WORLD HEALTH ENERGY HOLDINGS, INC. - Quarter Report: 2009 September (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form 10-Q
(Mark one)
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[X]
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Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934
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For the quarterly period ended September 30, 2009
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[_]
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Transition Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934
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For the transition period from ______________ to _____________
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Commission file number 000-26703
WORLD HEALTH ENERGY HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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000-29462
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59-276023
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(State or other jurisdiction
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(Commission
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(IRS Employer
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of incorporation)
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file number)
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Identification No.)
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777 S Flagler Dr., Suite 800
West Palm Beach FL 33411
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (212) 444 1019
Advanced Plant Pharmaceuticals, Inc.
(Former name or former address, if changes since last report)
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_|.
Indicate by check mark whether the registrant is an accelerated filer, a non-accelerated filer, or a smaller reporting company.
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Large accelerated filer |_|
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Accelerated filer |_|
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Non-accelerated filer |_|
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Smaller reporting company |X|
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). | | Yes |X| No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:
As of November 5, 2010, there were approximately 1,810,000,000 shares of the Issuer's common stock, par value $0.0007 per share outstanding.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this quarterly report on Form 10-Q contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors including the risk factors set forth in our Form 10-K. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this quarterly report in its entirety, including but not limited to our financial statements and the notes thereto. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
- 2 -
INDEX
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PART I. - FINANCIAL INFORMATION
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Financial Statements
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4 | |
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Item 2
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Management's Discussion and Analysis or Plan of Operations
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15 |
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Item 3
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Quantitative and Qualitative Disclosures About Market Risk
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16 |
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Item 4T.
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Controls and Procedures
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16 |
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PART II. - OTHER INFORMATION
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Item 1
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Legal Proceedings
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17 |
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Item 1A.
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Risk Factors
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17 |
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Item 2
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Unregistered Sales of Equity Securities and Use of Proceeds
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17 |
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Item 3
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Defaults Upon Senior Securities
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17 |
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Item 4
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Submission of Matters to a Vote of Security Holders
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17 |
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Other Information
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17 | |
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Item 6
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Exhibits
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17 |
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SIGNATURES
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18 | |
- 3 -
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
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Balance Sheet
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5
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Statements of Operations
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6
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Statements of Stockholders’ Equity
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7
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Statements of Cash Flows
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8
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Notes to Financial Statement
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9
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- 4 -
World Health Energy Holdings, Inc.
Consolidated Balance Sheet
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September 30, 2009
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December 31, 2008
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(Unaudited)
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ASSETS
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CURRENT ASSETS
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Cash
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$ | 0 | $ | 0 | ||||
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Prepaid expenses
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0 | 63 | ||||||
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Total current assets
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0 | 63 | ||||||
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PROPERTY AND EQUIPMENT
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Furniture, fixtures and equipment
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4,353 | 4,353 | ||||||
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Less: accumulated depreciation
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(4,353 | ) | (4,353 | ) | ||||
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Net property and equipment
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0 | 0 | ||||||
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OTHER ASSETS
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Investment in affiliates
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331,335 | 331,335 | ||||||
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Due from affiliates
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7,120 | 7,120 | ||||||
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Total other assets
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338,455 | 338,455 | ||||||
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Total Assets
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$ | 338,455 | $ | 338,518 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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CURRENT LIABILITIES
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Bank overdraft
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$ | 32,258 | $ | 32,258 | ||||
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Accounts payable
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251,188 | 251,188 | ||||||
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Accrued liabilities
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255,771 | 255,771 | ||||||
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Due to affiliates
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11,883 | 11,883 | ||||||
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Other current liabilities
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488,000 | 488,000 | ||||||
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Note payable and accrued interest
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11,000 | 11,000 | ||||||
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Total current liabilities
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1,050,100 | 1,050,100 | ||||||
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LONG-TERM LIABILITIES
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Officer and stockholder loans payable
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154,773 | 154,773 | ||||||
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Third party loans payable
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156,516 | 156,516 | ||||||
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Accrued salaries and payroll taxes payable
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1,413,920 | 1,413,920 | ||||||
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Total long-term liabilities
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1,725,209 | 1,725,209 | ||||||
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Total Liabilities
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2,775,309 | 2,775,309 | ||||||
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STOCKHOLDERS’ EQUITY
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Preferred stock, $0.0007 par value, 10,000,000 shares authorized,
5,000,000 issued and outstanding
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3,500 | 3,500 | ||||||
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Common stock, $0.0007 par value, authorized 4,500,000,000 shares;
880,000,000 issued and outstanding
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616,000 | 616,000 | ||||||
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Additional paid-in capital
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22,163,268 | 22,163,268 | ||||||
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Deficit accumulated during the development stage
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(25,219,622 | ) | (25,219,559 | ) | ||||
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Total stockholders’ equity
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(2,436,854 | ) | (2,436,791 | ) | ||||
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Total Liabilities and Stockholders’ Equity
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$ | 338,455 | $ | 338,518 | ||||
The accompanying notes are an integral part of the financial statements.
