UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington, D.C. 20549




Form
10-K




(Mark
One)




x  ANNUAL REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF


1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008




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


FOR
THE TRANSITION PERIOD FROM __________ TO __________


COMMISSION   FILE NUMBER
333-142076





IX
ENERGY HOLDINGS INC.


(Name of
small business issuer in its charter)




Delaware
            36-4620445(State
      or other jurisdiction of
            (I.R.S.
      Employerincorporation
      or organization)
            Identification
      No.)





711 Third Avenue, 12th Floor, New York, New
York 10017


(Address
of principal executive offices) (Zip Code)





Issuer's
telephone Number: (212) 682-5068




Securities
registered under Section 12(b) of the Exchange Act: None.




Securities
registered under Section 12(g) of the Exchange Act: None




Indicate
by check mark is the issuer is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes oNo x





Indicate
by check if the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act. Yes oNo x





Indicate
by check mark whether the issuer (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 xNo o




Indicate
by check mark if no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. x




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




Large
      accelerated filer o
            Accelerated
      filer oNon-accelerated
      filer o
            Smaller
      reporting company x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes oNo x




The
aggregate market value of the voting and non-voting common equity held by
non-affiliates (based on a sale price of $0.025  per share which was
the last sale price of the common stock as of June 30, 2008 was
$50,000.





State
issuer's revenues for its most recent fiscal year. $10,831,526




As of
March 27, 2009, the issuer had 60,340,785 outstanding shares of Common
Stock.




DOCUMENTS
INCORPORATED BY REFERENCE: NONE







TABLE OF
CONTENTS





PagePART
      IItem
      1.
            Business
            1Item
      1A.
            Risk
      Factors
            7Item
      1B.
            Unresolved
      Staff Comments
            18Item
      2.
            Properties
            18Item
      3.
            Legal
      Proceedings
            18Item
      4.
            Submission
      of Matters to a Vote of Security Holders
            18PART
      IIItem
      5.
            Market
      for Common Equity, Related Stockholder Matters and Issuer Purchases of
      Equity Securities
            19Item
      6.
            Selected
      Financial Data
            20Item
      7.
            Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations.
            20Item
      7A.
            Quantitative
      and Qualitative Disclosures About Market Risk
            22Item
      8.
            Financial
      Statements and Supplementary Data
            22Item
      9.
            Changes
      In and Disagreements with Accountants on Accounting and
      Financial Disclosure
            22Item
      9A(T).
            Controls
      and Procedures
            23Item
      9B.
            Other
      Information
            23PART
      IIIItem
      10.
            Directors,
      Executive Officers, and Corporate Governance
            24Item
      11.
            Executive
      Compensation
            25Item
      12.
            Security
      Ownership of Certain Beneficial Owners and Management and
      Related Stockholder Matters
            26Item
      13.
            Certain
      Relationship and Related Transactions, and Director
      Independence
            27Item
      14.
            Principal
      Accountant Fees and Services
            27Item
      15.
            Exhibits
            28SIGNATURES
            29









PART
I





ITEM
1. BUSINESS





Organizational
History





IX Energy
Holdings, Inc. (the “Company”) was incorporated pursuant to the laws of the
State of Delaware under the name Yoo Inc. on October 31, 2007.  Our
initial business plan was to market and sell a natural energy drink derived from
coconut water to distributors of soft drinks in Israel.




On
December 30, 2008, we entered into an Agreement and Plan of Merger and
Reorganization (the “Merger Agreement”) with IX Energy, Inc., a Delaware
corporation (“IX Energy”), and IX Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of Yoo Inc. (the “Acquisition Sub”).  Pursuant
to the Merger Agreement, the Acquisition Sub merged with and into IX Energy and
IX Energy became a wholly-owned subsidiary of Yoo Inc.  On January 13,
2009, the Company’s name was changed to IX Energy Holdings, Inc.  In
connection with this reverse merger, we discontinued our former business and
succeeded to the business of IX Energy as our sole line of
business.  As a result, we are now engaged in the development and
financing of solar power and other renewable energy solutions
systems.





Overview


Since its
inception, IX Energy’s operations have principally involved the integration and
installation of solar power systems manufactured by third parties. However, in
an effort to become a vertically integrated solar and renewable energy solutions
company  that markets, designs, engineers, installs and finances
solar  systems today, IX Energy, entered into an agreement with
Federal Prison Industries, Inc. ("UNICOR") to manufacture solar modules, using
components supplied by us that will be marketed primarily to federal military
and civilian agencies.
  As a
turnkey solutions provided in the renewable energy sector IX Energy is
developing integrated capabilities such as a solar integrated ground source
system to deliver a closed loop solar-geothermal application for government,
military and commercial customers.
  Solar
Solutions
  A solar
power system generally includes companies specializing in the
following:





·
            Silicon
      Refiners — companies that produce refined silicon, a material that has
      historically been used as the primary ingredient for solar panels. In
      light of the current shortage of silicon, it is possible that other
      materials may be used as the primary ingredient in the
    future.


·
            Wafer
      and Cell Manufacturers — companies that manufacture the electricity
      generating solar cells.


·
            Panel
      Manufacturers — companies that assemble solar cells into solar panels,
      generally laminating the cells between glass and plastic film, and
      attaching the wires and panel frame.


·
            Distributors
      — companies that purchase from manufacturers and resell to designers/
      integrators and other equipment resellers.


·
            Designer/Installers
      — companies that sell products to end user
  customers.




IX Energy
delivers solar power systems taking into account the customer's location, site
conditions and energy needs. During the preliminary design phase, we conduct a
site audit and building assessment for onsite generation feasibility and
identify energy efficiency savings opportunities. We model a proposed system
design based on variables including local weather patterns, utility rates and
other relevant factors at the customer's location. We also identify necessary
permits and design our systems to comply with applicable building codes and
other regulations.
  We offer
general contracting services and employ project managers to oversee all aspects
of system installation, including securing necessary permits and approvals.
Subcontractors, typically electricians and roofers, usually provide the
construction labor, tools and heavy equipment for solar system installation. We
have also served as a subcontractor for Johnson Controls, Inc. ("Johnson
Controls"), a heating, ventilating and air conditioning company, in connection
with the installation of a roof mounted solar power system for one of its
customers.


1








IX Energy
is distinguished from other solar developers in that we have put in place a
comprehensive partner and co-developer program to harness a variety of renewable
energy solutions including energy efficiency, geothermal, wind, biomass and
other applications that are important to a customer’s overall renewable energy
strategy. By bringing financing solutions and federal contracting experience
designed to meet the site and budget specifications of federal government
agencies we uniquely combine our renewable energy expertise with federal
government experience to deliver optimal solutions that set IX Energy
apart.




We have
the experience and background to solve the complex aspects of technology
evaluation, economic impact, systems engineering, system integration, project
execution, financing and more. We understand federal customers and can provide
them with the systems and solutions they need to meet renewable energy
requirements while reducing cost and their environmental impact.


Strategy
  Our
strategy is to leverage our foundation as a turnkey solar solutions provider to
the U.S. government agencies, the U.S. military and commercial customers and
government and deliver comprehensive energy conservation and renewable energy
solutions through strategic partners, teaming agreements and direct integration
of technologies into the IX Energy platform. As a vertically integrated solar
solutions company with manufacturing capabilities, design and engineering
expertise we already market, install and finance solar power systems
and  are now positions to assist customers achieve their federally
mandated renewable energy standards by integrated turnkey
solutions.  Thus far we have  synchronized the three
fundamental components of solar energy projects:


·
            solar
      module design;


·
            installation
      services; and


·
            project
      financing.




UNICOR
Sales and Marketing Agreement




In 2008
we entered into a five year sales and marketing agreement with UNICOR pursuant
to which IX Energy provides sales and marketing for the UNICOR
assembled solar panels at its facility in Otisville, New York and other UNICOR
facilities that it may be deemed appropriate. The agreement grants us the right
to market and sell to U.S. governmental customers any solar panels and related
products assembled and manufactured under this agreement.




The
UNICOR agreement provides for two different sales and marketing programs. Under
the first program, UNICOR will assemble and produce solar panels and we will
actively market to and solicit customers, prepare customer proposals and assist
customers in obtaining project financing. The customers will pay us directly and
we will pay UNICOR an amount equal to the cost of the solar cells plus a
below-market fee for panel fabrication. We will notify UNICOR of all
opportunities for pursuing contracts with federal government agencies. If UNICOR
decides not to pursue or contract for a federal job, we may notify another
manufacturer of the proposed project and pursue the federal job with that
manufacturer.




Under the
second program, we will act as a sales agent for UNICOR. UNICOR will identify
potential customers to us and we will work with UNICOR to prepare customer
proposals and aid customers in obtaining project financing. UNICOR will sell the
products directly to the customers and pay us a service fee equal to 25% of the
net earnings per project for projects that are under 5 megawatts. We will
negotiate the service fees for projects that are over 5 megawatts on a
project-by-project basis.




Installation





We
utilized experienced general and electrical subcontractors to install solar
panel projects. The subcontractors are responsible for obtaining licenses,
carrying appropriate insurance and adhering to the local labor and payroll
requirements.





Project
Financing





Our
customers will have a number of funding strategies for solar power projects
depending on their size, cash flow and tax status. In particular, our customers
may seek to qualify for power purchase agreements, or PPAs, to facilitate the
financing of solar power projects. A PPA is a long-term agreement pursuant to
which a financing provider, using its own source of funds, builds a solar energy
facility on a customer's site and maintains and operates the facility for 15
years or longer. The financing provider owns the solar energy facility and sells
the electricity to the customer. The financing provider, not IX Energy, will be
eligible to receive any government subsidies and incentives that promote the use
of solar power. At the end of the PPA term, the customer may elect to purchase
the facility or renew the PPA.





Customers




As we
commence the production of solar modules through our agreements with UNICOR, we
expect to target federal civilian and military agencies and institutional
commercial customers including large corporations, non-governmental
organizations, universities and solar powered electric generating stations. We
anticipate that the federal government will be a key customer as a result of
government mandates that require federal agencies to improve their energy
efficiency. Historically, however, we have principally designed and installed
solar power systems for commercial and residential customers and public schools,
both directly and as a subcontractor.




2




Federal
Mandates





Federal
agencies must meet energy management and renewable energy guidelines set forth
in the Energy Policy Act of 2005 ("EPACT"), Executive Order 13423 "Strengthening
Federal Environmental, Energy and Transportation Management" ("EO 13423") and
related regulations. In particular, EPACT directs that the following percentages
of an agency's energy consumption come from renewable energy
sources:





·
            3%
      or more in fiscal years 2007 through
2009


·
            5%
      or more in fiscal years 2010 through 2012,
and


·
            7.5%
      or more by 2013.





EO 13423,
on the other hand, orders federal agencies to improve energy efficiency and
reduce greenhouse gas emissions by 3% annually through fiscal year 2015 or by
30% by fiscal year 2015, relative to their energy use and emissions in fiscal
year 2003. EO 13423 also mandates that federal agencies use sustainable
practices when purchasing products and services. Implementing instructions
issued by the Department of Energy require that agencies give preference in
their procurement and acquisition programs to energy produced from renewable
sources. At least half of the renewable energy consumed by an agency must come
from renewable power sources placed into service after January 1,
1999.





Industry





Electric
power is used to operate businesses and industries, provides the power needed
for homes and offices, and provides the power for our communications,
entertainment, transportation and medical needs. As our energy supply and
distribution mix changes, electricity is likely to be used more for local
transportation (electric vehicles) and space/water heating needs. According to
the Edison Electric Institute, the electric power industry in the U.S. is over
$218 billion in size, and will continue to grow with our economy.




According
to the U.S. Department of Energy, electricity is generated from the following:
coal -51%, nuclear -21%, gas - 16%, hydro - 6%, and oil - 3%, with renewable
energy contributing 3%. "Renewable Energy" typically refers to non-traditional
energy sources, including solar energy. Due to continuously increasing energy
demands, we believe the electric power industry faces the following
challenges:





·
            Limited Energy Supplies
      . The primary fuels that have supplied this industry, fossil fuels in the
      form of oil, coal and natural gas, are limited. Worldwide demand is
      increasing at a time that industry experts have concluded that supply is
      limited. Therefore, the increased demand will probably result in increased
      prices, making it more likely that long-term average costs for electricity
      will continue to increase.


·
            Generation, Transmission and
      Distribution Infrastructure Costs . Historically, electricity has
      been generated in centralized power plants transmitted over high voltage
      lines, and distributed locally through lower voltage transmission lines
      and transformer equipment. As electricity needs increase, these systems
      will need to be expanded. Without further investments in this
      infrastructure, the likelihood of power shortages ("brownouts" and
      "blackouts") may increase.


·
            Stability of Suppliers
      . Since many of the major countries who supply fossil fuel are located in
      unstable regions of the world, purchasing oil and natural gas from these
      countries may increase the risk of supply shortages and cost
      increases.


·
            Environmental Concerns and
      Climate Change . Concerns about global warming and greenhouse gas
      emissions have resulted in the Kyoto Protocol, various states enacting
      stricter emissions control laws and utilities in several states being
      required to comply with renewable portfolio standards, which require the
      purchase of a certain amount of power from renewable
    sources.





Solar
energy is the underlying energy source for renewable fuel sources, including
biomass fuels and hydroelectric energy. By extracting energy directly from the
sun and converting it into an immediately usable form, either as heat or
electricity, intermediate steps are eliminated. We believe, in this sense, solar
energy is one of the most direct and unlimited energy sources.




Solar
energy can be converted into usable forms of energy either through the
photovoltaic effect (generating electricity from photons) or by generating heat
(solar thermal energy). Solar thermal systems include traditional domestic hot
water collectors (DHW), swimming pool collectors, and high temperature thermal
collectors (used to generate electricity in central generating systems). DHW
thermal systems are typically distributed on rooftops so that they generate heat
for the building on which they are situated. High temperature thermal collectors
typically use concentrating mirror systems and are typically located in remote
sites.




3


Anatomy
of a Solar Power System





Solar
power systems convert the energy in sunlight directly into electrical energy
within solar cells based on the photovoltaic effect. Multiple solar cells, which
produce direct current, or DC, power, are electrically interconnected into solar
panels. A typical 180 watt solar panel may have 72 individual solar cells.
Multiple solar panels are electrically wired together. The number of solar
panels installed on a building are generally selected to meet that building's
annual electrical usage, or selected to fill available unshaded roof or ground
space. Solar panels are electrically wired to an inverter, which converts the
power from DC to alternate current, or AC, and interconnects with the utility
grid.




Solar Electric Cells . Solar
electric cells convert light energy into electricity at the atomic level. The
conversion efficiency of a solar electric cell is defined as the ratio of the
sunlight energy that hits the cell divided by the electrical energy that is
produced by the cell. By improving this efficiency, we believe solar electric
energy becomes competitive with fossil fuel sources. The earliest solar electric
devices converted about 1 %-2% of sunlight energy into electric energy. Current
solar electric devices convert 5%­25% of light energy into electric energy
(the overall efficiency for solar panels is lower than solar cells because of
the panel frame and gaps between solar cells), and current mass produced panel
systems are substantially less expensive than earlier systems. Effort in the
industry is currently being directed towards the development of new solar cell
technology to reduce per watt costs and increase area efficiencies.




Solar Panels . Solar electric
panels are composed of multiple solar cells, along with the necessary internal
wiring, aluminum and glass framework, and external electrical connections.
Although panels are usually installed on top of a roof or on an external
structure, certain designs include the solar electric cells as part of
traditional building materials, such as shingles and rolled out roofing. Solar
electric cells integrated with traditional shingles is usually most compatible
with masonry roofs and, while it may offset costs for other building materials
and be aesthetically appealing, it is generally more expensive than traditional
panels.




Inverters . Inverters convert
the DC power from solar panels to the AC power used in buildings. Grid-tie
inverters synchronize to utility voltage and frequency and only operate when
utility power is stable (in the case of a power failure these grid-tie inverters
shut down to safeguard utility personnel from possible harm during repairs).
Inverters also operate to maximize the power extracted from the solar panels,
regulating the voltage and current output of the solar array based on sun
intensity.




Monitoring . There are two
basic approaches to access information on the performance of a solar power
system. One approach is to collect the solar power performance data locally from
the inverter with a hard-wired connection and then transmit that data via the
Internet to a centralized database. Data on the performance of a system can then
be accessed from any device with a web browser, including personal computers and
cell phones. As an alternative to web-based remote monitoring, most commercial
inverters have a digital display on the inverter itself that shows performance
data and can also display this data on a nearby personal computer with a
hard-wired or wireless connection.




Net Metering . The owner of a
grid-connected solar electric system may not only buy, but may also sell,
electricity each month. This is because electricity generated by the solar
electric system can be used on-site or fed through a meter into the utility
grid. Utilities are required to buy power from owners of solar electric systems
(and other independent producers of electricity) under the Public Utilities
Regulatory Policy Act of 1978 (PURPA). For instance, California's net metering
law provides that all utilities must allow customers with solar electric systems
rated up to 1.5 megawatts to interconnect with the local utility grid and
receive retail value for the electricity produced. When a home or business
requires more electricity than the solar power array is generating (for example,
in the evening), the need is automatically met by power from the utility grid.
When a home or business requires less electricity than the solar electric system
is generating, the excess is fed (or sold) back to the utility and the electric
meter actually spins backwards. Used this way, the utility serves as a backup to
the solar electric similar to the way in which batteries serve as a backup in
stand-alone systems.





Solar
Power Benefits





The
direct conversion of light into energy offers the following benefits compared to
conventional energy sources:





·
            Economic — Once a solar
      power system is installed, the cost of generating electricity is fixed
      over the lifespan of the system. There are no risks that fuel prices will
      escalate or fuel shortages will develop. In addition, cash paybacks for
      systems range from 5 to 25 years, depending on the level of state and
      federal incentives, electric rates, annualized sun intensity and
      installation costs. Solar power systems at customer sites generally
      qualify for net metering to offset a customer's highest electric rate
      tiers, at the retail, as opposed to the wholesale, electric
      rate.




4




·
            Convenience
      — Solar power systems can be installed on a wide range of sites, including
      small residential roofs, the ground, covered parking structures and large
      industrial buildings. Solar power systems also have few, if any, moving
      parts and are generally guaranteed to operate for 25 years resulting, we
      believe, in low maintenance and operating costs and reliability compared
      to other forms of power generation.


·
            Environmental
      — We believe solar power systems are one of the most environmentally
      friendly ways of generating electricity. There are no harmful greenhouse
      gas emissions, no wasted water, no noise, no waste generation and no
      particulates. Such benefits continue for the life of the
      system.


·
            Security
      — Producing solar power improves energy security both on an international
      level (by reducing fossil energy purchases from hostile countries) and a
      local level (by reducing power strains on local electrical transmission
      and distribution systems).


·
            Infrastructure
      — Solar power systems can be installed at the site where the power is to
      be used, thereby reducing electrical transmission and distribution costs.
      Solar power systems installed and operating at customer sites may also
      save the cost of construction of additional energy infrastructure
      including power plants, transmission lines, distribution systems and
      operating costs.





We
believe the volatility of fuel costs, environmental concerns and national energy
security concerns make it likely that the demand for solar and renewable energy
solutions will  grow geometrically given federal mandates, the recent
stimulus package and. The federal government, and several states (primarily
California and New Jersey), have put a variety of incentive programs in place
that directly spur the installation of grid-tied solar power systems, so that
customers will "purchase" their own power generating system rather than
"renting" power from a local utility. These programs include:


·
            Rebates
      — to customers (or to installers) to reduce the initial cost of the solar
      power system, generally based on the size of the system. California, New
      Jersey, New York, Connecticut and other states have rebates that can
      substantially reduce initial costs.


·
            Tax
      Credits — federal and state income tax offsets, directly reducing ordinary
      income tax. New York and California currently offer state tax credits.
      There is currently a 10% federal tax credit up to $2,000 for residential
      systems, and a 30% federal tax credit (with no cap) for business
      systems.


