ENERGY HOLDINGS INTERNATIONAL, INC. - FORM 10-Q/A

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EXCEL - IDEA: XBRL DOCUMENT - ENERGY HOLDINGS INTERNATIONAL, INC.	Financial_Report.xls
EX-32.2 - CERTIFICATION - ENERGY HOLDINGS INTERNATIONAL, INC.	egyh_ex322.htm
EX-32.1 - CERTIFICATION - ENERGY HOLDINGS INTERNATIONAL, INC.	egyh_ex321.htm
EX-31.1 - CERTIFICATION - ENERGY HOLDINGS INTERNATIONAL, INC.	egyh_ex311.htm
EX-31.2 - CERTIFICATION - ENERGY HOLDINGS INTERNATIONAL, INC.	egyh_ex312.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly period ended December 31, 2011

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 0-52631

ENERGY HOLDINGS INTERNATIONAL, INC.

(Exact Name of Registrant as specified in its charter)

Nevada		52-2404983
(State or other jurisdiction of incorporation)		(IRS Employer File Number)

12012 Wickchester Lane, Suite 150

Houston, TX 77079

(Address of principal executive offices) (zip code)

(281) 617-7198

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(Section 232.405 of this chapter) during the preceding 12 months(or such shorter period that the registrant was required to submit and post such files. Yes o No þ

Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “small reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	þ
(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 o No þ

The number of shares outstanding of the Registrant's common stock, as of the latest practicable date: January 31, 2012 was 33,684,006.

FORM 10-Q/A

Energy Holdings International, Inc.

TABLE OF CONTENTS

		PAGE
PART I. FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS		3

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION		12

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.		15

ITEM 4.	CONTROLS AND PROCEDURES		15

PART II. OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS		16

ITEM 1A.	RISK FACTORS		16

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		20

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES		20

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		20

ITEM 5.	OTHER INFORMATION		20

ITEM 6.	EXHIBITS		21

SIGNATURES			22

PART I. FINANCIAL INFORMATION

References in this document to "us," "we," or "Company" refer to ENERGY HOLDINGS INTERNATIONAL, INC. and its subsidiary.

ITEM 1. FINANCIAL STATEMENTS

ENERGY HOLDINGS INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

	December 31, 2011 (Unaudited)			June 30, 2011

ASSETS
Cash and equivalents – unrestricted	$	488,318		$	50,964
Cash and equivalents – restricted		40,046			40,030
Prepaid expenses and advances to employees		22,583			4,083
Total current assets		550,947			95,077

Property, Plant and Equipment, net of accumulated depreciation of $15,848 and $11,620 at December 31, 2011 and June 30, 2011, respectively		28,898			33,123
Deposits		8,181			8,181
Total non-current assets		37,079			41,304
TOTAL ASSETS	$	588,026		$	136,381

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable and accrued liabilities	$	56,161		$	167,452
Accounts payable - related party		523,042			241,128
Short-term note payable, net of discount of $210 and $15,620		38,704			27,662
Derivative liability		-			119,643
Deferred Revenue		-			299,975
Total current liabilities		617,907			855,860
TOTAL LIABILITIES		617,907			855,860

STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock - $0.10 par value: 25,000,000 shares authorized; none issued and outstanding at December 31, 2011 and June 30, 2010		-			-
Common stock, $0.001 par value; 100 million shares authorized, 33,684,006 and 31,612,109 shares issued and outstanding at December 31, 2011 and June 30, 2011, respectively		33,684			31,612
Additional paid in capital		3,471,145			1,955,483
Common stock committed		50,000			190,000
Accumulated deficit		(3,584,710	)		(2,896,574	)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)		(29,881	)		(719,479	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	588,026		$	136,381

The accompanying notes are integral to these financial statements.

ENERGY HOLDINGS INTERNATIONAL, INC.

CONSOLIDATED RESULTS OF OPERATIONS

(Unaudited)

	Six Months Ended December 31,						Three Months Ended December 31,
	2011			2010			2011			2010

REVENUES
Consulting revenues	$	-		$	166,667		$	-		$	-
TOTAL REVENUES		-			166,667			-			-

OPERATING EXPENSES
General and administrative expenses		858,598			799,539			573,147			308,460
Depreciation		4,226			23,527			2,114			11,763
Total operating expenses		862,824			823,066			575,261			320,223

NET LOSS FROM OPERATIONS		(862,824	)		(656,399	)		(575,261	)		(320,223	)

OTHER INCOME/(EXPENSE)
Gain (loss) on debt extinguishment		194,000			-			194,000			-
Interest expense		(19,327	)		-			(8,816	)		-
Interest income		15			-			-			-

Total other income/(expense)		174,688			-			185,184			-

Net loss	$	(688,136	)	$	(656,399	)	$	(390,077	)	$	(320,223	)

Net loss per share - basic and diluted	$	(0.02	)	$	(0.02	)	$	(0.01	)	$	(0.01	)

Weighted average number of shares outstanding		32,571,458			29,758,848			33,345,847			29,762,109

The accompanying notes are integral to these financial statements.

