##### 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 September 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)
 Yes o No þ




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##### 



RENEGY HOLDINGS, INC.
 FORM 10-Q
 September 30, 2008
 TABLE OF CONTENTS
 PageNo.PART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Consolidated Statements of Operations for the three- and nine-months ended September 30, 2008 and 2007 (Unaudited)
    
    
    3Consolidated Balance Sheets at September 30, 2008 and December 31, 2007 (Unaudited)
    
    
    4Consolidated Statements of Cash Flows for the nine-months ended September 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
    
    
    22Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    31Item 4. Controls and Procedures
    
    
    31PART II. OTHER INFORMATION
    
    
    32Item 1. Legal Proceedings
    
    
    32Item 1A. Risk Factors
    
    
    32Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    33Item 3. Defaults Upon Senior Securities
    
    
    33Item 4. Submission of Matters to a Vote of Security Holders
    
    
    33Item 5. Other Information
    
    
    34Item 6. Exhibits
    
    
    35Signatures
    
    
    37Exhibit 10.6Exhibit 10.7Exhibit 10.8Exhibit 10.11Exhibit 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
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    
    2007
    
    
    2008
    
    
    
    2007(Successor)
    
    
    
    (Predecessor)
    
    
    (Successor)
    
    
    
    (Predecessor)RevenuesPower generation
    
    $
    3,179
    
    
    
    $
    
    
    
    $
    4,100
    
    
    
    $
    Wood product and other
    
    
    140
    
    
    
    
    217
    
    
    
    676
    
    
    
    
    997Total revenues
    
    
    3,319
    
    
    
    
    217
    
    
    
    4,776
    
    
    
    
    997Costs and expenses:Plant operating expenses
    
    
    3,917
    
    
    
    
    
    
    
    
    5,716
    
    
    
    
    Cost of wood product operations
    
    
    244
    
    
    
    
    (1,984
    )
    
    
    2,064
    
    
    
    
    3,311General, administrative and development
    
    
    2,787
    
    
    
    
    337
    
    
    
    8,698
    
    
    
    
    814Loss (gain) on sale or disposal of assets
    
    
    
    
    
    
    
    (2
    )
    
    
    (157
    )
    
    
    
    87Total costs and expenses
    
    
    6,948
    
    
    
    
    (1,649
    )
    
    
    16,321
    
    
    
    
    4,212Operating income (loss )
    
    
    (3,629
    )
    
    
    
    1,866
    
    
    
    (11,545
    )
    
    
    
    (3,215
    )Other income (expense):Interest income
    
    
    17
    
    
    
    
    141
    
    
    
    162
    
    
    
    
    670Other income
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    
    Interest expense
    
    
    (898
    )
    
    
    
    (155
    )
    
    
    (948
    )
    
    
    
    (662
    )Other expense
    
    
    (63
    )
    
    
    
    (36
    )
    
    
    (264
    )
    
    
    
    (110
    )Debt commitment fees
    
    
    (265
    )
    
    
    
    (319
    )
    
    
    (791
    )
    
    
    
    (890
    )Change in fair value of derivative instruments
    
    
    106
    
    
    
    
    (1,201
    )
    
    
    1,125
    
    
    
    
    588Net income (loss)
    
    $
    (4,732
    )
    
    
    $
    296
    
    
    $
    (12,242
    )
    
    
    $
    (3,619
    )Net income (loss) per common share:Basic and diluted
    
    $
    (0.76
    )
    
    
    $
    0.08
    
    
    $
    (1.97
    )
    
    
    $
    (0.96
    )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)
 September 30,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,897
    
    
    $
    9,769Restricted cash
    
    
    1,760
    
    
    
    2,411Short-term investments
    
    
    
    
    
    
    5,991Receivables
    
    
    1,198
    
    
    
    864Biomass fuel and inventories
    
    
    6,377
    
    
    
    5,128Prepaid expenses and other assets
    
    
    939
    
    
    
    362Total current assets
    
    
    12,171
    
    
    
    24,525Property and equipment:Land
    
    
    21
    
    
    
    Leasehold improvements
    
    
    783
    
    
    
    265Machinery and equipment
    
    
    10,296
    
    
    
