UNITED
STATES




SECURITIES
AND EXCHANGE COMMISSION




WASHINGTON,
D.C. 20549




FORM
10-K





x
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the fiscal year ended December 31, 2008OR ̈
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from ____________ to ____________





Commission
file number:  001-32918





GLOBAL ENERGY HOLDINGS
GROUP, INC.


(Exact
name of registrant as specified in its charter)





Delaware
              
              84-1169517(State
      or other jurisdiction of
              
              (I.R.S.
      Employerincorporation
      or organization)
              
              Identification
      No.)3348
      Peachtree Road NE
                Suite
      250, Tower Place 200
                Atlanta, Georgia
              
              30326(Address
      of principal executive offices)
              
              (Zip
      Code)





(404)
814-2500


(Registrant’s
telephone number, including area code)





XETHANOL
CORPORATION


(Former
Name, Former Address and Former Fiscal Year, If Changed Since Last
Report)




Securities
registered under Section 12(b) of the Exchange Act:




Title
      of each class
            
            Name
      of each exchange on which registeredCommon
      Stock, par value $.001 per share
            
            NYSE
      Amex





Securities
registered pursuant to Section 12(g) of the Act:  None





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


Yes  ̈No  þ









Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange
Act.                                                                                                                                              
        Yes  ̈No  þ





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.


Yes þ No   ̈





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K 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.  o





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).Yes  ̈No  þ





As of
June 30, 2008, the aggregate market value of the registrant’s common stock
held by non-affiliates of the registrant was $12,879,180.74 based on the closing
sale price of $0.46 per share as reported on the NYSE Amex
exchange.





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.  (Check one):





Large
      accelerated filer    ̈
                Accelerated
      filer    ̈Non-accelerated
      filer    ̈
                  (Do
      not check if a smaller reporting company)
                Smaller
      reporting company   þ





Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date.





Class
            
            Outstanding
      at March 31,2009Common
      Stock, $.001 par value per share
            
            29,070,103
      shares





As of
March 31, 2009, there were approximately 132 record holders of our common stock
and 29,070,103 shares of our common stock issued and outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE





Document
            
            Parts into which
    incorporatedNone









TABLE
OF CONTENTS




PART I
                                                                                                                                                  
                                                                                                                                                  1ITEM 1.
                                                                                                                                                  BUSINESS
                                                                                                                                                  1ITEM 1A.
                                                                                                                                                  RISK FACTORS
                                                                                                                                                  26ITEM 1B.
                                                                                                                                                  UNRESOLVED STAFF COMMENTS
                                                                                                                                                  37ITEM 2.
                                                                                                                                                  PROPERTIES
                                                                                                                                                  37ITEM 3.
                                                                                                                                                  LEGAL PROCEEDINGS
                                                                                                                                                  39ITEM 4.
                                                                                                                                                  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS
                                                                                                                                                  40PART II
                                                                                                                                                  
                                                                                                                                                  42ITEM 5.
                                                                                                                                                  MARKET FOR REGISTRANT’S COMMON
      EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
      SECURITIES.
                                                                                                                                                  42ITEM 6.
                                                                                                                                                  SELECTED FINANCIAL DATA
                                                                                                                                                  43ITEM 7.
                                                                                                                                                  MANAGEMENT’S DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF
      OPERATION
                                                                                                                                                  44ITEM 7A.
                                                                                                                                                  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
      MARKET RISK
                                                                                                                                                  55ITEM 8.
                                                                                                                                                  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                                                                                                                                                  F-1ITEM 9.
                                                                                                                                                  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
      ACCOUNTING AND FINANCIAL DISCLOSURE
                                                                                                                                                  56ITEM 9A(T).
                                                                                                                                                  CONTROLS AND PROCEDURES
                                                                                                                                                  56ITEM 9B.
                                                                                                                                                  OTHER INFORMATION
                                                                                                                                                  57PART III
                                                                                                                                                  
                                                                                                                                                  59ITEM 10.
                                                                                                                                                  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
                                                                                                                                                  59ITEM 11.
                                                                                                                                                  EXECUTIVE COMPENSATION
                                                                                                                                                  64ITEM 12.
                                                                                                                                                  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
      AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
                                                                                                                                                  76ITEM 13.
                                                                                                                                                  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
      AND DIRECTOR INDEPENDENCE
                                                                                                                                                  81ITEM 14.
                                                                                                                                                  PRINCIPAL
      ACCOUNTING FEES AND SERVICES
                                                                                                                                                  85ITEM 15.
                                                                                                                                                  EXHIBITS, FINANCIAL STATEMENT
      SCHEDULES
                                                                                                                                                  86









PART
I





ITEM
1.              BUSINESS





Overview





Global Energy Holdings Group, Inc. (the
“Company”), formerly named Xethanol Corporation, is a diversified renewable
energy company based in Atlanta, Georgia.  The Company’s principal
operating division is Global Energy Systems, Inc. (“GES”), which is developing
renewable energy projects, including biomass projects, such as gasification, and
landfill-gas-to-energy projects.  The Company will need substantial
additional capital to pursue its plans and projects, and given the current
economic and financial climate, the Company can give no assurance that it will
be able to raise the additional capital it needs on commercially acceptable
terms, or at all.  See Item 1A, “Risk Factors.”





In 2008, we determined to focus our
operations on the development of renewable energy projects, such as biomass
gasification and landfill gas-to-energy projects, and to exit our legacy ethanol
business.  In furtherance of this new focus, in 2008 we changed
our name to Global Energy Holdings Group, Inc. and hired Dr. Romilos
Papadopoulos as our Chief Financial Officer and Chief Operating Officer and
Michael Ellis as President of our GES division, each of whom has significant
renewable energy experience.  In the first quarter of 2009, we
purchased the rights to collect all landfill gas generated at the Hickory Ridge
landfill (DeKalb County, Georgia) owned by Republic Services, Inc. and at the
Zemel Road landfill (Port Charlotte, Florida) owned by Charlotte County Florida,
which we intend to process into a saleable energy product.  On January
28, 2009, we entered into a definitive agreement to acquire WoodTech, LLC and
affiliated entities, which operate a wood fuel and landscape materials
processing business in Cherokee County, Georgia.  Currently, WoodTech
and its affiliates have the capacity to produce over 900,000 tons of biomass
annually and would provide an immediate source of operating revenue to the
Company.  WoodTech is also developing a biomass recycling center,
which upon completion later this year, will have the capacity to produce
annually over 1,225,000 tons of biomass products, including mulch, wood chips,
potting soil, bedding material and wood fuel.  The Company plans to
complete the acquisition of WoodTech later this year.