ENERGY HOLDINGS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDER DEFICIT

(Unaudited)

	Commons Stock				Additional Paid In		Common Stock			Accumulated			Total Stockholders' Equity
	Shares		Par Value		Capital		Payable			Deficit			(Deficit)

Balance at June 30, 2011		31,612,109	$	31,612	$	1,955,483	$	190,000		$	(2,896,574	)	$	(719,479	)

Shares issued for services		550,000		550		131,950								132,500
Shares issued for extinguishment of debt and deferred revenue		315,000		315		120,660								120,975
Extinguishment of derivative liability		-		-		119,643								119,643
Shares issued for cash		1,000,000		1,000		139,000		(140,000	)					-
Shares issued for conversion of convertible note		206,897		207		5,793								6,000
Sales of equity interest in subsidiary						998,616								998,616
Net loss											(688,136	)		(688,136	)

Balance at December 31, 2011		33,684,006	$	33,684	$	3,471,145	$	50,000		$	(3,584,710	)	$	(29,881	)

ENERGY HOLDINGS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended December 31,
	2011			2010

CASH FLOWS FROM OPERATING ACTIVITIES
Net income / (loss)	$	(688,136	)	$	(656,399	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		4,226			23,527
Amortization of discount on note payable		15,410			-
Gain on debt and deferred revenue extinguishment		(194,000	)		-
Stock based compensation		132,500			85,000

Change in operating assets and liabilities:
Restricted cash		(16	)		-
Deposits, prepaid expenses and other current assets		(18,500	)		10,794
Accounts payable and accrued liabilities		(94,660	)		85,435
Deferred revenues		-			133,308
Related party payables		281,914			-

Net cash provided by / (used in) operations		(561,262	)		(318,335	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets		-			-
Sale of equity interest in subsidiary		998,616			-
Proceeds from note payable		-			-

Net cash used in investing activities		998,616			-

CASH FLOWS FROM FINANCING ACTIVITIES

Net cash provided by/(used in) financing activities		-			-

Net change in cash and equivalents		437,354			(318,335	)
Cash and equivalents, beginning of period		50,964			359,079
Cash and equivalents, end of period	$	488,318		$	40,744

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$	-		$	-
Cash paid for income taxes		-			-

SUPPLEMENTAL DISCLOSURES ON NON-CASH FINANCING ACTIVITY
Common stock issued for outstanding stock commitment	$	140,000		$	-
Common stock issued for conversion of convertible note		6,000			-

The accompanying notes are integral to these financial statements.

ENERGY HOLDINGS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Energy Holdings International, Inc. (the “Company”), was incorporated in the State of Nevada on November 30, 2006 as a successor corporation to Green Energy Corp. which was incorporated in the State of Colorado on October 14, 2003. Green Energy Corp. acquired Green Energy Holding Corp. on December 18, 2006.

On March 10, 2009, the Company amended the Articles of Incorporation to change its name from Green Energy Holding Corp. to Energy Holdings International, Inc.

The Company is a holding company that also provides consulting services and is currently exploring various opportunities in the energy area. EHII’s management has been in active discussions with several potential companies, either to acquire, manage, or joint venture with these entities. However, as of the date of this filing, no definitive agreements or arrangements have been finalized.

The Company has consolidated the accounts of EHII MENA, a firm in Dubai, United Arab Emirates, into its financial statements.

Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q/A and do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of operations for a full year.

All of the Company’s accounting policies are not included in this Form 10-Q/A. A more comprehensive set of accounting policies adopted by the Company are included on our Form 10-K as of June 30, 2011 and are herein incorporated by reference.

Fiscal Year

The Company’s fiscal year is June 30.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. There are no cash equivalents at December 31, 2011 or June 30, 2011. At December 31, 2011, we had $40,046 on deposit with a financial institution as a compensating balance to cover our usage of credit cards for travel. We are prohibited from using these funds until such time as the institution releases us from the obligation to retain these funds at their bank.