    5,387Biomass plant
    
    
    63,392
    
    
    
    Construction in progress, biomass plant
    
    
    479
    
    
    
    54,626Construction in progress, other
    
    
    105
    
    
    
    981Less accumulated depreciation and amortization
    
    
    (3,365
    )
    
    
    (1,760
    )Total property and equipment
    
    
    71,711
    
    
    
    59,499Deferred financing costs, net
    
    
    2,468
    
    
    
    2,732Idle property and equipment
    
    
    1,375
    
    
    
    1,300Other assets
    
    
    312
    
    
    
    111Total assets
    
    $
    88,037
    
    
    $
    88,167LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,474
    
    
    $
    2,967Accrued payroll and benefits
    
    
    674
    
    
    
    789Accrued liabilities and other
    
    
    3,287
    
    
    
    2,103Non-revolving line of credit
    
    
    6,200
    
    
    
    Current portion of long-term debt
    
    
    2,105
    
    
    
    776Current portion of fair value of derivative instruments
    
    
    369
    
    
    
    389Total current liabilities
    
    
    14,109
    
    
    
    7,024Fair value of derivative instruments, net of current portion
    
    
    3,108
    
    
    
    4,213Convertible note
    
    
    1,000
    
    
    
    Long-term debt, net of current portion
    
    
    50,350
    
    
    
    50,942Other long-term liabilities
    
    
    269
    
    
    
    Total liabilities
    
    
    68,836
    
    
    
    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
    
    
    55,064
    
    
    
    49,606Accumulated deficit
    
    
    (35,869
    )
    
    
    (23,627
    )Accumulated other comprehensive income
    
    
    
    
    
    
    3Total stockholders equity
    
    
    19,201
    
    
    
    25,988Total liabilities and stockholders equity
    
    $
    88,037
    
    
    $
    88,167
   4




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##### Table of Contents



RENEGY HOLDINGS, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands) 
(Unaudited)
 Nine Months Ended September 30,2008
    
    
    
    2007(Successor)
    
    
    
    (Predecessor)Cash flows from operating activities:Net loss
    
    $
    (12,242
    )
    
    
    $
    (3,619
    )Adjustments to reconcile net loss from continuing operations to net
cash used in operating activities:Depreciation of property and equipment
    
    
    1,789
    
    
    
    
    611Impairment of long-lived assets
    
    
    109
    
    
    
    
    Amortization of deferred financing costs
    
    
    264
    
    
    
    
    113Change in fair value of derivative instruments
    
    
    (1,125
    )
    
    
    
    (588
    )Provision for uncollectible accounts
    
    
    7
    
    
    
    
    Stock based compensation
    
    
    458
    
    
    
    
    Inventory and equipment losses related to fire
    
    
    
    
    
    
    
    486Gain on sale of available-for-sale investments
    
    
    (8
    )
    
    
    
    Loss (gain) on sale or disposal of assets
    
    
    11
    
    
    
    
    (8
    )Changes in operating assets and liabilities:Receivables
    
    
    (341
    )
    
    
    
    36Biomass fuel and inventories
    
    
    (1,407
    )
    
    
    
    (2,223
    )Prepaid expenses and other current assets
    
    
    (383
    )
    
    
    
    (1,109
    )Accounts payable
    
    
    1,533
    
    
    
    
    212Accrued payroll and benefits
    
    
    (115
    )
    
    
    
    82Accrued liabilities and other
    
    
    702
    
    
    
    
    693Net cash used in operating activities
    
    
    (10,748
    )
    
    
    
    (5,314
    )Cash flows from investing activities:Proceeds from sale of available-for-sale investments
    
    
    5,996
    
    
    
    
    Net change in restricted cash investments
    
    
    651
    
    
    
    
    18,974Proceeds from sale of property and equipment
    
    
    4
    
    
    
    
    18Additions to property and equipment
    
    
    (16,170
    )
    
    
    
    (22,293
    )Change in other assets
    
    
    (238
    )
    
    
    
    Net cash used in investing activities
    
    
    (9,757
    )
    
    
    
    (3,301
    )
   5




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##### Table of Contents



RENEGY HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS  continued
(In thousands) 
(Unaudited)
 Nine Months Ended September 30,2008
    