The Company’s only source of revenue
during 2008 was from its sales of ethanol and related products at its
Blairstown, Iowa corn-based ethanol plant (the “Blairstown
Facility”).  As a result of high prices for corn and natural gas, the
Company ceased production of ethanol at the Blairstown Facility on May 1, 2008
to reduce its operating losses.  We have permanently suspended
construction of a previously announced second ethanol plant adjacent to our
Blairstown Facility due to the changing ethanol market and our inability to
arrange debt or equity financing for the project.  We are currently
seeking to sell our Blairstown Facility.  We no longer intend to build
a previously announced demonstration plant in Florida for converting citrus peel
waste into ethanol and have released our interest in that project in exchange
for the cancellation of the remaining balance of a note we issued in connection
with that project.  After evaluating our agreements to manufacture and
sell a diesel biofuel based on technology that New Generation Biofuels Holdings,
Inc. (“NGBF”), formerly known as H2Diesel Holdings, Inc., sublicensed to us, we
do not intend to pursue the manufacture and sale of a diesel biofuel based on
NGBF’s technology.  We have sold all of our shares of NGBF common
stock in a series of public sales and one private sale and have agreed to assign
our sublicense agreement with NGBF to 2020 Energy, LLC, an Arizona limited
liability company, if 2020 Energy, LLC obtains the written consent of NGBF to
the assignment.  We also own a former pharmaceutical manufacturing
complex in Augusta, Georgia and a former medium density fiberboard plant in
Spring Hope, North Carolina.  We have decided that our Augusta and
Spring Hope facilities do not fit within our long-term corporate strategy and
have been pursuing the sale of those facilities.









Our
corporate headquarters are located at 3348 Peachtree Road NE, Suite 250, Tower
Place 200, Atlanta, Georgia 30326, and our telephone number is (404)
814-2500.  Our website is located at www.gnhgroup.com.





This Item
1 is divided into two parts.  The first part describes our formation,
capitalization, acquisitions, proposed dispositions and
impairments.  The second part describes our current business and
strategy.





DESCRIPTION
OF FORMATION AND CAPITALIZATION





Historical
Overview





This
section of the report describes our formation, the reverse merger in 2005 by
which we became a public company, and several other transactions in which we
have issued our shares to raise capital or to acquire businesses, assets or
technology.  This section also describes the dispositions or proposed
dispositions of some of those assets, as well as impairments we have
accrued.





Global
Energy Holdings Group, Inc., formerly named Xethanol Corporation, is the
successor to a corporation that was organized under the laws of Delaware on
January 24, 2000.  In this report, we refer to that predecessor
corporation as “Old Xethanol.”  Old Xethanol was formed to capitalize
on the growing market for ethanol and its co-products.  Old Xethanol
commenced ethanol production in August 2003 with the acquisition of Permeate
Refining, Inc., which operated a small ethanol production facility in Iowa that
used non-corn-based feedstocks.  In October 2004, Old Xethanol
purchased its second ethanol production facility located on 25.5 acres in
Blairstown, Iowa, which used corn as its feedstock.  As discussed
below, we ceased production of ethanol at the Permeate facility in April 2005
and at the Blairstown Facility on May 1, 2008.





The
Reverse Merger





In
February 2005, Old Xethanol engaged in a series of transactions, which we
collectively refer to as the “reverse merger,” to gain access to the capital
markets.  In the reverse merger, we formed a wholly owned subsidiary
that merged with and into Old Xethanol, which then became our wholly owned
subsidiary.  In the merger, the former stockholders of Old Xethanol
received 9,706,781 shares of our common stock, which then comprised
approximately 74% of our outstanding common stock following the merger, in
exchange for their common stock in Old Xethanol.  Immediately
following consummation of the reverse merger, we discontinued our previous
business activities, reincorporated as a Delaware corporation, changed our name
to Xethanol Corporation and adopted the business of Old Xethanol as our sole
line of business.




- 2
-




All
outstanding warrants issued by Old Xethanol before the reverse merger to
purchase shares of Old Xethanol common stock were amended to become warrants to
purchase our common stock on the same terms and conditions as those warrants
issued by Old Xethanol, except that the number of shares issuable on the
exercise of those warrants was amended to reflect the applicable exchange
ratio.  Before the closing of the reverse merger, all outstanding Old
Xethanol warrants were exercisable for 1,465,068 shares of Old Xethanol common
stock.  At the closing of the merger, these warrants were amended to
become warrants to purchase 1,293,376 shares of our common
stock.  Neither Old Xethanol nor we had any stock options outstanding
as of the closing of the reverse merger.





We
accounted for the reverse merger as a recapitalization of Old Xethanol, because
immediately following the merger the former stockholders of Old Xethanol owned a
majority of the outstanding shares of our common stock.  Old Xethanol
was deemed to be the acquirer in the reverse merger and, consequently, the
assets and liabilities and the historical operations that are reflected in our
financial statements are those of Old Xethanol and are recorded at the
historical cost basis of Old Xethanol.  No arrangements or
understandings exist among present or former controlling stockholders with
respect to the election of members of our board of directors and, to our
knowledge, no other arrangements exist that might result in a change of control
of our company.  Further, as a result of the issuance of the 9,706,781
shares of our common stock to the former stockholders of Old Xethanol, a change
in control of our company occurred on the date of the consummation of the
merger.





In
connection with the reverse merger, we closed a private offering of 1,190,116
shares of our common stock at a purchase price of $3.25 per share to purchasers
that qualified as accredited investors, as defined in Regulation D promulgated
under the Securities Act of 1933.  Gross proceeds from the private
offering were $3,867,877.  Placement agents and advisors received
665,834 shares of our common stock in connection with the private offering and
reverse merger.  After the closings of the reverse merger and the
private offering, we had outstanding 13,437,033 shares of common stock and
warrants to purchase 1,293,376 shares of common stock.





Ethanol
Operations and Related Investments





Old Xethanol was formed in 2000 to
capitalize on the growing market for ethanol and its co-products.  As
discussed above, in May 2008 we determined to focus our operations on the
development of renewable energy projects, including biomass projects, such as
gasification, and landfill gas-to-energy projects, and to exit our legacy
ethanol business.  Our investments in the ethanol business are
described below.