Property and Equipment

Property and equipment are recorded at cost and straight-line depreciated over each item's estimated useful life, which is three years for vehicles, computers and other items. Our fixed assets consist generally of office furniture, which is being depreciated over its useful life, generally five years, and equipment, which is being depreciated over their useful lived, which is generally seven years.

ENERGY HOLDINGS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Revenue Recognition

Revenue is comprised principally of service and consulting revenue from work performed for customers under master service arrangements. Revenue is recognized over the period of the agreement as it is earned as such policy complies with the following criteria: (i) persuasive evidence of an arrangement exists; (ii) the services have been provided; (iii) the fee is fixed and determinable, (iv) collectability is reasonably assured. In the event that a customer pays up front, deferred revenue is recognized for the amount of the payment in excess of the revenue earned.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Income Tax

The Company accounts for income taxes under current Accounting Standards Codification 740, (“ASC 740”) where deferred taxes are provided on a liability method and deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Since the company considers it more likely than not that no benefit from net operating loss carry forwards will be recognized in the future, deferred tax assets are fully offset by a valuation allowance.

Net Income (Loss) per Share

The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding. Warrants, stock options, and common stock issuable upon the conversion of the Company's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.

As of December 31, 2011 and June 30, 2011, we had 500,000 warrants outstanding (see Note 4). These potentially dilutive securities did not affect our net loss per share for the periods presented in the statement of operations because to do so would be anti-dilutive.

Financial Instruments

Current accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1. Observable inputs such as quoted market prices in active markets.

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly, and

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

At June 30, 2011, we had a derivative liability of $119,634 included as a level 3 liability and none at December 31, 2011. See Note 4 for a discussion of this derivative liability.

Recent Accounting Pronouncements

Effective in this filing, the Company adopted changes issued by the FASB related to the authoritative hierarchy of Generally Accepted Accounting Principals (GAAP) and the establishment of the FASB Accounting Standards Codification. The codification is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. These changes and the codification itself do not change GAAP, and other than the manner in which accounting guidance is referenced in our filing, the adoption of this standard had no impact on our financial statements.

The Company has reviewed other recent accounting pronouncements and does not anticipate any impact on financial results as a result of recently issued standards.

NOTE 2. GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, we had losses and negative cash flows from operations and for the six months ended December 31, 2011 and negative working capital at December 31, 2011.

These conditions raise substantial doubt as to our ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Management has sold 35% of the equity in its yet-to-be-formed subsidiary for $5 million in cash of which $998,616 has been advanced as of December 31, 2011. We expect to receive the remainder of these amounts before the close of the quarter ended March 31, 2012, or shortly thereafter. The amount to be received (approximately $4 million) is contingent on our obtaining the Power Purchase Agreement from the government of Bangladesh.

The already-advanced amount ($998,616) will not be refundable if the Power Purchase Agreement is not approved by the government of Bangladesh.

NOTE 3. RELATED PARTY TRANSACTIONS

We owe $450,417 in salaries and $12,628 in advances to our Chief Executive Officer, John Adair and our Chief Financial Officer, Jalal Alghani and certain of their sons and daughters who work as consultants to the Company. At June 30, 2011, these amounts were $211,000 and $12,628, respectively.

We also owe $60,000 in cash to a director.

NOTE 4. COMMON STOCK AND CAPITAL STRUCTURE

Common Stock

At December 31, 2011 and June 30, 2011, the Company had 100 million shares of authorized common stock, $.001 par value, with 33,684,006 and 31,612,109 common shares issued and outstanding, respectively.

For a discussion of stockholders equity through June 30, 2011, see Note 8 to the Financial Statements filed with our Form 10-K as of June 30, 2011, filed on October 13, 2011.

On July 18, 2011, we issued the second tranche of stock to a consulting group pursuant to our contract which we signed on March 1, 2011. We valued the shares at the closing price on the grant date (March 1, 2011) and charged general and administrative expenses with $12,500.

On October 17, 2011, we issued 15,000 shares of common stock to a consultant for services, extinguishing $15,000 of debt for previous services rendered. We valued the shares at the closing price on the grant date, recorded an increase in Additional Paid in Capital of $975, and a gain on extinguishment of debt of $14,025.

Also on October 17, 2011, we issued 100,000 shares to a director for services. We valued the shares at the closing price on the grant date and charged general and administrative expense with $40,000.