- 5 -
World Health Energy Holdings, Inc.
Consolidated Statements of Operations
Three and Nine Months Ended September 30,
(unaudited)|
Three months
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Nine months
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2009
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2008
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2009
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2008
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REVENUES
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$ | 0 | $ | 117 | $ | 0 | $ | 757 | ||||||||
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COST OF GOODS SOLD
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0 | 0 | 0 | 14 | ||||||||||||
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GROSS MARGIN
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0 | 117 | 0 | 743 | ||||||||||||
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OPERATING EXPENSES
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Selling, general and administrative
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63 | 239 | 63 | 13,266 | ||||||||||||
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Salaries and consulting fees - stockholders
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0 | 0 | 0 | 500 | ||||||||||||
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Depreciation
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0 | 0 | 0 | 0 | ||||||||||||
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Net operating loss
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63 | 239 | 63 | 13,766 | ||||||||||||
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Interest expense
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0 | 17 | 0 | 17 | ||||||||||||
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Net loss
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$ | (63 | ) | $ | (139 | ) | $ | (63 | ) | $ | (13,040 | ) | ||||
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Basic net loss per share
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$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
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Weighted average shares outstanding
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880,000,000 | 880,000,000 | 880,000,000 | 880,000,000 | ||||||||||||
The accompanying notes are an integral part of the financial statements.
- 6 -
World Health Energy Holdings, Inc.
Consolidated Statement of Stockholders’ Equity (Deficit)
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Number of
Shares
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Common
Stock
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Additional
Paid-in Capital
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Accumulated
Deficit
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Total
Stockholders’
Equity
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BEGINNING BALANCE, January 1, 2006
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798,157,996 | $ | 558,711 | $ | 14,681,548 | $ | (22,792,391 | ) | $ | (7,552,132 | ) | |||||||||
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Shares issued for services
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52,000,000 | 36,400 | 196,400 | 0 | 232,800 | |||||||||||||||
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Adjust to record transfer as stk based compensation
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0 | 0 | 7,072,005 | 0 | 7,072,005 | |||||||||||||||
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Shares issued for cash
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25,000,000 | 17,500 | 32,500 | 0 | 50,000 | |||||||||||||||
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Net loss
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0 | 0 | 0 | (1,575,613 | ) | (1,575,613 | ) | |||||||||||||
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BALANCE, December 31, 2006
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875,157,996 | 612,611 | 21,982,453 | (24,368,004 | ) | (1,772,940 | ) | |||||||||||||
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Shares issued for debt late payment penalty
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6,000,000 | 4,200 | 33,600 | 0 | 37,800 | |||||||||||||||
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Shares issued for acquisition
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5,000,000 | 3,500 | 26,500 | 0 | 30,000 | |||||||||||||||
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Shares issued for services
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51,000,000 | 35,700 | 234,000 | 0 | 269,700 | |||||||||||||||
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Shares deemed not yet issued but accrued to be issued
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(57,157,996 | ) | (40,011 | ) | (113,285 | ) | 0 | (153,296 | ) | |||||||||||
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Net loss
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0 | 0 | 0 | (835,204 | ) | (835,204 | ) | |||||||||||||
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BALANCE, December 31, 2007
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880,000,000 | 616,000 | 22,163,268 | (25,203,208 | ) | (2,420,440 | ) | |||||||||||||
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Net loss
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0 | 0 | 0 | (16,351 | ) | (16,351 | ) | |||||||||||||
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BALANCE, December 31, 2008
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880,000,000 | 616,000 | 22,163,268 | (25,219,559 | ) | (2,436,791 | ) | |||||||||||||
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Net loss
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0 | 0 | 0 | (63 | ) | (63 | ) | |||||||||||||
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ENDING BALANCE, September 30, 2009 (unaudited)
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880,000,000 | $ | 616,000 | $ | 22,163,268 | $ | (25,219,622 | ) | $ | (2,436,854 | ) | |||||||||
The accompanying notes are an integral part of the financial statements.
