##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 For the transition period from  to.
 Commission File No. 001-33712
 
 RENEGY HOLDINGS, INC.
  Delaware
    
    20-8987239(State or other jurisdiction of incorporation or organization)
    
    (IRS Employer Identification No.)
 60 E. Rio Salado Parkway, Suite 1012
Tempe, Arizona 85281-9501
 (480) 556-5555
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



RENEGY HOLDINGS, INC.
 FORM 10-Q
 June 30, 2008
 TABLE OF CONTENTS
 PageNo.PART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Consolidated Statements of Operations for the three- and six-months ended June 30, 2008
and 2007 (Unaudited)
    
    
    3Consolidated Balance Sheets at June 30, 2008 and December 31, 2007 (Unaudited)
    
    
    4Consolidated Statements of Cash Flows for the six-months ended June 30, 2008 and 2007
(Unaudited)
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 4. Controls and Procedures
    
    
    29PART II. OTHER INFORMATION
    
    
    30Item 1. Legal Proceedings
    
    
    30Item 1A. Risk Factors
    
    
    30Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3. Defaults Upon Senior Securities
    
    
    30Item 4. Submission of Matters to a Vote of Security Holders
    
    
    30Item 5. Other Information
    
    
    30Item 6. Exhibits
    
    
    31Signatures
    
    
    33Exhibit 4.4Exhibit 10.3Exhibit 10.4Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 RENEGY HOLDINGS, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    
    2007
    
    
    2008
    
    
    
    2007(Successor)
    
    
    (Predecessor)
    
    
    (Successor)
    
    
    (Predecessor)RevenuesPower generation
    
    $
    921
    
    
    $
    
    
    
    $
    921
    
    
    $
    Wood product and other
    
    
    188
    
    
    
    284
    
    
    
    536
    
    
    
    780Total revenues
    
    
    1,109
    
    
    
    284
    
    
    
    1,457
    
    
    
    780Costs and expenses:Plant operating expenses
    
    
    1,753
    
    
    
    
    
    
    
    1,799
    
    
    
    Cost of wood product operations
    
    
    255
    
    
    
    4,335
    
    
    
    1,819
    
    
    
    5,295General, administrative and development
    
    
    2,525
    
    
    
    219
    
    
    
    5,911
    
    
    
    477Loss (gain) on sale or disposal of assets
    
    
    3
    
    
    
    88
    
    
    
    (157
    )
    
    
    88Total costs and expenses
    
    
    4,536
    
    
    
    4,642
    
    
    
    9,372
    
    
    
    5,860Operating loss
    
    
    (3,427
    )
    
    
    (4,358
    )
    
    
    (7,915
    )
    
    
    (5,080
    )Other income (expense):Interest income
    
    
    39
    
    
    
    213
    
    
    
    145
    
    
    
    529Other income
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    Interest expense
    
    
    (28
    )
    
    
    (227
    )
    
    
    (51
    )
    
    
    (508
    )Other expense
    
    
    (62
    )
    
    
    (37
    )
    
    
    (201
    )
    
    
    (73
    )Debt commitment fees
    
    
    (265
    )
    
    
    (306
    )
    
    
    (526
    )
    
    
    (571
    )Change in fair value of derivative
instruments
    
    
    1,206
    
    
    
    1,864
    
    
    
    1,019
    
    
    
    1,788Net loss
    
    $
    (2,537
    )
    
    $
    (2,851
    )
    
    $
    (7,510
    )
    
    $
    (3,915
    )Net loss per common share:Basic and diluted
    
    $
    (0.41
    )
    
    $
    (0.76
    )
    
    $
    (1.21
    )
    
    $
    (1.04
    )Weighted average shares:Basic and diluted
    
    
    6,208
    
    
    
    3,774
    
    
    
    6,208
    
    
    
    3,774
   3




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##### Table of Contents



RENEGY HOLDINGS, INC.
 
 CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)(Unaudited)
 June 30,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    3,560
    
    
    $
    9,769Restricted cash
    
    
    767
    
    
    
    2,411Short-term investments
    
    
    
    
    
    
    5,991Receivables
    
    
    723
    
    
    
    864Biomass fuel and inventories
    
    
    5,702
    
    
    
    5,128Prepaid expenses and other assets
    
    
    1,028
    
    
    
    362Total current assets
    
    
    11,780
    
    
    
    24,525Property and equipment:Leasehold improvements
    
    
    781
    
    
    
    265Machinery and equipment
    
    
    9,971
    
    
    
    5,387Biomass plant
    
    
    63,747
    
    
    
    Construction in progress, biomass plant
    
    
    
    
    
    
    54,626Construction in progress, other
    
    
    301
    
    
    
    981Less accumulated depreciation and amortization
    
    
    (2,352
    )
    
    
    (1,760
    )Total property and equipment
    
    
    72,448
    
    
    
    59,499Deferred financing costs, net
    
    
    2,531
    
    
    
    2,732Idle property and equipment
    
    
    1,375
    
    
    
    1,300Other assets
    
    
    318
    
    
    
    111Total assets
    
    $
    88,452
    
    
    $
    88,167LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,914
    
    
    $
    2,967Accrued payroll and benefits
    
    
    453
    
    
    
    789Accrued liabilities and other
    
    
    3,166
    
    
    
    2,103Non-revolving line of credit
    
    
    2,000
    
    
    
    Advance to related party
    
    
    600
    
    
    
    Current portion of long-term debt
    
    
    2,076
    
    
    
    776Current portion of fair value of derivative instruments
    
    
    1,119
    
    
    
    389Total current liabilities
    
    
    11,328
    
    
    
    7,024Fair value of derivative instruments, net of current portion
    
    
    2,464
    
    
    
    4,213Long-term debt, net of current portion
    
    
    50,581
    
    
    
    50,942Other long-term liabilities
    
    
    222
    
    
    
    Total liabilities
    
    
    64,595
    
    
    
    62,179Stockholders equity:Preferred stock, $0.001 par value; 1,500 shares authorized, none issued
    
    
    
    
    
    
    Common stock, $0.001 par value; 43,000 shares authorized; 6,208 and 6,208
issued and outstanding, respectively
    
    
    6
    
    
    
    6Additional paid-in capital
    
    
    54,988
    
    
    
    49,606Accumulated deficit
    
    
    (31,137
    )
    
    
    (23,627
    )Accumulated other comprehensive income
    
    
    
    
    
    
    3Total stockholders equity
    
    
    23,857
    
    
    
    25,988Total liabilities and stockholders equity
    
    $
    88,452
    
    
    $
    88,167
   4




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RENEGY HOLDINGS, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
 Six Months EndedJune 30, 2008
    
    
    
    June 30, 2007(Successor)
    
    
    (Predecessor)Cash flows from operating activities:Net loss
    
    $
    (7,510
    )
    
    $
    (3,915
    )Adjustments to reconcile net loss from continuing operations to net
cash used in operating activities:Depreciation of property and equipment
    
    
    776
    
    
    
    411Impairment of long-lived assets
    
    
    109
    
    
    
    Amortization of deferred financing costs
    
    
    201
    
    
    
    76Change in fair value of derivative instruments
    
    
    (1,020
    )
    
    
    (1,788
    )Provision for uncollectible accounts
    
    
    6
    
    
    
    Stock based compensation
    
    
    383
    
    
    
    Inventory and equipment losses related to fire
    
    
    
    
    
    
    3,318Loss (gain) on sale or disposal of assets
    
    
    11
    
    
    
    (10
    )Changes in operating assets and liabilities:Receivables
    
    
    135
    
    
    
    50Biomass fuel and inventories
    
    
    (731
    )
    
    
    (1,413
    )Prepaid expenses and other current assets
    
    
    (479
    )
    
    
    (1,154
    )Accounts payable
    
    
    1,622
    
    
    