Also on October 17, 2011, we issued 500,000 shares to a consultant in Saudi Arabia. 300,000 of these shares were to extinguish advances to the Company occurring during 2010 and 2011 totalling $299,975. These 300,000 shares were in exchange for the extinguishment of that obligation. 200,000 shares were in exchange for services related to our Bangladesh project. We valued the 500,000 shares at the closing price on the grant date which resulted in an increase in Additional Paid in Capital of $200,000. We charged General and Administrative Expenses with $80,000 of consulting costs, reduced the $299,975 debt to zero, and recognized a gain on extinguishment of debt of $179,975.

On May 22, 2011, we received $140,000 in cash for 1 million shares. At our previous fiscal year end of June 30, 2011, these shares had not yet been issued and were included in Common Stock Committed. On October 17, 2011, we issued these 1 million shares and reduced our obligation in Common Stock Committed by $140,000.

On October 26, we issued 206,897 shares to convert $6,000 of a $42,500 convertible promissory note. See the explanation below under “Convertible Securities Outstanding”.

Convertible Securities Outstanding

At September 30, 2011 we had outstanding 500,000 warrants issued in connection with our March 1, 2011 consulting agreement. The warrants expire March 1, 2012.

At June 30, 2011, we had a $42,500 convertible promissory note outstanding which can be converted beginning October 4, 2011 into common stock at 58% of the lowest three days’ closing prices of the 10 days previous to the conversion. On October 26, 2011, we issued 206,897 shares in conversion of $6,000 of the unpaid principal balance.

NOTE 5. NOTES PAYABLE, DEFERRED REVENUES AND DERIVATIVE LIABILITY

April 7, 2011 Convertible Note Payable of $42,500

On April 7, 2011, we issued a $42,500 convertible promissory note for $42,500 in cash. The note can be converted beginning October 4, 2011 into common stock at 58% of the lowest three days’ closing prices of the 10 days previous to the conversion.

Because of the number of shares at issuance were not determinable, and because those shares issuable upon conversion tainted the 500,000 warrants outstanding, we recorded a derivative liability at June 30, 2011 of $119,643.

On July 1, 2011, we amended the convertible promissory note to include a fixed conversion price of $0.00009. The promissory note is convertible at the greater of the variable conversion price (which defined above) and the fixed conversion price. Since the amendment provided a maximum number of shares that could be issued upon conversion, the derivative liability was extinguished. We therefore removed the derivative liability and recorded an increase in Additional Paid Capital of $119,643.

On October 26, 2011, we issued 206,897 shares in conversion of $6,000 of the unpaid principal balance of this note. At December 31, 2011, the unpaid principal is $36,500, with unpaid accrued interest of $2,114.

Deferred Revenues

On September 23, 2010 and November 5, 2011, an unrelated party in Saudi Arabia advanced us collectively $299,975 against a consulting agreement whereby we were to provide engineering services. This agreement was never consummated and we have held the $299,975 as deferred revenue. On October 17, 2011, we issued 300,000 shares of our common stock to extinguish this liability (see Note 4).

NOTE 6. CHANGE IN OWNERSHIP INTEREST IN SUBSIDIARY

During the six months ended December 31, 2011, we entered into two separate agreements to sell 35% of the equity in our yet-to-be formed subsidiary which will posses the rights to own and operate the power plant in Bangladesh if it is conveyed in the Purchase Price Agreement with the government of Bangladesh. The total purchase price of the 35% is $5 million in cash. Any amounts advanced under this agreement are not refundable if the Purchase Price Agreement is not successfully closed.

As of December 31, 2011, we had received $998,616 of advances against this agreement. We accounted for these advances in accordance with Accounting Standards Codification number 810 – Consolidations (“ASC 810”). Under ASC 810, change in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary is accounted for as equity. We therefore accounted for the $998,616 of advances as increases in Additional Paid in Capital.

NOTE 7. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date these financial statements were issued.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

The following discussion of our financial condition and results of operations should be read in conjunction with, and is qualified in its entirety by, the consolidated financial statements and notes thereto included in, Item 1 in this Quarterly Report on Form 10-Q/A. This item contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those indicated in such forward-looking statements.

Forward-Looking Statements

This Quarterly Report on Form 10-Q/A and the documents incorporated herein by reference contain forward-looking statements. Such forward-looking statements are based on current expectations, estimates, and projections about our industry, management beliefs, and certain assumptions made by our management. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, variations of such words, and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. However, readers should carefully review the risk factors set forth herein and in other reports and documents that we file from time to time with the Securities and Exchange Commission, particularly the Annual Reports on Form 10-K, Quarterly reports on Form 10-Q/A and any Current Reports on Form 8-K.