- 7 -
World Health Energy Holdings, Inc.
Consolidated Statements of Cash Flows
Nine Months Ended September 30,
(Unaudited)|
2009
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2008
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net loss
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$ | (63 | ) | $ | (13,040 | ) | ||
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Adjustments to reconcile net loss to net cash used by operating activities:
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Stock issued for services
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0 | 0 | ||||||
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Depreciation
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0 | 0 | ||||||
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Changes in operating assets and liabilities
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(Increase) decrease in prepaid expenses
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63 | 4,081 | ||||||
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Increase (decrease) in accounts payable & acc’d expenses
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0 | (14,638 | ) | |||||
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Increase (decrease) in accrued expenses - stockholders
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0 | 0 | ||||||
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Net cash provided (used) by operating activities
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0 | (23,597 | ) | |||||
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Purchase of fixed assets
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0 | 0 | ||||||
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Net cash provided (used) by investing activities
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0 | 0 | ||||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Cash received in acquisition of subsidiary
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0 | 0 | ||||||
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Bank overdraft
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0 | 23,486 | ||||||
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Proceeds from third party loans payable
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0 | 0 | ||||||
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Proceeds from stockholder loan payable
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0 | 0 | ||||||
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Payments on stockholder loans
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0 | 0 | ||||||
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Proceeds from deposits to acquire stock
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0 | 0 | ||||||
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Net cash provided by financing activities
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0 | 23,486 | ||||||
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Net increase (decrease) in cash
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0 | (111 | ) | |||||
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CASH, beginning of period
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0 | 111 | ||||||
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CASH, end of period
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$ | 0 | $ | 0 | ||||
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
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Interest paid in cash
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$ | 0 | $ | 17 | ||||
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Non-Cash Financing Activities:
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Common stock issued for reduction in accounts payable
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$ | 0 | $ | 0 | ||||
The accompanying notes are an integral part of the financial statements.
- 8 -
World Health Energy Holdings, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information with regard to the nine months ended September 30, 2009 and 2008 is unaudited)
(1) Nature of Business
The consolidated financial statements include the accounts of World Health Energy Holdings, Inc., ("WHEH"), (f/k/a Advanced Plant Pharmaceuticals, Inc.), and its majority owned subsidiaries, Amazing Nutritionals, Inc. ("Amazing") acquired in January 2004, and Mazal Plant Pharmaceuticals, Inc. ("Mazal") acquired in December 2004. On June 6, 2005, WHEH entered into a stock exchange agreement with AKID Corporation ("AKID") to exchange 7,000,000 shares of Mazal's common stock held by APPI for 20,000,000 shares of AKID common stock. AKID also acquired 3,130,000 shares of Mazal's outstanding shares from the remaining Mazal stockholders in exchange for 6,180,000 shares of its common stock. In connection with the merger, Mazal became a wholly owned subsidiary of AKID. Prior to the merger, AKID was a non-operating "shell" corporation. Pursuant to Securities and Exchange Commission rules, the merger of a private operating company, Mazal Plant Pharmaceuticals, Inc. into a non-operating public shell corporation with nominal net assets, AKID, is considered a capital transaction. At the time of the merger, the officers and directors of AKID resigned and were replaced with the officers and directors of Mazal. For Financial Statement presentation, the merger has been reflected in the Financial Statements as though it occurred on December 31, 2004. In October 2005, AKID filed a name change to Mazal Plant Pharmaceuticals, Inc. During 2006, as a result of the Company transferring shares of Mazal common stock to the Company's stockholders' in payment of debt, Mazal ceased to be a subsidiary. As a result of shares of stock issued by Amazing, the Company no longer holds a majority interest. The results of operations for Mazal and amazing are included in the 2006 financial statements from January 1, 2006 through September 30, 2006.
The Company focuses on the sale of plant based dietary health supplements. The Company owns the rights to a thirteen step manufacturing process which utilizes whole plants to manufacture all natural dietary supplements. The Company intends to use this process to manufacture products for distribution worldwide. APPI was incorporated in November 1994 and had devoted most of its efforts since inception to 1999 conducting research and development, acquiring agreements to the rights of the thirteen step process, and one major sinus product. The Company's products are available for sale to retail stores and its operations are located in Long Island, New York and its corporate offices were located in New York City, and now are in West Palm Beach, Florida. In April 2008, the Company changed its name from Advanced Plant Pharmaceuticals, Inc. To World Health Energy, Inc., pursuant to the January 2007 reorganization.
(2) Basis of Presentation
The accompanying financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America.