    (414
    )Accrued payroll and benefits
    
    
    (336
    )
    
    
    11Accrued liabilities and other
    
    
    141
    
    
    
    756Net cash used in operating activities
    
    
    (6,692
    )
    
    
    (4,072
    )Cash flows from investing activities:Maturities of available-for-sale investments
    
    
    5,988
    
    
    
    Proceeds from sale of restricted cash investments
    
    
    
    
    
    
    12,767Net change in restricted cash investments
    
    
    1,644
    
    
    
    Sale of property and equipment
    
    
    4
    
    
    
    13Additions to property and equipment
    
    
    (15,151
    )
    
    
    (14,535
    )Change in other assets
    
    
    (238
    )
    
    
    Net cash used in investing activities
    
    
    (7,753
    )
    
    
    (1,755
    )
   5




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RENEGY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS  continued
(In thousands) (Unaudited)
 Six Months EndedJune 30, 2008
    
    
    
    June 30, 2007(Successor)
    
    
    (Predecessor)Cash flows from financing activities:Proceeds from issuance of notes payable
    
    
    2,879
    
    
    
    3,474Repayments of notes and leases payable
    
    
    (243
    )
    
    
    (52
    )Advances
from related party
    
    
    600
    
    
    
    Contributions from majority shareholder
    
    
    5,000
    
    
    
    Contributions from member
    
    
    
    
    
    
    2,564Net cash provided by financing activities
    
    
    8,236
    
    
    
    5,986Net increase (decrease) in cash and cash equivalents
    
    
    (6,209
    )
    
    
    159Cash and cash equivalents at beginning of period
    
    
    9,769
    
    
    
    31Cash and cash equivalents at end of period
    
    $
    3,560
    
    
    $
    190Supplemental disclosures of noncash investing and
financing activitiesAdditions of property, plant and equipment financed with payables
    
    $
    1,237
    
    
    $
    2,881Additions of property, plant and equipment financed with capital
leases
    
    $
    304
    
    
    $
    788
   6




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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 Note 1. Basis of Presentation and Consolidation and Recent Accounting Pronouncements
 Formation and Operations of the Company .
  Business Combinations,
  Description of Business .
   7




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Unaudited Interim Financial Information.
  Principles of Consolidation .
 Predecessor
 Accounting and
Reporting by Limited Liability Companies and Limited Liability Partnerships
 Successor
  Recent Accounting Pronouncements . Fair Value Measurements, Effective Date
of FASB Statement No. 157
  8




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The Fair Value Option for
Financial Assets and Financial Liabilities.
 Business Combinations
 Non-controlling Interests in
Consolidated Financial Statements  an amendment of ARB 51
 Disclosures about Derivative
Instruments and Hedging Activities-an amendment of FASB Statement No. 133 Accounting for Derivative Instruments
and Hedging Activities
 Hierarchy of Generally Accepted
Accounting Principles. The Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles
 Note 2. Operations and Financing
    9




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Note 3. Other Financial Data
 Statements of Operations Supplemental Information
 Comprehensive Loss
  Three Months Ended,
    
    
    Six Months Ended,June 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Successor)
    
    
    (Predecessor)
    
    
    (Successor)
    
    
    (Predecessor)Net loss
    
    $
    (2,537
    )
    
    $
    (2,851
    )
    
    $
    (7,510
    )
    
    $
    (3,915
    )Other comprehensive loss:Change in unrealized loss on
available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    Comprehensive loss
    
    $
    (2,537
    )
    
    $
    (2,851
    )
    
    $
    (7,513
    )
    
    $
    (3,915
    )
  10




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##### Table of Contents



Balance Sheets Supplemental Information
 Biomass Fuel and Inventories
  Inventory Costs
  Idle Property and Equipment
  June 30,
    
    
    December 31,2008
    
    
    2007Susanville biomass plant
    
    $
    1,300
    
    
    $
    1,300Sawmill equipment
    
    
    75
    
    
    