Overview and History

The Company’s predecessor, Green Energy Corp. was originally organized as a Colorado corporation, referred to in this document as “Old Green Energy”, commenced operations in 2003 as a marketer of a specific gasification technology for commercial applications to produce fuels and chemicals. On November 20, 2003, Old Green Energy filed a Limited Registration Offering Statement under cover of Form RL pursuant to the Colorado Securities Code relating to a proposed offering of up to 1.8 million shares of common stock, which was declared effective by the Colorado Division of Securities on January 21, 2004. The offering, which closed on June 29, 2004, raised $263,850 and sold a total of 527,700 shares in the offering. In December 2006, Old Green Energy reincorporated as a Nevada corporation and changed its name to Green Energy Holding Corp.

On December 28, 2008, GEHC entered into a stock purchase agreement to issue 14,370,300 shares to accredited investors for $175,000, giving those outside investors approximately 96.5% controlling interest in the Company with a total acquisition cost being $500,000.

On March 10, 2009, the Company amended the Articles of Incorporation to change its name from Green Energy Holding Corp. to Energy Holdings International, Inc.

Our Business

The Company was originally organized in October 2003 to capitalize on the growing market for alternative fuels and its co-products. The Company acquired a non-exclusive license to a specific technology for the conversion of biomass to synthesis gas (“syngas”). The technology includes the ability to produce a consistent, high-quality syngas product that can be used for energy production or as a building block for other chemical manufacturing processes.

Following the sale of 96.5% of the Company’s capital stock at the end of calendar 2008, the Company decided to modify its focus, concentrating on acquiring, developing and managing cash producing oil and gas properties in the Middle East, Asia and the Americas, particularly in the middle region of the United States. It aspires to find new, long-term energy solutions that are safe, economically viable and environmentally friendly to enhance the future of countries and economies worldwide. It is responding to international, political, environmental and free market demands for investments in the Independent Power Project (IPP) market with safer, cleaner and more technologically advanced energy sources. The Company is dedicated to the task of providing the best management and advisory services available in the complex arena of international business and project development in oil and gas production and power generation.

Our corporate headquarters is located at 12012 Wickchester Lane, Suite 150, Houston, Texas 77079 and our telephone number is (561) 445-1050. The Company’s website is www.energhii.com.

Results of Operations

For the Six Months Ended December 31, 2011 and 2010

Net Loss. We had a net loss of $688,136 for the six months ended December 31, 2011, versus a loss of $656,399 for the same period in 2010. The reasons are set forth in the following paragraphs.

Operating Expenses. Our general and administrative expenses were $858,598 for the six months ended December 31, 2011 versus $799,539 for the same period last year for a net increase of $59,059, or a 7% increase. The increase is due primarily from increased salaries to officers and directors, and from stock-based consulting compensation.

Depreciation Expense. Our depreciation expense for the six months ended December 31, 2011 was only $4,226 versus $23,527 for the same period in 2010. The decrease is due to certain depreciable items in our Dubai subsidiary which became fully depreciated during the previous year. Those items are no longer being depreciated.

Other Income/(Expense). Items included in this category are a gain on extinguishment of debt with common stock, and interest expense. These items collectively result in a gain of $174,688. We had none of these items during the six months ended December 31, 2010.

For the Three Months Ended December 31, 2011 and 2010

Net Loss. We had a net loss of $390,077 for the three months ended December 31, 2011, versus a loss of $320,223 for the same period in 2010. The reasons are set forth in the following paragraphs.

Operating Expenses. General and administrative expenses are higher in the current year ($573,147 in 2011 versus $308,460 for a total increase of $264,687, or 46%) due primarily to non-cash stock-based consulting compensation in Dubai and to increased officer and director salary.

Depreciation Expense. Our depreciation expense was $2,114 for the three months ended December 31, 2011 versus $11,763, for the same period last year. The decrease is due to having fully depreciated certain leasehold improvements in the previous year for our subsidiary in Dubai, whereas the current year contains only depreciation of office furniture and equipment.

Other Income/(Expense). Items included in this category are a gain on extinguishment of debt with common stock, and interest expense. These items collectively result in a gain of $185,184. We had none of these items during the three months ended December 31, 2010.

Liquidity and Capital Resources

As of December 31, 2011, we had $528,364 in cash of which $40,046 is restricted from our use by our bank as a compensating balance to offset our credit card use which we use for travel to the Middle East.