- 3
-




Permeate
Facility.  Old Xethanol commenced ethanol production in August
2003 with the acquisition of Iowa-based Permeate Refining,
Inc.  Permeate had operated for more than a decade, principally using
non-corn-based feedstocks such as waste candy sugars sourced from the
greater-Chicago candy industry and waste starches sourced from regional wet
millers.  Permeate had a nominal production capacity of 1.6 million
gallons of ethanol per year.  In April 2005, we ceased operations at
Permeate and planned to upgrade the site.  Given Permeate’s small
production size and location in a residential community, as well as subsequent
acquisitions of more attractive sites, however, we determined in 2007 that
Permeate was no longer a core asset.  At September 30, 2007, we
recorded a $522,000 impairment loss on fixed assets related to our Permeate
assets.  We sold the Permeate facility, at no gain or loss, for
$500,000 in November 2007.





Blairstown
Facility.  In October 2004, Old Xethanol purchased its second
facility located on 25.5 acres in Blairstown, Iowa.  We operated this
facility until May 1, 2008, when we decided to cease production to reduce
operating losses.  When we acquired it, the Blairstown plant was idle
and in bankruptcy.  After substantial upgrades and refurbishment, we
recommenced production in July 2005.  The facility was producing
ethanol at a rate of approximately 5.6 million gallons per year, using corn as
its feedstock.  In addition to ethanol production, the Blairstown
Facility also produced distillers wet grains, or DWG, a by-product of the
traditional corn-to-ethanol process.  Our 2008 sales and revenue
relate entirely to the Blairstown Facility.  The Company performed an
analysis of the fair market value of the property at December 31, 2008 and
determined that an impairment loss of $1.75 million was necessary.





In July
2006, we announced plans to construct a second ethanol facility at the
Blairstown site with an additional production capacity of 35 million gallons of
ethanol per year.  We acquired all necessary permits, purchased an
adjacent 55-acre lot, engaged consultants for design and engineering services,
and completed site preparation.  In 2007, we permanently suspended
construction of this second ethanol plant as a result of the changing ethanol
market, high prices for corn and our inability to arrange debt or equity
financing for the project.  For these reasons, we recorded an
impairment loss of $2.6 million at December 31, 2007 to reflect some of the
costs incurred on this proposed ethanol facility.  We also performed
an analysis of the fair market value of the property at December 31, 2008 and
determined that an additional impairment loss of $.95 million was
necessary.  We are actively looking for a buyer of the Blairstown
Facility but we can offer no assurances regarding how long it will take to sell
the facility or the price we might receive.





Relationship with UTEK
Corporation.  In April 2004, Old Xethanol engaged UTEK
Corporation, a publicly-traded technology transfer company, to assist it in
identifying technologies to enable it to lower costs throughout the ethanol
production cycle and create a technology platform for biomass
conversion.  Old Xethanol entered into a strategic alliance agreement
with UTEK that detailed the research and development activities to be performed
by UTEK on its behalf.  The UTEK agreement expired on March 31,
2007.  Under this arrangement, we acquired a portfolio of diverse
technologies and developed strategic alliances with government-sponsored
research facilities at the National Renewable Energy Laboratory and the U.S.
Department of Agriculture’s Forest Products Labs, as well as research labs at
Queen’s University, Ontario, Canada, Virginia Polytechnic Institute and State
University, and the University of North Dakota.  Through these
strategic alliances, we outsourced our research and development to specialists
in the fields of enzyme, fermentation and gasification
technologies.  Under this arrangement, Old Xethanol issued UTEK shares
of its common stock, which were converted into 1,142,152 shares of our common
stock in the reverse merger.




- 4
-




Investment in New Generation
Biofuels Holdings, Inc.  On April 14, 2006, we entered into a
sublicense agreement with New Generation Biofuels Holdings, Inc. (“NGBF”),
formerly known as H2Diesel, Inc., a development stage company that has generated
only nominal revenue.  The sublicense agreement was subsequently
amended and restated on June 15, 2006, effective as of April 14, 2006 (as
amended and restated, the “Sublicense Agreement”).  NGBF is the
licensee of a proprietary vegetable oil-based diesel biofuel to be used as a
substitute for conventional petroleum diesel and biodiesel, heating and other
fuels, under an exclusive license agreement with the inventor of the
biofuel.  Under the Sublicense Agreement, we were granted (a) an
exclusive sublicense to make, use and sell products manufactured by using the
NGBF fuel additive in Maine, Vermont, New Hampshire, Massachusetts, Connecticut,
Rhode Island, New York, Pennsylvania, Delaware, New Jersey, Virginia, West
Virginia, North Carolina, South Carolina, Georgia and Florida, and (b) a
non-exclusive license to sell those products anywhere else within North America,
Central America and the Caribbean.  As discussed below, we do not
intend to pursue the manufacture and sale of a diesel biofuel based on NGBF’s
technology.  In connection with the March 18, 2009 sale of our
5,301,300 NGBF shares (discussed below), we agreed to assign to 2020 Energy,
LLC, an Arizona limited liability company (“2020 Energy”), all of our interest
in and rights under the Sublicense Agreement if 2020 Energy obtains NGBF’s
consent to the assignment.





The
material terms of the Sublicense Agreement are described under “Intellectual
Property Rights and Patents - New Generation Biofuels Sublicense”
below.  We entered into the Sublicense Agreement in connection with
(a) an investment agreement dated as of April 14, 2006 among NGBF, two
institutional investors and us; and (b) a management agreement dated as of April
14, 2006 between NGBF and us.  Both the investment agreement and the
management agreement were amended on June 15, 2006, effective as of April 14,
2006.  NGBF terminated the management agreement effective as of
September 25, 2006.  Under the April 14, 2006 investment agreement, on
April 14, 2006: (a) NGBF issued to us a total of 2,600,000 shares of its common
stock; and (b) we granted the institutional investors the right to require us to
purchase the 3,250,000 shares of NGBF common stock they owned in exchange for
500,000 shares of our common stock (the “Put Right”).  NGBF had issued
the 3,250,000 shares of its common stock to the institutional investors on March
20, 2006, together with stock options to purchase 2,000,000 shares of its common
stock at an aggregate exercise price of $5,000,000.  The institutional
investors paid NGBF $2,000,000 for the NGBF common stock and
options.  The option expired unexercised on August 21,
2006.





Of the
2,600,000 shares of NGBF common stock issued to us, 1,300,000 shares were issued
as an inducement to enter into the Put Right.  The fair value of these
shares was $793,815, based on a price per share of approximately $0.61, which we
credited to additional paid-in capital.  Concurrently, on April 14,
2006, the institutional investors exercised the Put Right, and we purchased
their 3,250,000 shares of NGBF common stock in exchange for 500,000 shares of
our common stock, which increased our ownership of NGBF common stock to
5,850,000 shares.  We have entered in to a registration rights
agreement dated as of April 14, 2006 with the institutional investors under
which they have the right to require us to register the resale of these shares
of our common stock with the U.S. Securities and Exchange Commission (“SEC”)
under the Securities Act of 1933.  Under the registration rights
agreement, subject to its terms and conditions, the investors are entitled to
require us to file up to two registration statements and to “piggyback”
registration rights.