    $
    1,375
    
    
    $
    1,300
   11




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Long-Term Debt
  June 30,
    
    
    December 31,2008
    
    
    2007ID Bonds  Solid Waste Disposal Revenue Bonds, due 2037, principal
repayments required January 2014 through January 2026 per related letter
of credit, quarterly payments of interest at a variable rate determined by
the bond underwriter (1)
    
    $
    39,250
    
    
    $
    39,250SWMP Construction Loan  construction loan to bank, converts to term
loan no later than August 31, 2008, principal payments through maturity in
January 2014, quarterly payments of interest at LIBOR plus 1.5% through
March 2013, then LIBOR plus 1.8% through maturity in January 2014 (1)
    
    
    9,302
    
    
    
    9,302Renegy Term Facility  construction loan to bank, converts to term loan no
later than August 31, 2008, principal payments through maturity in January
2013, quarterly payments of interest at 7.2% per annum through maturity
    
    
    1,492
    
    
    
    1,471Chase Lease  equipment loan to bank, monthly payments of interest at
prime less 1% until conversion to note payable in May 2008; monthly
payments of principal and interest at 6.6% per annum from June 2008
through May 2013
    
    
    1,652
    
    
    
    1,372Other
    
    
    961
    
    
    
    323Total debt
    
    
    52,657
    
    
    
    51,718Less current maturities
    
    
    (2,076
    )
    
    
    (776
    )Long-term debt, net of current portion
    
    $
    50,581
    
    
    $
    50,942
 (1)
    
    ID Bonds and SWMP Construction Loan are subject to a floating to fixed interest rate
swap at closing through maturity (see Note 11). Note 4. Net Income (Loss) per Share (EPS)
 Earnings
per Share
 Note 5. Stock Based Compensation
 Share-Based Payment, Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services
  12




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Three Months Ended,
    
    
    Six Months Ended,June 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Stock options
    
    $
    63
    
    
    $
    
    
    
    $
    307
    
    
    $
    Warrants
    
    
    42
    
    
    
    
    
    
    
    76
    
    
    
    $
    105
    
    
    $
    
    
    
    $
    383
    
    
    $
    
 Note 6. Impairment of Long-Lived Assets
 Accounting for the Impairment or Disposal of Long-Lived
Assets
  Note 7. Major Customers and Suppliers
     13




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Note 8. Equity Infusion, Advance from Related Party, and Line of Credit
     14




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Note 9. Capitalized Interest
 Capitalization of
Interest Cost Capitalization of Interest Cost in Situations Involving Certain
Tax-Exempt Borrowings and Certain Gifts and Grants
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Successor)
    
    
    (Predecessor)
    
    
    (Successor)
    
    
    (Predecessor)Project interest costs incurred
    
    $
    642
    
    
    $
    500
    
    
    $
    1,285
    
    
    $
    1,000Project interest costs
capitalized
    
    $
    642
    
    
    $
    284
    
    
    $
    1,279
    
    
    $
    510
  Note 10. Fair Value Measurements
       15




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Fair Value Measurementsat Reporting Date UsingQuotedPrices inActiveMarketsfor
    
    
    SignificantIdentical
    
    
    Other
    
    
    SignificantAs of
    
    
    Assets or
    
    
    Observable
    
    
    UnobservableJune 30,
    
    
    Liabilities
    
    
    Inputs
    
    
    Inputs2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)AssetsAvailable-for-sale securities(1)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    LiabilitiesDerivative instruments(2)
    
    $
    3,583
    
    
    $
    
    
    
    $
    3,583
    
    
    $
    $
    3,583
    
    
    $
    
    
    
    $
    3,583
    
    
    $
    
 Fair Value Measurementsat Reporting Date UsingQuotedPrices inActiveMarketsfor
    
    
    SignificantIdentical
    
    
    Other
    
    
    SignificantAs of
    
    
    Assets or
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Liabilities
    
    
    Inputs
    
    
    Inputs2007
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)AssetsAvailable-for-sale securities(1)
    
