legal Proceedings - Not Applicable 18 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 18 Item 3. Defaults Upon Senior Securities - Not Applicable 18 Item 4. Submission of Matters to a Vote of Security Holders - Not Applicable 19 Item 5. Other Information - Not Applicable 19 Item 6. Exhibits 19 SIGNATURES 20
PART I ITEM 1. FINANCIAL STATEMENTS -3- ALTERNATE ENERGY HOLDINGS, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED BALANCE SHEETS ASSETS SEPTEMBER 30, DECEMBER 31, 2008 2007 UNAUDITED AUDITED ------------ ------------- CURRENT ASSETS: Cash and Cash Equivalents $ 341,459 $ 269,431 Deposits 58,000 55,000 Due from Related Parties 10,000 - ------------ ------------- Total Current Assets 409,459 324,431 ------------ ------------- TOTAL ASSETS $ 409,459 $ 324,431 ============ ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts Payable $ 43,016 33,066 Due to Related Parties - - ------------ ------------- Total Current Liabilities 43,016 33,066 ------------ ------------- STOCKHOLDERS' EQUITY: Common Stock, par value $.001, 150,000,000 shares authorized; 74,703,263 and 42,715,274 issued and outstanding on September 30, 2008 and December 31, 2007 74,703 42,715 Additional Paid in Capital 8,450,003 5,158,253 Treasury Stock (20,000) (20,000) Deficit Accumulated During Development Stage (8,138,263) (4,889,603) ------------ ------------- Total Stockholders' Equity 366,443 291,365 ------------ ------------- TOTAL LIABILITY AND STOCKHOLDERS' EQUITY $ 409,459 $ 324,431 ============ ============= The accompanying notes are an integral part of these consolidated financial statements. -4-
ALTERNATE ELNERGY HOLDIGNS, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For The Three Months Ended For the Nine Months Ended Inception September 30, September 30, to 2008 2007 2008 2007 September 30, 2008 --------------- ---------------- --------------- ---------------- -------------------- REVENUE: $ - $ - $ - $ - $ - --------------- ---------------- --------------- ---------------- -------------------- OPERATING EXPENSES: General and Administrative Expenses 389,294 1,016,472 3,259,090 2,007,880 9,166,950 --------------- ---------------- --------------- ---------------- -------------------- NET LOSS FROM OPERATIONS (389,294) (1,016,472) (3,259,090) (2,007,880) (9,166,950) --------------- ---------------- --------------- ---------------- -------------------- OTHER INCOME (EXPENSE): Interest Expense 1,792 10,530 10,431 16,024 30,568 Gain on Sales of Investments - - - - 1,626 Interest Expense - - - - (3,507) --------------- ---------------- --------------- ---------------- -------------------- Total Other Expense 1,792 10,530 10,431 16,024 28,687 --------------- ---------------- --------------- ---------------- -------------------- LOSS BEFORE NON-CONTROLLING INTEREST IN VARIABLE INTEREST ENTITY (387,502) (1,005,942) (3,248,659) (1,991,856) (9,138,263) Non-Controlling interest in Variable Interest Entity - - - - 1,000,000 --------------- ---------------- --------------- ---------------- -------------------- NET LOSS $ (387,502) $ (1,005,942) $ (3,248,659) $ (1,991,856) $ (8,138,263) =============== ================ =============== ================ ==================== NET LOSS PER COMMON STOCK $ (0.01) $ (0.03) $ (0.06) $ (0.06) --------------- ---------------- --------------- ---------------- WEIGHTED AVERAGE SHARES OUTSTANDING 73,934,002 33,930,480 58,709,269 32,745,980 --------------- ---------------- --------------- ----------------
The accompanying notes are an integral part of these consolidated financial statements. -5-
ALTERNATE ENERGY HOLDINGS, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FROM INCEPTION (AUGUST 29, 2005) THROUGH SEPTEMBER 30, 2008 (UNAUDITED) DEFICIT ACCUMULATED NUMBER OF ADDITIONAL DURING THE COMMON COMMON PAID IN TREASURY DEVELOPMENT SHARES STOCK CAPITAL STOCK STAGE TOTAL ----------- --------- ----------- ---------- ------------- ----------- Founder Shares issued August 29, 2005 14,800,000 $ 14,800 $ (14,800)$ - $ - $ - Issuance of Common Stock for Services October 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 600,000 600 24,400 - 25,000 - November 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 ----------- --------- ----------- ---------- ------------- ----------- (continued) The accompanying notes are an integral part of these consolidated financial statements. -6- ALTERNATE ENERGY