·
            Accelerated
      Depreciation — solar power systems installed for businesses (including
      applicable home offices) are generally eligible for accelerated
      depreciation.


·
            Net
      Metering — provides a full retail credit for energy
    generated.


·
            Feed-in
      Tariffs — are additional credits to consumers based on how much energy
      their solar power system generates. Feed-in Tariffs set at appropriate
      rates have been successfully used in Europe to accelerate
      growth.


·
            Renewable
      Portfolio Standards — require utilities to deliver a certain percentage of
      power generated from renewable energy
sources.


·
            Renewable
      Energy Credits (RECs) — are additional credits provided to customers based
      on the amount of renewable energy they
produce.


·
            Solar
      Rights Acts — state laws to prevent unreasonable restrictions on solar
      power systems. California's Solar Rights Act has been updated several
      times in past years to make it easier for customers of all types and in
      all locations to install a solar power
system.




According
to PV News, California and New Jersey account for approximately 90% of the U.S.
residential market. We believe this is largely attributable to the fact that
they currently have the most attractive incentive programs. The California Solar
Initiative provides $3.2 billion of incentives toward solar development over 11
years. In addition, recently approved regulations in New Jersey require solar
photovoltaic power to provide 2% of New Jersey's electricity needs by 2020,
requiring the installation of 1,500 megawatts of solar electric power. According
to DSIRE (the Database of State Incentives for Renewable Energy) at least 18
other states also have incentive programs. We expect that such programs, as well
as federal tax rebates and other incentives, will continue to drive growth in
the solar power market for the near future.





Sales
and Marketing





Historically,
we have generated sales through the direct efforts of management and its
pre­existing relationships. However, as we expand the breadth of our
operations, our sales and marketing program will entail our participation in
industry trade shows, individual consultations with prospective customers,
hiring additional sales personnel and direct marketing.




5


Competition





We face
intense competition in the manufacture, design, marketing and installation of
solar power systems. We believe that our principal competitors include SunPower
Corporation, another vertically integrated solar products and services company,
SunEdison LLC, an installer and integrator, and Evergreen Solar, Inc., United
Solar Ovonic LLC, Schott Solar Inc. and Kyocera Corporation, solar panel and
solar cell manufacturers. A significant number of our competitors are developing
or currently producing products based on the more advanced photovoltaic
technologies, including thin film solar module, amorphous silicon, string ribbon
and nano technologies, which may eventually offer cost advantages over the
crystalline polysilicon technologies currently used by us. However, we believe
our solar systems will provide the following benefits compared with competitors'
systems:





·
            superior
      performance delivered by maximizing energy delivery and financial return
      through systems technology design;


·
            superior
      systems design to meet customer needs and reduce
  cost;


·
            superior
      channel breadth and delivery capability including turnkey systems;
      and


·
            significant
      cost savings due to our vertically integrated structure that enables us to
      source our own high quality, low-cost solar cells directly from suppliers
      and avoid paying brokers' fees on the
cells.





We also
compete against other power generation sources including conventional fossil
fuels supplied by utilities, other alternative energy sources such as wind,
biomass, concentrated solar power and emerging distributed generation
technologies such as micro-turbines, sterling engines and fuel cells. We believe
solar power has certain advantages when compared to these other power generating
technologies. We believe solar power offers a stable power price compared to
utility network power, which typically increases as fossil fuel prices increase.
In addition, solar power systems are deployed in many sizes and configurations
and do not produce air, water and noise emissions. Most other distributed
generation technologies create environmental impacts of some sort. However, due
to the relatively high manufacturing costs compared to most other energy
sources, solar energy is generally not competitive without government incentive
programs.




Competition
is intense, and many of our competitors have significantly greater access to
financial, technical, manufacturing, marketing, management and other resources
than we do. Many also have greater name recognition, a more established
distribution network and a larger base of customers. In addition, many of our
competitors have well-established relationships with our current and potential
suppliers, manufacturing partners and customers and have extensive knowledge of
our target markets. As a result, our competitors may be able to devote greater
resources to the research, development, promotion and sale of their products and
respond more quickly to evolving industry standards and changing customer
requirements than we can. Consolidation or strategic alliances among our
competitors may strengthen these advantages and may provide them greater access
to customers or new technologies. In addition to facing competition from other
solar power system providers, our competitors may enter into strategic
relationships with or be acquired by our customers. To the extent that
government funding for research and development grants, customer tax rebates and
other programs that promote the use of solar and other renewable forms of energy
are limited, we compete for such funds, both directly and indirectly, with other
renewable energy providers and with current and potential
customers.





Environmental,
Health and Safety Regulations





We are
subject to a variety of federal, state and local governmental laws and
regulations related to the purchase, storage, use and disposal of hazardous
materials. We are also subject to occupational health and safety regulations
designed to protect worker health and safety from injuries and adverse health
effects from exposure to hazardous chemicals and working conditions. If we fail
to comply with present or future environmental laws and regulations, we could be
subject to fines, or a cessation of operations. In addition, under some federal,
state and local statutes and regulations, a governmental agency may seek
recovery and response costs from operators of property where releases of
hazardous substances have occurred or are ongoing, even if the operator was not
responsible for the release or otherwise was not at fault.




Any
failure by us to control the use of, or to restrict adequately the discharge of,
hazardous substances could subject us to substantial financial liabilities,
operational interruptions and adverse publicity, any of which could materially
and adversely affect our business, results of operations and financial
condition.




6




Solar
Energy Industry




We
believe that economic and national security issues, technological advances,
environmental regulations seeking to limit emissions by fossil fuel, air
pollution regulations restricting the release of greenhouse gasses, aging
electricity transmission infrastructure and depletion and limited supply of
fossil fuels, has made reliance on traditional sources of fuel for generating
electricity less attractive. Government policies, in the form of both regulation
and incentives, have accelerated the adoption of solar technologies by
businesses and consumers. For example, in the U.S., EPACT enacted a 30%
investment tax credit for solar, and in January 2006 California approved the
largest solar program in the country's history that provides for long term
subsidies in the form of rebates to encourage use of solar energy where
possible.




Government
Subsidies and Incentives




Various
subsidies and tax incentive programs exist at the federal and state level to
encourage the adoption of solar power including capital cost rebates,
performance-based incentives, feed-in tariffs, tax credits and net metering.
Capital cost rebates provide funds to customers based on the cost of size of a
customer's solar power system. Performance-based incentives provide funding to a
customer based on the energy produced by their solar system. Under a feed-in
tariff subsidy, the government sets prices that regulated utilities are required
to pay for renewable electricity generated by end-users. The prices are set
above market rates and may be differentiated based on system size or
application. Feed-in tariffs pay customers for solar power system generation
based on kilowatt-hours produced, at a rate generally guaranteed for a period of
time. Tax credits reduce a customer's taxes at the time the taxes are due. Under
net metering programs, a customer can generate more energy than used, during
which periods the electricity meter will spin backwards. During these periods,
the customer "lends" electricity to the grid, retrieving an equal amount of
power at a later Net time metering programs enable end-users to sell excess
solar electricity to their local utility in exchange for a credit against their
utility bills. Net metering programs are usually combined with rebates, and do
not provide cash payments if delivered solar electricity exceeds their utility
bills. In addition, several states have adopted renewable portfolio standards,
which mandate that a certain portion of electricity delivered to customers come
from a set of eligible renewable energy resources. Under a renewable portfolio
standard, the government requires regulated utilities to supply a portion of
their total electricity in the form of renewable electricity. Some programs
further specify that a portion of the renewable energy quota must be from solar
electricity.




Despite
the benefits of solar power, there are also certain risks and challenges faced
by solar power. Solar power is heavily dependent on government subsidies to
promote acceptance by mass markets. We believe that the near-term growth in the
solar energy industry depends significantly on the availability and size of
these government subsidies and on the ability of the industry to reduce the cost
of generating solar electricity. The market for solar energy products is, and
will continue to be, heavily dependent on public policies that support growth of
solar energy. There can be no assurances that such policies will continue.
Decrease in the level of rebates, incentives or other governmental support for
solar energy would have an adverse affect on our ability to sell our
products.




Building
Codes




We are
required to obtain building permits and comply with local ordinances and
building codes for each project, the cost of which is included in our estimated
costs for each proposal.





Employees





As of
March 30, 2009 we have 7 full time employees.





ITEM
1A. RISK FACTORS





Risks
Relating to Our Business




Since
we lack a meaningful operating history, it is difficult for potential investors
to evaluate our business.




Our
limited operating history makes it difficult for potential investors to evaluate
our business or prospective operations. Since our formation, we have generated
only limited revenues. As a startup, we are subject to all the risks inherent in
the initial organization, financing, expenditures, complications and delays
inherent in a new business. Investors should evaluate an investment in us in
light of the uncertainties encountered by start-up companies in a competitive
environment. Our business is dependent upon the implementation of our business
plan, as well as our ability to enter into agreements with suppliers, customers
or integral service providers on commercially favorable terms. There can be no
assurance that our efforts will be successful or that we will ultimately be able
to attain profitability.




7




We
will need additional financing to execute our business plan and fund operations,
which additional financing may not be available on reasonable terms or at
all.




Although
we recently raised an aggregate of $3.475 million in a private placement, our
ultimate success may depend upon our ability to raise additional capital. There
can be no assurance that additional funds will be available when needed from any
source or, if available, will be available on terms that are acceptable to
us.




We may be
required to pursue sources of additional capital through various means,
including joint venture projects and debt or equity financings. Future
financings through equity investments are likely to be dilutive to existing
stockholders. Also, the terms of securities we may issue in future capital
transactions may be more favorable for our new investors. Newly issued
securities may include preferences, superior voting rights, the issuance of
warrants or other derivative securities, and the issuances of incentive awards
under equity employee incentive plans, which may have additional dilutive
effects. Further, we may incur substantial costs in pursuing future capital
and/or financing, including investment banking fees, legal fees, accounting
fees, printing and distribution expenses and other costs. We may also be
required to recognize non-cash expenses in connection with certain securities we
may issue, such as convertible notes and warrants, which will adversely impact
our financial condition.




Our
ability to obtain needed financing may be impaired by such factors as the
capital markets, both generally and specifically in the renewable energy
industry, and the fact that we are not profitable, which could impact the
availability or cost of future financings. If the amount of capital we are able
to raise from financing activities, together with our revenues from operations,
is not sufficient to satisfy our capital needs, even to the extent that we
reduce our operations accordingly, we may be required to cease
operations.




We
are dependent upon key personnel whose loss may adversely impact our
business.




We rely
heavily on the expertise, experience and continued services of our senior
management, especially Steven Hoffmann, our Chairman and Chief Executive
Officer. The loss of Mr. Hoffmann, or an inability to attract or retain other
key individuals, could materially adversely affect us. We seek to compensate and
motivate our executives, as well as other employees, through competitive
salaries and bonus plans, but there can be no assurance that these programs will
allow us to retain key employees or hire new key employees. As a result, if Mr.
Hoffmann left us, we could face substantial difficulty in hiring a qualified
successor and could experience a loss in productivity while any such successor
obtains the necessary training and experience. In connection with the Merger, we
assumed an employment agreement with Mr. Hoffmann. However, there can be no
assurance that the terms of this employment agreement will be sufficient to
retain Mr. Hoffmann.




We
may be unable to complete our development, manufacturing and commercialization
plans, and the failure to do so will significantly harm our business plans,
prospects, results of operations and financial condition.




Commercializing
our planned solar modules and processes depends on a number of factors,
including but not limited to:





·
            further
      product and manufacturing process
development;


·
            development
      of certain critical tools;


·
            completion,
      refinement and management of our supply
chain;


·
            completion,
      refinement, and management of our distribution
  channels;


·
            demonstration
      of efficiencies that will make our products attractively priced;
      and·
            developing
      an adequate sales force and sales channels necessary to distribute our
      products and achieve our desired revenue
goals.




We do not
have any experience in carrying out any of the foregoing tasks, and, as such, we
cannot assure investors that the strategies we intend to employ will enable us
to support the large-scale manufacturing of commercially desirable solar
modules.




We
may not be able to effectively control and manage our growth.




Our
strategy envisions a period of potentially rapid growth. We currently maintain
nominal administrative and personnel capacity due to the startup nature of our
business, and our expected growth may impose a significant burden on our future
planned administrative and operational resources. The growth of our business may
require significant investments of capital and increased demands on our
management, workforce and facilities. We will be required to substantially
expand our administrative and operational resources and attract, train, manage
and retain qualified management and other personnel. Failure to do so or satisfy
such increased demands would interrupt or would have a material adverse effect
on our business and results of operations.




8




Our
products have never been sold on a mass market commercial basis, and we do not
know whether they will be accepted by the market.




The solar
energy market is at a relatively early stage of development and the extent to
which solar modules will be widely adopted is uncertain. If our products are not
accepted by the market, our business plans, prospects, results of operations and
financial condition will suffer. Moreover, demand for solar modules in our
targeted markets may not develop or may develop to a lesser extent than we
anticipate. The development of a successful market for our proposed products and
our ability to sell our products at a lower price per watt may be affected by a
number of factors, many of which are beyond our control, including, but not
limited to:




·
            failure
      to produce solar power products that compete favorably against other solar
      power products on the basis of cost, quality and
    performance;


·
            competition
      from conventional energy sources and alternative distributed generation
      technologies, such as wind energy;


·
            failure
      to develop and maintain successful relationships with suppliers,
      distributors and strategic partners;
and


·
            customer
      acceptance of our products.




If our
proposed products fail to gain sufficient market acceptance, our business plans,
prospects, results of operations and financial condition will
suffer.




We
could become involved in intellectual property disputes that create a drain on
our resources and could ultimately impair our assets.




We rely
on trade secrets and our industry expertise and know how. We do not knowingly
infringe on patents, copyrights or other intellectual property rights owned by
other parties; however, in the event of an infringement claim, we may be
required to spend a significant amount of money to defend a claim, develop a
non-infringing alternative or to obtain licenses. We may not be successful in
developing such an alternative or obtaining licenses on reasonable terms, if at
all. Any litigation, even if without merit, could result in substantial costs
and diversion of our resources and could materially and adversely affect our
business and operating results.




Upon
commencement of manufacturing with UNICOR, we will be dependent upon a limited
number of third party suppliers, some of whom will be located in foreign
countries, for key materials, and any disruption from such suppliers or
fluctuations in foreign currency and exchange rates could prevent us from
manufacturing and selling cost-effective products.




We
anticipate manufacturing our products with UNICOR using materials and components
procured from a limited number of third-party suppliers. If we fail to maintain
our relationships with these suppliers, or fail to secure additional supply
sources from other solar cell suppliers, UNICOR may be unable to manufacture our
products or our products may be available only at a higher cost or after a long
delay. Any of these factors could prevent us from delivering our products to our
customers within required timeframes, resulting in potential order cancellations
and lost revenue. Further, we intend to purchase solar cells for our solar
modules from suppliers located in foreign countries. We will therefore be
subject to risks associated with fluctuations in foreign currency and exchange
rates. As a result, we may not be able to manufacture our products with UNICOR
at competitive prices and may not achieve our expected margins or cover our
costs.




As
our business plan contemplates the federal government becoming a principal
customer of ours, any reduction in anticipated orders from the federal
government could significantly reduce our sales and operating
results.




Currently
we anticipate selling our solar modules and integration services principally to
agencies of the federal government. Should the federal government fail to
materialize as a substantial customer or should the federal government cut back
orders following commencement of sales, it could significantly reduce our
revenues and harm our operating results. Our customer relationships with the
federal government are in their infancy and we cannot guarantee investors that
we will ultimately receive significant revenues from this customer over the long
term. Any loss of business with the federal government will be particularly
damaging unless we are able to diversify our customer base and substantially
expand sales to other customers.





We recognize revenue on system installations on a
"percentage of completion" basis and payments are due upon the achievement of
contractual milestones and any delay or cancellation of a project could
adversely affect our business.




9




We
recognize revenue on our system installations on a "percentage of completion"
basis and, as a result, our revenue from these installations is driven by the
performance of our contractual obligations, which is generally driven by
time-lines for the installation of our solar power systems at customer sites.
This could result in unpredictability of revenue and, in the near term, a
revenue decrease. As with any project-related business, there is the potential
for delays within any particular customer project. Variation of project
time-lines and estimates may impact our ability to recognize revenue in a
particular period. In addition, certain customer contracts may include payment
milestones due at specified points during a project. Because we must invest
substantial time and incur significant expense in advance of achieving
milestones and the receipt of payment, failure to achieve milestones could
adversely affect our business and results of operations.




We
are exposed to risks associated with product liability claims in the event that
the use or installation of our products results in injury or damage, and we have
limited insurance coverage to protect against such claims.




Since our
products are electricity-producing devices, it is possible that users could be
injured or killed by our products, whether by product malfunctions, defects,
improper installation or other causes. As a planned manufacturer, distributor,
and installer of products that will be used by consumers, we will face an
inherent risk of exposure to product liability claims or class action suits in
the event that the use of the solar power products we sell or install results in
injury or damage. We are unable to predict whether product liability claims will
be brought against us in the future or the effect of any resulting adverse
publicity on our business. Moreover, to the extent that a claim is brought
against us we may not have adequate resources in the event of a successful claim
against us. We rely on our general liability insurance to cover product
liability claims and have not obtained separate product liability insurance. The
successful assertion of product liability claims against us could result in
potentially significant monetary damages and, if our insurance protection is
inadequate, could require us to make significant payments which could have a
materially adverse effect on our financial results.




We
sometimes act as the general contractor for our customers in connection with the
installation of solar power systems and are subject to risks associated with
construction, bonding, cost overruns, delays and other contingencies, which
could have a material adverse effect on our business and results of
operations




We
sometimes act as the general contractor for our customers in connection with the
installation of solar power systems. All essential costs are estimated at the
time of entering into the sales contract for a particular project, and these are
reflected in the overall price that we charge our customers for the project.
These cost estimates are preliminary and may or may not be covered by contracts
between us or the other project developers, subcontractors, suppliers and other
parties to the project. In addition, we require qualified, licensed
subcontractors to install most of our systems. Shortages of such skilled labor
could significantly delay a projector otherwise increase our costs. Should
miscalculations in planning a projector defective or late execution occur, we
may not achieve our expected margins or cover our costs. Also, most systems
customers require performance bonds issued by a bonding agency. Due to the
general performance risk inherent in construction activities, it has become
increasingly difficult recently to secure suitable bonding agencies willing to
provide performance bonding. In the event we are unable to obtain bonding, we
will be unable to bid on, or enter into, sales contracts requiring such
bonding.




Delays in
solar panel or other supply shipments, other construction delays, unexpected
performance problems in electricity generation or other events could cause us to
fail to meet these performance criteria, resulting in unanticipated and severe
revenue and earnings losses and financial penalties. Construction delays are
often caused by inclement weather, failure to timely receive necessary approvals
and permits, or delays in obtaining necessary solar panels, inverters or other
materials. The occurrence of any of these events could have a material adverse
effect on our business and results of operations.





Our
business requires us to place our employees and technicians in our customers’
properties, which could give rise to claims against us.





If we are
unsuccessful in our installation of products and provision of services to
customers, we could damage or cause a material adverse change to their premises
or property, which could give rise to claims against us. Any such claims could
be material in dollar amount and/or could significantly damage our reputation.
In addition, we are exposed to various risks and liabilities associated with
placing our employees and technicians in the homes and workplaces of others,
including possible claims of errors and omissions based on the alleged actions
of our personnel, including harassment, theft of client property, criminal
activity and other claims.




10




The execution of our growth
strategy is dependent upon the
continued availability of third-party financing arrangements for our
customers.