    $
    5,991
    
    
    $
    
    
    
    $
    5,991
    
    
    $
    $
    5,991
    
    
    $
    
    
    
    $
    5,991
    
    
    $
    LiabilitiesDerivative instruments(2)
    
    $
    4,602
    
    
    $
    
    
    
    $
    4,602
    
    
    $
    $
    4,602
    
    
    $
    
    
    
    $
    4,602
    
    
    $
    
 (1)
    
    The fair values of the Companys available-for-sale securities are based on
broker-dealer quotations. During the three months ended March 31, 2008, all of the
Companys available-for-sale securities matured or were liquidated and the proceeds
were invested in cash equivalents.(2)
    
    The fair values of the Companys derivative instruments are based on the
discounted expected future cash flows of the interest rate swaps based on LIBOR yield
curves at the reporting date.  16




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Note 11. Derivative Financial Instruments
 Accounting for Derivative Instruments and Hedging Activities,
   SWAP 1
    
    SWAP 2(ID Bonds)
    
    (SWMP Construction Loan)Notional amount at June 30, 2008
    
    $39,250,000
    
    $8,669,000Notional amount at December 31, 2007
    
    $39,250,000
    
    $6,289,000Trade date
    
    9/8/2006
    
    9/8/2006Termination date
    
    1/2/2026
    
    1/2/2014Benchmark rate hedged
    
    Muni Bond Index Rate (BMA)
    
    3 Month LIBORItem description
    
    Designated Bond
    
    Designated LoanFixed rate
    
    4.5%
    
    5.2%Fair value of liability at June 30, 2008
    
    $3,366,000
    
    $217,000Fair value of liability at December 31,
2007
    
    $4,297,000
    
    $305,000
 Note 12. Segment Disclosures and Related Information
 Disclosures about Segments of an Enterprise and Related Information,
   17




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Note 13. Commitments and Contingencies
  Catalytica-related
 Kawasaki and Eaton sale representations and warranties
   SCR-Tech sale representations and warranties
   Snowflake Entities-related
   1 2
   18




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Post-merger Renegy-related
 Merger Transaction representations and warranties
   Overrun Guaranty
    Registration Rights Agreement
   19




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##### Table of Contents



Susanville Land Lease and Option to Purchase
 th
 Note 14. Warrants
   Note 15. Subsequent Event
    20




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
  Forward-Looking Statements
 This Managements Discussion and Analysis and other parts of this Report on Form 10-Q and our
2007 Annual Report on Form 10-KSB contain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended, that involve risks and uncertainties. The words anticipates, believes,
estimates, expects, intends, plans, will and similar expressions identify forward-looking
statements, which are based on information available to us on the date hereof. We assume no
obligation to publicly update or revise any such forward-looking statements.
 You should not place undue reliance on forward-looking statements. They are subject to known
and unknown risks, uncertainties, and other factors that may cause our actual results to be
materially different from any future results expressed or implied by the forward-looking
statements.
 Should the underlying assumptions associated with these forward-looking statements, or should
one or more of the risks or uncertainties described in the section titled Risk Factors located
within Part I, Item 1 of our 2007 Annual Report on Form 10-KSB and elsewhere in our 2007 Annual
Report on Form 10-KSB , as well as in this Form 10-Q occur, our actual results could differ
materially from those anticipated in these forward-looking statements.
 Basis of Presentation
  Introduction
   21




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History
    Overview
      22




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Critical Accounting Policies and Estimates
   Results of Operations
  Three Months Ended
    
    
    
    
    
    
    Six Months EndedJune 30,
    
    
    
    
    
    
    June 30,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    ChangeRevenuesPower generation
    
    $
    921
    
    
    $
    
    
    
    $
    921
    
    
    $
    921
    
    
    $
    
    
    
    $
    921Wood product and other
    
    
    188
    
    
    
    284
    
    
    
    (96
    )
    
    
    536
    
    
    
    780
    
    
    