HOLDINGS, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FROM INCEPTION (AUGUST 29, 2005) THROUGH SEPTEMBER 30, 2008 (UNAUDITED) (continued) DEFICIT ACCUMULATED NUMBER OF ADDITIONAL DURING THE COMMON COMMON PAID IN TREASURY DEVELOPMENT SHARES STOCK CAPITAL STOCK STAGE TOTAL ----------- --------- ----------- ---------- ------------- ----------- Nussential Holdings Inc. shareholders prior to merger 4,252,088 4,252 (4,252) - - - Issuance of Common Stock for Services September 1,149,999 1,150 1,157,599 - - 1,158,749 November 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 1,000,000 1,000 49,000 - - 50,000 May 400,000 400 19,600 - - 20,000 June 100,000 100 4,900 - - 5,000 October 273,000 273 176,227 - - 176,500 November 116,000 116 38,550 - - 38,666 December 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 ----------- --------- ----------- ---------- ------------- ----------- (Continued) The accompanying notes are an integral part of these consolidated financial statements. -7- ALTERNATE ENERGY HOLDINGS, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FROM INCEPTION (AUGUST 29, 2005) THROUGH SEPTEMBER 30, 2008 (UNAUDITED) (continued) DEFICIT ACCUMULATED NUMBER OF ADDITIONAL DURING THE COMMON COMMON PAID IN TREASURY DEVELOPMENT SHARES STOCK CAPITAL STOCK STAGE TOTAL ----------- --------- ----------- ---------- ------------- ----------- Issuance of Common Stock for Services February 920,000 920 459,080 - - 460,000 March 300,000 300 149,700 - - 150,000 April 100,000 100 24,900 - - 25,000 June 550,000 550 136,950 - - 137,500 August 531,552 532 212,089 - - 212,621 September 4,583,200 4,583 478,697 - - 483,280 October 366,400 366 146,194 - - 146,560 November 457,000 457 65,943 - - 66,400 December 57,500 58 5,692 - - 5,750 Issuance of Common Stock for Cash January 23,000 23 12,227 - - 12,250 February 55,000 55 27,445 - - 27,500 March 10,000 10 4,990 - - 5,000 April 25,000 25 9,975 - - 10,000 May 206,000 206 51,294 - - 51,500 June 180,000 180 42,820 - - 43,000 July 2,591,000 2,591 645,159 - - 647,750 August 2,521,036 2,521 626,238 - - 628,759 September 64,000 64 15,936 - - 16,000 October 20,000 20 4,980 - - 5,000 November 287,500 287 57,213 - - 57,500 December 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 ----------- --------- ----------- ---------- ------------- ----------- (continued) The accompanying notes are an integral part of these consolidated financial statements. -8- ALTERNATE ENERGY HOLDINGS, INC. (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FROM INCEPTION (AUGUST 29, 2005) THROUGH SEPTEMBER 30, 2008 (UNAUDITED) (continued) DEFICIT ACCUMULATED NUMBER OF ADDITIONAL DURING THE COMMON COMMON PAID IN TREASURY DEVELOPMENT SHARES STOCK CAPITAL STOCK STAGE TOTAL ----------- --------- ----------- ---------- ------------- ----------- Issuance of Common Stock for Services January 1,312,250 1,312 129,913 - - 131,225 February 70,000 70 6,930 - - 7,000 March 183,250 183 18,142 - - 18,325 April 20,000 20 1,980 - - 2,000 May 14,556,875 14,557 1,441,131 - - 1,455,688 June 4,365,342 4,365 432,169 - - 436,534 July 798,625 798 158,927 - - 159,725 August 71,500 72 14,228 - - 14,300 September 25,430 25 5,061 - - 5,086 Issuance of Common Stock for Cash January 7,720,000 7,720 764,280 - - 772,000 February 1,120,750 1,121 110,954 - - 112,075 March 225,000 225 22,275 - - 22,500 April 250,000 250 24,750 - - 25,000 May 50,000 50 4,950 - - 5,000 June 576,000 576 57,024 - - 57,600 July 307,301 308 31,072 - - 31,380 August 182,000 182 28,018 - - 28,200 September 153,666 154 39,946 - - 40,100 Net Loss - - - - (3,248,660) (3,248,660) ----------- --------- ----------- ---------- ------------- ----------- Balances, September 30, 2008 74,703,263 $ 74,703 $ 8,450,003 $ (20,000) $ (8,138,263) $ 366,443 =========== ========= =========== ========== ============= =========== The accompanying notes are an integral part of these consolidated financial statements. -9-