    
    
    2007(Successor)
    
    
    
    (Predecessor)Cash flows from financing activities:Proceeds from issuance of notes payable
    
    
    879
    
    
    
    
    5,752Proceeds from line of credit
    
    
    6,200
    
    
    
    
    Proceeds from issuance of convertible debt
    
    
    1,000
    
    
    
    
    Repayments of notes and leases payable
    
    
    (446
    )
    
    
    
    (82
    )Contributions from majority shareholder
    
    
    5,000
    
    
    
    
    Contributions from member
    
    
    
    
    
    
    
    2,917Net cash provided by financing activities
    
    
    12,633
    
    
    
    
    8,587Net increase (decrease) in cash and cash equivalents
    
    
    (7,872)
    
    
    
    
    (28
    )Cash and cash equivalents at beginning of period
    
    
    9,769
    
    
    
    
    31Cash and cash equivalents at end of period
    
    $
    1,897
    
    
    
    $
    3Supplemental disclosures of noncash investing and financing activitiesAdditions of property, plant and equipment financed with payables
    
    $
    494
    
    
    
    $
    2,898Additions of property, plant and equipment financed with capital leases
    
    $
    304
    
    
    
    $
    1,168
   6




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##### Table of Contents



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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##### Table of Contents



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
 The Fair Value Option for
Financial Assets and Financial Liabilities.
 Business Combinations
  8




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##### Table of Contents



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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##### Table of Contents



Note 3. Other Financial Data
 Statements of Operations Supplemental Information
 Comprehensive Loss
  Three Months Ended,
    
    
    Nine Months Ended,September 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(Successor)
    
    
    (Predecessor)
    
    
    (Successor)
    
    
    (Predecessor)Net loss
    
    $
    (4,732
    )
    
    $
    296
    
    
    $
    (12,242
    )
    
    $
    (3,619
    )Other comprehensive loss:Change in unrealized loss on
available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    Comprehensive loss
    
    $
    (4,732
    )
    
    $
    296
    
    
    $
    (12,245
    )
    
    $
    (3,619
    )
  10




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##### Table of Contents



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




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##### Table of Contents



Long-Term Debt
  September 30,
    
    
    December 31,2008
    
    
    2007ID 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
    
    
    $
    39,250SWMP Construction Loan  construction loan to bank, converts to term
loan no later than December 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)(2)
    
    
    9,302
    
    
    
    9,302Renegy Term Facility  construction loan to bank, converts to term loan no
later than December 31, 2008, principal payments through maturity in January
2013, quarterly payments of interest at 7.2% per annum through maturity (2)
    
    
    1,492
    
    
    
    1,471Chase Loan  equipment loan to bank, bears interest at a fixed annual rate
of 6.6%, payable in sixty principal and interest payments of $33,000 from
June 2008 through May 2013
    
    
    1,580
    
    
    
    1,372Other
    
    
    831
    
    
    
    323Total debt
    
    
    52,455
    
    
    
    51,718Less current maturities
    
    
    (2,105
    )
    
    
    (776
    )Long-term debt, net of current portion
    
    $
    50,350
    
    
    $
    50,942
 (1)
    
    ID Bonds and SWMP Construction Loan are subject to floating to fixed
interest rate swaps at closing through maturity (see Note 11).(2)
    
    On September 30, 2008, the credit agreement related to these loans was
amended to extend the term conversion date for these loans from September 30, 2008 to December 31, 2008
and to adjust the principal payment amounts and due dates. The maturity dates of the loans was not
effected by the amendment.  Note 4. Net Income (Loss) per Share (EPS)
 Earnings
per Share
  12




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##### Table of Contents



Three Months Ended,
    
    
    Nine Months Ended,September 30,
    
    
    September 30,2008
    
    
    2007 (A)
    
    
    2008
    
    
    2007 (A)Stock options (1)
    
    
    705
    
    
    
    
    
    
    
    616
    
    
    
    Warrants (2)
    
    
    60
    
    
    
    
    
    
    
    60
    
    
    
    Warrants (3)
    
    
    2,473
    
    
    
    
    
    
    
    2,473
    
    
    
    Convertible securities (4)
    
    
    500
    
    
    