For many
of our projects, our customers will have entered into agreements with third
parties to pay for solar energy over an extended period of time based on energy
savings generated by our solar power systems, rather than paying us to purchase
our solar power systems. For these types of projects, most of our customers will
choose to purchase solar electricity under a power purchase agreement with a
financing company that purchases the system from us. These structured finance
arrangements are complex and may not be feasible in many situations. In
addition, customers opting to finance a solar power system may forgo certain tax
advantages associated with an outright purchase on an accelerated basis which
may make this alternative less attractive for certain potential customers. If
financing companies are unwilling or unable to finance the cost of our products,
or if the parties that have historically provided this financing cease to do so,
or only do so on terms that are substantially less favorable for us or these
customers, our growth will be adversely affected.





Environmental
obligations and liabilities could have a substantial negative impact on our
financial condition, cash flows and profitability.




We are
subject to a variety of federal, state, local and foreign laws and regulations
relating to the protection of the environment, including those governing the
use, handling, generation, processing, storage, transportation and disposal of,
or human exposure to, hazardous and toxic materials, the discharge of pollutants
into the air and water, and occupational health and safety. We are also subject
to environmental laws that allow regulatory authorities to compel, or seek
reimbursement for, cleanup of environmental contamination at sites now or
formerly owned or operated by us and at facilities where our waste is or has
been disposed. We may incur significant costs and capital expenditures in
complying with these laws and regulations. In addition, violations of, or
liabilities under, environmental laws or permits may result in restrictions
being imposed on our operating activities or in our being subjected to
substantial fines, penalties, criminal proceedings, third party property damage
or personal injury claims, cleanup costs or other costs. Also, future
developments such as more aggressive enforcement policies, the implementation of
new, more stringent laws and regulations, or the discovery of presently unknown
environmental conditions or non-compliance may require expenditures that could
have a material adverse effect on our business, results of operations and
financial condition. Further, greenhouse gas emissions have increasingly become
the subject of international, national, state and local attention. Although
fixture regulations could potentially lead to an increased use of alternative
energy, there can be no guarantee that such future regulations will encourage
solar technology. Given our limited history of operations, it is difficult to
predict future environmental expenses.





If
we do not achieve satisfactory yields or quality in manufacturing our solar
modules with UNICOR or if our suppliers furnish us with defective solar cells,
our sales could decrease and our relationships with our customers and our
reputation maybe harmed.




The
success of our business depends upon our ability to incorporate high quality and
yield solar cells into our products. We anticipate testing the quality and yield
of our solar products and the solar cells that we incorporate into our solar
products, and we intend to source our solar cells from manufacturers we believe
are reputable. Nonetheless, our solar modules may contain defects that are not
detected until after they are shipped or are installed because we cannot test
for all possible scenarios. These defects could cause us to incur significant
re-engineering costs, divert the attention of our engineering personnel from
product development efforts and significantly affect our customer relations and
business reputation. In addition, we may not be able to fulfill our purchase
orders if we purchase a large number of defective solar cells. The number of
solar cells that we purchase at any time is based upon expected demand for our
products and an assumed ratio of defective to non-defective solar cells. If this
ratio is greater than expected, we may not have an adequate number of
non-defective solar cells to allow us to fulfill our purchase orders on time. If
we do not fulfill orders for our products because we have a shortage of
non-defective solar cells or deliver modules with errors or defects, or if there
is a perception that these solar cells or solar modules contain errors or
defects, our credibility and the market acceptance and sales of our products
could be harmed.





We
face risks associated with our anticipated international business.




We expect
to establish, and to expand over time, international commercial operations and
activities. Such international business operations will be subject to a variety
of risks associated with conducting business internationally, including the
following:




·
            changes
      in or interpretations of foreign regulations that may adversely affect our
      ability to sell our products, perform services or repatriate profits to
      the United States;


·
            the
      imposition of tariffs;


·
            economic
      or political instability in foreign
countries;


·
            imposition
      of limitations on or increase of withholding and other taxes on
      remittances and other payments by foreign subsidiaries or joint
      ventures;




11




·
            conducting
      business in places where business practices and customs are unfamiliar and
      unknown;


·
            the
      imposition of restrictive trade
policies;


·
            the
      existence of inconsistent laws or
regulations;


·
            the
      imposition or increase of investment requirements and other restrictions
      or requirements by foreign
governments;


·
            uncertainties
      relating to foreign laws and legal
proceedings;


·
            fluctuations
      in foreign currency and exchange rates;
and


·
            compliance
      with a variety of federal laws, including the Foreign Corrupt Practices
      Act.




We do not
know the impact that these regulatory, geopolitical and other factors may have
on our international business in the future.





Risks
Relating to Our Industry




The reduction or elimination of
government subsidies and economic incentives for on-grid solar electricity
applications could reduce demand for our solar modules, lead to a reduction in
our net sales and harm our operating results .




The
reduction, elimination or expiration of government subsidies and economic
incentives for solar electricity could result in the diminished competitiveness
of solar energy relative to conventional and non-solar renewable sources of
energy, which would negatively affect the growth of the solar energy industry
overall and our net sales specifically. We believe that the near-term growth of
the market for on-grid applications, where solar energy is used to supplement
the electricity a consumer purchases from the utility network, depends
significantly on the availability and size of government and economic
incentives. Currently the cost of solar electricity substantially exceeds the
retail price of electricity in every significant market in the world. As a
result, federal, state and local governmental bodies in many countries have
provided subsidies in the form of tariffs, rebates, tax write-offs and other
incentives to end-users, distributors, systems integrators and manufacturers of
photovoltaic products. Many of these government incentives could expire,
phase-out over time, exhaust the allocated funding or require renewal by the
applicable authority. A reduction, elimination or expiration of government
subsidies and economic incentives for solar electricity could result in the
diminished competitiveness of solar energy, which would in turn hurt our sales
and financial condition.




Technological
changes in the solar power industry could render our solar power products
uncompetitive or obsolete, which could reduce our market share and cause our
revenues to decline.




The solar
power market is characterized by continually changing technology requiring
improved features, such as increased efficiency, higher power output and lower
price. Our failure to further refine our technology and develop and introduce
new solar power products could cause our products to become uncompetitive or
obsolete, which could reduce our market share and cause our revenues to decline.
The solar power industry is rapidly evolving and competitive. We will need to
invest significant financial resources in research and development to keep pace
with technological advances in the solar power industry and to effectively
compete in the future. A variety of competing solar power technologies are under
development by other companies that could result in lower manufacturing costs or
higher product performance than those expected for our solar power products. Our
development efforts may be rendered obsolete by the technological advances of
others, and other technologies may prove more advantageous for the
commercialization of solar power products.





The
solar power industry is currently experiencing an industry-wide shortage of
polysilicon. This shortage poses several risks to our business, including
possible constraints on revenue growth and possible decreases in our gross
margins and profitability.




There is
currently an industry-wide shortage of polysilicon, which has resulted in
significant price increases in solar cells. Polysilicon is an essential raw
material used in the production of solar cells. We expect that the average spot
price of polysilicon will continue to increase in the near-term. Increases in
polysilicon prices could increase the price we pay for solar cells, which could
impact our manufacturing costs and our net income. Even with these price
increases, demand for solar cells has increased, and many of our principal
competitors have announced plans to add additional manufacturing capacity. As
this manufacturing capacity becomes operational, it may increase the demand for
polysilicon in the near-term and further exacerbate the current shortage.
Polysilicon is also used in the semiconductor industry generally and any
increase in demand from that sector will compound the shortage. The production
of polysilicon is capital intensive and adding additional capacity requires
significant lead time. While we are aware that several new facilities for the
manufacture of polysilicon are under construction, we do not believe that the
supply imbalance will be remedied in the near-term, which could lead to higher
prices for, and reduced availability of, solar cells.


12




As
polysilicon supply increases, the corresponding increase in the global supply of
so/ar ce//s and panels may cause substantial downward pressure on the prices of
our products, resulting in lower revenues and earnings.




The
scarcity of polysilicon has resulted in the underutilization of solar panel
manufacturing capacity at many of our competitors and potential competitors,
particularly in China. As additional polysilicon becomes available, we expect
solar panel production globally to increase. Decreases in polysilicon pricing
and increases in solar panel production could each result in substantial
downward pressure on the price of solar cells and panels, including our
products. Such price reductions could have a negative impact on our revenue and
earnings, and materially adversely affect our business and financial
condition.





If
solar power technology is not suitable for widespread adoption or sufficient
demand for solar power products does not develop or takes longer to develop
titan we anticipate, our revenues would not significantly increase and we would
be unable to achieve or sustain profitability.





The
market for solar power products is emerging and rapidly evolving, and its future
success is uncertain. If solar power technology proves unsuitable for widespread
commercial deployment or if demand for solar power products fails to develop
sufficiently, we would be unable to generate enough revenues to achieve and
sustain profitability. In addition, demand for solar power products in the
markets and geographic regions we target may not develop or may develop more
slowly than we anticipate. Many factors will influence the widespread adoption
of solar power technology and demand for solar power products,
including:





·
            cost-effectiveness
      of solar power technologies as compared with conventional and non-solar
      alternative energy technologies;


·
            performance
      and reliability of solar power products as compared with conventional and
      non-solar alternative energy
products;


·
            success
      of alternative distributed generation technologies such as fuel cells,
      wind power and micro turbines;


·
            fluctuations
      in economic and market conditions that impact the viability of
      conventional and non-solar alternative energy sources, such as increases
      or decreases in the prices of oil and other fossil
  fuels;


·
            capital
      expenditures by customers that tend to decrease when the United States or
      global economy slows;


·
            continued
      deregulation of the electric power industry and broader energy industry;
      and


·
            availability
      of government subsidies and
incentives.





We
face intense competition, and many of our competitors have substantially greater
resources than we do.




We
operate in a competitive environment that is characterized by price fluctuation
and technological change. We compete with major international and domestic
companies. Some of our current and potential competitors have greater market
recognition and customer bases, longer operating histories and substantially
greater financial, technical, marketing, distribution, purchasing,
manufacturing, personnel and other resources than we do. In addition, many of
our competitors are developing and are currently producing products based on new
solar power technologies that may ultimately have costs similar to, or lower
than, our projected costs. As a result, they may be able to respond more quickly
to changing customer demands or to devote greater resources to the development,
promotion and sales of solar and solar-related products than we
can.




Our
business plan relies on sales of our solar power products and our competitors
with more diversified product offerings may be better positioned to withstand a
decline in the demand for solar power products. Some of our competitors own,
partner with, have longer term or stronger relationships with solar cell
providers that could result in them being able to obtain solar cells on a more
favorable basis than us. It is possible that new competitors or alliances among
existing competitors could emerge and rapidly acquire significant market share,
which would harm our business. If we fail to compete successfully, our business
would suffer and we may lose or be unable to gain market share.


Because
our industry is highly competitive and has low barriers to entry, we may lose
market share to larger companies that are better equipped to weather a
deterioration in market conditions due to increased competition.





Our
industry is highly competitive and fragmented, subject to rapid change and has
low barriers to entry. We may in the future compete for potential customers with
solar and heating, ventilating, and air conditioning, or HVAC, systems
installers and servicers, electricians, utilities and other providers of solar
power equipment or electric power. Some of these competitors may have
significantly greater financial, technical and marketing resources and greater
name recognition than we have.




13




We
believe that our ability to compete depends in part on a number of factors
outside of our control, including:





·
            the
      ability of our competitors to hire, retain and motivate qualified
      personnel;


·
            the
      ownership by competitors of proprietary tools to customize systems to the
      needs of a particular customer;


·
            the
      price at which others offer comparable services and
    equipment;


·
            the
      extent of our competitors’ responsiveness to customer needs;
      and


·
            installation
      technology.




Competition
in the solar power services industry may increase in the future, partly due to
low barriers to entry, as well as from other alternative energy resources now in
existence or developed in the future. Increased competition could result in
price reductions, reduced margins or loss of market share and greater
competition for qualified personnel. There can be no assurance that we will be
able to compete successfully against current and future competitors. If we are
unable to compete effectively, or if competition results in a deterioration of
market conditions, our business and results of operations would be adversely
affected.





We
may be vulnerable to the efforts of electric utility companies lobbying to
protect their revenue streams am/from competition from solar power
systems.




Electric
utility companies could lobby for a change in the relevant legislation in their
markets to protect their current revenue streams. Any adverse changes to the
regulations and policies of the solar energy industry could deter end-user
purchases of solar power products and investment in the research and development
of solar power technology. In addition, electricity generated by solar power
systems mostly competes with expensive peak hour electricity, rather than the
less expensive average price of electricity. Modifications to the peak hour
pricing policies of utilities such as flat rate pricing, would require solar
power systems to achieve lower prices in order to compete with the price of
electricity. Any changes to government regulations or utility policies that
favor electric utility companies could reduce our competitiveness and cause a
significant reduction in demand for our products.





A
drop in the retail price of conventional energy or non-solar alternative energy
sources may negatively impact our profitability.




We
believe that a customer’s decision to purchase or install solar power
capabilities is primarily driven by the cost of electricity from other sources
and their anticipated return on investment resulting from solar power systems.
Fluctuations in economic and market conditions that impact the prices of
conventional and non-solar alternative energy sources, such as decreases in the
prices of oil and other fossil fuels, could cause the demand for solar power
systems to decline, which would have a negative impact on our profitability.
Changes in utility electric rates or net metering policies could also have a
negative effect on our business.




Existing regulations and changes to
such regulations concerning the electrical utility industry may present technical, regulatory and
economic barriers to the purchase and use of solar power products, which may
significantly reduce demand for our products.




The
market for electricity generation products is heavily influenced by foreign,
federal, state and local government regulations and policies concerning the
electric utility industry, as well as internal policies and regulations
promulgated by electric utilities. These regulations and policies often relate
to electricity pricing and technical interconnection of customer-owned
electricity generation. In the U.S. and in a number of other countries, these
regulations and policies are being modified and may continue to be modified.
Customer purchases of~ or further investment in the research and development of;
alternative energy sources, including solar power technology, could be deterred
by these regulations and policies, which could result in a significant reduction
in the potential demand for our solar power products. For example, utility
companies commonly charge fees to larger, industrial customers for disconnecting
from the electric gild or for having the capacity to use power from the electric
~id for back-up purposes. These fees could increase the cost to our customers of
using our solar power products and make them less desirable, thereby harming our
business, prospects, results of operations and financial condition.




We
anticipate that our solar power products and their installation will be subject
to oversight and regulation in accordance with national, state and local laws
and ordinances relating to building codes, safely, environmental protection,
utility interconnection and metering and related matters. There is also a burden
in having to track the requirements of individual states and design equipment to
comply with the varying standards. Any new government regulations or utility
policies pertaining to our solar power products may result in significant
additional expenses to us and our resellers and their customers and, as a
result, could cause a significant reduction in demand for our solar power
products.




14




Risks
Relating to Our Organization and Our Common Stock





As
of the Merger, we became subject to the reporting requirements of federal
securities laws, which can be expensive and may divert resources from other
projects, thus impairing our ability to grow.




As a
result of the Merger, we became subject to the information and reporting
requirements of the Exchange Act and other federal securities laws, including
compliance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). The
costs of preparing and filing annual and quarterly reports, proxy statements and
other information with the SEC (including reporting of  the Merger) and
furnishing audited reports to stockholders will cause our expenses to be higher
than they would have been if we remained privately held and did not consummate
the Merger.




It may be
time consuming, difficult and costly for us to develop and implement the
internal controls and reporting procedures required by the Sarbanes-Oxley Act.
We may need to hire additional financial reporting, internal controls and other
finance personnel in order to develop and implement appropriate internal
controls and reporting procedures. If we are unable to comply with the internal
controls requirements of the Sarbanes-Oxley Act, then we may not be able to
obtain the independent accountant certifications required by such act, which may
preclude us from keeping our filings with the SEC current.





If
we fail to establish and maintain an effective system of internal control, we
may not be able to report our financial results accurately or to prevent fraud.
Any inability to report and file our financial results accurately and timely
could harm our reputation and adversely impact the trading price of our common
stock.




Effective
internal control is necessary for us to provide reliable financial reports and
prevent fraud. If we cannot provide reliable financial reports or prevent fraud,
we may not be able to manage our business as effectively as we would if an
effective control environment existed, and our business and reputation with
investors may be harmed. As a result, our small size and any current internal
control deficiencies may adversely affect our financial condition, results of
operation and access to capital. We have not performed an in-depth analysis to
determine if historical un-discovered failures of internal controls exist, and
may in the future discover areas of our internal control that need
improvement.





Public
company compliance may make it more difficult for us to attract and retain
officers and directors.





The
Sarbanes-Oxley Act and new rules subsequently implemented by the SEC have
required changes in corporate governance practices of public companies. As a
public company, we expect these new rules and regulations to increase our
compliance costs in 2008 and beyond and to make certain activities more time
consuming and costly. As a public company, we also expect that these new rules
and regulations may make it more difficult and expensive for us to obtain
director and officer liability insurance in the future and we may be required to
accept reduced policy limits and coverage or incur substantially higher costs to
obtain the same or similar coverage. As a result, it may be more difficult for
us to attract and retain qualified persons to serve on our board of directors or
as executive officers.




Because we became public by means of
a reverse merger, we may not be able to attract the attention of
major brokerage firms.





There may
be risks associated with us becoming public through a reverse merger.”
Securities analysts of major brokerage firms may not provide coverage of us
since there is no incentive to brokerage firms to recommend the purchase of our
common stock. No assurance can be given that brokerage firms will, in the
future, want to conduct any secondary offerings on behalf of our post-Merger
company.





Failure
to cause a registration statement to become effective in a timely manner could
materially adversely affect our company.




We have
agreed,- at our expense, to prepare a registration statement covering the shares
of our common stock sold in the Private Placement and to use our best efforts to
file that registration statement with the SEC within 90 days of the final
closing of the Private Placement or the date on which the Private Placement is
terminated, whichever occurs later, and to use commercially reasonable efforts
to obtain the effectiveness of such registration statement no later than 180
days after the final closing of the Private Placement or the date on which the
Private Placement is terminated, whichever occurs later. There are many reasons,
including those over which we have no control, which could delay the filing or
effectiveness of the registration statement, including delays resulting from the
SEC review process and comments raised by the SEC during that process. Our
efforts to file the registration statement and have it declared effective could
become extremely costly, and our failure to do so in a timely manner could
require us to pay liquidated damages to investors in the Private Placement,
either or both of which could materially adversely affect us.




15


Our
stock price may be volatile




The
market price of our common stock is likely to be highly volatile and could
fluctuate widely in price in response to various factors, many of which are
beyond our control, including the following:





·
            changes
      in our industry;


·
            competitive
      pricing pressures;


·
            our
      ability to obtain working capital
financing;


·
            additions
      or departures of key personnel;


·
            limited
      “public float” in the bands of a small number of persons whose sales or
      lack of sales could result in positive or negative pricing pressure on the
      market price for our common stock;


·
            sales
      of our common stock (particularly following effectiveness of the resale
      registration statement required to be filed in connection with the Private
      Placement);


·
            our
      ability to execute our business
plan;


·
            operating
      results that fall below
expectations;


·
            loss
      of any strategic relationship;


·
            regulatory
      developments;


·
            economic
      and other external factors; and


·
            period-to-period
      fluctuations in our financial
results




In
addition, the securities markets have from time to time experienced significant
price and volume fluctuations that are unrelated to the operating performance of
particular companies. These market fluctuations may also materially and
adversely affect the market price of our common stock.





We
have not paid dividends in the past and do not expect to pay dividends in the
future. Any return on investment may be limited to the value of our common
stock.




We have
never paid cash dividends on our common stock and do not anticipate doing so in
the foreseeable future. The payment of dividends on our common stock will depend
on earnings, financial condition and other business and economic factors
affecting us at such time as our board of directors may consider relevant. If we
do not pay dividends, our common stock may be less valuable because a return on
your investment will only occur if our stock price appreciates.





There
is currently no liquid trading market for our common stock and we cannot ensure
that one will ever develop or be sustained.