ALTERNATE ENERGY HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) NINE MONTHS ENDED INCEPTION TO SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30 2008 2007 2008 -------------------- ------------------- ----------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (3,248,659) $ (1,991,856) $ (8,138,263) -------------------- ------------------- ----------------- Adjustments to reconcile Net Loss to Net Cash Used by Operating Activities - Common stock issued for services 2,229,879 1,468,541 5,319,493 Loss from Variable Interest - - (1,000,000) Change in operating Assets and Liabilities - Deposits (3,000) (50,000) (58,000) Due from Related Parties (10,000) - 30,000 Accounts Payable 9,953 50,028 43,016 -------------------- ------------------- ----------------- Total Adjustments 2,226,832 1,468,569 4,334,509 -------------------- ------------------- ----------------- Net Cash Used by Operating Activities (1,021,827) (523,287) (3,803,754) -------------------- ------------------- ----------------- CASH FLOWS FROM FINANCING ACTIVITIES: Receipt of Cash for Common Stock 1,093,855 1,441,759 3,165,213 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 1,093,855 1,443,859 4,145,213 -------------------- ------------------- ----------------- NET (DECREASE) INCREASE IN CASH 72,028 920,572 341,459 CASH - BEGINNING 269,431 254,022 - -------------------- ------------------- ----------------- CASH - ENDING $ 341,459 $ 1,174,594 $ 341,459 ==================== =================== ================= 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 -10- ALTERNATE ENERGY HOLDINGS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES DESCRIPTION OF BUSINESS Alternate Energy Holdings, Inc., (and its subsidiaries Idaho Energy Complex Corporation and Reactor Development, LLC) formerly Nussentials Holdings Inc., is a development stage enterprise focused on the purchase, optimization and construction of green energy sources - primary nuclear power plants. Sunbelt Energy Resources Inc. was formed on August 29, 2005 to operate in the alternate energy industry and has limited operational activity. In September 2006, Sunbelt acquired Nussential Holdings, Inc. by exchanging 17,900,000 shares of Sunbelt which represented 100% for 21,399,998 shares of common stock of Nussential Holdings Inc. As a result of the acquisition, the shareholders of Sunbelt owned a majority of the voting stock of Nussentials Holdings, Inc. which changed its name to Alternate Energy Holdings, Inc. The merger has been accounted for as a reverse merger whereby Alternate Energy Holdings, Inc. is the accounting acquirer resulting in a recapitalization of Alternate Energy Holdings, Inc.'s equity. In connection with and simultaneous to the reverse merger, Nussentials Corporation, a wholly owned subsidiary of Nussentials Holdings Inc. was transferred to Nussential Holdings, Inc. majority shareholder through issuance of 4,252,088 shares of common stock. BASIS OF PRESENTATION Development Stage Company The Company has not earned significant revenues from planned operations. Accordingly, the Company's activities have been accounted for as those of a "Development Stage Company", as set forth in Statement of Financial Accounting Standards No. 7 ("SFAS"). Among the disclosures required by SFAS No. 7 are that the Company's financial statements of operations, stockholders' equity and cash flows disclose activity since the date of the Company's inception. Going Concern In the Company's Audited Financial Statements for the fiscal year ended December 31, 2007, the Report of the Independent Registered Public Accounting Firm includes an explanatory paragraph that describes substantial doubt about the Company's ability to continue as a going concern. The Company's interim financial statements for the nine months ended September 30, 2008 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company reported an accumulated deficit of $8,138,263 as of September 30, 2008. -11- ALTERNATE ENERGY HOLDINGS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED SIGNIFICANT ACCOUNTING POLICIES 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. 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 September 30, 2008. -12- ALTERNATE ENERGY HOLDINGS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 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 nine months ending September 30, 2008 and 2007 and therefore, has no tax liability. The deferred tax asset generated by the carry-forward is approximately $ 2,767,009 at September 30, 2008 and will expire 20 years in 2028. Components of deferred tax assets at September 30, 2008 are as follows: Deferred tax asset - net operating loss Carry-forwards $ 2,767,009 Valuation Allowance (2,767,009) ------------ Net deferred tax asset $ -0- ============ NOTE 3 - COMMON STOCK During 2006, Alternate Energy Holdings, Inc. - Issued 4,252,088 shares of common stock to the Nussential