- 5
-




On
October 16, 2006, we entered into a registration rights agreement with NGBF
covering our 5,850,000 shares of NGBF common stock.  On October 20,
2006, NGBF consummated a “reverse merger” transaction, as a result of which NGBF
became a wholly owned subsidiary of Wireless Holdings, Inc., a Florida shell
corporation without any continuing operations or assets, and each share of NGBF
common stock outstanding immediately before the merger automatically converted
into one share of Wireless Holdings, Inc. common stock.  Wireless
Holdings, Inc. subsequently changed its name to New Generation Biofuels
Holdings, Inc.  In connection with the reverse merger, Wireless
Holdings, Inc. assumed NGBF’s obligations under the registration rights
agreement.  We did not request that NGBF file a registration statement
for the resale by us of our NGBF shares prior to our sale of all of our NGBF
shares (described below).





On
October 5, 2007, we entered into a stock purchase and termination agreement with
NGBF.  Under the agreement, we agreed to sell to NGBF 5,460,000 of our
shares of the common stock of NGBF for the aggregate price of $7.0 million, or
approximately $1.28 per share.  In addition, the agreement provided
for termination, at the closing of the sale, of the agreements described above
to which NGBF and we are parties and cancellation of our $50,000 loan to
NGBF.  On signing the agreement, NGBF paid us a $250,000
non-refundable deposit to apply towards the purchase price.





The
closing of the sale was conditioned on NGBF’s obtaining a minimum of $10,000,000
of new financing and that if the closing did not occur on or before November 9,
2007, or a later date as the parties might agree in writing, each party would
have an independent right to terminate the agreement on 10 calendar days’
written notice to the other.  We had the right to retain the
non-refundable deposit of $250,000 if the agreement was terminated other than as
a result of a breach by us of our obligations under the agreement.  On
or about November 13, 2007, the parties agreed in writing to amend the agreement
to extend the closing date referenced above from November 9, 2007 to November
23, 2007.





The
closing did not occur on or before November 23, 2007.  On January 7,
2008, we provided NGBF with written notice to terminate the agreement effective
January 17, 2008, 10 calendar days from the date of the notice.  The
agreement was terminated on January 17, 2008.  We retained the
non-refundable deposit of $250,000 and our shares of NGBF common
stock.





Since the
termination of the stock purchase and termination agreement, we have sold all of
our shares of NGBF common stock pursuant to a series of market sales and one
private transaction.  We began selling shares of NGBF common stock in
the market in February 2008.  During 2008, we sold 548,700 shares of
NGBF common stock in the market for proceeds of approximately
$2,408,100.  Because we owned more than 10% of the outstanding shares
of NGBF, we relied on Rule 144 under the Securities Act of 1933 in selling the
NGBF shares in the market.  Under that rule, the volume of our sales
of NGBF common stock was limited to 1% of the outstanding shares of NGBF common
stock every 90 days.




- 6
-




As of
March 1, 2009, we held 5,301,300 shares of NGBF common stock, which represented
approximately 26.1% of the NGBF common stock outstanding, based on the number of
shares of NGBF common stock reported to be outstanding as of January 14, 2009 in
NGBF’s Pre-Effective Amendment No. 1 to its Registration Statement on Form S-3
filed with the SEC on January 15, 2009.  On March 18, 2009, we
completed the private sale of the remaining 5,301,300 shares of NGBF common
stock that we owned to 2020 Energy pursuant to a stock purchase agreement
between us and 2020 Energy dated March 17, 2009.  The aggregate
purchase price we received for the sale of these shares was
$583,143.  We also agreed under the stock purchase agreement to assign
to 2020 Energy our interest in and rights under the Sublicense Agreement,
described above, if 2020 Energy obtained NGBF’s written consent to such
assignment.





We
consider our former investment in NGBF as a variable interest in a variable
interest entity.  Because we were not the primary beneficiary of the
variable interest entity, we have accounted for our investment in NGBF using the
equity method of accounting under APB Opinion No. 18, The Equity Method of Accounting for
Investments in Common Stock, at the fair value of the 500,000 shares of
our common stock that we issued, or $5,425,000.





For the
period from April 14, 2006 through December 31, 2006, we recorded a loss on our
investment in NGBF of $1.6 million.  For the years ended December 31,
2007 and 2008, we recorded a loss on our investment in NGBF of $1.2 million and
$618,000, respectively.  These losses represent our portion of NGBF’s
net losses, based on the equity method of accounting.  We recognized
losses in the value of the investment in NGBF that is other than a temporary
decline in accordance with APB18.





CoastalXethanol
LLC.  In May 2006, we organized CoastalXethanol LLC to develop
plants for the production of ethanol in Georgia and parts of South
Carolina.  CoastalXethanol was a joint venture with Coastal Energy
Development, Inc. (“CED”).  As discussed below, we acquired CED’s
interest in CoastalXethanol in September 2007, and Coastal Xethanol is now our
wholly owned subsidiary.





We
entered into an organizational agreement with CED under which, among other
things, we issued to CED a warrant to purchase 200,000 shares of our common
stock.  We acquired an 80% membership interest in CoastalXethanol for
a capital contribution of $40,000, and CED acquired a 20% membership interest in
CoastalXethanol for a capital contribution of $10,000.  In August
2006, Augusta BioFuels, LLC, a wholly owned subsidiary of CoastalXethanol,
purchased a former pharmaceutical manufacturing complex located in Augusta,
Georgia from Pfizer Inc. for approximately $8,400,000 in cash.  In
October 2006, Augusta BioFuels sold surplus equipment from the Augusta facility
for $3,100,000 in cash.





On March
5, 2007, we, along with CoastalXethanol, initiated litigation against CED
alleging that it failed to repay loans and failed to account properly for the
funds it spent.  On April 3, 2007, CED filed an answer and
counterclaim, asserting various claims.  On September 14, 2007, we
reached a settlement with CED and agreed to pay CED $400,000 in exchange for
CED’s 20% interest in CoastalXethanol.  The parties executed releases
and replaced the warrant described above with a warrant to purchase 200,000
shares of our common stock that is exercisable at an exercise price of $6.85 per
share through May 30, 2009.  The payment and purchase of CED’s 20%
interest in CoastalXethanol was completed on September 24, 2007.  We
dismissed our claims against CED with prejudice.