(3) Significant Accounting Policies
a) 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 the 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 materially from those estimates.
b) Loss per share: Basic loss per share excludes dilution and is computed by dividing the loss attributable to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings of the Company. Diluted loss per share is computed by dividing the loss available to common shareholders by the weighted average number of common shares outstanding for the period and dilutive potential common shares outstanding unless consideration of such dilutive potential common shares would result in anti-dilution. There were no common stock equivalents for the periods ended September 30, 2009 and 2008.
c) Cash and Cash Equivalents The Company considers all highly-liquid investments with a maturity of three months or less when purchased to be cash equivalents. There are no cash equivalents at September 30, 2009 and 2008.
- 9 -
World Health Energy Holdings, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information with regard to the nine months ended September 30, 2009 and 2008 is unaudited)
(3) Significant Accounting Policies, continued
d) Significant Estimates Several areas require significant management estimates relating to uncertainties for which it is reasonably possible that there will be a material change in the near term. Significant areas requiring the use of management estimates include: valuation of inventory, impairment loss on intangible assets, accrued liabilities including contingent liabilities for payroll taxes, valuation of stock options and stock issued for debt and services provided by related parties.
e) Income Taxes The Company follows Statement of Financial Accounting Standards No. 109 ("SFAS" No. 109). Under this method, the Company recognizes a deferred tax liability or asset for temporary differences between the tax basis of an asset or liability and the related amount reported on the financial statements. The principal types of differences, which are measured at the current tax rates are the deductibility of stock based compensation for income tax purposes, and net operating loss carry forwards. SFAS No. 109 requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets.
f) Allowance for Doubtful Accounts It is the Company's policy to provide an allowance for doubtful accounts when it believes there is a potential for non-collectibility.
g) Inventories Inventories are stated at the lower of cost or market on the first-in, first-out ("FIFO") basis. There was no inventory at September 30, 2009 and 2008.
h) Office Equipment and Depreciation Office equipment is stated at cost and is depreciated using the straight line method over the estimated useful lives of the respective assets which is three years. Routine maintenance, repairs and replacement costs are expensed as incurred and improvements that extend the useful life of the assets are capitalized. When office equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is recognized in operations.
i) Stock-Based Compensation SFAS No. 123, "Accounting for Stock-Based Compensation" prescribes accounting and reporting standards for all stock-based compensation plans, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123 requires employee compensation expense to be recorded (1) using the fair value method or (2) using the intrinsic value method as prescribed by accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB25") and related interpretations with pro forma disclosure of what net income and earnings per share would have been if the Company adopted the fair value method. The Company accounts for employee stock based compensation in accordance with the provisions of APB 25. For non-employee options and warrants, the company uses the fair value method as prescribed in SFAS 123.
j) Revenue Recognition The Company recognizes revenue when the product is manufactured and shipped.
k) Research and Development Costs Research and development costs are expensed as incurred. Total research and development expenditures for the periods ended September 30, 2009 and 2008, amounted to $0 and $0, respectively.
l) Impairment of Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeded the fair value of the assets.
(m) Interim financial information The financial statements for the nine months ended September 30, 2009 and 2008 are unaudited and include all adjustments which in the opinion of management are necessary for fair presentation, and such adjustments are of a normal and recurring nature. The results for the nine months are not indicative of a full year results.
- 10 -
World Health Energy Holdings, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information with regard to the nine months ended September 30, 2009 and 2008 is unaudited)
(4) Stockholders' Equity (Deficit)
The Company has the authority to issue 10,000,000 shares of preferred stock, par value $0.0007 per share, which may be divided into series and with the preferences, limitations and relative rights determined by the Board of Directors. At September 30, 2009, 5,000,000 shares of preferred stock shares were issued and outstanding. The Company is authorized to issue 4,500,000,000 shares of common stock, par value $0.0007. At September 30, 2009, 880,000,000 shares were issued and outstanding. In April 2008, the Company increased the authorized common stock from 880,000,000 to 4,500,000,000, par value of $0.0007.
In the second quarter 2006, the Company issued 19,000,000 shares of its common stock to a vendor for prepaid services at $0.0016 per share. The aggregate remuneration of $30,400 has been treated as prepaid consulting expenses.