To date
there has been no liquid trading market for our common stock. We cannot predict
how liquid the market for our common stock might become. Should trading of our
common stock be suspended from the OTC Bulletin Board, the trading price of our
common stock could suffer and the trading market for our common stock may be
less liquid and our common stock price may be subject to increased
volatility.




Furthermore,
for companies whose securities are quoted on the OTC Bulletin Board, it is more
difficult (1) to obtain accurate quotations, (2) to obtain coverage for
significant news events because major wire services generally do not publish
press releases about such companies, and (3) to obtain needed
capital.





Our
common stock maybe deemed a “penny stock,” which would make it more difficult
for our investors to sell their shares.





Our
common stock may be subject to the “penny stock” rules adopted under Section
15(g) of the Exchange Act. The penny stock rules generally apply to companies
whose common stock is not listed on The Nasdaq Stock Market or other national
securities exchange and trades at less than $4.00 per share, other than
companies that have had average revenue of at least $6,000,000 for the last
three years or that have tangible net worth of at least $5,000,000 ($2,000,000
if the company has been operating for three or more years). These rules require,
among other things, that brokers who trade penny stock to persons other than
“established customers” complete certain documentation, make suitability
inquiries of investors and provide investors with certain information concerning
trading in the security, including a risk disclosure document and quote
information under certain circumstances. Many brokers have decided not to trade
penny stocks because of the requirements of the penny stock rules and, as a
result, the number of broker-dealers willing to act as market makers in such
securities is limited. If we remain subject to the penny stock rules for any
significant period, it could have an adverse effect on the market, if any, for
our securities. If our securities are subject to the penny stock rules,
investors will find it more difficult to dispose of our securities.




16




Offers or availability for sale of a substantial number of
shares of our common stock may cause the price of our common stock to
decline.




If our
stockholders sell substantial amounts of our common stock in the public market,
including shares in the Private Placement upon the effectiveness of the
registration statement required to be filed, or upon the expiration of any
statutory holding period, under Rule 144, or upon expiration of lock­up
periods applicable to outstanding shares, or issued upon the exercise of
outstanding options or warrants, it could create a circumstance commonly
referred to as an “overhang” and in anticipation of which the market price of
our common stock could fall. The existence of an overhang, whether or not sales
have occurred or are occurring, also could make more difficult our ability to
raise additional financing through the sale of equity or equity-related
securities in the future at a time and price that we deem reasonable or
appropriate. The shares of our common stock issued to the current and former
officers and directors of IX Energy in the Merger will be subject to a lock-up
agreement prohibiting sales of such shares for a period of 15 months following
the Merger. Following such date, all of those shares will become freely
tradable, subject to securities laws and SEC regulations regarding sales by
insiders. In addition, the shares of our common stock sold in the Private
Placement and the shares underlying the warrants issued to the placement agents
in connection with the Private Placement will be freely tradable upon the
earlier of: (i) 
effectiveness of a registration statement covering such shares and (ii) the date
on which such shares may be sold without registration pursuant to Rule 144 (or
other applicable exemption) under the Securities Act. We note that recent
revisions to Rule 144 may result in shares of our common stock that we may issue
in the future becoming eligible for resale into the public market without
registration in as little as six months after their issuance.





We may apply the proceeds of the
Private Placement to uses that ultimately do not improve our
operating results or increase the price of our common stock.




We intend
to use the net proceeds from the Private Placement for costs and expenses
incurred in connection with the Private Placement and organizational matters, as
well as for general working capital purposes and repayment of outstanding
indebtedness. However, we do not have more specific plans for the net proceeds
from the Private Placement and our management has broad discretion in how we use
these proceeds. These proceeds could be applied in ways that do not ultimately
improve our operating results or otherwise increase the value of our common
stock.





Because our directors and executive
officers are among our largest stockholders, they can exert significant control over our business
and affairs and have actual or potential interests that may depart from those of
our other stockholders.




Our  directors and executive
officers own or control a significant percentage of our common stock.
Immediately following the Merger and the Private Placement, our directors and
executive officers and the nominees to serve on our board may be deemed
beneficially to own an aggregate of approximately 10,653,854  shares of our common
stock, representing 50.05% of the outstanding shares of our common stock.
Additionally, these figures do not reflect any increase in beneficial ownership
that such persons may experience in the future upon vesting or other maturation
of exercise rights under any of the options or warrants they may hold or in the
future be granted or if they otherwise acquire additional shares of our common
stock. The interests of such persons may differ from the interests of our other
stockholders. As a result, in addition to their board seats and offices, such
persons will have significant influence over and control all corporate actions
requiring stockholder approval, irrespective of how our other stockholders may
vote, including the following actions:





·
            to
      elector defeat the election of our
directors;


·
            to
      amend or prevent amendment of our Certificate of Incorporation or
      By-laws;


·
            to
      effect or prevent a merger, sale of assets or other corporate transaction;
      and


·
            to
      control the outcome of any other matter submitted to our stockholders for
      vote




Such
persons’ stock ownership may discourage a potential acquirer from making a
tender offer or otherwise attempting to obtain control of us, which in turn
could reduce our stock price or prevent our stockholders from realizing a
premium over our stock price.




17


ITEM
1B. UNRESOLVED STAFF COMMENTS





N/A





ITEM
2. PROPERTIES.





We lease
approximately 600 square feet of office space in New York, New York for $5,715
per month on a month-to-month basis. This facility serves as our corporate
headquarters.




We
believe that our current facilities are adequate for our immediate and near-term
needs. Additional space may be required as we expand our activities. We do not
currently foresee any significant difficulties in obtaining any required
additional facilities. In the opinion of the management, our property is
adequately covered by insurance.




We are
not dependent on a specific location for the operation of our
business.





ITEM
3. LEGAL PROCEEDINGS.





From time
to time we may be involved in claims arising in the ordinary course of business.
No legal proceedings are currently pending or, to our knowledge, threatened
against us or involve us that, in the opinion of our management, could
reasonably be expected to have a material adverse effect on our business and
financial condition.





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




None




18





PART
II




ITEM 5. MARKET FOR COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.





MARKET
INFORMATION





Our
common stock was initially quoted on the OTC Bulletin Board on September 5, 2008
under the symbol “YOOO”.  During the year ended December 31, 2008,
there was no trading activity.  On January 27, 2009, following our
name change to IX Energy Holdings, Inc., our common stock began trading under
the symbol “IXEH”.  The following table sets forth the quarterly high
and low bid information for our common stock for  the interim period
through March 27, 2009.





High
      Bid
            
            Low
      BidYear
      Ended December 31, 2008First
      Quarter (through March 27, 2009)
            
            $
            1.50
            
            $
            0.05





As of
March 27, 2009, we had 60,340,785 shares of common stock issued and
outstanding and approximately 90 stockholders of record of our common
stock.





Dividend
Policy





As of the
date of hereof, we have not paid any cash dividends to stockholders. The
declaration of any future cash dividend will be at the discretion of our Board
of Directors and will depend upon our earnings, if any, our capital requirements
and financial position, our general economic and other pertinent conditions. It
is our present intention not to pay any cash dividends in the foreseeable
future, but rather to reinvest earnings, if any, into our business.





Equity
Compensation Plan Information





As of
December 31, 2008, the Company had no compensation plans under which equity
securities were authorized for issuance.




RECENT
SALES OF UNREGISTERED SECURITIES





During
the year ended December 31, 2008, we accepted subscriptions for a total of 27.5
Units in the Private Placement or gross proceeds of $2,750,000, consisting of an
aggregate of 6,875,000 shares of the our common stock, par value $.0001 per
share, and three-year Warrants to purchase an aggregate of 6,875,000 shares of
common stock at an exercise price of $0.50 per share for a purchase price of
$100,000 per Unit pursuant to the terms of a Confidential Private Offering
Memorandum, dated August 22, 2008, as supplemented.




The
Private Placement was made solely to “accredited investors,” as that term is
defined in Regulation D under the Securities Act. The securities sold in the
Private Placement were not registered under the Securities Act, or the
securities laws of any state, and were offered and sold in reliance on the
exemption from registration afforded by Section 4(2) and Regulation ID (Rule
506) under the Securities Act and corresponding provisions of state securities
laws, which exempt transactions by an issuer not involving any public
offering.




We agreed
to pay the placement agents commissions of 8% of the aggregate purchase price of
units sold to investors in the Private Placement.  In addition,
certain placement agents also received three-year warrants to purchase such
number of shares of common stock equal to 4% of the common stock on which the
cash fee is payable, at an exercise price of $0.50 per share.




On
February 25, 2009, we accepted subscriptions for a total of 7.25 Units or
gross proceeds of $725,000, consisting of an aggregate of 1,812,500 shares of
the Company’s common stock, par value $.0001 per share, and three-year Warrants
to purchase an aggregate of 1,812,500 shares of common stock at an exercise
price of $0.50 per share for a purchase price of $100,000 per Unit pursuant to
the terms of a Confidential Private Offering Memorandum, dated August 22, 2008,
as supplemented.




19




The
Private Placement was made solely to “accredited investors,” as that term is
defined in Regulation D under the Securities Act. The securities sold in the
Private Placement were not registered under the Securities Act, or the
securities laws of any state, and were offered and sold in reliance on the
exemption from registration afforded by Section 4(2) and Regulation D (Rule 506)
under the Securities Act and corresponding provisions of state securities laws,
which exempt transactions by an issuer not involving any public
offering.




We agreed
to pay the placement agents commissions of 8% of the aggregate purchase price of
units sold to investors in the private placement.  In addition,
certain placement agents also received three-year warrants to purchase such
number of shares of common stock equal to 8% of the common stock sold to the
investors in the private placement, at an exercise price of $0.50 per
share.





ITEM
6. SELECTED FINANCIAL DATA





N/A





ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.





Forward-Looking
Statements





The
information in this report contains forward-looking statements. All statements
other than statements of historical fact made in this report are forward
looking. In particular, the statements herein regarding industry prospects and
future results of operations or financial position are forward-looking
statements. These forward-looking statements can be identified by the use of
words such as “believes,” “estimates,” “could,” “possibly,” “probably,”
anticipates,” “projects,” “expects,” “may,” “will,” or “should” or other
variations or similar words. No assurances can be given that the future results
anticipated by the forward-looking statements will be achieved. Forward-looking
statements reflect management’s current expectations and are inherently
uncertain. Our actual results may differ significantly from management’s
expectations.




The
following discussion and analysis should be read in conjunction with our
financial statements, included herewith. This discussion should not be construed
to imply that the results discussed herein will necessarily continue into the
future, or that any conclusion reached herein will necessarily be indicative of
actual operating results in the future. Such discussion represents only the best
present assessment of our management.





Recent
Events




Prior to
December 30, 2008, we were a development stage company that sought to market and
sell a natural energy drink derived from coconut water to distributors of soft
drinks in Israel.  On December 30, 2008, we completed a reverse
merger, pursuant to which we merged with and into a private company, IX Energy,
with IX Energy being the surviving company. In connection with this reverse
merger, we discontinued our former business and succeeded to the business of IX
Energy as our sole line of business. Since IX Energy acquired a controlling
voting interest, it was deemed the accounting acquirer, while we were deemed the
legal acquirer. The historical financial statements of the Company are those of
IX Energy and of the consolidated entities from the date of merger and
subsequent.





Overview




IX Energy
was incorporated in the State of Delaware on March 3, 2006 for the purpose of
designing, selling and installing high-performance solar electric power
technologies. Historically, our operations have principally involved the
integration and installation of solar power systems manufactured by third
parties. However, in an effort to become a vertically integrated solar products
and services company that manufactures, designs, markets and installs its own
solar power systems, we have recently entered into an agreement to manufacture
solar modules that will be marketed primarily to federal military and civilian
agencies.




Year
Ended December 31, 2008 Compared to the year ended December 31,
2007.




Revenues . During the year
ended December 31, 2008, we recorded revenues of approximately $10,832,000 as
compared to revenue of approximately $186,000 for the year ended December 31,
2007. Approximately $10,612,000 of the increase in revenues was primarily due to
the fulfillment of our UNICOR Government Agreement and sales to one commercial
customer to supply solar panels.  In 2007 we did not have any sales of
solar panels. The remaining increase of approximately $34,000 is related to our
construction in progress contracts as we completed more projects in 2008
compared to 2007.




20




Cost of Sales . During the
year ended December 31, 2008, we recorded cost of sales of approximately
$10,399,000 as compared to cost of sales of approximately $261,000 for the year
ended December 31, 2007. $10,235,000 approximately of this increase was related
to the sale of solar panels. The remaining decrease of $97,000 approximately of
cost of sales is related to our completion and ongoing construction in progress
contracts.




Our
margin on the resale of solar panels was approximately 4% for 2008. We expect
our margins to increase significantly going forward as we now have a more stable
arrangement with our suppliers.




Our
margin on our construction in progress contracts for 2008 was approximately 25%
as compared to a negative margin in 2007. We believe that our margin in 2008 is
representative of our contracts going forward.




Operating Expenses . During
the year ended December 31, 2008, we recorded operating expenses of
approximately $1,567,000, as compared to operating expenses of $26,000
approximately for the year ended December 31, 2007, representing an increase of
$1,541,000 approximately. This increase in operating expenses was primarily due
to increased hiring in 2008 for our management and administrative team, legal
and accounting expenses related to the reverse merger of our company into a
public shell.




Loss from Operations . During
the year ended December 31, 2008, we recorded an operating loss of approximately
$1,135,000, as compared to an operating loss of approximately $101,000 for the
year ended December 31, 2007, representing an increase of approximately
$1,034,000. This increase in loss from operations was primarily due to increased
operation expenses by $1,541,000 approximately that was partially offset by our
gross profit.




Provision for Income Taxes .
We did not recognize any provisions for income taxes during the year ended
December 31, 2008 and the year ended December 31, 2007 due to our net losses
during these periods and the valuation allowances on the resulting deferred tax
assets.





Liquidity
and Capital Resources




We have
historically met our liquidity requirements from a variety of sources, including
the sale of equity and debt securities to related parties and institutional
investors. Based on our strategy and the anticipated growth in our business, we
believe that our liquidity needs will increase. The amount of such increase will
depend on many factors, including building out our management team, the costs
associated with the fulfillment of our projects, whether we upgrade our
technology, and the amount of inventory required for our expanding
business.




Although
we recently raised an aggregate of $3.475 million in a private placement, our
ultimate success may depend upon our ability to raise additional capital. There
can be no assurance that additional funds will be available when needed from any
source or, if available, will be available on terms that are acceptable to
us.
  We may be
required to pursue sources of additional capital through various means,
including joint venture projects and debt or equity financings. Future
financings through equity investments are likely to be dilutive to existing
stockholders.
  Our
ability to obtain needed financing may be impaired by such factors as the
capital markets, both generally and specifically in the renewable energy
industry, and the fact that we are not profitable, which could impact the
availability or cost of future financings. If the amount of capital we are able
to raise from financing activities, together with our revenues from operations,
is not sufficient to satisfy our capital needs, even to the extent that we
reduce our operations accordingly, we may be required to cease
operations.
  Cash and
Cash Equivalents. As of December 31, 2008, we had cash and cash equivalents of
approximately $4,737,000, as compared to cash and cash equivalents of
approximately $176,000 as of December 31, 2007.




Net Cash
Provided By Operating Activities. Net cash provided by operating activities
totaled approximately $2,116,000 for the year ended December 31, 2008, as
compared to cash used of approximately $221,000 for the year ended December 31,
2007. This increase was primarily due to issuance of common stock for services
of approximately $153,000, accounts payable and accrued expenses of
approximately $518,000, cost and estimated earnings in excess of billings on
uncompleted contracts of approximately $50,000, an increase in accrued interest
payable to related party of $76,000 approximately and an increase in deferred
revenue of approximately $2,684,000. The increase in net cash provided by
operating activities was partially offset by our net loss of approximately
$1,357,000, estimated losses on uncompleted contracts of $20,000 approximately,
accounts receivable of approximately $2,000 and deposits for the purchase of
equipment and materials in the amount of $4,000. For the year ended
December 31, 2007, our net cash used in operating activities was comprised of
primarily net loss of approximately $102,000, accounts receivable of
approximately $82,000 and cost in excess of billings of approximately $57,000 on
uncompleted contracts. This was partially offset by estimated losses in excess
of billings on uncompleted contracts of approximately $20,000.




Net Cash
Used in Investing Activities. Net cash used in investing activities totaled
$1,371,000 approximately during the year ended December 31, 2008, as compared to
net cash used in investing activities of $35,000 approximately during the year
ended December 31, 2007. Cash used in investing activities during the year ended
December 31, 2008 was primarily comprised of forgiveness of debt that was due
from a related party of approximately $44,000 and the purchase of property and
equipment for approximately $1,334,000.  For the year ended December
31, 2007, our net cash used in investing activities was comprised of $35,000
approximately for the forgiveness of debt that was due from a related
party.




Net Cash
Provided By Financing Activities. Net cash provided by financing activities
totaled approximately $3,816,000 during the year ended December 31, 2008, as
compared to net cash provided by financing activities of approximately $433,000
during the year ended December 31, 2007. The proceeds for 2008 were derived from
the issuance of promissory notes to a related party and proceeds from a bridge
loan totaling approximately $1,438,000 that was partially offset by our
repayment of $250,000 of these notes.  In addition, we raised
$2,750,000 in a private placement and paid approximately $123,000 in expenses
related to the private placement. For the year ended December 31, 2007, our cash
provided by financing activities was comprised of proceeds from the sale of
common stock to a related party for approximately $248,000. In addition, we
received proceeds from notes totaling $235,000 that was partially offset by our
repayment of $50,000 of these notes.




21




Critical
Accounting Policies and Estimates


We
have identified the policies below as critical to our business operations and
the understanding of our results of operations. The impact and any associated
risks related to these policies on our business operations are disclosed
throughout this section where such policies affect our reported and expected
financial results. Our preparation of our financial statements requires us to
make estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of our
financial statements, and the reported amounts of revenues and expenses during
the reporting period. There can be no assurance that actual results will not
differ from those estimates.


Use of Estimates. The
preparation of financial statements in conformity with accounting principles
generally accepted in the U.S. 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 their reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.




Significant
estimates for the year ended December 31, 2008 and 2007 included management’s
estimate for recording costs and estimated earnings in excess of billings,
estimating the loss on uncompleted contracts in the period when known, and a
100% valuation allowance for deferred taxes due to the Company’s continuing and
expected future losses.




Cash and Cash Equivalents.
For the purpose of reporting cash flows, we consider all highly liquid debt
instruments purchased with original maturities of three months or less to be
cash equivalents. The Company minimizes its credit risk associated with cash by
periodically evaluating the credit quality of its primary financial institution.
The balance at times may exceed federally insured limits. At December 31, 2008
and 2007, the balance exceeded the federally insured limit by $4,249,256 and
$76,160, respectively.




Accounts Receivable.Accounts
receivable represents trade obligations from customers that are subject to
normal trade collection terms, without discounts, however, in certain cases we
are entitled to rebates upon the completion of certain jobs post installation.
The Company periodically evaluates the collectability of its accounts receivable
and considers the need to adjust an allowance for doubtful accounts based upon
historical collection experience and specific customer information. Actual
amounts could vary from the recorded estimates. We have determined that as of
December 31, 2008 and 2007 no allowance was required.




At both
December 31, 2008 and 2007, the Company had a concentration of accounts
receivable from one customer totaling 100%.  For the year ended
December 31, 2008, the Company had a concentration of sales with two customers
totaling 46% and 43%, respectively.  For the year ended December 31,
2007, the Company had a concentration of sales with two customers totaling 75%
and 25%.