    
    
    
    
    500
    
    
    
    3,738
    
    
    
    
    
    
    
    3,649
    
    
    
    
 (A)
    
    Results of operations for the three and nine months ended September 30, 2007 reflect
results of operations prior to consummation of the Merger Transaction; at which point
no common share equivalents had yet been assumed or issued.(1)
    
    Exercise prices ranging from $5.11 to $185.50.(2)
    
    Warrants issued to a consultant with an exercise price of $6.34.(3)
    
    Warrants issues to Worsley Trust in connection with Merger Transaction, vesting in three
tranches conditioned upon the Companys acheivement of certain renewable energy-related
milestones, at an exercise price of $16.38 per share.(4)
    
    Convertible note to Worsley (see Note 8); assumes conversion based on $2.00 closing
market price of Renegy common stock on September 30, 2008. 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
     13




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##### Table of Contents



Three Months Ended,
    
    
    Nine Months Ended,September 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Stock options
    
    $
    61
    
    
    $
    
    
    
    $
    368
    
    
    $
    Warrants
    
    
    15
    
    
    
    
    
    
    
    91
    
    
    
    $
    76
    
    
    $
    
    
    
    $
    459
    
    
    $
    
 Note 6. Impairment of Long-Lived Assets
 Accounting for the Impairment or Disposal of Long-Lived
Assets
  Note 7. Revenue Concentrations and Major Receivables
    Note 8. Equity Infusion, Convertible Note, and Line of Credit
 Equity Infusion
  Convertible Note
   14




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##### Table of Contents



Line of Credit
   Note 9. Capitalized Interest
 Capitalization of
Interest Cost Capitalization of Interest Cost in Situations Involving Certain
Tax-Exempt Borrowings and Certain Gifts and Grants
   15




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Project interest costs incurred
    
    $
    644
    
    
    $
    558
    
    
    $
    1,929
    
    
    $
    1,558Project interest costs capitalized
    
    $
    
    
    
    $
    417
    
    
    $
    1,132
    
    
    $
    927
 Note 10. Fair Value Measurements
       Fair Value Measurementsat Reporting Date UsingQuoted
    
    
    SignificantPrices in
    
    
    Other
    
    
    SignificantAs of
    
    
    Active
    
    
    Observable
    
    
    UnobservableSeptember 30,
    
    
    Markets
    
    
    Inputs
    
    
    Inputs2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)AssetsAvailable-for-sale securities (1)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    LiabilitiesDerivative instruments (2)
    
    $
    3,477
    
    
    $
    
    
    
    $
    3,477
    
    
    $
    $
    3,477
    
    
    $
    
    
    
    $
    3,477
    
    
    $
    
  16




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##### Table of Contents



Fair Value Measurementsat Reporting Date UsingQuoted
    
    
    SignificantPrices in
    
    
    Other
    
    
    SignificantAs of
    
    
    Active
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Markets
    
    
    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. Note 11. Derivative Financial Instruments
 Accounting for Derivative Instruments and Hedging Activities,
   17




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##### Table of Contents



SWAP 1
    
    SWAP 2(ID Bonds)
    
    (SWMP Construction Loan)Notional amount at September 30, 2008
    
    $39,250,000
    
    $8,333,000Notional 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 September 30, 2008
    
    $3,274,000
    
    $203,000Fair 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,
  Note 13. Commitments and Contingencies
  Catalytica-related
 Eaton sale representations and warranties
  SCR-Tech sale representations and warranties
   18




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##### Table of Contents



Snowflake Entities-related
   1 2
  Post-merger Renegy-related
 Merger Transaction representations and warranties
    19




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##### Table of Contents



Overrun Guaranty
    Registration Rights Agreement
  Susanville Land Lease and Option to Purchase
 th
  20




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Catalyst Paper Dispute
 Accounting for
Contingencies
 Note 14. Warrants
   Note 15. Subsequent Events
     21




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##### Table of Contents



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
   22




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History
    Overview
      23




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Critical Accounting Policies and Estimates
   Impairment of Long-Lived Assets Accounting for the
Impairment or Disposal of Long-Lived Assets
  24




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##### Table of Contents



Results of Operations
  Three Months Ended
    
    
    