In the fourth quarter 2006, the Company issued 25,000,000 shares of its common stock pursuant to a stock purchase agreement at $0.002 per share realizing $50,000 and the Company issued 13,000,000 shares of its common stock to consultants for services at $0.0068 per share. The aggregate remuneration of $88,400 has been treated as stock based compensation and expensed in the current year. Additional paid-in capital includes $272,600 for the transfer of 1,400,000 shares of common stock of Amazon Biotech, Inc., held as an investment by the Company, to three stockholders' of the Company in payment of accrued expenses - stockholders' in the amount of $202,000 and compensation in the amount of $72,000. The stock had a basis of $1,400. Additional paid-in capital includes $6,799,405 for the transfer of 17,000,000 shares of common stock of Mazal, held as an investment by the Company, to two stockholders' in payment of accrued expenses - stockholders' in the amount of $253,550, due to stockholder - asset acquisition in the amount of $1,315,000, loans payable - stockholders' in the amount of $13,709, and compensation in the amount of $5,217,741. The stock had a basis of $595.
Included in shares of common stock outstanding at September 30, 2009, are 88,750,000 shares authorized for issuance by the director of the Company which have not been issued by the Company's stock transfer agent, of which 4,842,004 were issued in 2007. In the first quarter 2007, the Company authorized the issuance of 4,000,000 shares of its common stock under an S-8 filing with the Securities and Exchange Commission at $0.0072 per share to the Company's attorney in consideration of accrued legal services, and the Company authorized the issuance of 17,000,000 shares of its common stock under an S-8 filing with the Securities and Exchange Commission at $0.0047 per share for services rendered. These shares remain unissued at September 30, 2009.
(5) Income Taxes
Deferred income taxes (benefits) are provided for certain income and expenses which are recognized in different periods for tax and financial reporting purposes. The Company had net operating loss carry- forwards for income tax purposes of approximately $25,219,600 expiring in various years from 2019 through 2029. Deferred tax assets are reduced by a valuation allowance if, 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. Management's valuation procedures consider projected utilization of deferred tax assets over the next several years, and continually evaluate new circumstances surrounding the future realization of such assets. The difference between income taxes and the amount computed by applying the federal statutory tax rate to the loss before income taxes is due to an increase in the deferred tax asset valuation allowance. The valuation allowance at September 30, 2009 and 2008 is 100%.
(6) Related Parties
a) Due to Stockholder - Asset Acquisition The Company agreed to pay a related party consultant a royalty payment of $0.01 per bottle plus, 1% of the Company's suggested retail price of each bottle sold, plus 10% of the Company's net profits from the sale of products manufactured with the process. In the event the Company enters into an agreement with a third party for the sale of products manufactured with the process, the agreement must unconditionally provide for payment to the Company of not less than $20,000,000. Upon receipt of sale proceeds by the Company, the Company must issue to the related consultant 5,000,000 shares for each $20,000,000 paid to the Company, not to exceed 25,000,000 shares. Revenues to date have been insignificant and no payments or stock issuances to this related party consultant have been made to date.
- 11 -
World Health Energy Holdings, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information with regard to the nine months ended September 30, 2009 and 2008 is unaudited)
(6) Related Parties, continued
b) Loans Payable and Accrued Expenses - Stockholders Loans payable - stockholders consists of unsecured, non-interest bearing short-term loans including cash for working capital and other expenses paid on behalf of the Company. Accrued expenses - stockholders consists of accrued salaries and consulting fees.
Upon the resignation of C.J. Lieberman (the "related party consultant") as President in 1996, the Company retained him as a consultant. His current consultant's agreement dated June 10, 1999, provides for monthly consulting fees of $9,000, reimbursement of all direct expenses incurred while providing services to the Company, and a five year option to purchase 750,000 shares of the Company's common stock at an exercise price of $0.02 per share. These options expired in June 2004. No shares of common stock were issued to this consultant for services in 2007 or 2006. During 2006, the Company transferred shares of Mazal and Amazon Biotech, Inc. ("Amazon") common stock held for investment to the consultant in payment in the amount of $207,900. The balance due the related party consultant at December 31, 2007 and 2006 was $47,000 and $47,000, respectively. CJ Lieberman also entered into an employment agreement with Mazal. The agreement had a monthly base of $4,000 which was increased to $5,500 and has additional incentive clauses for payment in Mazal common stock and salary increases. The agreement expired December 10, 2006. Salary expense amounted to $0 and $49,500 for the years ended December 31, 2007 and 2006.