Revenue Recognition. We
follow the guidance of the Securities and Exchange Commission's Staff Accounting
Bulletin ("SAB") No. 104, "Revenue Recognition" ("SAB 104") for revenue
recognition and we record revenue when all of the following have occurred: (1)
persuasive evidence of an arrangement exists, (2) the product is delivered and
installed, (3) the sales price to the customer is fixed or determinable and (4)
collectability of the related customer receivable is reasonably assured. We have
two methods of revenue recognition. For our construction contracts, we record
revenues based upon the use of the percentage of completion method. For certain
energy products that we resell to third parties, we record revenue based upon
the shipment date.




Share-Based Compensation.We
follow Statement of Financial Accounting Standards (“SFAS”) No. 123R (revised
2004), “Share-Based
Payment,” (“SFAS
123R”) which requires the measurement and recognition of compensation
expense for all share-based payment awards made to employees and directors
including grants of employee stock options based on estimated fair values. We
have used the Black-Scholes option pricing model to estimate grant date fair
value for all option grants.  The assumptions we use in calculating
the fair value of share-based payment awards represent management’s best
estimates, but these estimates involve inherent uncertainties and the
application of management judgment. As such, as we use different assumptions
based on a change in factors, our stock-based compensation expense could be
materially different in the future.




Income Taxes.Significant
management judgment is required in developing the provision for income taxes,
including the determination of foreign tax liabilities, deferred tax assets and
liabilities and any valuation allowances that might be required against the
deferred tax assets. Our management evaluates our ability to realize our
deferred tax assets on a quarterly basis and adjusts our valuation allowance
when we believe that it is more likely than not that the asset will
not be realized. We follow SFAS No. 109, “Accounting for Income Taxes”
(“SFAS No.
109”).




Under
SFAS No. 109, deferred tax assets and liabilities are recognized for the future
tax consequences attributed to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases.  Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.  The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment
date.  If it is more likely than not that some portion of a deferred
tax asset will not be realized, a valuation allowance is recognized. In June
2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation
No. 48, “Accounting for
Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109”
(“FIN 48”). FIN 48
addresses the accounting and disclosure of uncertain tax positions. FIN 48
prescribes a recognition threshold and measurement attribute for the financial
statement recognition and measurement of a tax position taken or expected to be
taken. We adopted FIN 48 on January 1, 2007 as required, and determined that the
adoption of FIN 48 did not have a material impact on our consolidated
financial position and results of operations.  At December 31, 2008
and 2007, the Company did not record any liabilities for uncertain tax
positions.


ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





N/A





ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.





All
financial information required by this Item is attached hereto at the end of
this report beginning on page F-1 and is hereby incorporated by reference.




ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.





On
January 22, 2009, the board of directors of IX Energy Holdings, Inc. (the
“Company”) dismissed Weinberg & Associates LLC (“Weinberg”) as the Company’s
independent registered public accounting firm.




During
the fiscal year ended December 31, 2007, and any subsequent period through
January 29, 2009, (i) there were no disagreements between the Company and
Weinberg on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure which, if not resolved to
the satisfaction of Weinberg would have caused Weinberg to make reference to the
matter in its reports on the Company's financial statements, and (ii) Except as
described below, Weinberg’s reports on the Company's financial statements did
not contain an adverse opinion or disclaimer of opinion, and was not modified as
to uncertainty, audit scope or accounting principles. Weinberg’s audit report
for the year ended December 31, 2007 stated that several factors raised
substantial doubt about the Company’s ability to continue as a going concern and
that the financial statements do not include any adjustments that might result
from the outcome of this uncertainty.  During the fiscal year ended
December 31, 2007 and through January 29, 2009, there were no reportable events
as the term described in Item 304(a)(1)(iv) of Regulation S-K.




22




On
January 29, 2009, the Company provided Weinberg with a copy of the disclosures
it is making in response to Item 4.01 on this Form 8-K, and has requested that
Weinberg furnish it with a letter addressed to the Securities and Exchange
Commission stating whether it agrees with the above statements.  A copy of
the letter, dated January 29, 2009, is filed as Exhibit 16.1 (which is
incorporated by reference herein) to this Current Report on Form
8-K.




On
January 22, 2009, the Company engaged Berman & Company, P.A. (“Berman”) as
its independent registered public accounting firm for the Company’s fiscal year
ended December 31, 2008. The change in the Company’s independent registered
public accounting firm was approved by the Company’s Board of Directors on
January 22, 2009.




During
the year ended December 31, 2007 and any subsequent period through January 22,
2009, the Company did not consult with Berman regarding either (i) the
application of accounting principles to a specific completed or contemplated
transaction, or the type of audit opinion that might be rendered on the
Company’s financial statements or (ii) any matter that was either the subject of
a disagreement or event identified in response to (a)(1)(iv) of Item 304 of
Regulation S-K.





ITEM
9(T). CONTROLS AND PROCEDURES.





Evaluation of Disclosure Controls
and Procedures. Under the supervision and
with  the  participation  of  our  management,  including  our
President,  Chief Financial
Officer  and  Secretary,  we  evaluated  the  effectiveness  of
the design and operation  of
our  disclosure  controls  and  procedures  (as  defined  in  Rule
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange
Act")) as of the end of the  period  covered  by
this  report.  Based  upon that
evaluation,  our  President,  Chief Financial
Officer and Secretary  concluded  that our
disclosure  controls and  procedures as of the end of the
period covered by this report were effective such that
the  information  required to be disclosed by us in
reports  filed under
the  Securities  Exchange  Act of 1934 is
(i)  recorded, processed,  summarized  and
reported  within the time  periods  specified in
the SEC's rules and forms and (ii)  accumulated
and  communicated to our management to allow timely
decisions  regarding  disclosure.  A
controls  system  cannot  provide  absolute
assurance,  however,  that the objectives of the controls
system are met, and no evaluation of controls can
provide  absolute  assurance  that all control
issues
and  instances  of  fraud,   if  any,  within  a  company  have  been  detected.




Management's  Annual
Report on Internal  Control over
Financial  Reporting. Our management is responsible for
establishing and maintaining adequate internal control over financial reporting
(as defined in Rule 13a-15(f)  under the
Exchange  Act).  Our internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external  purposes of accounting principles generally accepted in
the United States.




Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be
effective can provide only reasonable  assurance of achieving their
control objectives.




Our
management evaluated the effectiveness of our internal control over financial
reporting as of December 31, 2008.  In making this assessment, our
management used the COSO framework, an integrated  framework for the
evaluation of internal controls issued by the Committee of
Sponsoring  Organizations of the Treadway Commission.  Based
on this evaluation, our management concluded that, as of December 31, 2008, our
internal control over financial reporting was effective.




This
annual report does not include an attestation report of our registered
public  accounting  firm
regarding  internal  control over financial
reporting.  Management's  report was not subject to
attestation by our registered  public accounting firm pursuant to
temporary rules of the SEC  that permit the company to
provide  only  management's report in this annual
report.




Changes
in  Internal  Control  Over  Financial  Reporting.  During
the most recent quarter ended December 31, 2008, there has been no change in our
internal control over  financial  reporting  (as
defined in Rule  13a-15(f) and 15d-15(f) under the Exchange Act) )
that has materially affected,  or is reasonably likely to materially
affect, our internal control over financial reporting.





ITEM
9B. OTHER INFORMATION.




None.




23





PART
III





ITEM 10. DIRECTORS, EXECUTIVE
OFFICERS AND CORPORATE GOVERNANCE.





EXECUTIVE
OFFICERS, DIRECTORS AND KEY EMPLOYEES





The
following table sets forth the names and ages of the members of our Board of
Directors and our executive officers and the positions held by each as of March
30, 2009. There are no family relationships among any of our Directors and
Executive Officers.





Name
            Age
            PositionSteven
      Hoffmann
            33
            Chief
      Executive Officer, Chief Financial Officerand
      DirectorKaren
      Morgan
            48
            PresidentRobert
      Lynch, Jr.
            76
            Director





Executive
Biographies





Steven Hoffmann, Chief Executive Officer,
Chief Financial Officer and Director. Steven  Hoffmann was appointed
as our Chief Executive Officer, Chief Financial Officer and as a director on
December 30, 2008.  He founded IX Energy in 2006 and has served as its
Chief Executive Officer and Chairman since inception. He has served as IX
Energy’s Chief Financial Officer since November 2008. From 2004 until 2006, Mr.
Hoffmann served as the east coast regional sales manager of Solar Integrated
Technologies, Inc., a designer, manufacturer, marketer and installer of solar
roofing and power generation systems. From 2002 until 2004, Mr. Hoffmann was a
sales manager with Turtle & Hughes Inc., a distributor of electrical and
industrial equipment. Additionally, Mr. Hoffmann’s family has been a leading
provider of institutional steam power and heating generation systems for
primarily East Coast companies and institutions for the last thirty years. Mr.
Hoffmann has had ten years experience with the institutional production,
manufacturing, marketing and sales of these systems.




Karen Morgan, President. Karen
Morgan was appointed as President of the Company on February 9,
2009.  Prior to joining the Company, Ms. Morgan served as President of
Envision Solar International, Inc. from October 2007 through December
2008.  In addition, Ms. Morgan was a founding member of Generating
Assets, LLC, a solar project finance company established in September
2006.  She was a member of Generating Assets from September 2006
through October 2007.  She also served as a managing member of
GlobalNet Partners, an international advisory and consulting firm from 2000
through 2006. While at GlobalNet, Ms. Morgan led its energy solutions
subsidiary which focused on energy efficiency and renewable energy
solutions.




Robert Lynch, Jr.,
Director.  Robert Lynch was appointed to our board of directors
on February 5, 2009.  Mr. Lynch served as a Director of IX
Energy, Inc. from May 2007 through December 2008. Mr. Lynch has been President
of American & Foreign Enterprises, Inc. (“AFE”), an investment firm, for the
last 20 years. Among its many enterprises, AFE is partnered with Hochtief AG and
has worked with international investment banks including Goldman Sachs &
Co., BV Bank of Munich and Citibank. Mr. Lynch is 76 years old.  Mr.
Lynch has been a director of many public companies in various industries,
including AMASYS, Dames & Moore (environmental/geotechnical engineering),
Data Broadcasting Corporation (real-time financial market data) and Turner
Construction Company. Mr. Lynch currently serves as a director of Comtex News
Network, Inc., a leading provider of business-related electronic real time news,
content and SmarTrend® market products.





Board
of Directors





Our
Directors are elected by the vote of a majority in interest of the holders of
our voting stock and hold office until the expiration of the term for which he
or she was elected and until a successor has been elected and
qualified.




A
majority of the authorized number of directors constitutes a quorum of the Board
for the transaction of business. The directors must be present at the meeting to
constitute a quorum. However, any action required or permitted to be taken by
the Board may be taken without a meeting if all members of the Board
individually or collectively consent in writing to the action.




Directors
may receive compensation for their services and reimbursement for their expenses
as shall be determined from time to time by resolution of the Board. Each of our
directors currently receives no cash compensation for their service on the Board
of Directors, but do receive a small amount of stock options.




Audit
Committee





We do not
have a separately designated standing audit committee.





Code
of Ethics





We have
not adopted a formal Code of Business Conduct and Ethics.




24


ITEM
11. EXECUTIVE COMPENSATION.




The
following table sets forth all compensation earned in respect of our Chief
Executive Officer and those individuals who received compensation in excess of
$100,000 per year, collectively referred to as the named executive officers, for
our last three completed fiscal years.




Summary
Compensation Table




Name & Principal
              Position
            
            Year
            
            Salary
              ($)
            
            Bonus
              ($)
            
            Stock
              Awards
              ($)
            
            Option
              Awards
              ($)
            
            Non-Equity
              Incentive Plan
              Compensation
              ($)
            
            Change in Pension
              Value and Non-
              Qualified Deferred
              Compensation
              Earnings ($)
            
            AllOther
              Compensation
              ($)
            
            Total
              ($)Steven
      Hoffmann,
            
            
            2008
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0CEO,
            
            
            2007
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0CFO
      and Director (1)
            
            
            2006
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0Roland
      J. Bopp,
            
            
            2008
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0President,
            
            
            2007
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0COO
      (2)
            
            
            2006
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0Zvi
      Pessahc Frank
            
            
            2008
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0President
      (3)
            
            
            2007
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            02006
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0
            
            0
            
            
            0





(1)
            Mr.
      Hoffmann was appointed as our Chief Executive Officer, Chief Financial
      Officer and as a Director on December 30,
2008.


(2)
            Mr.
      Bopp was appointed as our President on December 30,
      2008.  Effective January 31, 2009, Mr. Bopp is no longer serving
      as the Company’s President and Chief Operating
  Officer.


(3)
            Mr.
      Frank resigned as the Company’s President effective December 30,
      2008.





Employment
Agreements with Executive Officers





On May 1,
2008, the Company’s now wholly-owned subsidiary, IX Energy, Inc. entered into an
employment agreement with Steven Hoffmann, pursuant  to which Mr.
Hoffmann agreed to serve as Chief Executive Officer of IX Energy,
Inc.  Mr. Hoffmann’s employment agreement is for a term of 2
years.  Pursuant to his employment agreement, Mr. Hoffmann is entitled
to an annual base salary of $225,000.  In addition, Mr. Hoffmann was
entitled to receive compensation of $80,000 as a bonus and expenses for 2008
upon the Company’s sale of debt and/or equity securities in one or more
transactions that result in gross proceeds to the Company of at least $2.5
million.  Mr. Hoffmann is also entitled to an annual bonus in an
amount to be determined by the Company’s compensation committee or by the
independent members of the Company’s board of directors, if no such committee
exists.  Pursuant to his employment agreement, Mr. Hoffmann is also
eligible to participate in incentive, saving, retirement and other welfare
benefit plans of the Company.  In addition, Mr. Hoffmann is entitled
to receive a multi-year grant of non-qualified stock options in an amount equal
to 6% of the total common shares of the Company following the reverse merger,
vesting at a rate of 1/3 per year commencing on May 1, 2008.




On
February 12, 2009, the Company entered into an employment agreement with Karen
Morgan, pursuant to which Ms. Morgan agreed to serve as the Company’s
President.  Ms. Morgan’s employment agreement is for a term of 3
years.  Pursuant to her employment agreement, Ms. Morgan is entitled
to an annual base salary of $200,000.  Ms. Morgan also received a
sign-on bonus of $25,000. The Company issued 50,000 shares of common
stock, having a fair value of $75,000 ($1.50/share) based on the closing price
on that day. Ms. Morgan will earn 100,000 shares of common stock 120 days
from the employment date.  Ms. Morgan is also eligible for an annual
bonus in an amount of up to 100% of her annual base salary.  The Chief
Executive Officer of the Company shall recommend such bonus amount to the
Company’s compensation committee, or by the independent members of the Company’s
board of directors, if no such committee exists, for
approval.  Pursuant to her employment agreement, Ms. Morgan may also
be eligible for additional performance bonuses for transactions relating to
business growth and capital raising efforts.  Requests for such bonus
amounts shall be submitted to the Chief Executive Officer for submission to the
Company’s compensation committee or its independent directors, if no such
committee exists, for approval.  Ms. Morgan is also entitled to
reimbursement for all reasonable and ordinary and necessary travel and
entertainment expenses.  She is also entitled to be reimbursed for
travel in her own personal vehicle and use of a vehicle of the Company for any
business related travel.  Pursuant to her employment agreement, Ms.
Morgan is also eligible to participate in incentive, saving, retirement and
other welfare benefit plans of the Company.  In addition, Ms. Morgan
is entitled to receive options to purchase an aggregate of 2,500,000 shares of
the Company’s common stock, vesting quarterly for a term of 10
years.  Under the terms of the Plan, these stock options are subject
to board approval, which is expected during the second quarter of 2009. Ms.
Morgan is also eligible to receive grants or awards under the Company’s 2009
Incentive Stock Plan as the compensation committee or the Company’s independent
directors, if such committee does not exist, may from time to time
determine.




25




OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END




During
the year ended  December 31, 2008, there were no grants of options to
purchase shares of common stock of the Company.




Director
Compensation





The
directors of the Company did not receive any compensation during the fiscal year
ended December 31, 2008.





ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.





SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





The
following table sets forth certain information, as of March 27, 2009 with
respect to the beneficial ownership of the outstanding common stock by (i) any
holder of more than five (5%) percent; (ii) each of our executive officers and
directors; and (iii) our directors and executive officers as a group. Except as
otherwise indicated, each of the stockholders listed below has sole voting and
investment power over the shares beneficially owned.





Name
      of
              Beneficial
      Owner (1)
            
            Number
      of Shares
              Beneficially
      Owned (2)
            
            
            Percentage
      of Common Stock Beneficially Owned (2)Directors
      and Executive Officers:Steven
      Hoffmann (3)
            
            21,901,705
      (6)
            
            
            35.69%Karen
      Morgan (4)
            
            0
      (8)
            
            
            *Robert  Lynch,
      Jr.(5)
            
            0
            
            
            *All
      Executive Officers and
              Directors
      as a Group (3 persons)
            
            21,901,705
            
            
            35.69%Beneficial
      owners of more than 5%Scott
      Schlesinger
              218
      Hudson Street
              Hoboken,
      NJ 07030
            
            8,410,409
            
            
            13.70%Robert
      Prag
              3455
      El Amigo Road
              Del
      Mar, CA 92014
            
            5,179,063
            
            
            8.44%Barry
      Honig
              595
      S Federal Hwy Ste 600
              Boca
      Raton, FL 33432-5542
            
            3,655,812
      (7)
            
            
            5.96%Semper
      Gastion S.A
              5,
      rue Pedro-Meylan
              Geneva,
      Switzerland 1208
            
            3,250,000
            
            
            5.30%


* Less
than 1%


(1)
            Except
      as otherwise indicated, the address of each beneficial owner is c/o IX
      Energy Holdings,  Inc., 711 Third Ave., New York, NY
      10017(2)
            Beneficial
      ownership is determined in accordance with the rules of the Securities and
      Exchange Commission and generally includes voting or investment power with
      respect to the shares shown. Except where indicated by footnote and
      subject to community property laws where applicable, the persons named in
      the table have sole voting and investment power with respect to all shares
      of voting securities shown as beneficially owned by
  them.(3)
            Mr.
      Hoffmann was appointed as our Chief Executive Officer, Chief Financial
      Officer and as a director on December 30, 2008.(4)
            Ms.
      Morgan was appointed as President of the Company on February 9,
      2009.(5)
            Mr.
      Lynch was appointed as a Director of the Company on February 5,
      2009.(6)
            Includes
      (i) 20,868,639 shares of common stock and (ii) options to purchase
      1,033,066 shares of common stock.(7)
            Includes
      (i) 1,015,495 shares held by Mr. Honig and (ii) 2,640,317 shares held by
      GRQ Consultants Inc. 401(k), an entity over which Mr. Honig
      has voting and dispositive control.(8)
            Ms.
      Morgan's options to purchase 2,500,000 shares of common stock have not yet
      been approved by the Board.




26


ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE





Board Determination of
Independence




Our board
of directors has determined that Robert Lynch, Jr. cannot be deemed
“independent” as that term is defined by the National Association of Securities
Dealers Automated Quotations (“NASDAQ”) as he received compensation for
consulting services for the year ended December 31, 2008 and that Steven
Hoffmann cannot be deemed “independent” in light of his employment as our Chief
Executive Officer and Chief Financial Officer.





ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.




Audit
Fees




The
aggregate fees billed by our principal accountant for the audit of our annual
financial statements, review of financial statements included in the quarterly
reports and other fees that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for the fiscal
years ended December 31, 2008 and 2007 were $75,478 and $0,
respectively.




Tax
Fees




The
aggregate fees billed for professional services rendered by our principal
accountant for tax compliance, tax advice and tax planning for the fiscal years
ended December 31, 2008 and 2007 were $0 and $0, respectively. These fees
related to the preparation of federal income and state franchise tax
returns.