    
    
    
    Nine Months EndedSeptember 30,
    
    
    
    
    
    
    September 30,2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    ChangeRevenuesPower generation
    
    $
    3,179
    
    
    $
    
    
    
    $
    3,179
    
    
    $
    4,100
    
    
    $
    
    
    
    $
    4,100Wood product and other
    
    
    140
    
    
    
    217
    
    
    
    (77
    )
    
    
    676
    
    
    
    997
    
    
    
    (321
    )Total revenues
    
    
    3,319
    
    
    
    217
    
    
    
    3,102
    
    
    
    4,776
    
    
    
    997
    
    
    
    3,779Costs and expenses:Plant operating expenses
    
    
    3,917
    
    
    
    
    
    
    
    3,917
    
    
    
    5,716
    
    
    
    
    
    
    
    5,716Cost of wood product operations
    
    
    244
    
    
    
    (1,984
    )
    
    
    2,228
    
    
    
    2,064
    
    
    
    3,311
    
    
    
    (1,247
    )General, administrative and development
    
    
    2,787
    
    
    
    337
    
    
    
    2,450
    
    
    
    8,698
    
    
    
    814
    
    
    
    7,884Loss (gain) on sale or disposal of assets
    
    
    
    
    
    
    (2
    )
    
    
    2
    
    
    
    (157
    )
    
    
    87
    
    
    
    (244
    )Total costs and expenses
    
    
    6,948
    
    
    
    (1,649
    )
    
    
    8,597
    
    
    
    16,321
    
    
    
    4,212
    
    
    
    12,109Operating income (loss )
    
    
    (3,629
    )
    
    
    1,866
    
    
    
    (5,495
    )
    
    
    (11,545
    )
    
    
    (3,215
    )
    
    
    (8,330
    )Interest income
    
    
    17
    
    
    
    141
    
    
    
    (124
    )
    
    
    162
    
    
    
    670
    
    
    
    (508
    )Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    19Interest expense
    
    
    (898
    )
    
    
    (155
    )
    
    
    (743
    )
    
    
    (948
    )
    
    
    (662
    )
    
    
    (286
    )Other expense
    
    
    (63
    )
    
    
    (36
    )
    
    
    (27
    )
    
    
    (264
    )
    
    
    (110
    )
    
    
    (154
    )Debt commitment fees
    
    
    (265
    )
    
    
    (319
    )
    
    
    54
    
    
    
    (791
    )
    
    
    (890
    )
    
    
    99Change in fair value of derivative instruments
    
    
    106
    
    
    
    (1,201
    )
    
    
    1,307
    
    
    
    1,125
    
    
    
    588
    
    
    
    537Net income (loss)
    
    $
    (4,732
    )
    
    $
    296
    
    
    $
    (5,028
    )
    
    $
    (12,242
    )
    
    $
    (3,619
    )
    
    $
    (8,623
    )
 Comparison of the three and nine month periods ended September 30, 2008 and 2007
 Revenues.
    25




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Plant Operating Expenses.
   Cost of Wood Product Operations.
 Inventory Costs
  26




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General, Administrative and Development (GA&D) Expenses.
    Loss (Gain) on Sale or Disposal of Assets.
  27




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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.
  Income Taxes.
  28




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Liquidity and Capital Resources
         29




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30




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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 September 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.
  31




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  
 Item 1A. RISK FACTORS
  We may not be able to raise the additional capital we need on favorable terms, or at all.
  We may be unable to complete our assessment of the effectiveness of our internal controls over
financial reporting in a timely manner.
  We may reverse-split and/or deregister our common stock which could negatively impact the market
price of our common stock, availability of public information regarding our Company, and the
ability to trade our common stock.
   32




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##### Table of Contents



If the national and worldwide financial crisis intensifies, potential disruptions in the capital
and credit markets may adversely affect our businesses, including the availability and cost of
short-term funds for liquidity requirements, our ability to meet long-term commitments; each of
which could adversely affect our results of operations, cash flows, and financial condition.
  