The Director of the Company advanced to the Company cash and paid expenses on behalf of the Company. The Director has an employment agreement with the Company dated June 10, 1999, which provides for an annual base salary of $135,000, reimbursement of all direct expenses incurred while providing services to the Company and a five year option to purchase 750,000 shares of the Company's common stock at an exercise price of $0.01 per share. These options expired in June 2004. During 2006, the Company transferred shares of Amazon common stock held for investment in payment of $90,000. The balance due the Director at December 31, 2007 and 2006 was $738,839 and $738,839, respectively. The Director also entered into an employment agreement with Mazal. The agreement has a monthly base salary of $2,000. The agreement expired December 10, 2006. Salary expense amounted to $0 and $24,000 for the years ended December 31, 2007 and 2006, respectively. Accrued expenses - stockholders includes accrued salary of $9,000 at September 30, 2008.
An officer of the Company has an employment agreement with the Company dated June 10, 1999, which provides for an annual base salary of $75,000 and a five year option to purchase 750,000 shares of the Company's common stock at an exercise price of $0.02 per share. These options expired in June 2004. During 2006, the Company transferred shares of Mazal and Amazon common stock held for investment as payment in the amount of $157,650. The balance due the Officer at September 30, 2009 and 2008 was $29,346 and $29,346, respectively. This officer also entered into an employment agreement with Mazal. The agreement has an annual salary of $36,000 and expired January 2, 2007. Accrued expenses - stockholders includes accrued salary of $8,018 at September 30, 2009.
During 2003, a stockholder loaned the Company $620,000 for working capital. During 2004, this stockholder loaned the Company $8,000 and the Company issued 25,000,000 shares of common stock to the stockholder to reduce the debt by $500,000. The balance due the stockholder at September 30, 2009 and 2008 was $128,000. There is no due date and the loan is to be repaid with the issuance of 26,000,000 shares of the Company's common stock.
A stockholder loaned the Company $5,000 for working capital. The balance due the stockholder at September 30, 2009 and 2008 was $5,000. There is no due date and the loan is to be repaid with the issuance of 1,000,000 shares of the Company's common stock.
On February 20, 2000, the Company entered into an asset purchase agreement with Dr. Leonard Bielory (former Chairman of the Board of Directors of APPI who resigned in 2003) whereby the Company acquired the exclusive rights and interest to allergy and sinus formulations he developed ("Assets"). The purchase price included options to purchase 18,000,000 shares of the Company's common stock at an aggregate exercise price of $180. The options were to be issued in two phases. The first phase was completed in 2000 and the options, for 12,000,000 shares of common stock, required to purchase the assets were issued in 2000. The fair value of the 12,000,000 shares, as determined by management, was $1,079,880 and is included in intangible assets. In addition, the Company agreed to pay Dr. Bielory a royalty payment of $0.01 per bottle plus, 1% of the Company's suggested retail price of each product
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World Health Energy Holdings, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information with regard to the nine months ended September 30, 2009 and 2008 is unaudited)
(6) Related Parties, continued
b) Loans Payable and Accrued Expenses - Stockholders, continued
sold, plus 10% of the Company's net profits from the sale of products manufactured with these Assets. In the event the Company enters into an agreement with a third party for the sale of products manufactured with these assets, the agreement must unconditionally provide for payment of not less than $20,000,000 either in lump sum or over a period of four years. Upon receipt of the sale proceeds by the Company, the Company shall issue to Dr. Bielory 5,000,000 shares for each $20,000,000 paid to the Company, not to exceed 25,000,000 shares. During the years ended December 31, 2007 and 2006 royalty expense amounted to $0 and $56, respectively. On March 15, 2000, the Company entered into a consulting agreement with Dr. Bielory whereby under the terms of the agreement, the Company is required to pay Dr. Bielory certain monthly amounts, some contingent on the Company achieving specified net profit levels. During 2004, the Company paid down $20,000 of the liability due to Dr. Bielory by issuing 2,000,000 shares of common stock. At September 30, 2009 and 2008 the balance due was $115,438.
The President of Mazal entered into an employment agreement which had a monthly base salary of $4,000 which was increased to $5,500, and has additional incentive clauses for payment in Mazal common stock and salary increases. The agreement expired November 1, 2006. Salary expense amounted to $157,500 and $157,500 for the years ended December 31, 2007 and 2006, and included monthly payments totaling $49,500 and $63,000, and 100,000 and 750,000 shares of Mazal common stock valued at $108,000 and $149,530, respectively.
The Chief Financial Officer of Mazal entered into an employment agreement which had a monthly base of $2,900 and 75,000 shares of Mazal common stock upon signing. Salary expense amounted to $26,100 for the year ended December 31, 2006. Salary expense amounted to $99,900 for the year ended December 31, 2005 and included monthly payments totaling $17,400 and 75,000 shares of Mazal common stock valued at $82,500.