Policy
on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Auditors





The
Company currently does not have a designated Audit Committee, and accordingly,
the Company’s Board of Directors’ policy is to pre-approve all audit and
permissible non-audit services provided by the independent auditors. These
services may include audit services, audit-related services, tax services and
other services. Pre-approval is generally provided for up to one year and any
pre-approval is detailed as to the particular service or category of services
and is generally subject to a specific budget. The independent auditors and
management are required to periodically report to the Company’s Board of
Directors regarding the extent of services provided by the independent auditors
in accordance with this pre-approval, and the fees for the services performed to
date. The Board of Directors  may also pre-approve particular services
on a case-by-case basis.





27


ITEM
15. EXHIBITS.




Exhibit
              Number
            Description
      of Exhibit2.1
            Agreement
      of Merger and Plan of Reorganization, dated as of December 30, 2008, by
      and among IX Energy Holdings, Inc., IX Acquisition Corp. and IX Energy,
      Inc (Incorporated by reference to the Registrant’s Form 8-K filed on
      January 6, 2009).3.1
            Amended
      and Restated By-laws (Incorporated by reference to the Registrant’s Form
      8-K filed on January 6, 2009).


10.1
            Form
      of Subscription Agreement (Incorporated by reference to the Registrant’s
      Form 8-K filed on January 6, 2009).10.2
            Form
      of Warrant (Incorporated by reference to the Registrant’s Form 8-K filed
      on January 6, 2009).10.3
            Form
      of Placement Agent Warrant (Incorporated by reference to the Registrant’s
      Form 8-K filed on January 6, 2009).10.4
            Form
      of Registration Rights Agreement (Incorporated by reference to the
      Registrant’s Form 8-K filed on January 6, 2009).10.5
            Form
      of Management Lock-Up Agreement (Incorporated by reference to the
      Registrant’s Form 8-K filed on January 6, 2009).10.7
            Form
      of Directors and Officers Indemnification
  Agreement10.8
            Employment
      Agreement, dated May 1, 2008, by and between IX Energy, Inc. and Steven
      Hoffmann (Incorporated by reference to the Registrant’s Form 8-K filed on
      January 6, 2009).10.9
            Employment
      Agreement, dated August 1, 2008, by and between IX Energy, Inc. and Roland.Bopp.
      (To be filed by
Amendment)


10.10
            Stock
      Purchase Agreement, dated as of August, 2008 among IX Energy Holdings,
      Inc. and the Buyers set forth therein. (To be filed by Amendment to the
      Registrant's Form 8-K filed on January 6, 2009)10.11
            Securities
      Purchase Agreement, dated as of July 1,2008, between IX Energy, Inc. and
      each purchaser of 5% Promissory Notes of IX Energy,
      Inc.10.12
            Form
      of 5% Promissory Notes of IX Energy, Inc. (Incorporated by reference to
      the Registrant’s Form 8-K filed on January 6, 2009).10.13
            Promissory
      Note issued to Scott Schlesinger, dated November 1, 2007 (To be filed by
      Amendment to the Registrant's Form 8-K filed on January 6,
      2009)10.14
            Promissory
      Note, dated November 1, 2007, issued by IX Energy, Inc. to Scott
      Schlesinger in the principal sum of $3,000 (Incorporated by reference to
      the Registrant’s Form 8-K filed on January 6, 2009).10.15
            Promissory
      Note, dated December 30, 2007, issued by IX Energy, Inc. to Scott
      Schlesinger in the principal sum of $110,000(Incorporated by reference to
      the Registrant’s Form 8-K filed on January 6, 2009).10.16
            Promissory
      Note, dated December 30, 2007, issued by IX Energy, Inc. to Scott
      Schlesinger in the principal sum of $110,000(Incorporated by reference to
      the Registrant’s Form 8-K filed on January 6, 2009).10.17
            Promissory
      Note, dated July 21, 2008, issued by IX Energy, Inc. to IX Energy
      Investment, LLC in   the principal sum of $900,000 (Incorporated by
      reference to the Registrant’s Form 8-K filed on January 6,
      2009).10.18
            Teaming
      Agreement, dated February 14, 2008, between Federal Prison Industries,
      Inc. and IX Energy(Incorporated by reference to the Registrant’s Form 8-K
      filed on January 6, 2009).10.19
            Solar
      Panel Manufacture Agreement, dated June 19, 2008, between Federal Prison
      Industries, Inc. and IX Energy, Inc. (Incorporated by reference to the
      Registrant’s Form 8-K filed on January 6, 2009).10.20
            OEM
      Supply Agreement, dated June 24, 2008, between Tynsolar Corporation and IX
      Energy, Inc. (Incorporated by reference to the Registrant’s Form 8-K filed
      on January 6, 2009).




28


SIGNATURES




In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.




IX
      ENERGY HOLDINGS INC.March 31,
    2009
            By:
            /s/
      Steven HoffmannSteven
      Hoffmann
              Chief
      Executive Officer, Chief Financial Officer and
    Director




In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.





SIGNATURE
            
            TITLE
            
            DATE/s/
      Steven Hoffmann
            
            Chief
      Executive Officer, Chief Financial Officer and
            
            March
      31, 2009Steven
      Hoffmann
            
            Director/s/
      Robert Lynch, Jr.
            
            Director
            
            March
      31, 2009Robert
      Lynch, Jr.





29


IX
ENERGY HOLDINGS, INC.




INDEX
TO FINANCIAL STATEMENTS







Page(s)Report
      of Independent Registered Public Accounting Firm
            F-1Financial
      Statements:Balance
      Sheets as of December 31, 2008 (Consolidated) and 2007
            F-2Statements
      of Operations For the Years Ended December 31, 2008 (Consolidated) and
      2007
            F-3Statements
      of Changes in Stockholders' Equity For the Years EndedDecember
      31, 2008 (Consolidated) and 2007
            F-4Statements
      of Cash Flows For the Years Ended December 31, 2008 (Consolidated) and
      2007
            F-5Notes
      to Financial Statements For the Years Ended December 31, 2008
      (Consolidated)and
      2007
            F-6 – F-19




30




REPORT
OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTINGFIRM
  To the
Board of Directors and Stockholders of:
 IXEnergy Holdings, Inc.
  We have
audited the accompanying balance sheets of IX Energy Holdings, Inc. and
Subsidiaries as of December
31, 2008 (consolidated) and 2007,and the related statements of operations, changes in stockholders'
equity and cash flows for the years then ended. These financial statements are
the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial
statements based on our audits.
  We
conducted our audits inaccordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audits to
obtain reasonable assurance
about whether the financial statements are free of material misstatement. The
Company isnot required
to have, nor were we engaged to perform, an audit of its internal control over
financial reporting.
Our audits included consideration of internal control over financial reporting
as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing
an opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly,
we express no such opinion. An audit includes examining, on a test basis,
evidence supporting
theamounts and disclosuresin the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, aswell as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
  In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial
position of IXEnergy Holdings, Inc. and Subsidiaries as of December 31, 2008
(consolidated) and 2007
and the results of its operations and its cash flows for the years then ended,
in conformity with accounting
principles generally accepted in the United States of America.
   Berman&Company,P.A.
 Signature
 Boca
Raton, Florida
 March 20,
2009


F-1


IX
Energy Holdings, Inc. and Subsidiary
 Balance
Sheets
 December 31, 2008
(Consolidated) and 2007


2008
              
              
              2007AssetsAssetsCash
      and cash equivalents
              
              $
              4,736,812
              
              
              $
              176,160Accounts
      receivable (including retainage of $0 and $8,210 in 2008 and
      2007)
              
              
              84,420
              
              
              
              82,100Costs
      and estimated earnings in excess of billings on uncompleted
      contracts
              
              
              6,974
              
              
              
              57,340Deposits
              
              
              4,000
              
              
              
              -Total
      Current Assets
              
              
              4,832,206
              
              
              
              315,600Property
      and equipment, net of accumulated depreciation of $2,505 and $0 in 2008
      and 2007
              
              
              1,331,787
              
              
              
              -Debt
      issue costs, net of accumulated amortization of $3,893 and $0 in 2008 and
      2007
              
              
              4,170
              
              
              
              -Total
      Assets
              
              $
              6,168,163
              
              
              $
              315,600Liabilities and
      Stockholders’ EquityLiabilitiesAccounts
      payable and accrued expenses
              
              $
              525,994
              
              
              $
              -Notes
      payable - related party
              
              
              873,000
              
              
              
              184,748Notes
      payable - other
              
              
              500,000
              
              
              
              -Accrued
      interest payable - related party
              
              
              76,217
              
              
              
              61Accrued
      interest payable - other
              
              
              12,071
              
              
              
              -Deferred
      revenue
              
              
              2,683,833
              
              
              
              -Estimated
      losses on uncompleted contracts
              
              
              -
              
              
              
              20,172Total
      Current Liabilities
              
              
              4,671,115
              
              
              
              204,981Stockholders’
      EquityCommon
      stock, $0.0001 par value, 100,000,000 shares authorized,58,528,285
      and 41,635,688 shares issued and outstanding
              
              
              5,853
              
              
              
              4,164Additional
      paid in capital
              
              
              2,962,960
              
              
              
              220,728Accumulated
      deficit
              
              
              (1,471,765
              )
              
              
              (114,273
              )Total
      Stockholders’ Equity
              
              
              1,497,048
              
              
              
              110,619Total
      Liabilities and Stockholders’ Equity
              
              $
              6,168,163
              
              
              $
              315,600




See
accompanying notes to financial statements




F-2




IX
Energy Holdings, Inc. and Subsidiary


Statements
of Operations
 For the Years Ended December
31, 2008 (Consolidated) and 2007


2008
            
            
            2007Revenues
      - solar panels
            
            $
            10,612,270
            
            
            $
            -Revenues
      - construction contracts
            
            
            219,256
            
            
            
            185,940Total
      revenues
            
            
            10,831,526
            
            
            
            185,940Cost
      of revenues - solar panels
            
            
            10,235,171
            
            
            
            -Cost
      of revenues - construction contracts
            
            
            164,279
            
            
            
            260,740Total
      cost of revenues
            
            
            10,399,450
            
            
            
            260,740Gross
      profit (loss)
            
            
            432,076
            
            
            
            (74,800
            )Operating
      expensesGeneral
      and administrative
            
            
            1,567,352
            
            
            
            25,897Total
      operating expenses
            
            
            1,567,352
            
            
            
            25,897Loss
      from operations
            
            
            (1,135,276
            )
            
            
            (100,697
            )Other
      income (expense)Interest
      income
            
            
            42,348
            
            
            
            -Interest
      expense
            
            
            (107,743
            )
            
            
            (1,576
            )Transaction
      loss
            
            
            (35,875
            )
            
            
            -Letter
      of credit fee - stockholders
            
            
            (120,946
            )
            
            
            -Total
      other expense - net
            
            
            (222,216
            )
            
            
            (1,576
            )Net
      loss
            
            $
            (1,357,492
            )
            
            $
            (102,273
            )Net
      Loss per Share - Basic and Diluted
            
            $
            (0.03
            )
            
            $
            -Weighted
      Average Number of Shares OutstandingDuring
      the Year - Basic and Diluted
            
            
            43,911,325
            
            
            
            37,141,315




See accompanying notes to
financial statements





F-3





IX
Energy Holdings, Inc. and Subsidiary
 Statements
of Changes in Stockholders' Equity
 For the Years Ended December
31, 2008 (Consolidated) and 2007







TotalCommon
      Stock, $0.0001 Par Value
            
            
            Additional
            
            
            Accumulated
            
            
            Stockholders'Shares
            
            
            Amount
            
            
            Paid
      in Capital
            
            
            Deficit
            
            
            EquityBalance,
      December 31, 2006
            
            
            33,308,550
            
            
            $
            3,331
            
            
            $
            8,669
            
            
            $
            (12,000
            )
            
            $
            -Common
      stock issued for cash ($0.08/share)
            
            
            8,327,138
            
            
            
            833
            
            
            
            247,107
            
            
            
            -
            
            
            
            247,940Forgiveness
      of amounts due from affiliate
            
            
            -
            
            
            
            -
            
            
            
            (35,048
            )
            
            
            -
            
            
            
            (35,048
            )Net
      loss for the year ended December 31, 2007
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (102,273
            )
            
            
            (102,273
            )Balance,
      December 31, 2007
            
            
            41,635,688
            
            
            
            4,164
            
            
            
            220,728
            
            
            
            (114,273
            )
            
            
            110,619Common
      stock issued for loan fee - stockholders ($0.03/share)
            
            
            4,332,818
            
            
            
            433
            
            
            
            128,576
            
            
            
            -
            
            
            
            129,009Common
      stock issued for consulting services - related parties
      ($0.17/share)
            
            
            144,201
            
            
            
            14
            
            
            
            24,965
            
            
            
            -
            
            
            
            24,979Common
      stock issued for officer's compensation ($0.16/share)
            
            
            40,578
            
            
            
            4
            
            
            
            6,663
            
            
            
            -
            
            
            
            6,667Forgiveness
      of amounts due from affiliate
            
            
            -
            
            
            
            -
            
            
            
            (44,325
            )
            
            
            -
            
            
            
            (44,325
            )Deemed
      issuance in recapitalization
            
            
            5,500,000
            
            
            
            550
            
            
            
            (424
            )
            
            
            -
            
            
            
            126Common
      stock issued for cash in private placement ($0.40/share)
            
            
            6,875,000
            
            
            
            688
            
            
            
            2,749,312
            
            
            
            -
            
            
            
            2,750,000Cash
      paid as direct offering costs
            
            
            -
            
            
            
            -
            
            
            
            (122,535
            )
            
            
            -
            
            
            
            (122,535
            )Net
      loss for the year ended December 31, 2008
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (1,357,492
            )
            
            
            (1,357,492
            )Balance,
      December 31, 2008
            
            
            58,528,285
            
            
            $
            5,853
            
            
            $
            2,962,960
            
            
            $
            (1,471,765
            )
            
            $
            1,497,048




See accompanying notes to
financial statements





F-4


IX
Energy Holdings, Inc. and Subsidiary
 Statements
of Cash Flows
 For the Years Ended December
31, 2008 (Consolidated) and 2007





2008
            
            
            2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
            
            $
            (1,357,492
            )
            
            $
            (102,273
            )Adjustments
      to reconcile net loss to net cash provided by (used in) operating
      activities:Common
      stock issued for loan fee - stockholders
            
            
            120,946
            
            
            
            -Common
      stock issued for consulting services - related parties
            
            
            24,979
            
            
            
            -Common
      stock issued for officer's compensation
            
            
            6,667
            
            
            
            -Depreciation
            
            
            2,505
            
            
            
            -Amortization
      of debt issue costs
            
            
            3,893
            
            
            
            -Changes
      in operating assets and liabilities:(Increase)
      Decrease in:Accounts
      receivable
            
            
            (2,320
            )
            
            
            (82,100
            )Cost
      & estimated earnings in excess of billings on uncompleted
      contracts
            
            
            50,366
            
            
            
            (57,340
            )Deposits
            
            
            (4,000
            )
            
            
            -Increase
      (Decrease) in:Accounts
      payable and accrued expenses
            
            
            518,361
            
            
            
            -Accrued
      interest payable - related party
            
            
            76,156
            
            
            
            61Accrued
      interest payable - other
            
            
            12,071
            
            
            
            -Estimated
      losses on uncompleted contracts
            
            
            (20,172
            )
            
            
            20,172Deferred
      revenue
            
            
            2,683,833
            
            
            
            -Net
      Cash Provided by (Used in) Operating Activities
            
            
            2,115,793
            
            
            
            (221,480
            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Cash
      acquired in recapitalization
            
            
            7,759
            
            
            
            -Due
      from affiliate
            
            
            (44,325
            )
            
            
            (35,048
            )Purchase
      of property and equipment
            
            
            (1,334,292
            )
            
            
            -Net
      Cash Used in Investing Activities
            
            
            (1,370,858
            )
            
            
            (35,048
            )CASH
      FLOWS FROM FINANCING ACTIVITIES:Advances
      made to related party
            
            
            -
            
            
            
            (50,000
            )Advances
      repaid by related party
            
            
            -
            
            
            
            50,000Proceeds
      from issuance of notes payable - related party
            
            
            938,252
            
            
            
            184,748Proceeds
      from issuance of notes payable - other
            
            
            500,000
            
            
            
            -Repayment
      of notes payable - related party
            
            
            (250,000
            )
            
            
            -Proceeds
      from issuance of common stock - related party
            
            
            -
            
            
            
            247,940Proceeds
      from common stock issued for cash in private placement
            
            
            2,750,000
            
            
            
            -Cash
      paid as direct offering costs
            
            
            (122,535
            )
            
            
            -Net
      Cash Provided By Financing Activities
            
            
            3,815,717
            
            
            
            432,688Net
      Increase in Cash and Cash Equivalents
            
            
            4,560,652
            
            
            
            176,160Cash
      and Cash Equivalents - Beginning of Year
            
            
            176,160
            
            
            
            -Cash
      and Cash Equivalents - End of Year
            
            $
            4,736,812
            
            
            $
            176,160SUPPLEMENTARY CASH
      FLOW INFORMATION:Cash
      Paid During the Year for:Income
      taxes
            
            $
            -
            
            
            $
            -Interest
            
            $
            15,622
            
            
            $
            -SUPPLEMENTAL
      DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:Forgiveness
      of amounts due from affiliate
            
            $
            44,325
            
            
            $
            35,048Stock
      issued as debt issue costs
            
            $
            8,063
            
            
            $
            -




See
accompanying notes to financial statements


F-5





IX
Energy Holdings, Inc.


Notes
to Consolidated Financial Statements


For the Years Ended December
31, 2008 (Consolidated) and 2007






Note 1 - Basis of
Presentation


On
December 30, 2008, the Company executed a reverse acquisition with a public
shell company (See Note 9).  The accompanying financial statements are
consolidated for the year ended December 31, 2008 due to the reverse acquisition
and recapitalization.  The financial statements for the year ended
December 31, 2007, consist solely of IX Energy, Inc., the accounting
acquirer.
 
 Note 2 - Organization,
Nature of Operations and Summary of Significant Accounting
Policies
 
 Nature
of operations
 
 IX Energy
Holdings, Inc.  (“IX Energy” or the “Company”) was incorporated on March 3,
2006 under the laws of the State of Delaware. The Company is a renewable energy
company primarily focused on solar power project development and
integration.  In an effort to become a vertically integrated solar
products and services company that designs, markets and installs its own solar
power systems, the Company plans to design solar modules that will be marketed
primarily to federal military and civilian agencies.
 
 Use
of estimates
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles 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 revenue and expenses during
the reporting period. Actual results could differ from those
estimates.
 
 Significant
estimates included management’s estimate for recording costs and estimated
earnings in excess of billings, estimating the loss on uncompleted contracts in
the period when known, depreciable lives of property, valuation of warrants and
stock options granted for services or compensation pursuant to EITF No. 96-18
and SFAS No. 123R, estimates of the probability and potential magnitude of
contingent liabilities, and a 100% valuation allowance for deferred taxes due to
the Company’s continuing and expected future losses.
 
 Risks
and uncertainties
 
 The
Company operates in an industry that is subject to intense competition and rapid
technological change, and is in a state of fluctuation as a result of the credit
crisis occurring in the United States.  The Company's operations are
subject to significant risk and uncertainties including financial, operational,
technological, and regulatory risks including the potential risk of business
failure.
 
 Principles
of consolidation
 
 The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiary. All significant intercompany balances and transactions
have been eliminated in consolidation.
 