Holdings shareholders in the reverse merger - See Note 1 for the details. - Issued 1,249,999 shares of common stock valued at $ 1,318,749 for services. - Issued 1,964,000 shares of common stock for cash received in the amount of $321,999. - Purchase 400,000 shares of treasury stock for cash in the amount of $20,000. During 2007, Alternate Energy Holdings, Inc. - Issued 7,865,652 shares of common stock valued at $ 1,687,111 for services. - Issued 8,433,536 shares of common stock for cash received in the amount of $ 1,749,359. During 2008, Alternate Energy Holdings, Inc. - Issued 21,403,272 shares of common stock valued at $ 2,229,879 for services. - Issued 10,584,717 shares of common stock for cash received in the amount of $ 1,093,855. NOTE 4 - COMMITMENTS Alternate Energy Holdings, Inc lease it office space under a one-year lease and on a month-to-month basis under another lease. The one year lease is dated June 1, 2008 and expires May 2009. Rent Expense for the nine months ending September 30, 2008 and 2007 was $ 17,084 and $ -0-, respectively. -13- ALTERNATE ENERGY HOLDINGS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE 5 - 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 Development, LLC was formed for the purpose of developing and managing an energy complex. Alternate Energy Holdings, Inc. invested $1,000,000 which represents approximately 50% of Reactor Development LLC's capital structure as of December 31, 2007. Furthermore, the daily operating decisions of Reactor Development, LLC are made by the members of Alternate Energy Holdings, Inc.'s management. Under FASB Interpretation No. 46, Reactor Development, LLC is deemed a variable Interest Entity to Alternate Energy Holding, Inc. and as such Reactor Development, LLC's financial information has been consolidated with Alternate Energy Holdings, Inc. The consolidated financial statements includes the full operating activities of Reactor Development, LLC, with amounts allocated to Reactor Development, LLC disclosed under "Non-Controlling Interest in Variable Interest Entity" in the accompanying consolidated income statement. Assets and liabilities of Reactor Development, LLC were $ -0- and $ -0-, respectively, at September 30, 2008 and 2007, respectively. -14- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR UNAUDITED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN. IN CONNECTION WITH, AND BECAUSE WE DESIRE TO TAKE ADVANTAGE OF, THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, WE CAUTION READERS REGARDING CERTAIN FORWARD LOOKING STATEMENTS IN THE FOLLOWING DISCUSSION AND ELSEWHERE IN THIS REPORT AND IN ANY OTHER STATEMENT MADE BY, OR ON OUR BEHALF, WHETHER OR NOT IN FUTURE FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. FORWARD-LOOKING STATEMENTS ARE STATEMENTS NOT BASED ON HISTORICAL INFORMATION AND WHICH RELATE TO FUTURE OPERATIONS, STRATEGIES, FINANCIAL RESULTS OR OTHER DEVELOPMENTS. FORWARD LOOKING STATEMENTS ARE NECESSARILY BASED UPON ESTIMATES AND ASSUMPTIONS THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND OUR CONTROL AND MANY OF WHICH, WITH RESPECT TO FUTURE BUSINESS DECISIONS, ARE SUBJECT TO CHANGE. THESE UNCERTAINTIES AND CONTINGENCIES CAN AFFECT ACTUAL RESULTS AND COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD LOOKING STATEMENTS MADE BY, OR ON OUR BEHALF. WE DISCLAIM ANY OBLIGATION TO UPDATE FORWARD-LOOKING STATEMENTS. THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S REPORT ON THE COMPANY'S FINANCIAL STATEMENTS AS OF DECEMBER 31, 2007, AND FOR EACH OF THE YEARS IN THE TWO-YEAR PERIOD THEN ENDED, INCLUDES A "GOING CONCERN" EXPLANATORY PARAGRAPH, THAT DESCRIBES SUBSTANTIAL DOUBT ABOUT THE COMPANY'S ABILITY TO CONTINUE AS A GOING CONCERN. PLAN OF OPERATIONS Alternate Energy Holdings, Inc. (AEHI or the Company) is a development stage enterprise focused on the purchase, optimization and construction of green energy sources - primary nuclear power plants. The Company is in the business of serving the electric power generation industry by acquiring and developing nuclear plant sites and obtaining licenses for their construction and operation throughout the United States, specifically Idaho. The Company 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. The Company is currently in the process of raising funding for the construction of the first facility. While the success of the nuclear facility project does not depend on financial assistance from the government, management believes that through the 2005 Energy Policy Act, the nuclear facility 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. 