- 7
-




We have
reevaluated the Augusta facility and have decided that it does not fit within
our long-term corporate strategy.  On March 20, 2008, our board
authorized management to pursue the sale of the facility, which we are
pursuing.  We estimate that upon the sale of the Augusta facility, we
would reduce our annual overhead by approximately $500,000.  We can
offer no assurances regarding how long it will take to sell the facility or the
price we might receive.  In connection with the potential sale of the
property, we performed a market study analysis of the amount that we can expect
to realize upon the sale of the site and, based on this analysis, recorded a
$2.1 million impairment loss as of December 31, 2007.  The Company
also performed an analysis of the fair market value of the property at December
31, 2008 and determined that no additional impairment loss was
necessary.





NewEnglandXethanol,
LLC.  On June 23, 2006, we entered into an organizational
agreement with Global Energy and Management, LLC, an unrelated entity (“GEM”),
with respect to the formation of NewEnglandXethanol, LLC, a Delaware limited
liability company, under which, among other things, we issued to GEM a warrant
to purchase 20,000 shares of our common stock at a purchase price of $6.85 per
share that was first exercisable on the first anniversary of the date of the
organizational agreement and expires on the fourth anniversary of the date of
the organizational agreement.  In December 2006, the
NewEnglandXethanol joint venture effectively ended based on a disagreement
between GEM and us with respect to the actions that GEM and we were required to
take pursuant to our joint venture.  We do not believe that the
NewEnglandXethanol joint venture will conduct any further business.





In
December 2007, GEM filed an action in the federal court for the Southern
District of New York against the Company and nine of our current or former
officers, directors and affiliates, entitled Global Energy Management v.
Xethanol Corporation, et. al.  The lawsuit alleges fraud by the
defendants in connection with GEM’s alleged investment of $250,000 in
NewEnglandXethanol.  Initially, GEM sought more than $10,000,000 in
damages plus pre-judgment interest and costs based on its alleged investment of
$250,000.  In an amendment to its complaint, GEM has reduced its
requested damages to $250,000.  Upon the Company’s motion, the court
dismissed the complaint on February 23, 2009, holding that GEM could file an
amended complaint only upon payment to the Company of $5,000 towards its legal
fees.  On March 17, 2009, GEM paid the Company $5,000 and filed its
fourth amended complaint against the Company and four former officers and
directors, seeking recovery of its alleged $250,000 investment, lost profits,
consequential damages, interest and costs.  The Company has asked the
court for leave to move to dismiss the fourth amended complaint and has
instructed counsel to vigorously represent and defend our interests in this
litigation.




- 8
-




Spring Hope Manufacturing
Facility.  In November 2006, we acquired the assets of Carolina
Fiberboard Corporation, LLC, a former medium density fiberboard plant located in
Spring Hope, North Carolina, for $4,000,000 in cash, 1,197,000 shares of our
common stock, and warrants to purchase an additional 300,000 shares of our
common stock at an exercise price of $4.00 per share.  We agreed to
file a registration statement registering the resale of the shares of common
stock issued at closing and the shares of common stock issuable on exercise of
the warrants no later than 20 days after the effective date of another
registration statement that became effective on August 10, 2007.  The
warrants are exercisable until the third anniversary of issuance.  We
have not filed a registration statement for these shares of common stock and
warrants.





We have
reevaluated this facility and have determined that it does not fit within our
long-term corporate strategy.  On March 20, 2008, our board authorized
management to pursue the sale of the facility, and management is doing
so.  Upon the sale of the facility, we estimate that we would reduce
our annual overhead by approximately $150,000.  Before we sell the
property (or as a term of its sale), we will have to resolve certain liens on
the property filed by companies that performed, or have claimed to have
performed, environmental remediation and demolition work on the
property.  We can offer no assurances regarding how long it will take
to sell the facility or the price we might receive.  In connection
with the potential sale of the property, we performed a market study analysis of
the amount that we can expect to realize upon the sale of the site and, based on
this analysis, recorded a $4.2 million impairment loss as of December 31,
2007.  The Company also performed an analysis of the fair market value
of the property at December 31, 2008 and determined that no additional
impairment loss was necessary.





Renewable Spirits,
LLC.  In December 2006, Southeast Biofuels, LLC, a newly formed
subsidiary of CoastalXethanol, purchased assets from Renewable Spirits, LLC in
exchange for $100,000 in cash, a $600,000 note payable over 120 months and a 22%
membership interest in Southeast Biofuels.  The purchased assets
consisted of equipment and intellectual property associated with an experimental
system for the production of ethanol and other marketable co-products from waste
citrus biomass, including Renewable Spirits’ rights under a cooperative research
and development agreement with the U.S. Department of Agriculture’s Agricultural
Research Service.





We have
reevaluated our investment in Southeast Biofuels and have decided that it does
not fit within our long-term corporate strategy.  On January 19, 2009,
we entered into an agreement with Renewable Spirits to exchange our remaining
78% interest in Southeast Biofuels in return for cancellation of the remaining
balance of $279,000 on the note.  As a result of this transaction, we
no longer have any interest in Southeast Biofuels or the purchased
assets.





Issuances
of Securities





In addition to the issuances of our
common stock and warrants to purchase our common stock in the transactions
described above, we issued securities to raise additional capital in the
transactions described below.





Senior Secured Note
Financing.  On January 19, 2005, Old Xethanol completed a
transaction with two institutional investors to refinance the acquisition of
bank debt of its subsidiary that operated our Blairstown Facility.  At
the closing of that transaction, the subsidiary issued senior secured royalty
income notes in the total principal amount of $5,000,000.  The
proceeds of the financing were used to:




- 9
-




·
            satisfy
      the $3,000,000 demand note held by an Omaha, Nebraska commercial bank in
      connection with the purchase of the Blairstown
  Facility;


·
            refurbish
      and upgrade production capacity at the Blairstown
  Facility;


·
            fund
      start-up activities at the Blairstown Facility and related working capital
      requirements; and


·
            pay
      legal and other professional fees.





In
addition, on August 8, 2005, we completed another transaction with the same two
institutional investors and, at the closing of that transaction, the subsidiary
issued senior secured royalty income notes in the aggregate principal amount of
$1,600,000.  We used the proceeds of the financing to repay funds we
had advanced to the subsidiary, and we used those repaid funds for working
capital and general corporate purposes.