For the six months ended December 31, 2011, we used $561,246 in operating activities, compared to a use of $318,335 for the same period in the previous year. The increase is primarily related to the increased travel to the Middle East.

For the six months ended December 31, 2011, net cash provided by investing activities was $$998,616 resulting from an advance against our sale of equity in our Bangladesh project. We had no funds used or provided by investing activities during the six months ended December 31, 2010.

We currently intend to continue the Company’s business focus in the areas of oil and gas, including exploration and development, as well as other energy projects including power development, both domestically and internationally. We are currently in discussions with several intermediaries, advisors and investors to structure and raise the funds to optimally finance various potential projects, both domestically and in the Middle East. We are evaluating debt and equity placements at the corporate level as well as project specific capital opportunities.

Off-Balance Sheet Arrangements

We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.

Critical Accounting Policies

Our discussion and analysis of results of operations and financial condition are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis and base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The accounting policies that we follow are set forth in Note 1 to our financial statements as included in this filing. These accounting policies conform to accounting principles generally accepted in the United States, and have been consistently applied in the preparation of the financial statements.

Recently Issued Accounting Pronouncements

We do not expect any recently issued accounting pronouncements to have a material impact on our financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a "smaller reporting company" as defined by Item 10 of Regulation S-K, EHII is not required to provide this information.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of the end of the period covered by this report, based on an evaluation of our disclosure controls and procedures (as defined in Rules 13a -15(e) and 15(d)-15(e) under the Exchange Act), our Chief Executive Officer and the Chief Financial Officer each have concluded that our disclosure controls and procedures are not effective to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the applicable time periods specified by the SEC’s rules and forms.

This conclusion is based upon material weaknesses relating to the lack of segregation of duties in financial reporting, as accounting functions in Dubai are performed by individuals lacking appropriate oversight by those with accounting and financial reporting expertise. The officers of the Company do not possess accounting expertise and our company does not have an audit committee. This weakness is due to the company’s lack of working capital to hire additional staff. To remedy this material weakness, management is considering hiring additional staff or outsourcing some or all of the Company’s accounting functions to those with the appropriate level of accounting expertise.

There were no changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no legal proceedings, to which we are a party, which could have a material adverse effect on our business, financial condition or operating results.

ITEM 1A. RISK FACTORS

Important Risk Factors Concerning our Business.

You should carefully consider the following risk factors and all other information contained in this Report in evaluating our business and prospects. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties other than those we described below that are not presently known to us or that we believe are immaterial may also impair our business operations. If any of the following risks occur, our business and financial results could be harmed. You should also refer to the other information contained in this Quarterly Report, including our consolidated financial statements and the related notes.

Risks Related to Our Business and Industry

We have a limited operating history.

We began operations in October 2003. Since the inception of our current business operations, we have been engaged in organizational activities, including developing a strategic operating plan, entering into contracts, hiring personnel, developing processing technology, raising private capital and seeking acquisitions. Accordingly, we have a limited relevant operating history upon which an evaluation of our performance and future prospects can be made.

We will be forced to continue to seek financing partners, either through debt or equity, to achieve our business objectives.

As of December 31, 2011, we had unrestricted cash of $488,318, representing approximately 6 months of operating capital. We will need significant capital expenditures and investments over the next twelve to eighteen months related to our growth program. We are also currently evaluating potential joint venture partners. We plan to raise additional capital to fund these site acquisitions or provide seed equity for the projects while we analyze financing options.

We are currently in discussions with several intermediaries, advisors and investors to structure and raise the funds to optimally finance potential projects. We are evaluating debt and equity placements at the corporate level as well as project specific capital opportunities. We have no commitments for any additional financing, and there can be no assurance that, if needed, additional capital will be available to use on commercially acceptable terms or at all. Our failure to raise capital as needed would significantly restrict our growth and hinder out ability to compete. We may need to curtail expenses, reduce planned investments in technology and research and development and forgo business opportunities. Additional equity financings are likely to be dilutive to holders of our common stock and debt financing, if available, may involve significant payment obligation and covenants that restrict how we operate our business.

We may incur expenses and costs in connection with due diligence of potential partners and joint venturers, which projects may not come to fruition.

The Company is currently undertaking financial and technical due diligence, both directly and through third parties, with respect to a potential acquisition of oil and gas properties in North America and power general plants in the Middle East. EHII is still in discussion with various potential trading partners and oil and gas property sellers and cannot make any estimates when or if the transaction will occur.