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 ------------------------------------------------------------------- --------- -15- The Company anticipates using the funds raised to pay listed categories as set forth. The Company will have complete discretionary control over the actual utilization of said funds. Although the Company 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. RESULTS OF OPERATIONS RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- During the nine months ended September 30, 2008 and 2007, we did not recognize any revenues from our operational activities. During the nine months ended September 30, 2008, we incurred operational expenses of $3,259,090 compared to $2,007,880 during the nine months ended September 30, 2007. The increase of $1,251,210 was a result of an increase of $761,338 in the expenses related to shares of common stock issued for services compared to the prior period. The remaining $489,872 is a result of an increase in operational expenses over the prior period. During the nine months ended September 30, 2008, we recognized a net loss of $3,248,659 compared to a net loss of $1,991,856 for the nine months ended September 30, 2007. The increase of $1,256,803 was a result of the $1,251,210 increase in operational expenses discussed in the previous paragraph. During the nine months ended September 30, 2008 and 2007, the Company has net loss per share of $0.06. RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2008 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2007 -------------------------------------------------------------------------------- During the three months ended September 30, 2008 and 2007, we did not recognize any revenues from our operations. During the three months ended September 30, 2008, we incurred operational expenses of $389,294 compared to $1,016,472 during the three months ended September 30, 2007. The decrease of $627,178 is a result of the $511,790 decrease in the expenses related to shares of our common stock issued for services. During the three months ended September 30, 2008, we recognized a net loss of $387,502 compared to $1,005,942 during the three months ended September 30, 2007. The decrease of $618,440 was a result of the decrease in operational expenses of $627,178, as discussed in the previous paragraph. During the three months ended September 30, 2008 and 2007, we had a net loss per share of $0.01 and $0.03, respectively. -16- LIQUIDITY AND CAPITAL RESOURCES From the Company's inception through September 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 September 30, 2008, the Company had cash and cash equivalents of $341,459. At September 30, 2008, we had total current assets of $409,459, consisting of cash and cash equivalents of $341,459, deposits of $58,000 and amounts due from related parties of $10,000. At September 30, 2008, we had total current liabilities of $43,016, consisting solely of accounts payable. During the nine months ended September 30, 2008, we used cash of $1,021,827 in our operating activities. During the nine months ended September 30, 2008, we recognized a net loss of $3,248,659 which was adjusted for $2,229,879 in expenses related to shares of our common stock issued for services. During the nine months ended September 30, 2007, we used cash of $523,287 in our operating activities. During the nine months ended September 30, 2007, we recognized a net loss of $1,991,856, which was adjusted for $1,468,541 in expenses related to shares of our common stock issued for services. During the nine months ended September 30, 2008, we issued 10,584,717 shares of our common stock in exchange for cash of $1,093,855, which has been used to support our operations. CAPITAL RESOURCES We have only common stock as our capital resource. We have no material commitments for capital expenditures within the next year, however if operations are commenced, substantial capital will be needed to pay for participation, investigation, exploration, acquisition and working capital. NEED FOR ADDITIONAL FINANCING We do not have capital sufficient to meet our cash needs. We will have to seek loans or equity placements to cover such cash needs. Once exploration commences, our needs for additional financing is likely to increase substantially. No commitments to provide additional funds have been made by our management or other stockholders. Accordingly, there can be no assurance that any additional funds will be available to us to allow it to cover our expenses as they may be incurred. ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. NOT APPLICABLE -17- ITEM 4. CONTROLS AND PROCEDURES Based upon an evaluation as of the end of the period covered by this report, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to the Company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There have been no changes in the Company's internal controls over financial reporting, that occurred during the period covered by this report, that have materially affected, or are reasonably likely to materially affect the Company's internal controls over financial reporting. The Company's disclosure controls and procedures and internal controls over financial reporting provide reasonable, but not absolute, assurance that all deficiencies in design or operation of those control systems, or all instances of errors or fraud, will be prevented or detected. Those control systems are designed to provide reasonable assurance of achieving the goals of those systems in light of the Company's resources and nature of the Company's business operations. The Company's disclosure controls and procedures and internal control over financial reporting remain subject to risks of human error and the risk that controls can be circumvented for wrongful purposes by one or more individuals in management or non-management positions. ITEM 4T. CONTROLS AND PROCEDURES MANAGEMENT'S QUARTERLY REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING. This quarterly report does not include a report of management's assessment regarding internal control over financial reporting or an attestation report of the Company's registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission of newly public companies. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS NONE. ITEM 2. CHANGES IN SECURITIES The Company made the following unregistered sales of its securities from July 1, 2008 through September 30, 2008.
TITLE OF DATE OF SALE SECURITIES NO. OF SHARES CONSIDERATION CLASS OF PURCHASER ------------------------- ------------------ --------------- ----------------------------- ----------------------------- July 1, 2008 through Common Stock 895,555 $179,111 worth of services Business Associates September 30, 2008 ------------------------- ------------------ --------------- ----------------------------- ----------------------------- July 1, 2008 through Common Stock 642,967 $99,036 Business Associates September 30, 2008
EXEMPTION FROM REGISTRATION CLAIMED All of the sales by the Company of its unregistered securities were made by the Company in reliance upon Section 4(2) of the Securities Act of 1933, as amended (the "1933 Act"). All of the individuals and/or entities listed above that purchased the unregistered securities were almost all existing shareholders, all known to the Company and its management, through pre-existing business relationships, as long standing business associates, and employees. All -18- 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 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 3. DEFAULTS UPON SENIOR SECURITIES NONE. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NONE. ITEM 5. OTHER INFORMATION NONE. ITEM 6. EXHIBITS EXHIBITS. The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K. EXHIBIT NO. DESCRIPTION ------------------ ----------------------------------------------------- 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act 32.1 Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act 32.2 Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act -19- SIGNATURES Pursuant to the requirements of Section 12 of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ALTERNATE ENERGY HOLDINGS, INC. --------------------------------------------------- (REGISTRANT) Dated: February 5, 2009 By: /s/Donald Gillispie ----------------------------------------------- Donald Gillispie (Principal Executive Officer, President and Chief Executive Officer) Dated: February 5, 2009 By: /s/Rick J. Bucci ----------------------------------------------- Rick J. Bucci, (Chief Financial Officer/Principal Accounting Officer and Vice President) -20-