 Cash
and cash equivalents
  For
purposes of the statement of cash flows, the Company considers all highly liquid
instruments purchased with a maturity of three months or less to be cash
equivalents.
  The
Company minimizes its credit risk associated with cash by periodically
evaluating the credit quality of its primary financial institution. The balance
at times may exceed federally insured limits. At December 31, 2008 and 2007, the
balance exceeded the federally insured limit by $4,249,256 and $76,160,
respectively.
  F-6
  IX
Energy Holdings, Inc.
 Notes
to Consolidated Financial Statements
 For the Years Ended December
31, 2008 (Consolidated) and 2007
   Accounts
receivable and concentrations
 
 Accounts
receivable represents trade obligations from customers that are subject to
normal trade collection terms, without discounts, however, in certain cases we
are entitled to rebates upon the completion of certain jobs post installation.
The Company periodically evaluates the collectability of its accounts receivable
and considers the need to adjust an allowance for doubtful accounts based upon
historical collection experience and specific customer information. Actual
amounts could vary from the recorded estimates. We have determined that as of
December 31, 2008 and 2007, respectively, no allowance was
required.
 
 At
December 31, 2008 and 2007, respectively, the Company had a concentration of
accounts receivable from one customer totaling 100%.
 
 For the
year ended December 31, 2008, the Company had a concentration of sales with two
customers totaling 46% and 43%, respectively.  For the year ended
December 31, 2007, the Company had a concentration of sales with two customers
totaling 75% and 25%, respectively.
 
 Property
and equipment
 
 Property
and equipment are stated at cost. Maintenance and repairs are charged to
operations as incurred. Betterments or renewals are capitalized when incurred.
Depreciation is provided using the straight line method over the estimated
useful lives of the asset.
 
 Long
lived assets
  Long-lived
assets are reviewed for impairment whenever events or changes in circumstances
indicate that 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 impaired, the impairment
to be recognized is measured by the amount by which the carrying amount of the
assets exceeds the fair value of the assets. There were no impairment charges
taken during the years ended December 31, 2008 and 2007,
respectively.
 
 Basic
and diluted loss per share
 
 Basic
loss per share is computed by dividing net loss by weighted average number of
shares of common stock outstanding during each period.  Diluted
earnings per share is computed by dividing net income by the weighted average
number of shares of common stock, common stock equivalents and potentially
dilutive securities outstanding during each period.  The Company has
common stock equivalents consisting of warrants to purchase 7,225,000 and 0
common shares as of December 31, 2008 and 2007, respectively.  These
common stock equivalents are not included in the diluted loss per share
computation since the inclusion of such common stock equivalents would be
anti-dilutive for all periods presented due to the Company’s net loss during
2008 and 2007.
 
 As a
result of the reverse acquisition and recapitalization (see Note 9) and stock
dividend (see Note 12(E)), all share and per share amounts have been
retroactively restated.
 
 Fair
value of financial instruments
 
 Statement
of Financial Accounting Standards No. 107, “Disclosures about Fair Value of
Financial Instruments,” requires disclosures of information about the
fair value of certain financial instruments for which it is practicable to
estimate the value.  For purpose of this disclosure, the fair value of
a financial instrument is the amount at which the instrument could be exchanged
in a current transaction between willing parties, other than in a forced sale or
liquidation.
 
 The
carrying amount reported in the balance sheet for accounts receivable, costs and
estimated earnings in excess of billings on uncompleted contracts, accounts
payable and accrued expenses, notes payable – related party, notes payable –
other, accrued interest payable – related party and accrued interest payable –
other approximates its fair market value based on the short-term maturity of
these instruments.
  F-7
  IX
Energy Holdings, Inc.
 Notes
to Consolidated Financial Statements
 For the Years Ended December
31, 2008 (Consolidated) and 2007
   Minority
Interest
 
 Under
generally accepted accounting principles, when losses applicable to the minority
interest in a subsidiary exceed the minority interest in the equity capital of
the subsidiary, the excess is not charged to the minority interest since there
is no obligation of the minority interest to make good on such
losses.  The Company, therefore, has included losses applicable to the
minority interest against its interest. If future earnings do materialize, the
Company will be credited to the extent of such losses previously
absorbed.  For financial reporting purposes, minority interest will
not be presented until the minority’s share of profit exceeds its previously
recorded deficit.
 
 Revenue
recognition
 
 The
Company follows the guidance of the Securities and Exchange Commission’s Staff
Accounting Bulletin No. 104 for revenue recognition and records revenue when all
of the following have occurred: (1) persuasive evidence of an arrangement
exists, (2) the product is delivered and installed, (3) the sales price to the
customer is fixed or determinable, and (4) collectability of the related
customer receivable is reasonably assured.
 
 The
Company has two methods of revenue recognition:
 
 (1)
Energy product reseller
 
 The
Company purchases product from suppliers and resells them to third
parties.  The Company records the revenue from the buyer and related
cost paid to the suppliers on these types of arrangements.
 
 In 2008,
the Company entered into similar arrangements wherein the Company had no
installation responsibility and no further obligation after delivery was made to
the customers.  Payments from the customers are received in advance of
delivery of solar panels and are treated as deferred
revenue.  Payments are then made to the suppliers and cost of
materials is recorded.  A pro-rata portion of the deferred revenue
from the customers is recognized as shipments are made.
 
 Revenues
from these arrangements are recognized upon shipment from the supplier to these
third parties.  In addition, the Company has reviewed EITF No. 99-19
to ascertain the relevance of gross versus net reporting. Upon the Company’s
review of this guidance, as well as SAB No. 104, the Company has determined that
it is subject to gross reporting as it bears the risk of loss in each of these
arrangements. There were no such arrangements at December 31, 2007.
 
 For the
years ended December 31, 2008 and 2007, respectively, approximately 98% and 0%
of revenues were earned under this method.
 
 (2)
Percentage of completion
 
 Revenue
from construction contracts are reported under the percentage-of-completion
method for financial statement purposes.  The estimated revenue for
each contract reflected in the financial statements represent that percentage of
estimated total revenue that costs incurred to date bear to estimated total
costs, based on the Company’s current estimates.  With respect to
contracts that extend over one or more accounting periods, revisions in costs
and revenue estimates during the course of the work are reflected in the period
the revisions become known.  When current estimates of total contract
costs indicate a loss, provision is made for the entire estimated
loss.
 
 The
asset, “Costs and estimated
earnings in excess of billings on uncompleted contracts,” represents
revenues recognized in excess of amounts billed.  The liability, “Estimated earnings on uncompleted
contracts,” represents billings in excess of revenues
recognized.
 
 Billing
practices for these projects are governed by the contract terms of each project
based upon actual costs incurred, achievement of milestones, or pre-agreed
schedules. Billings do not necessarily correlate with revenue recognized under
the percentage-of-completion method of accounting.  With the exception
of claims and change orders that are in the process of being negotiated with
customers, unbilled work is usually billed during normal billing processes
following achievement of the contractual requirements.
  F-8
  IX
Energy Holdings, Inc.
 Notes
to Consolidated Financial Statements
 For the Years Ended December
31, 2008 (Consolidated) and 2007
   For the
years ended December 31, 2008 and 2007, respectively, approximately 2% and 100%
of revenues were earned under this method.
 
 Cost
of sales
 
 Cost of
sales, including contract costs represents costs directly related to the
purchasing and installation of the Company’s solar panel products. Primary costs
include direct materials and labor costs and those indirect costs related to
contract performance, such as indirect labor, supplies, tools, repairs and
depreciation costs.
 
 Shipping
and handling costs
 
 Shipping
and handling costs associated with inbound freight are included in cost of
sales. Amounts billed to customers for shipping and handling is recorded as
revenue.  For the years ended December 31, 2008 and 2007,
respectively, the Company had no such revenues or expenses.
 
 Foreign
currency transactions
 
 The
Company’s functional currency is the U.S. dollar. In those instances where the
Company has foreign currency transactions, the financial statements are
translated to U.S. dollars in accordance with Statement No. 52 of the Financial
Accounting Standards Board (FASB), “Foreign Currency
Translation.”  Monetary assets and liabilities denominated in
foreign currencies are translated using the exchange rate prevailing at the date
of settlement. Gains and losses arising on settlement of
foreign-currency-denominated transactions or balances are included in the
determination of income. The Company’s primary foreign currency transactions are
in Euros. The Company has not entered into derivative instruments to offset the
impact of foreign currency fluctuations. The Company had foreign currency
transaction losses of $35,875 and $0 for the year ended December 31, 2008 and
2007, respectively.
 
 Stock-based
compensation
 
 All
share-based payments to employees will be recorded and expensed in the statement
of operations as applicable under SFAS No. 123R, “Share-Based
Payment”.
 
 SFAS No.
123R requires the measurement and recognition of compensation expense for all
share-based payment awards made to employees and directors including grants of
employee stock options based on estimated fair values.  The Company
has used the Black-Scholes option-pricing model to estimate grant date fair
value for all option grants.
 
 Share-based
compensation expense is based on the value of the portion of share-based payment
awards that is ultimately expected to vest during the year, less expected
forfeitures.  SFAS No. 123R requires forfeitures to be estimated at
the time of grant and revised, if necessary in subsequent periods if actual
forfeitures differ from those estimates.
 
 Non-employee
stock based compensation
 
 Stock-based
compensation awards issued to non-employees for services are recorded at either
the fair value of the services rendered or the instruments issued in exchange
for such services, whichever is more readily determinable, using the measurement
date guidelines enumerated in Emerging Issues Task Force Issue EITF No. 96-18,
“Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services” (“EITF 96-18”).
  F-9
 IX
Energy Holdings, Inc.
 Notes
to Consolidated Financial Statements
 For the Years Ended December
31, 2008 (Consolidated) and 2007
 Income
Taxes
  The
Company accounts for income taxes under the liability method in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Under this method,  deferred income tax assets and
liabilities are determined based on differences  between the financial
reporting and tax bases of assets and  liabilities  and are measured
using the enacted tax rates and laws  that will be in effect  when
the  differences  are  expected  to reverse.
 
 The
Company adopted the provisions of FASB Interpretation No. 48; “Accounting for Uncertainty in
Income Taxes-An Interpretation of FASB Statement No. 109” (“FIN
48”).  FIN 48 contains a two-step approach to recognizing and measuring
uncertain tax positions. The first step is to evaluate the tax position for
recognition by determining if the weight of available evidence indicates it is
more likely than not, that the position will be sustained on audit, including
resolution of related appeals or litigation processes, if any. The second step
is to measure the tax benefit as the largest amount, which is more than 50%
likely of being realized upon ultimate settlement. The Company considers many
factors when evaluating and estimating the Company’s tax positions and tax
benefits, which may require periodic adjustments. At December 31, 2008 and 2007,
the Company did not record any liabilities for uncertain tax
positions.
 
 Segment
information
 
 The
Company follows Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information."  During 2008 and 2007, the
Company only operated in one segment; therefore, segment information has not
been presented.
 
 Recent
accounting pronouncements
 
 In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”
(“SFAS 157”), which clarifies the principle that fair value should be based on
the assumptions that market participants would use when pricing an asset or
liability.  It also defines fair value and established a hierarchy
that prioritizes the information used to develop assumptions.  SFAS
No. 157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007.  The adoption of SFAS No. 157 did not have a
material effect on the Company’s financial position, results of operations or
cash flows.
 
 In
February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial
Assets and Financial Liabilities”(“SFAS 159”), which permits entities to
choose to measure many financial instruments and certain other items at fair
value. The unrealized gains and losses on items for which the fair value option
has been elected should be reported in earnings.  The decision to
elect the fair value option is determined on an instrument-by-instrument basis,
should be applied to an entire instrument and is irrevocable.  Assets
and liabilities measured at fair values pursuant to the fair value option should
be reported separately in the balance sheet from those instruments measured
using other measurement attributes.  SFAS No. 159 is effective as
of the beginning of the Company’s 2008 fiscal year. The adoption of SFAS No. 159
did not have a material effect on the Company’s financial position, results of
operations or cash flows.
 
 In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements, an amendment of Accounting Research Bulletin
No 51” (“SFAS 160”). SFAS 160 establishes accounting and reporting
standards for ownership interests in subsidiaries held by parties other than the
parent, changes in a parent’s ownership of a noncontrolling interest,
calculation and disclosure of the consolidated net income attributable to the
parent and the noncontrolling interest, changes in a parent’s ownership interest
while the parent retains its controlling financial interest and fair value
measurement of any retained noncontrolling equity investment. SFAS 160 is
effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years. Early adoption
is prohibited. The adoption of SFAS No. 160 is not expected to have a material
effect on the Company’s financial position, results of operations or cash
flows.
 
 In
December 2007, the FASB issued SFAS 141R,“Business Combinations”
(“SFAS 141R”), which replaces FASB SFAS 141,“Business
Combinations”.  This Statement retains the fundamental
requirements in SFAS 141 that the acquisition method of accounting be used for
all business combinations and for an acquirer to be identified for each business
combination. SFAS 141R defines the acquirer as the entity that obtains control
of one or more businesses in the business combination and establishes the
acquisition date as the date that the acquirer achieves control.  SFAS
141R will require an entity to record separately from the business combination
the direct costs, where previously these costs were included in the total
allocated cost of the acquisition.  SFAS 141R will require an entity
to recognize the assets acquired, liabilities assumed, and any non-controlling
interest in the acquired at the acquisition date, at their fair values as of
that date.  This compares to the cost allocation method previously
required by SFAS No. 141.  SFAS 141R will require an entity to
recognize as an asset or liability at fair value for certain contingencies,
either contractual or non-contractual, if certain criteria are
met.  Finally, SFAS 141R will require an entity to recognize
contingent consideration at the date of acquisition, based on the fair value at
that date.  This Statement will be effective for business combinations
completed on or after the first annual reporting period beginning on or after
December 15, 2008.  Early adoption of this standard is not permitted
and the standards are to be applied prospectively only.  Upon adoption
of this standard, there would be no impact to the Company’s results of
operations and financial condition for acquisitions previously
completed.  The adoption of SFAS No. 141R is not expected to have a
material effect on the Company’s financial position, results of operations or
cash flows.
  F-10
 IX
Energy Holdings, Inc.
 Notes
to Consolidated Financial Statements
 For the Years Ended December
31, 2008 (Consolidated) and 2007
 In
January 2008, the SEC released SAB No. 110, which amends SAB No. 107 which
provided a simplified approach for estimating the expected term of a “plain
vanilla” option, which is required for application of the Black-Scholes option
pricing model (and other models) for valuing share options. At the time, the
Staff acknowledged that, for companies choosing not to rely on their own
historical option exercise data (i.e., because such data did not provide a
reasonable basis for estimating the term), information about exercise patterns
with respect to plain vanilla options granted by other companies might not be
available in the near term; accordingly, in SAB No. 107, the Staff permitted use
of a simplified approach for estimating the term of plain vanilla options
granted on or before December 31, 2007. The information concerning exercise
behavior that the Staff contemplated would be available by such date has not
materialized for many companies. Thus, in SAB No. 110, the Staff continues to
allow use of the simplified rule for estimating the expected term of plain
vanilla options until such time as the relevant data becomes widely available.
The Company does not expect its adoption of SAB No. 110 to have a material
impact on its financial position, results of operations or cash
flows.
 
 In March
2008, the FASB issued SFAS No. 161 “Disclosures about Derivative
Instruments and Hedging Activities—An Amendment of FASB Statement
No. 133” (“SFAS161”).SFAS161 establishes the
disclosure requirements for derivative instruments and for hedging activities
with the intent to provide financial statement users with an enhanced
understanding of the entity’s use of derivative instruments, the accounting of
derivative instruments and related hedged items under Statement 133 and its
related interpretations, and the effects of these instruments on the entity’s
financial position, financial performance, and cash flows. This statement
is effective for financial statements issued for fiscal years beginning after
November 15, 2008. The Company does not expect its adoption of SFAS 161 to
have a material impact on its financial position, results of operations or cash
flows.
 
 In April
2008, the FASB issued FASB Staff Position (“FSP”) SFAS No. 142-3, “Determination of the Useful Life of
Intangible Assets”. This FSP amends the factors that should be considered
in developing renewal or extension assumptions used to determine the useful life
of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible
Assets”(“SFAS 142”). The intent of this FSP is to improve the
consistency between the useful life of a recognized intangible asset under
SFAS 142 and the period of expected cash flows used to measure the fair
value of the asset under SFAS 141R, and other GAAP. This FSP is effective for
financial statements issued for fiscal years beginning after December 15,
2008, and interim periods within those fiscal years. Early adoption is
prohibited. The Company is currently evaluating the impact of SFAS FSP 142-3,
but does not expect the adoption of this pronouncement will have a material
impact on its financial position, results of operations or cash
flows.
 
 In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS 162”).  SFAS 162 identifies the
sources of accounting principles and the framework for selecting principles to
be used in the preparation of financial statements of nongovernmental entities
that are presented in conformity with generally accepted accounting principles
in the United States.  This statement is effective 60 days following the
SEC’s approval of the Public Company Accounting Oversight Board’s amendments to
AU section 411, The Meaning of Present Fairly in Conformity with Generally
Accepted Accounting Principles.  The Company is currently evaluating the
impact of SFAS 162, but does not expect the adoption of this pronouncement will
have a material impact on its financial position, results of operations or cash
flows.
 
 Other
accounting standards have been issued or proposed by the FASB or other
standards-setting bodies that do not require adoption until a future date and
are not expected to have a material impact on the financial statements upon
adoption.
 
 Note 3 - Construction
Contracts
 
 Information
with respect to uncompleted contracts is summarized below for the periods ended
December 31, 2008 and December 31, 2007:
 
 In 2007,
the Company anticipated that it was going to have a loss on its uncompleted
contracts and recorded the loss at December 31, 2007 prior to the completion of
these contracts in 2008.
 
 December
      31,2008
              
              
              2007Actual
      costs incurred on uncompleted contracts
              
              $
              415,320
              
              
              
              240,568Estimated
      losses
              
              
              (10,124
              )
              
              
              (74,800
              )405,196
              
              
              
              165,768Less:
      progress billings to date
              
              
              (398,222
              )
              
              
              (128,600
              )$
              6,974
              
              
              
              37,168These
      amounts are included in the accompanying December 31, 2008 and December
      31, 2007 balance sheets under the following captions:Costs
      and estimated earnings in excess of billings on uncompleted
      contracts
              
              $
              6,974
              
              
              
              57,340Estimated
      losses on uncompleted contracts
              
              
              -
              
              
              
              (20,172
              )$
              6,974
              
              
              
              37,168
 
 In June
2008, the Company entered into an agreement with Federal Prison Industries, Inc.
("UNICOR"), under which UNICOR provides the labor for assembly and production of
solar panels to the Company, and the Company sells the solar panels to Federal,
civilian and military government customers of both the Company and this
customer.  The agreement has a term of five years.  In June
2008, the Company received $6,800,000 from UNICOR for the supply of solar
cells.  This amount was initially recorded as deferred
revenue.  Shipment of these solar cells began in October
2008.  At December 31, 2008, the Company has recognized revenue based
on shipments under this agreement of $5,003,762.  The balance, of
$1,796,238, remains in deferred revenue and is expected to be earned in
2009.
 
 F-11
 
 IX
Energy Holdings, Inc.
 Notes
to Consolidated Financial Statements
 For the Years Ended December
31, 2008 (Consolidated) and 2007
 In June
2008, the Company entered into an agreement, under which a supplier provides the
labor for the assembly and production of solar panels to the Company, and the
Company sells the solar panels to a third party. The agreement has a term of one
year.  In July and September 2008, the Company received $1,897,335
from this customer for the shipment of solar panels.  This amount was
initially recorded as deferred revenue.  At December 31, 2008, the
Company recognized $1,009,740 of revenue.  The balance, of $887,595,
remains in deferred revenue and is expected to be earned in 2009.
 
 Note 4 - Affiliate
Charge to Equity
 
 In 2008
and 2007, a Company related to the Company’s Chief Executive Officer collected
certain funds on contracts entered into by the Company.  The
affiliated entity did not have the ability to repay these funds that the Company
was entitled to.  As a result, the Company recorded a charge to
additional paid in capital of $44,325 and $35,048, respectively, to reflect the
uncollectible receivable from this related party.
 