We are currently focusing on energy projects in the United Arab Emirates and the Middle East, areas where there have been political conflicts and instability.

The Company is in discussions with a number of entities that are located in the United Arab Emirates and elsewhere in the Middle East. Because of conflicts in the region, continuing terrorism concerns, both in the United States and internationally, the environment in which we operate could become unstable.

Strategic acquisitions could have a dilutive effect on shareholdings. Failure to make accretive acquisitions and successfully integrate them could adversely affect our future financial results

As part of our growth strategy, we will seek to acquire or invest in complementary (including competitive) businesses, facilities or technologies and enter into co-location joint ventures in the oil & gas and power generation industries. Our goal is to make such acquisitions, integrate these acquired assets into our operations and reduce operating expenses. The process of integrating these acquired assets into our operations may result in unforeseen operating difficulties and expenditures, and may absorb significant management attention that would otherwise be available for the ongoing development of our business. We cannot assure you that the anticipated benefits of any acquisitions will be realized. In addition, future acquisitions by us could result in potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities and amortization expenses related to goodwill and other intangible assets, any of which can materially and adversely affect our operating results and financial position.

We depend on our officers and key personnel and the loss of any of these persons could adversely affect our operations and results.

We believe that implementing our proposed expansion strategy and execution of our business plan to acquire, manage and develop power generation and oil & gas assets will depend to a significant extent upon the efforts and abilities of our officers and key personnel. Because the oil, gas and alternative energy industries are highly competitive, we believe that the personal contacts of our officers and key personnel within the industry and within the scientific community engaged in related businesses are a significant factor in our continued success. Our failure to retain our officers or key personnel, or to attract and retain additional qualified personnel, could adversely affect our operations and results. We do not currently carry key-man life insurance on any of our officers.

Because we are smaller and have fewer financial and other resources than energy focused companies, we may not be able to successfully compete in the very competitive industry.

There are significant competition among existing oil, gas, and alternative energy companies. Our business faces competition from a number of entities that have the financial and other resources that would enable them to expand their businesses. Even if we are able to enter into joint venture agreements, our competitors may be more profitable than us, which may make it more difficult for us to raise any financing necessary for us to achieve our business plan and may have a materially adverse effect on the market price of our common stock.

The United States oil, gas, alternative energy industry is highly dependent upon federal and state legislation and regulation and any changes in that legislation or regulation could materially adversely affect our results of operations and financial condition.

The elimination or significant reduction in the federal tax incentive could have a material adverse effect on our results of operations

Costs of compliance with burdensome or changing environmental and operational safety regulations could cause our focus to be diverted away from our business and our results of operations to suffer.

Risks Related to an Investment in Our Common Stock

Our common stock price has fluctuated considerably and stockholders may not be able to resell their shares at or above the price at which such shares were purchased.

The market price of our common stock has fluctuated in the past, and may continue to fluctuate significantly in response to factors, some of which are beyond our control. The stock market in general has experienced extreme price and volume fluctuations. The market prices of securities of fuel-related companies have experienced fluctuations that often have been unrelated or disproportionate to the operating results of these companies. Continued market fluctuations could result in extreme volatility in the price of our common stock, which could cause a decline in the value of our common stock. Price volatility might be intensified under circumstances where the trading volume of our common stock is low.

We may not be able to attract the attention of major brokerage firms for research and support which may adversely affect the market price of our common stock.

Securities analysts of major brokerage firms may not publish research on our common stock. The number of securities competing for the attention of such analysts is large and growing. Coverage of a security by analysts at major brokerage firms increases the investing public’s knowledge of and interest in the issuer, which may stimulate demand for and support the market price of the issuer’s securities. The failure of major brokerage firms to cover our common stock may adversely affect the market price of our common stock.

Future sales of common stock or other dilutive events may adversely affect prevailing market prices for our common stock.

We are currently authorized to issue up to 100 million shares of common stock, of which 33,684,006 shares were issued and outstanding as of December 31, 2011. Our board of directors has the authority, without further action or vote of our stockholders, to issue any or all of the remaining authorized shares of our common stock that are not reserved for issuance and to grant options or other awards to purchase any or all of the shares remaining authorized. The board may issue shares or grant options or awards relating to shares at a price that reflects a discount from the then-current market price of our common stock. The options and awards referred to above can be expected to include provisions requiring us to issue increased numbers of shares of common stock upon exercise or conversion in the event of stock splits, redemptions, mergers or other transactions. If any of these events occur, the exercise of any of the options or warrants described above and any other issuance of shares of common stock will dilute the percentage ownership interests of our current stockholders and may adversely affect the prevailing market price of our common stock.