The
senior secured royalty income notes provided for interest to be paid
semi-annually at the greater of 10% per year or 5% of gross revenues from sales
of ethanol, wet distillers grain and any other co-products, including xylitol,
at the Blairstown Facility, with principal becoming due in January
2012.  We had the right to require the holders of the notes, from and
after January 2008, to surrender their notes for an amount equal to 130% of the
outstanding principal, plus unpaid accrued interest.  The holders of
the notes had the right to convert their notes into shares of our common stock
at any time at a conversion price equal to $4.00 per share (equivalent to
1,650,000 shares), which was in excess of the $3.25 purchase price for shares
sold in our February 2005 private offering in connection with the reverse
merger.





On April
21, 2006, the holders of our $5,000,000 senior secured royalty income notes and
$1,600,000 senior secured royalty income notes exercised their rights to convert
the principal amounts of the notes into shares of our common stock at a price
equal to $4.00 per share.  In connection with the conversions, we
issued: (a) 1,250,000 shares of common stock and a three-year warrant to
purchase 250,000 shares of common stock at a purchase price of $12.50 to the
holders of the $5,000,000 notes; and (b) 400,000 shares and a three-year warrant
to purchase 80,000 shares of our common stock at a purchase price of $12.50 to
the holders of the $1,600,000 notes.  The subsidiary had pledged its
land, buildings and site improvements, mechanical and process equipment, and
specific personal property as security for the payment of the principal and
interest of the notes.  Upon the conversion of the secured notes into
our common stock on April 21, 2006, the security interest in our property was
released.





Fusion Capital Common Stock
Purchase Agreement.  On October 18, 2005, we entered into a
common stock purchase agreement with Fusion Capital Fund II, LLC, under which
Fusion Capital agreed, under certain conditions, to purchase on each trading day
$40,000 of our common stock up to an aggregate of $20 million over a 25-month
period, subject to earlier termination at our discretion.  Under the
terms of this agreement, we issued 303,556 shares of our common stock to Fusion
Capital as a commitment fee.  We sold a total of 1,894,699 shares to
Fusion Capital for net cash proceeds of $9,611,680.  On November 13,
2007, we and Fusion Capital agreed to terminate the agreement and a related
registration rights agreement.




- 10
-




Multiple Investor Securities
Purchase Agreement.  On April 3, 2006, we entered into a
securities purchase agreement with 100 investors.  Under this
agreement, on April 13, 2006, we issued to the investors:





·
            6,697,827
      shares of our common stock at a purchase price of $4.50 per
      share;


·
            three-year
      Series A warrants to purchase up to 1,339,605 shares of common stock at an
      exercise price of $4.50 per share;
and


·
            three-year
      Series B warrants to purchase up to 669,846 shares of common stock at an
      exercise price of $6.85 per share.





We
received $30,139,951 from the investors for these securities.  We also
issued Series A warrants to purchase up to 606,938 shares of common stock to
placement agents.  All of the warrants expired on April 13,
2009.  None of the warrants were exercised prior to their
expiration.





In 2007, we filed a registration
statement on Form SB-2, which the SEC declared effective on August 10,
2007.  The registration covered the resale of the 6,697,827 shares of
common stock issued to these investors and the resale of up to 2,009,451
additional shares of common stock that were issuable on the exercise of
Series A warrants and Series B warrants issued to those
investors.  The registration statement also covered the resale of up
to 606,938 additional shares of common stock that were issuable on exercise
of the Series A warrants we issued to the placement agents.





Goldman Sachs Securities
Purchase Agreement.  Also on April 3, 2006, we entered into a
securities purchase agreement with Goldman Sachs.  Under this
agreement, on April 13, 2006, we issued to Goldman Sachs:





·
            888,889
      shares of our common stock at a purchase price of $4.50 per
      share;


·
            three-year
      Series A warrants to purchase up to 177,778 shares of common stock at an
      exercise price of $4.50 per share;
and


·
            three-year
      Series B warrants to purchase up to 88,889 shares of common stock at an
      exercise price of $6.85 per share.





We
received $4,000,000 from Goldman Sachs for these securities.  If
Goldman Sachs had exercised all of its warrants, its total investment would have
been $5,408,890.  All of the warrants expired on April 13, 2009, and
none were exercised prior to their expiration.




- 11
-




DESCRIPTION
OF BUSINESS





Company
Overview





Global Energy Holdings Group, Inc. (the
“Company”), formerly named Xethanol Corporation, is a diversified renewable
energy company based in Atlanta, Georgia.  The Company’s principal
operating division is Global Energy Systems, Inc. (“GES”), which is developing
renewable energy projects, including biomass projects, such as gasification, and
landfill gas-to-energy projects.  The Company will need substantial
additional capital to pursue its plans and projects, and given the current
economic and financial climate, the Company can give no assurance that it will
be able to raise the additional capital it needs on commercially acceptable
terms, or at all.  See Item1A, “Risk Factors.”





Current
Business Operations and Investments





Our current business operations and
investments include:




·
            the
      right to purchase all landfill gas generated at the Hickory Ridge Landfill
      in DeKalb County, Georgia.




·
            the
      right to purchase all landfill gas generated at the Zemel Road Landfill in
      Port Charlotte, Florida.




·
            utility
      energy service contract Master Agreement with AGL Services Company and The
      Southern Company.




·
            minority
      investments in renewable energy or clean technology
      businesses.




We
describe each of these current business operations and investments in greater
detail below.  In addition, the Company entered into a definitive
agreement on January 28, 2009 to acquire WoodTech, LLC and affiliated entities,
which operate a wood fuel and landscape materials processing business in
Cherokee County, Georgia.  The Company plans to complete the
acquisition of WoodTech later this year, but will need to obtain financing to do
so, which may not be available. The sellers in this transaction may terminate
the purchase agreement before the deal can be completed.  Even if we
are successful closing the acquisition of the WoodTech companies, financing will
be required to meet our plans for the wood gasification facility at the WoodTech
site and we cannot assure that such financing will be readily available; see
Item 1A, “Risk Factors.”