The Director of Regulatory and Clinical Operations of Mazal entered into an employment agreement with a monthly base of $2,200 which expired December 10, 2006. Salary expense for the year ended December 31, 2006 amounted to $59,800 and included monthly payments totaling $15,800 and 40,000 shares of Mazal common stock valued at $44,000.
(7) Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company's financial position and operating results raise substantial doubt about the Company's ability to continue as a going concern, as reflected by the net loss of approximately $25,219,600 accumulated through September 30, 2009. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management is presently seeking to raise permanent equity capital in the capital markets to eliminate negative working capital and provide working capital. Failure to raise equity capital or secure some other form of long-term debt arrangement will cause the Company to further increase its negative working capital deficit and could result in the Company having to curtail or cease operations. Additionally, even if the Company does raise sufficient capital to support its operating expenses and generate revenues, there can be no assurances that the revenue will be sufficient to enable it to develop business to a level where it will generate profits and cash flows from operations.
(8) Office Space
The Company maintained its corporate office in New York pursuant to an operating lease which expired March 31, 2008 and called for monthly lease payments of $2,445 from April 2007 through March 2008, plus 35% of the floors electricity cost and $100 per month May to September for air conditioning. In 2010, the Company relocated its corporate office to West Palm Beach, FL, and sub-leases space on an informal month to month lease.
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World Health Energy Holdings, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information with regard to the nine months ended September 30, 2009 and 2008 is unaudited)
(9) Stock Options and Warrants
There are no stock options outstanding at September 30, 2009. There were 7,000,000 warrants outstanding at December 31, 2006, which expired during 2007.
(10) Securities Purchase Agreement and Plan of Reorganization
On January 16, 2007, the Company's board of directors approved a Securities Purchase Agreement and Plan of Reorganization entered into on January 9, 2007, between the Company and World Health Energy, Inc. ("WHE") to effect a merger of the two companies. The agreement calls for APPI to purchase 100% of the shares of WHE in exchange for 55,000,000 shares of the Company. The resulting entity would be known as World Health Energy, Inc. In addition, the agreement calls for an employment agreement with the shareholder of WHE as the Chief Operating Officer ("COO") of the Company which will include the issuance of 25,000,000 shares of the current APPI common stock (or the equivalent upon execution of the exchange) and an additional 15,000,000 shares will be allocated to an employment performance package. The COO will also receive a bonus of one percent (1%) of net profits once the Company reaches $5,000,000 in revenue.
(11) Subsequent Events
c) Conversion of Debt
In the fourth quarter 2009, the Company converted a substantial amount of its then existing debt into shares of common stock.
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Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our Financial Statements and Notes thereto appearing elsewhere in this Report on Form 10-Q as well as our other SEC filings.
Overview
The following discussion and analysis should be read in conjunction with the financial statements of the Company and the accompanying notes appearing subsequently under the caption "Financial Statements."
This report on Form 10-Q contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements and from historical results of operations. Among the risks and uncertainties which could cause such a difference are those relating to our dependence upon certain key personnel, our ability to manage our growth, our success in implementing the business strategy, our success in arranging financing where required, and the risk of economic and market factors affecting us or our customers. Many of such risk factors are beyond the control of the Company and its management.
Management has not been satisfied with the results of its operations in the field of our current endeavors. Due to limited capital resources, it has not been able to properly promote or advertise its products. Moreover, even with increased brand awareness, competition in the field remains intense. As a result the Company is pursuing other business opportunities and has acquired all of the issued and outstanding shares of common stock of World Health. Assuming the Company can raise sufficient finances, the Company will focus its attention on the operations on World Health. In the interim, it will continue with its current operations.
Comparison of Operating Results for the Three Months Ended September 30, 2009 to the Three Months Ended September 30, 2008
Revenues
Revenues for the quarter ended September 30, 2009 were $0 as compared to $117 for the quarter ended September 30, 2008, which represents a decrease of $117.
Operating Expenses and Charges
Cost and expenses for the quarter ended September 30, 2009 were $0 as compared to $239 for the quarter ended September 30, 2008. The decrease of $239, is principally a result of our slow down in expenditures, including salaries and consulting fees.
We incurred a net operating loss for the third quarter 2009 of $0 as compared to a net operating loss for the third quarter 2008, totaling $122.
Net Loss and Net Loss Per Share
Our net loss and net loss per share was $0 and $0.00 for the quarter ended September 30, 2009, as compared to $139 and $0.00 for the quarter ended September 30, 2008. This decrease was due primarily to reduced operations.