A significant number of our shares will be eligible for sale, and their sale could depress the market price of our common stock.

Sales of a significant number of shares of our common stock in the public market could harm the market price of our common stock. Virtually all shares of our common stock may be offered from time to time in the open market, including the shares offered pursuant to this filing. These sales may have a depressive effect on the market for the shares of our common stock. Moreover, additional shares of our common stock, including shares that have been issued in private placements, may be sold from time to time in the open market pursuant to Rule 144. In general, a person who has held restricted shares for a period of one year may, upon filing with the SEC a notification on Form 144, sell into the market common stock in an amount equal to the greater of 1% of the outstanding shares or the average weekly number of shares sold in the last four weeks prior to such sale. Such sales may be repeated at specified intervals. Subject to satisfaction of a two-year holding requirement, non-affiliates of an issuer may make sales under Rule 144 without regard to the volume limitations and any of the restricted shares may be sold by a non-affiliate after they have been held two years. Sales of our common stock by our affiliates are subject to Rule 144.

Investors should not anticipate receiving cash dividends on our common stock.

We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings to support operations and to finance expansion and, therefore, we do not anticipate paying any cash dividends on our common stock in the foreseeable future.

We may issue shares of preferred stock without stockholder approval that may adversely affect your rights as a holder of our common stock.

Upon our amending our certificate of incorporation authorizes us to issue up to 25 million shares of “blank check” preferred stock with such designations, rights and preferences as may be determined from time to time by our board of directors. Accordingly, our board of directors is empowered, without stockholder approval, to issue a series of preferred stock with rights to receive dividends and distributions upon liquidation in preference to any dividends or distributions upon liquidation to holders of our common stock and with conversion, redemption, voting or other rights which could dilute the economic interest and voting rights of our common stockholders. The issuance of preferred stock could also be used as a method of discouraging, delaying or preventing a change in control of our company or making removal of our management more difficult, which may not be in your interest as holders of common stock.

Provisions in our articles of incorporation and bylaws and under Nevada law could inhibit a takeover at a premium price.

Our bylaws limit who may call a special meeting of stockholders and establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon at stockholder meetings. Each of these provisions may have the effect to discouraging, delaying or preventing a change in control of our company or making removal of our management more difficult, which may not be in your interest as holders of common stock.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

See Note 8 to our Financial Statements filed on Form 10-K as of June 30, 2011 for a discussion of unregistered sales of equity securities prior to the six months ended December 31, 2011.

On July 18, 2011, we issued the second tranche of stock to a consulting group pursuant to our contract which we signed on March 1, 2011.

On October 17, 2011, we issued 15,000 shares of common stock to a consultant for services to extinguish debt (see Note 4 to the Financial Statements).

Also on October 17, 2011, we issued 100,000 shares to a director for services (see Note 4 to the Financial Statements).

Also on October 17, 2011, we issued 500,000 shares to a consultant in Saudi Arabia for services and debt reduction (see Note 4 to the Financial Statements).

On May 22, 2011, we received $140,000 in cash for 1 million shares (see Note 4 to the Financial Statements).

On October 26, we issued 206,897 shares to convert $6,000 of a $42,500 convertible promissory note. (see Note 4 to the Financial Statements).

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

Exhibits

3.1	Articles of Incorporation
3.1.1	Articles of Amendment filed with the Nevada Secretary of State (filed with the Securities and Exchange Commission on Form 8-K/A on March 24, 2009)
3.2*	Bylaws
21 *	List of Subsidiaries.
10.1	Stock Purchase Agreement between the Company and the Representative of the Stockholders, effective December 29, 2008 (filed with the Securities and Exchange Commission on Form 8-K on January 5, 2009).
31.1**	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a)
31.2**	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a)
32.1**	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

______

* Previously filed under cover of Form SB-2 on February 27, 2007.

** Filed herein

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on January 30, 2012.

	ENERGY HOLDING INTERNATIONAL, INC.

February 22, 2012	By:	/s/ John Adair
		John Adair
		Chairman, Chief Executive Officer and President

February 22, 2012	By:	/s/ Jalal Al Ghani
		Jalal Al Ghani
		Director and Chief Financial Officer

ENERGY HOLDINGS INTERNATIONAL, INC. - FORM 10-Q/A - February 23, 2012

Attached files

ENERGY HOLDINGS INTERNATIONAL, INC. Reports