 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
     33




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Nominee
    
    For
    
    
    WithheldRichard A. Abdoo
    
    
    5,390,555
    
    
    
    50,891
  BrokerFor
    
    Against
    
    Abstain
    
    Non-Votes4,640,178
    
    273,021
    
    37,386
    
    490,861
 
 Item 5. OTHER INFORMATION
 First Modification to Credit Agreement
    34




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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
    
    
    
    (4
    )
    
    Amended and Restated Certificate of Incorporation of the Registrant.3.2
    
    
    
    (9
    )
    
    Amended and Restated Bylaws of the Registrant, as of October 1, 2008.4.1
    
    
    
    (4
    )
    
    Stock Specimen of the Registrant.4.2
    
    
    
    (3
    )
    
    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
    
    
    
    (3
    )
    
    Common Stock Purchased Warrant issued October 1, 2007 to the Robert M. Worsley and Christi
M. Worsley Revocable Trust.4.4
    
    
    
    (5
    )
    
    Convertible Subordinated Promissory Note issued August 13, 2008 to the Robert M. Worsley and
Christi M. Worsley Revocable Trust.10.1
    
    
    
    (5
    )
    
    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.10.2
    
    
    
    *
    (5)
    
    Employment Agreement dated as of August 14, 2008 between the Registrant and Hugh W. Smith.10.3
    
    
    
    (6
    )
    
    Seventh 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 August 29, 2008.10.4
    
    
    
    (8
    )
    
    Eighth 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 September 30, 2008.10.5
    
    
    
    *
    (7)
    
    Amended and Restated 2007 Equity Incentive Plan.10.6
    
    
    
    *
**
    
    
    Amended and Restated Form of Stock Option Agreement.10.7
    
    
    
    *
**
    
    
    Amended and Restated Form of Restricted Stock Unit Agreement.10.8
    
    
    
    *
**
    
    
    Amended and Restated Form of Restricted Stock Agreement.
  35




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##### Table of Contents



ExhibitNumber
    
    Notes
    
    Description10.9
    
    
    
    *
    (9)
    
    Letter Agreement, dated October 1, 2008, by and between the Registrant and Hugh W. Smith.10.10
    
    
    
    *
    (9)
    
    Letter Agreement, dated October 1, 2008, by and between the Registrant and Robert M. Worsley.10.11
    
    
    
    **
    
    
    First Modification to Credit Agreement, dated November 14, 2008, by and between the
Registrant, Robert M. Worsley, Christi M. Worsley, the Robert M. Worsley and Christi M.
Worsley Revocable Trust, NZ Legacy, LLC, New Mexico & Arizona Land Company, LLC, and
Comerica Bank.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.
 
 +
    
    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 exhibits filed with our Form 8-K, filed on October 1, 2007.(4)
    
    Incorporated by reference to exhibits filed with our Form 10QSB, filed on November 14, 2007.(5)
    
    Incorporated by reference to exhibits filed with our Form 10-Q, filed on August 14, 2008.(6)
    
    Incorporated by reference to exhibits filed with our Form 8-K, filed on August 29, 2008.(7)
    
    Incorporated by reference to Appendix A to Registrants Definitive Proxy Statement on
Schedule 14A, filed on September 2, 2008.(8)
    
    Incorporated by reference to exhibits filed with our Form 8-K, filed on October 2, 2008.(9)
    
    Incorporated by reference to exhibits filed with our Form 8-K, filed on October 3, 2008.  36




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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)  37




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##### Table of Contents



RENEGY HOLDINGS, INC.
 
 EXHIBIT INDEX
 ExhibitNumber
    
    Notes
    
    Description10.6
    
    
    *
**
    
    Amended and Restated Form of Stock Option Agreement.10.7
    
    
    *
**
    
    Amended and Restated Form of Restricted Stock Unit Agreement.10.8
    
    
    *
**
    
    Amended and Restated Form of Restricted Stock Agreement.10.11
    
    
    **
    
    First Modification to Credit Agreement, dated November 14, 2008, by
and between the Registrant, Robert M. Worsley, Christi M. Worsley,
the Robert M. Worsley and Christi M. Worsley Revocable Trust, NZ
Legacy, LLC, New Mexico & Arizona Land Company, LLC, and Comerica
Bank.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.
 
 *
    
    Represents management contracts or compensatory plans for executive officers and
directors.**
    
    Filed herewith.  38