 Note 5 - Property and
Equipment
 
 At
December 31, 2008 & December 31, 2007, property and equipment consists of
the following:
 
 December 31, 2008
              
              
              December 31, 2007
              
              Estimated Useful LivesSolar
      Panel Equipment
              
              $
              1,300,000
              
              
              $
              -
              
              20
      yearsAutomobile
              
              
              26,999
              
              
              
              -
              
              5
      yearsComputers
      and Office Equipment
              
              
              7,293
              
              
              
              -
              
              3
      years1,334,292
              
              
              
              -Less:
      Accumulated Depreciation
              
              
              (2,505
              )
              
              
              -Property
      and Equipment, Net
              
              $
              1,331,787
              
              
              $
              -
 
 The solar
panel equipment, purchased for $1,300,000, is not in service at December 31,
2008.
 
 Note 6 - Guarantee
Letter of Credit
 
 On May
27, 2008 the Company entered in to a standby letter of credit with a bank for
$1,600,000.  The letter of credit acts as a performance bond, with a
customer being the beneficiary, if the Company defaults on their monthly
delivery agreement. The Company’s Chief Executive Officer has provided a
personal guarantee of $800,000 on behalf of the Company for the letter of
credit.  In exchange for the personal guarantee, the Company issued
2,031,030 shares of the Company’s common stock, having a fair value of $60,473
($0.03/share) based upon the then recent cash offering price.  The
letter of credit expired in August 2008.  However, the bank extended
the letter of credit until August 7, 2009.  The full amount of the
letter of credit remains available for use and has not been drawn
down.
  F-12
 IX
Energy Holdings, Inc.
 Notes
to Consolidated Financial Statements
 For the Years Ended December
31, 2008 (Consolidated) and 2007
 On June
30, 2008, two third party shareholders also provided personal guarantees, of
$400,000 each, for the letter of credit.  In exchange for the personal
guarantee, the Company issued 1,015,494 shares of the Company’s common stock to
each stockholder, having a total fair value of $60,473 ($0.03/share), based upon
the recent cash offering price to third parties.
 
 The
letter of credit was released in February 2009, as the Company fulfilled its
obligation under the terms of its government contract with UNICOR.
 
 Note 7 - Loans, Notes and
Accrued Interest Payable
 
 (A)
Notes Payable & Accrued Interest Payable – Related Party
 
 On
February 14, 2007, the Company advanced $50,000, which was unsecured, due on
demand and bore interest at approximately 3.7% to a third party. This individual
repaid the Company on December 10, 2007.
 
 On
November 1, 2007 and December 30, 2007, respectively, the Company issued notes
payable of $3,000 and $220,000, respectively to the same stockholder. The notes
bear interest at 12%, are unsecured, have a default interest rate of 24% and are
due 3 business days after the Company receives the cash proceeds from certain
solar panel installation jobs.  The Company completed these solar
panel installations in 2008.  However, the stockholder has extended
the repayment date of the notes to March 31, 2009.
 
 On July
21, 2008, the Company issued a note payable, of $900,000, to an affiliate of a
stockholder. The note bears interest at 18%, is unsecured, has a default
interest rate of 24% and is due 3 business days after the Company receives the
cash proceeds from a solar panel installation job that is expected to be
completed by the second quarter of 2009. In October and November 2008, the
Company repaid $250,000 of principal and $15,622 of accrued
interest.
 
 (B)
Notes Payable - Other, Conversion to Equity & Accrued Interest Payable -
Other
 
 In July
2008, the Company entered into eight promissory note agreements for aggregate
principal totaling $500,000 with various third parties.  The notes
bear interest at 5%, and the principal and interest is due and payable on the
earlier of July 1, 2009 or when the Company completes the sale of any debt
securities, common stock or common stock equivalents in a single transaction or
series of related transactions resulting in gross proceeds of
$3,500,000.
 
 In July
2008, the Company entered into a Securities Purchase agreement with all eight of
the note holders listed above.  The Company issued a total of 270,800
shares to the note holders in connection with these promissory notes. The number
of shares each note holder received was in direct proportion to the amount of
their promissory notes.  The fair value of the common shares are
valued at $8,063 ($0.03/share) based upon the then recent cash offering price.
This amount is treated as a debt issue cost and is being amortized to interest
expense over the life of the underlying promissory notes.
 
 For the
year ended December 31, 2008, the Company recorded amortization of debt issue
costs to interest expense of $3,893.
 
 At
December 31, 2008 and December 31, 2007, the Company reflected notes payable –
other of $500,000 and $0, respectively and related accrued interest payable of
$12,071 and $0, respectively.
 
 Note 8 - Stockholders’
Equity
 
 (A)
Share Issuances
 
 On July
17, 2007, the Company issued 8,327,138 shares of common stock for $247,940
($0.03/ share).
 
 On June
30, 2008, the Company issued 83,271 shares of common stock to a related party
shareholder for consulting services provided to the Company.  For the
years ended December 31, 2008 and 2007, the Company recorded consulting fees of
$2,479 ($0.03/share) and $0, respectively.   The fair value of
the stock issuance was based upon the then recent cash offerings to third
parties.
  F-13
 IX
Energy Holdings, Inc.
 Notes
to Consolidated Financial Statements
 For the Years Ended December
31, 2008 (Consolidated) and 2007
 (B)
Private Placement and Registration Rights Agreement
 
 In 2008,
the Company sold 27.5 units at $100,000 per unit. Each unit consisted of 250,000
shares of common stock and a detachable three-year warrant to purchase 250,000
shares of common stock for an exercise price of $0.50 per share.  Gross
proceeds were $2,750,000 and the Company paid direct offering costs of
$122,535.
 
 As a
result of the offering, the Company issued 6,875,000 shares of common stock and
7,225,000 warrants, inclusive of 350,000 warrants paid to a placement agent as a
direct offering cost.  The warrants paid as a direct offering cost
have a net effect of zero on the statement of equity.
 
 The
Company also granted the investors registration rights for the common stock and
common stock underlying the warrants.  The Company can be assessed
liquidated damages, as defined in the agreement, for the failure to file a
registration statement within 180 days from the termination from the offering as
well as to have the registration statement declared effective. The termination
date was February 25, 2009. Penalties will be assessed at 1% per month, payable
in cash, for every 30 day period under which the Company is in default under the
terms of the registration rights agreement, up to a maximum of 10%. In assessing
the likelihood and amount of possible liability for liquidated damages, the
Company considered the guidance of EITF No.’s 00-19-2 and 05-04 as well as SFAS
No. 5.  The Company has concluded that itbelieves it
will satisfy the conditions of registration in the time required pursuant to the
registration rights agreement.  The Company will not record a
registration rights liability in connection with this
offering.
 
 See Note 12(C) for similar
arrangement.
 
 (C)
Warrants
 
 The
following is a summary of the Company’s warrant activity:
 
 Warrants
              
              
              Weighted Average Exercise
    PriceOutstanding
      – December 31, 2006
              
              
              -
              
              
              $
              -Granted
              
              
              -
              
              
              $
              -Exercised
              
              
              -
              
              
              $
              -Forfeited
              
              
              -
              
              
              $
              -Outstanding
      – December 31, 2007
              
              
              -
              
              
              $
              -Exercisable
      - December 31, 2007
              
              
              -
              
              
              $
              -Granted
              
              
              7,225,000
              
              
              $
              0.50Exercised
              
              
              -
              
              
              $
              -Forfeited
              
              
              -
              
              
              $
              -Outstanding
      – December 31, 2008
              
              
              7,225,000
              
              
              $
              0.50Exercisable
      - December 31, 2008
              
              
              7,225,000
              
              
              $
              0.50
 
 Warrants Outstanding
                Warrants ExercisableRange ofexercise
price
                Number
                  Outstanding
                Weighted
                  Average Remaining Contractual
      Life
                  (in years)
                Weighted Average
                  Exercise Price
                Number
                  Exercisable
                Weighted Average
                  Exercise Price$0.50
                7,225,000
                3.0
      years
                $0.50
                7,225,000
                $0.50
 At
December 31, 2008, the total intrinsic value of warrants outstanding and
exercisable was $0 and $0, respectively.
  F-14
 IX
Energy Holdings, Inc.
 Notes
to Consolidated Financial Statements
 For the Years Ended December
31, 2008 (Consolidated) and 2007
 Note 9 - Reverse Acquisition
and Recapitalization
 
 On
December 30, 2008, Yoo, Inc. (“Yoo”), a then shell corporation, merged with IX
Energy, and IX Energy became the surviving corporation. This transaction was
accounted for as a reverse acquisition. Yoo did not have any operations and
majority-voting control was transferred to IX Energy.  The transaction also
required a recapitalization of IX Energy. Since IX Energy acquired a controlling
voting interest, it was deemed the accounting acquirer, while Yoo was deemed the
legal acquirer. The historical financial statements of the Company are those of
IX Energy and of the consolidated entities from the date of merger and
subsequent.
 
 Since the
transaction is considered a reverse acquisition and recapitalization, the
guidance in SFAS No. 141 does not apply for purposes of presenting
pro-forma financial information.
 
 Pursuant
to the Merger, Yoo’s majority stockholders cancelled 4,000,000 shares of common
stock and the Company concurrently issued 46,153,284 shares of common stock to
IX Energy.  Upon the closing of the reverse acquisition, IX Energy
stockholders held 89% of the issued and outstanding shares of common stock at
the date of the transaction. Yoo retained 5,500,000 shares of common stock upon
the closing of the reverse acquisition.
 
 Note 10 - Commitments and
Contingencies
 
 (A)
              Litigations,
      claims and assessments
 
 From time
to time, the Company may become involved in various lawsuits and legal
proceedings, which arise in the ordinary course of business. However, litigation
is subject to inherent uncertainties, and an adverse result in these or other
matters may arise from time to time that may harm its business. The Company is
currently not aware of any such legal proceedings or claims that they believe
will have, individually or in the aggregate, a material adverse affect on its
business, financial condition or operating results.
 
 (B)
              Employment
      agreements
 
 (1)
CEO
 
 On May 1,
2008, the Company entered into a two-year employment agreement with an
individual to serve as the Company’s CEO and Chairman of the Board. The
agreement provides for an annual salary of $225,000 and $80,000 to be paid as a
bonus for services rendered prior to this agreement.  The individual
is also eligible for a multi-year grant of the Company’s non-qualified options
that will be equal to 6% of the total common shares outstanding.  At
December 31, 2008, these options have not been granted.
 
 
 On March
19, 2009, the Company granted 1,033,066 options to this individual, having a
fair value of $284,259.  The Black-Scholes assumptions used are as
follows:
 
 Exercise
      price
              $0.50Expected
      dividends
              0%Expected
      volatility
              78.88%Risk
      fee interest rate
              0.98%Expected
      life of option
              5
      yearsExpected
      forfeitures
              0%
  F-15
 IX
Energy Holdings, Inc.
 Notes
to Consolidated Financial Statements
 For the Years Ended December
31, 2008 (Consolidated) and 2007
 (2)
Former CFO
 
 Effective
May 12, 2008, the Company entered into a two-year employment agreement with a
former member of its senior management to serve as CFO.  The agreement
provided for a salary of $150,000 per annum. On August 15, 2008, the Company
received a promissory note from the former CFO in the amount of $10,000 bearing
interest at a rate of 6% per annum.  This amount plus interest was to
be repaid to the Company by December 31, 2008.
 
 On
September 11, 2008, the Company forgave the $10,000 principal amount and unpaid
interest totaling $10,833 and recorded the forgiveness as compensation
expense.
 
 Effective
October 17, 2008, the Company terminated its employment agreement with this
individual.
 
 (C)
Former COO
 
 On April
23, 2008, the Company entered into a consulting agreement with a then unrelated
party for hourly fees to be paid in the Company’s common stock at a future
date.  The Company accrued $22,500 related to this consulting
agreement.  On September 23, 2008, the Company authorized the issuance of
60,930 shares of common stock in full satisfaction of all amounts owed to this
individual under this individual’s consulting agreement totaling $22,500. The
Company recorded consulting fees of $22,500. The fair value of the stock issued
was based upon the fair value of the services rendered.
 
 Effective
July 1, 2008, the Company entered into a two-year employment agreement with the
individual to serve as COO.  The agreement provides for a salary
$160,000 per annum plus entitlement to an annual bonus based upon the Company’s
performance during each year of employment. The individual will also be eligible
for a multi-year grant of the Company’s non-qualified options that will be equal
to 3% of the total common shares outstanding.
 
 On
September 23, 2008, the Company authorized the issuance of 40,578 shares of
common stock in full satisfaction of $6,667 of accrued salary that was unpaid to
the Company’s COO during the first two weeks of employment in July
2008.  The Company recorded consulting fees of $6,667.  The
fair value of the stock issued was based upon the fair value of the services
rendered.
 
 In
January 2009, this individual resigned as the Company’s President and Chief
Operating Officer.
 
 Note 11 - Income
Taxes
 
 SFAS No.
109 requires the recognition of deferred tax assets and liabilities for both the
expected impact of differences between the financial statements and the tax
basis of assets and liabilities, and for the expected future tax benefit to be
derived from tax losses and tax credit carryforwards.  SFAS No. 109
additionally requires the establishment of a valuation allowance to reflect the
likelihood of realization of deferred tax assets.
 
 The
Company has a net operating loss carryforward for tax purposes totaling
approximately $1,110,000 at December 31, 2008 expiring through the year 2028.
Internal Revenue Code Section 382 places a limitation on the amount of taxable
income that can be offset by carryforwards after a change in control (generally
greater than a 50% change in ownership).  Temporary differences, which
give rise to a net deferred tax asset, are approximately as
follows:
  F-16
 IX
Energy Holdings, Inc.
 Notes
to Consolidated Financial Statements
 For the Years Ended December
31, 2008 (Consolidated) and 2007
 Significant
deferred tax assets at December 31, 2008 and 2007 are approximately as
follows:
 
 2008
              
              
              2007Gross
      deferred tax assets:Future
      losses on uncompleted contracts
              
              $
              -
              
              
              $
              (9,000
              )Accrued
      salary
              
              
              (37,000
              )
              
              
              -Net
      operating loss carryforwards
              
              
              (509,000
              )
              
              
              (43,000
              )Total
      deferred tax assets
              
              
              (546,000
              )
              
              
              (52,000
              )Less:
      valuation allowance
              
              
              546,000
              
              
              
              52,000Deferred
      tax asset – net
              
              $
              -
              
              
              $
              -
 
 The
valuation allowance at December 31, 2007 was approximately
$52,000.  The net change in valuation allowance during the year ended
December 31, 2008 was an increase of approximately $494,000.  In
assessing the realizability of deferred tax assets, management considers whether
it is more likely than not that some portion or all of the deferred income tax
assets will be realized.  The ultimate realization of deferred income
tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become
deductible.  Management considers the scheduled reversal of deferred
income tax liabilities, projected future taxable income, and tax planning
strategies in making this assessment. Based on consideration of these items,
management has determined that enough uncertainty exists relative to the
realization of the deferred income tax asset balances to warrant the application
of a full valuation allowance as of December 31, 2008.
 
 The
actual tax benefit differs from the expected tax benefit for the years ended
December 31, 2008 and 2007, respectively, (computed by applying the U.S. Federal
corporate tax rate of 35% to income before taxes and 16.72% for New York state
and city income taxes, a blended rate of 45.86%) as follows:
  2008
              
              
              2007Expected
      tax expense (benefit) – Federal
              
              $
              (396,000
              )
              
              $
              (30,000
              )Expected
      tax expense (benefit) - State
              
              
              (227,000
              )
              
              
              (17,000
              )Meals
      and Entertainment @ 50%
              
              
              47,000
              
              
              
              -Non-deductible
      stock compensation
              
              
              73,000
              
              
              
              -Other
              
              
              9,000
              
              
              
              -Total
      deferred tax assets
              
              
              (494,000
              )
              
              
              (47,000
              )Change
      in valuation allowance
              
              
              494,000
              
              
              
              47,000Actual
      tax expense (benefit)
              
              $
              -
              
              
              $
              -
  F-17
 IX
Energy Holdings, Inc.
 Notes
to Consolidated Financial Statements
 For the Years Ended December
31, 2008 (Consolidated) and 2007
 Note 12 - Subsequent
Events
 
 (A)
Employment Agreements
 
 On
February 12, 2009, the Company entered into a three-year employment agreement
with an individual to serve as President of the Company.  The
agreement provides for an annual salary of $200,000 plus eligibility for an
annual bonus.  In February 2009, the Company paid $25,000 as s sign-on
bonus.  The Company issued 50,000 shares of common stock, having a
fair value of $75,000 ($1.50/share) based upon the closing price on that
day.  The individual will earn 100,000 shares of common stock 120 days
from the employment date.  The individual will also be granted
2,500,000 of the Company’s non-qualified options vesting quarterly. Under the terms of the
plan, these stock options are subject to board approval, which is expected
during the second quarter of 2009.
  On March
2, 2009, the Company entered into a two-year employment agreement with an
individual as Senior Vice President - Government Sales.  The agreement
provides for an annual salary of $100,000 plus entitlement to an annual bonus
based upon the Company’s performance during each year of
employment.  The individual will also be granted 120,000 of the
Company’s non-qualified options vesting bi-annually. Under the terms of the
plan, these stock options are subject to board approval, which is expected
during the second quarter of 2009.
  On March
9, 2009, the Company entered into a two-year employment agreement with an
individual as Vice President - Finance.  The agreement provides for an
annual salary of $87,000 plus entitlement to an annual bonus based upon the
Company’s performance during each year of employment.  The Company
issued 10,000 shares of common stock, having a fair value of $10,100
($1.01/share) based upon the closing price on that day.  The
individual will be granted 200,000 of the Company’s non-qualified options
vesting bi-annually. Under the terms of the plan, these stock options are
subject to board approval, which is expected during the second quarter of
2009.
  F-18
 IX
Energy Holdings, Inc.
 Notes
to Consolidated Financial Statements
 For the Years Ended December
31, 2008 (Consolidated) and 2007
 (B)
2009 Stock Option Plan
 
 On
February 17, 2009, the Company adopted the 2009 Incentive Stock Plan (“the
Plan”). The total number of shares of stock which may be purchased or granted
directly by options, stock awards or restricted stock purchase offers, or
purchased indirectly through exercise of options granted under the Plan shall
not exceed 12,000,000.
 
 The Plan
indicates that the exercise price of an award is equivalent to the market value
of the Company’s common stock on the grant date.
 
 (C)
Private Placement and Registration Rights Agreement
 
 In
January and February 2009, the Company sold an additional 7.25 units at $100,000
per unit. Each unit consisted of 250,000 shares of common stock and a detachable
three-year warrant to purchase 250,000 shares of common stock for an exercise
price of $0.50 per share.  Gross proceeds were $725,000 and the Company
paid direct offering costs of $201,000.
 
 As a
result of the offering, the Company issued an additional 1,812,500 shares of
common stock and 1,952,500 warrants, inclusive of 140,000 warrants paid to a
placement agent as a direct offering cost.  The warrants paid as a
direct offering cost have a net effect of zero on the statement of
equity.
 
 See Note
8(B) for discussion of similar terms relating to registration rights of the
common stock and common stock underlying the warrants.
 
 (D)
Consulting Agreement
 
 On March
20, 2009, the Company entered into a one-year agreement with a consulting
company to provide investor relation services.  In addition to monthly
fees of $5,500, the Company will issue a five-year warrant to purchase 200,000
shares of common stock, having a fair value of $69,708.  The
Black-Scholes assumptions used are as follows:
 
 Exercise price
              $0.55Expected
      dividends
              0%Expected
      volatility
              78.88%Risk
      fee interest rate
              1.23%Expected
      life of warrant
              5
      yearsExpected
      forfeitures
              0%
 
 (E)
Stock Dividend
 
 In
January 2009, the Company effected a stock dividend.  Each stockholder
of record as of January 12, 2009 received 1.75 shares of common stock for each
share of common stock they owned.
  F-19