    (244
    )Total revenues
    
    
    1,109
    
    
    
    284
    
    
    
    825
    
    
    
    1,457
    
    
    
    780
    
    
    
    677Costs and expenses:Plant operating expenses
    
    
    1,753
    
    
    
    
    
    
    
    1,753
    
    
    
    1,799
    
    
    
    
    
    
    
    1,799Cost of wood product operations
    
    
    255
    
    
    
    4,335
    
    
    
    (4,080
    )
    
    
    1,819
    
    
    
    5,295
    
    
    
    (3,476
    )General, administrative and development
    
    
    2,525
    
    
    
    219
    
    
    
    2,306
    
    
    
    5,911
    
    
    
    477
    
    
    
    5,434Loss (gain) on sale or disposal of assets
    
    
    3
    
    
    
    88
    
    
    
    (85
    )
    
    
    (157
    )
    
    
    88
    
    
    
    (245
    )Total costs and expenses
    
    
    4,536
    
    
    
    4,642
    
    
    
    (106
    )
    
    
    9,372
    
    
    
    5,860
    
    
    
    3,512Operating loss
    
    
    (3,427
    )
    
    
    (4,358
    )
    
    
    931
    
    
    
    (7,915
    )
    
    
    (5,080
    )
    
    
    (2,835
    )Interest income
    
    
    39
    
    
    
    213
    
    
    
    (174
    )
    
    
    145
    
    
    
    529
    
    
    
    (384
    )Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    19Interest expense
    
    
    (28
    )
    
    
    (227
    )
    
    
    199
    
    
    
    (51
    )
    
    
    (508
    )
    
    
    457Other expense
    
    
    (62
    )
    
    
    (37
    )
    
    
    (25
    )
    
    
    (201
    )
    
    
    (73
    )
    
    
    (128
    )Debt commitment fees
    
    
    (265
    )
    
    
    (306
    )
    
    
    41
    
    
    
    (526
    )
    
    
    (571
    )
    
    
    45Change in fair value of derivative
instruments
    
    
    1,206
    
    
    
    1,864
    
    
    
    (658
    )
    
    
    1,019
    
    
    
    1,788
    
    
    
    (769
    )Net loss
    
    $
    (2,537
    )
    
    $
    (2,851
    )
    
    $
    314
    
    
    $
    (7,510
    )
    
    $
    (3,915
    )
    
    $
    (3,595
    )
 Comparison of the three and six month periods ended June 30, 2008 and 2007
 Revenues.
  23




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Plant Operating Expenses.
      24




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Cost of Wood Product Operations.
 Inventory Costs
   General, Administrative and Development (GA&D) Expenses.
    25




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Loss (Gain) on Sale or Disposal of Assets.
   Interest and Other Income.
   Interest and Other Expense.
 Capitalization of Interest Cost in Situations
Involving Certain Tax-Exempt Borrowings and Certain Gifts and Grants
  Change in Fair Value of Derivative Instruments.
   26




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Income Taxes.
 Liquidity and Capital Resources
        27




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28




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
 (a)
    
    Evaluation of disclosure controls and procedures. Our management evaluated, with the
participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness
of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of the end
of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our
Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure
controls and procedures are effective as of June 30, 2008 to ensure that information we are
required to disclose in reports that we file or submit under the Exchange Act is (i)
recorded, processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to
our management, including our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.(b)
    
    Changes in internal control over financial reporting.There was no change in our
internal control over financial reporting that occurred during the period covered by this
Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
  29




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PART II  OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  
 Item 1A. RISK FACTORS
  
 Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 Item 3. DEFAULTS UPON SENIOR SECURITIES
  