As
discussed above, in 2008 we determined to focus our operations on the
development of renewable energy projects, such as biomass gasification and
landfill gas-to-energy projects, and to exit our heritage ethanol
business.  In that connection, we have decided not to pursue certain
business opportunities and to sell some of our assets.  As of May 1,
2008, we ceased producing ethanol at our Blairstown, Iowa facility and are
actively seeking a buyer for that facility.  We are also seeking
buyers for the former pharmaceutical manufacturing complex in Augusta, Georgia
acquired from Pfizer, Inc. and the former medium density fiberboard plant in
Spring Hope, North Carolina acquired from Carolina Fiberboard Corporation,
LLC.  We cannot offer any assurance regarding how long it will take us
to sell any of these facilities or the prices we might receive.  In
addition, after evaluating our agreements to manufacture and sell a diesel
biofuel based on technology that New Generation Biofuels Holdings, Inc.
(formerly known as H2Diesel Holdings, Inc.) (“NGBF”) sublicensed to us, we have
decided not to pursue that business and have sold all of our shares of common
stock of NGBF.  We have also agreed to assign our rights and interests
in our sublicense agreement with NGBF to 2020 Energy, LLC, an Arizona limited
liability company, if 2020 Energy, LLC obtains the written consent of NGBF to
the assignment.Finally, we have decided
to not pursue the development of a citrus waste-to-ethanol demonstration plant
in Florida and have assigned our interest in that project in exchange for the
cancellation of a note issued in connection with that project.




- 12
-




Landfill
Gas-To-Energy Business





Industry
Overview





The
landfill gas-to-energy industry utilizes gas that results as a byproduct of the
decay of organic matter in municipal solid waste (“MSW”)
landfills.  Landfill gas (“LFG”) consists of approximately 50% methane
gas and 50% carbon dioxide, with other trace elements.  LFG is a
reliable and renewable energy source and has a heat value ranging from 400 to
600 British Thermal Units (Btu) per cubic foot.  LFG can be used in
various energy production applications, including direct use, electricity
production and refinement to pipeline quality gas.  According to the
U.S. Environmental Protection Agency (“EPA”), as of December 2008 there were at
least 450 operational LFG projects in 43 states supplying 11 billion kilowatt
hours of electricity and 77 billion cubic feet of LFG to direct use applications
annually.





Landfill
gas-to-energy projects are beneficial to the environment because they help
reduce the emission of methane gas, a gas that is 20 times more potent as a
greenhouse gas than carbon dioxide, from MSW landfills.  The emission
of methane gas into the atmosphere can cause local smog and, as a greenhouse
gas, has been linked to global climate change.  The EPA estimates that
every one million tons of MSW in landfills produces 432,000 cubic feet of LFG
per day.  Landfill gas-to-energy projects harness LFG emissions as a
renewable source of energy while reducing the emission of harmful greenhouse
gasses into the atmosphere.  LFG energy projects can also help offset
the use of non-renewable fossil fuels, which emit greenhouse gasses linked to
global climate change.





LFG is
extracted from MSW landfills through vertical wells, and sometimes horizontal
trenches, within the waste using flare vacuum systems.  Once
harnessed, LFG has five principal energy uses: (1) direct heating (e.g., use as
fuel in boilers, furnaces, etc.), (2) electricity generation (e.g., processed
and used in internal combustion engines, turbines or fuel cells), (3) chemical
feedstock to produce fuel such as methanol or diesel, (4) purification to
pipeline quality gas for use in natural gas systems, and (5) heat recovery
technology (e.g., Stirling cycle or organic Rankine cycle engines).




- 13
-







Source:
U.S. Environmental Protection Agency Landfill Methane Outreach Program
website.





According
to the EPA, electricity generation accounted for approximately two-thirds of the
operational LFG projects in the U.S. as of December 2008, and the majority of
these projects use internal combustion engines or turbines.  Stirling
cycle and organic Rankine cycle engines and fuel cell technologies are still in
development stages.  Direct use of LFG to offset use of another fuel
(such as natural gas, coal or fuel oil) accounted for approximately one third of
operational projects.  Processing alternate fuels from LFG is an
emerging area, and LFG has been successfully processed and delivered to natural
gas pipeline systems as both high-Btu and medium-Btu fuel.  LFG has
also been processed into compressed natural gas and liquefied natural gas for
use as vehicle fuel.





LFG
energy has the advantage of being a reliable, environmentally friendly source of
energy and can also serve as a long-term price and volatility hedge against
fossil fuels.  LFG energy projects also contribute to better waste
management and environmental protection.  Recent laws and governmental
programs suggest growing support for LFG energy projects.  However,
LFG energy production involves high initial capital and transportation expenses,
and low oil and gas prices can cause smaller LFG operations that lack economies
of scale to be uncompetitive.  See Item 1A, “Risk Factors,” for a
description of some of the difficulties and risks associated with our investment
in landfill gas-to-energy projects.





Hickory
Ridge Landfill Gas-to-Energy Project





On
February 2, 2009, we acquired pursuant to a Landfill Gas Sale and Purchase
Agreement dated November 14, 2008 (as amended, the “Hickory Ridge Agreement”)
the right to purchase from a subsidiary of Republic Services, Inc. (“Republic”)
all of the landfill gas generated at Republic’s Hickory Ridge Landfill located
in Conley (DeKalb County), Georgia (“Hickory Ridge”) through December 31,
2029.  We intend to process the landfill gas collected at Hickory
Ridge to convert it into a saleable energy product.  We paid an
aggregate purchase price of $3,350,000 to acquire the Hickory Ridge landfill gas
purchase rights.




- 14
-




Pursuant to the Hickory Ridge
Agreement, we will lease a portion of the Hickory Ridge property on which we
will be required at our cost to acquire or construct a processing facility to
process the landfill gas collected at Hickory Ridge.  We are also
required, at our cost, to obtain all necessary permits and to construct all
required pipelines and ancillary facilities to transport the collected landfill
gas to the processing facility and the processed gas to any purchaser, as well
as to install all metering and measuring equipment.   If we do
not complete the processing facility, pipelines and ancillary facilities by
December 31, 2010, subject to our right to extend the completion date through
December 31, 2012 under certain circumstances, Republic will have the right to
terminate the Hickory Ridge Agreement.





Once our processing facility commences
commercial operation, we will pay Republic for landfill gas received at the
processing facility a percentage royalty on the sum of the revenue that we
collect from the sale of gas from the processing facility plus the value of
certain environmental allowances, credits and offsets attributable to our
processing facility’s displacement of conventional energy
generation.  Our plans for the Hickory Ridge facility will require
financing, and we cannot assure that such financing will be readily available;
see Item 1A, “Risk Factors.”





Port
Charlotte, Florida Landfill Gas-to-Energy Project





On January 20, 2009, we acquired,
pursuant to a project assignment agreement with North American Natural
Resources—Southeast, LLC (“NANR”), NANR’s rights to purchase from Charlotte
County, Florida all of the landfill gas generated at the Zemel Road Landfill
located in Port Charlotte, Florida (“Zemel Road”) for 20 years following
commencement of operations at Zemel Road and the exclusive right to construct
and operate a landfill gas-to-energy project at Zemel Road, subject to the
approval of Charlotte County.  On January 22, 2009, Charlotte County
approved NANR’s transfer of its rights to the Zemel Road landfill gas-to-energy
project to us and we, Charlotte County and NANR entered into a novation
agreement to substitute us for NANR as a party to each of the Landfill Gas
Purchase Agreement (the “Zemel Road Agreement”) and the Site Lease Agreement
with Charlotte County.