Comparison of Operating Results for the Nine Months Ended September 30, 2009 to the Nine Months Ended September 30, 2008
Revenues
Revenues for the nine months ended September 30, 2009 were $0 as compared to $757 for the nine months ended September 30, 2008, which represents a decrease of $757.
Operating Expenses and Charges
Cost and expenses for the nine months ended September 30, 2009 were $63 as compared to $13,766 for the nine months ended September 30, 2008. The decrease of $13,703, is principally a result of our slow down in expenditures, including salaries and consulting fees.
We incurred a net operating loss for the nine months 2009 of $63 as compared to a net operating loss for the nine months 2008 totaling $13,023.
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Net Loss and Net Loss Per Share
Our net loss and net loss per share was $63 and $0.00 for the nine months ended September 30, 2009, as compared to $13,040 and $0.00 for the nine months ended September 30, 2008. This decrease was due primarily to reduced operations.
Financial Condition, Liquidity and Capital Resources
As of September 30, 2009 we had current assets of $0 and total assets of $338,455. We had current liabilities of $1,050,100. At September 30, 2009, we had a working capital deficiency of $1,050,100.
If we need to obtain capital, no assurance can be given that we will be able to obtain this capital on acceptable terms, if at all. In such an event, this may have a materially adverse effect on our business, operating results and financial condition. If the need arises, we may attempt to obtain funding through the use of various types of short term funding, loans or working capital financing arrangements from banks or financial institutions.
No trends have been identified which would materially increase or decrease our results of operations or liquidity.
Going Concern.
The Company has suffered recurring losses from operations and is in serious need of additional financing. These factors among others indicate that the Company may be unable to continue as a going concern, particularly in the event that it cannot obtain additional financing or, in the alternative, affect a merger or acquisition. The Company's continuation as a going concern depends upon its ability to generate sufficient cash flow to conduct its operations and its ability to obtain additional sources of capital and financing. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.
Critical Accounting Policies
Use of Estimates. The financial statements have been prepared in conformity with generally accepted accounting principles. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the statements of financial condition and revenues and expenses for the year then ended. Actual results may differ significantly from those estimates.
Start-Up Costs. Costs of start-up activities, including organization costs, are expensed as incurred, in accordance with Statement of Position (SOP) 98-5.
Net loss per share. Basic loss per weighted average common share excludes dilution and is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The Company applies Statement of Financial Accounting Standards No. 128, "Earnings Per Share" (FAS 123).
Fair value of financial instruments. The carrying values of cash and accrued liabilities approximate their fair values due to the short maturity of these instruments.
The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the 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 may differ from those estimates.
Item 3 - Quantitative and Qualitative Disclosures About Market Risk
The Company is not subject to any specific market risk other than that encountered by any other public company related to being publicly traded.
Item 4T - Controls and Procedures
Our management, which includes our Chief Executive Officer who also serves as our principal financial officer, have conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-14(c) promulgated under the Securities and Exchange Act of 1934, as amended) as of a date (the "Evaluation Date") as of the end of the period covered by this report. We believe that our disclosure controls and procedures are effective based upon the conduct of our evaluation for the period ended September 30, 2009. We are continually in the process of improving our internal controls in an effort to discover and remediate any deficiencies prior to filing any report. There have been no significant changes made in our internal controls or in other factors that could significantly affect our internal controls subsequent to the end of the period covered by this report based on such evaluation.
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PART II
OTHER INFORMATION
None.
Item 3 Defaults Upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Security Holders
None
None
Item 6 Exhibits
(a) The following sets forth those exhibits filed pursuant to Item 601 of Regulation S-K:
|
Exhibit
Number
|
Descriptions
|
|
31.1
|
* Certification of the Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002
|
|
31.2
|
* Certification of the Acting Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
|
|
32.1
|
* Certification Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
|
|
32.2
|
* Certification Acting Chief Financial Officerpursuant to Section 906 of Sarbanes-Oxley Act of 2002.
|
______________
* Filed herewith.
(b) The following sets forth the Company's reports on Form 8-K that have been filed during the quarter for which this report is filed:
None.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| World Health Energy Holdings, Inc. | ||
|
By:
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/s/ David Lieberman
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|
|
David Lieberman
|
||
|
Chief Executive Officer,
|
||
|
Chief Financial Officer*
|
Date: November 15, 2010
* David Lieberman has signed both on behalf of the registrant as a duly authorized officer and as the Registrant's principal accounting officer.
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