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 Item 5. OTHER INFORMATION
 Letter Agreement
   Convertible Subordinated Promissory Note
   Employment Agreement On August 14, 2008, the Company and Hugh W. Smith, the Companys Executive Vice President and Chief Operating
Officer, entered into an employment agreement (the Employment Agreement) regarding the employment of Mr. Smith for a
period of three (3) years commencing March 3, 2008. The Employment Agreement provides that Mr. Smith shall receive:
(i) a base salary equal to $350,000 per annum; (ii) a target bonus equal to 125% of his base salary, which may be paid
in a combination of cash and equity compensation, provided that at least 50% of the target bonus must be paid in cash;
(iii) a grant of 100,000 stock options under the Companys 2007 Equity Incentive Plan, which will vest ratably over a
48-month period commencing as of his employment with the Company; (iv) fifteen months of mortgage payment reimbursement
beginning in March 2008 and continuing until Mr. Smiths home is sold, but not to exceed $45,000; and (v) a $100,000
signing bonus (paid $10,000 per month during the first ten months of employment). In addition, among other things, the Employment Agreement provides that:  1.
    
    If Mr. Smith is involuntarily terminated other than for cause at any time prior to an announcement of a
change of control or on or after the date that is twenty-four (24) months following a change of control or the
announcement of a change of control whichever comes later, then Mr. Smith will be entitled to receive the
following severance and non-competition benefits: (i) a cash payment equal to one year of his annual
compensation; (ii) subsidized COBRA premiums for up to a maximum of 18 months; and (iii) a pro-rated portion
of the amount of current year bonus award which Mr. Smith would earn for the fiscal year in which the
termination occurs.  2.
    
    If Mr. Smith is involuntarily terminated other than for cause at any time after an announcement of a
change of control and prior to twenty-four (24) months following a change of control or the announcement of a
change of control, whichever comes later, then Mr. Smith will be entitled to receive the following severance
and non-competition benefits: (i) a cash payment equal to two hundred percent (200%) of his annual
compensation plus the maximum amount of the current year bonus award which Mr. Smith could earn for the fiscal
year in which the termination date occurs; and (ii) full acceleration of the vesting of the unvested portion
of any stock option held by Mr. Smith. The foregoing summary of the Employment Agreement does not purport to be complete and is qualified in its entirety
by reference to the Employment Agreement which is attached hereto as Exhibit 10.4 and which is incorporated herein by
reference in its entirety.  30




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Item 6. EXHIBITS
  ExhibitNumber
    
    Notes
    
    Description2.1
    
    
    
    (1
    )
    
    Contribution and Merger Agreement, dated as of May 8, 2007 among
the Registrant, Catalytica Energy Systems, Inc., Snowflake
Acquisition Corporation, Renegy, LLC, Renegy Trucking, LLC,
Snowflake White Mountain Power, LLC, Robert M. Worsley, Christi M.
Worsley and the Robert M. Worsley and Christi M. Worsley Revocable
Trust.2.2
    
    
    
    (1
    )
    
    Amendment No. 1 dated as of August 9, 2007 to Contribution and
Merger Agreement, dated as of May 8, 2007 among the Registrant,
Catalytica Energy Systems, Inc., Snowflake Acquisition Corporation,
Renegy, LLC, Renegy Trucking, LLC, Snowflake White Mountain Power,
LLC, Robert M. Worsley, Christi M. Worsley and the Robert M.
Worsley and Christi M. Worsley Revocable Trust.2.3
    
    
    
    (2
    )
    
    Amendment No. 2 dated as of September 20, 2007 to Contribution and
Merger Agreement, dated as of May 8, 2007, as amended, among the
Registrant, Catalytica Energy Systems, Inc., Snowflake Acquisition
Corporation, Renegy, LLC, Renegy Trucking, LLC, Snowflake White
Mountain Power, LLC, Robert M. Worsley, Christi M. Worsley and the
Robert M. Worsley and Christi M. Worsley Revocable Trust.3.1
    
    
    
    (5
    )
    
    Amended and Restated Certificate of Incorporation of the Registrant.3.2
    
    
    
    (3
    )
    
    Amended and Restated Bylaws of the Registrant.4.1
    
    
    
    (5
    )
    
    Stock Specimen of the Registrant.4.2
    
    
    
    (4
    )
    
    Registration Rights Agreement dated as of October 1, 2007 between
the Registrant and the Robert M. Worsley and Christi M. Worsley
Revocable Trust.4.3
    
    
    
    (4
    )
    
    Common Stock Purchased Warrant issued October 1, 2007 to the Robert
M. Worsley and Christi M. Worsley Revocable Trust.4.4
    
    
    
    **
    
    
    Convertible
Subordinated Promissory Note issued August 13, 2008 to the
Robert M. Worsley and Christi M. Worsley Revocable Trust.10.1
    
    
    
    (6
    )
    
    Fifth Amendment to Credit Agreement and Consent by and among
Snowflake White Mountain Power, LLC, Renegy, LLC, Renegy Truck, LLC
and CoBank, ACB, as Administrative Agent and Lender, dated as of
April 10, 2008.10.2
    
    
    
    (7
    )
    
    Sixth Amendment to Credit Agreement by and among Snowflake White
Mountain Power, LLC, Renegy, LLC, Renegy Trucking, LLC and CoBank,
ACB, as Administrative Agent and Lender, dated as of June 30, 2008.10.3
    
    
    
    **
    
    
    Second
Letter Agreement, dated August 13, 2008, by and between the
Registrant, Robert M. Worsley, Christi M. Worsley and the
Robert M. Worsley and Christi M. Worsley Revocable Trust.10.4
    
    
    
    *
**
    
    
    Employment
Agreement dated as of August 14, 2008 between the Registrant and
Hugh W. Smith.31.1
    
    
    
    **
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
/ 15d-14(a) of the Securities Exchange Act of 1934, as amended.31.2
    
    
    
    **
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
/ 15d-14(a) of the Securities Exchange Act of 1934, as amended.32.1
    
    
    
    **
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350.32.2
    
    
    
    **
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350.
  31




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+
    
    Confidential treatment has been granted for portions of these agreements.*
    
    Represents management contracts or compensatory plans for executive officers and
directors.**
    
    Filed herewith.(1)
    
    Incorporated by reference to Annex A to Amendment No. 2 to Registrants Registration
Statement on Form S-4 (file No. 333-144110) filed on August 31, 2007.(2)
    
    Incorporated by reference to exhibits filed with our Form 8-K, filed on September
21, 2007.(3)
    
    Incorporated by reference to Annex D to Amendment No. 2 to Registrants Registration
Statement on Form S-4 (file No. 333-144110) filed on August 31, 2007.(4)
    
    Incorporated by reference to exhibits filed with our Form 8-K, filed on October 1,
2007.(5)
    
    Incorporated by reference to exhibits filed with our Form 10QSB, filed on November
14, 2007.(6)
    
    Incorporated by reference to exhibits filed with our Form 8-K, filed on April 15,
2008.(7)
    
    Incorporated by reference to exhibits filed with our Form 8-K, filed on July 3, 2008.  32




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##### Table of Contents



RENEGY HOLDINGS, INC.
 
 SIGNATURES
   RENEGY HOLDINGS, INC.
(Registrant)By:
    /s/ Robert W. ZackRobert W. ZackExecutive Vice President and Chief
Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)  33




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RENEGY HOLDINGS, INC.
 
 EXHIBIT INDEX
 ExhibitNumber
    
    Description4.4
    
    
    Convertible
Subordinated Promissory Note issued August 13, 2008 to the
Robert M. Worsley and Christi M. Worsley Revocable Trust.10.3
    
    
    Second
Letter Agreement, dated August 13, 2008, by and between the
Registrant, Robert M. Worsley, Christi M. Worsley and the
Robert M. Worsley and Christi M. Worsley Revocable Trust.10.4
    
    
    Employment
Agreement dated as of August 14, 2008 between the Registrant and
Hugh W. Smith.31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
/ 15d-14(a) of the Securities Exchange Act of 1934, as amended.31.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
/ 15d-14(a) of the Securities Exchange Act of 1934, as amended.32.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350.32.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350.
  34