The aggregate purchase price payable to
NANR is $350,000.  At the closing, we paid NANR $100,000, which
included credit for a non-refundable deposit of $10,000.  We will pay
the remaining $250,000 of the purchase price in installments upon our completion
of the following milestones:




·
            $100,000
      after procuring the air construction permit and the solid waste permit for
      the project;




·
            $50,000
      after installing the landfill gas collection
  system;




·
            $50,000
      after execution of a purchase power agreement with a local electric
      utility and an agreement with the utility for the construction of the
      necessary interconnect; and




- 15
-




·
            $50,000
      after the first anniversary of the commencement of operations (as defined
      in the Zemel Road Agreement).




If we are
not able to achieve or attain any of the milestones listed above within a
reasonable period of time, without any fault on our part, we will not be
obligated to make the payment associated with that milestone or to pursue, or
make any payment associated with, any subsequent milestone.  However,
if we fail to complete construction of the landfill gas collection system and
the facility to convert the landfill gas at Zemel Road into energy by January
22, 2010, we will become liable to Charlotte County for liquidated damages equal
to $1,000 per day for each day of delay in completing the collection system and
$200 per day for each day of delay in completing the energy
facility.





We expect to make a $6,000,000
investment at this landfill for infrastructure and power generation
equipment.  Once operational, we plan to sell power generated from LFG
at this landfill to a local electric utility through a purchase power
agreement.  We will pay Charlotte County for landfill gas received at
the processing facility a royalty on the gross revenue (from megawatt sales)
that we collect from the sale of power generated from LFG at Zemel Road to third
parties, plus 80% of the revenue received from the sale of carbon credits in
connection with this project, if and when available.  Our plans for
the Port Charlotte facility will require financing, and we cannot assure that
such financing will be readily available; see Item 1A, “Risk
Factors.”





Utility
Energy Service Contracts





Industry
Overview





Under
utility energy service contracts (“UESCs”), federal government agencies partner
with their franchised or serving utilities to implement efficiency and renewable
energy projects.  UESCs are used by federal agencies to implement
energy and water related upgrades and other strategies, with a goal to improve
energy efficiency and conservation.  The utilities typically arrange
financing to cover the upgrades and are repaid over the contract term from the
cost savings generated by the energy efficiency measures.  According
to the U.S. Department of Energy, more than 45 utilities have provided USECs to
federal agencies, investing more than $600 million in project financing for
energy and water efficiency upgrades at federal facilities since
1995.





According
to a report of the U.S. Government Accountability Office released on October 2,
2008, the Department of Energy estimates that the federal government will have
to invest approximately $1.1 billion annually through 2015 on energy efficiency
projects to meet the requirement imposed by the Energy Independence and Security
Act of 2007 (“EISA”) and Executive Order 13423, which require that federal
government agencies reduce energy use, as compared against 2005 levels, 30% by
2015.  The report explains that due to a lack of upfront funding for
such projects, agencies are relying on alternative funding mechanisms such as
UESCs.




- 16
-




EISA also
requires that 30% of hot water demand in new federal buildings (or buildings
undergoing major renovations) be met with solar hot water equipment and that
such buildings reduce fossil fuel energy use 55% by 2010 and 100% by
2030.  In addition, the Energy Policy Act of 2005 requires that of the
total amount of electrical energy consumed by the federal government during any
year, the following amounts be renewable energy: (1) not less than 3% in years
2007-2009, (2) not less than 5% in years 2010 through 2012, and (3) not less
than 7.5% in years 2013 and thereafter.  These and other federal
initiatives will likely involve projects requiring large investments of third
party capital which could be financed through UESCs.





Our
UESC Business





We
provide project development, project management and installation, financing,
contract administration, risk management, guaranteed performance, and optional
guaranteed savings and maintenance services to our utilities customers to
support their UESCs with Federal agency customers.





On October 14, 2008, our subsidiary GES
entered into an agreement with AGL Services Company, a subsidiary of AGL
Resources, Inc., a distributor of natural gas throughout the southeastern United
States, to act as a nonexclusive subcontractor for AGL Services Company and its
affiliates (collectively, “AGL”) in the performance of AGL’s obligations under
contracts with the United States for the provision of energy conservation
measures.  Pursuant to the agreement, we will, upon AGL’s request,
identify and market energy management services to federal government facilities,
including U.S. military installations, located in AGL’s service territory and
designated by AGL.  We will also, upon AGL’s request, implement
identified energy conservation measures at designated federal government
facilities.  We will be paid a fee for our services, which will be
determined on a project-by-project basis.  Under this agreement, AGL
has requested us to implement energy conservation measures at the Agricultural
Research Service facility of the United States Department of Agriculture located
in Athens, Georgia.  The agreement with AGL Services Company will
expire in November 2011, although AGL Services Company may terminate the
agreement for convenience before then by giving 30 days notice.





On September 18, 2008 GES entered into
a similar agreement with Gulf Power Company, an electric utility subsidiary of
the Southern Company serving northwest Florida.  Under this agreement,
we will act as Gulf Power’s nonexclusive subcontractor to implement energy
conservation measures at federal government facilities identified by Gulf Power
and located in its service territory.  We will be paid a fee for our
services, which will be determined on a project-by-project basis.  The
agreement with Gulf Power has a term of one year, but renews annually unless
either party elects not to renew by giving 60 days notice prior to the
expiration of the then current term.  On March 11, 2009, we amended
our agreement with Gulf Power to expand our relationship to its parent, The
Southern Company, as well as The Southern Company’s affiliates which include
Alabama Power Company, Georgia Power Company, Mississippi Power Company,
Savannah Electric and Power Company, Southern Company Services, Inc., Southern
Electric Generating Company, Southern Nuclear Operating Company, Inc., The
Southern Investment Group, Inc., Southern Electric Railroad Company, Inc., and
Southern Electric International, Inc.




- 17
-




Minority
Investments





Carbon Motors
Corporation.  In January 2008 we invested $250,000 in Carbon
Motors Corporation, a new privately-held American automaker developing a
specially-built law enforcement vehicle featuring a clean diesel engine that can
run on biodiesel fuel.  Carbon Motors is currently showing its
prototype vehicle, the Carbon “E7”.  Presently, over 1,000 law
enforcement agencies have expressed an interest in purchasing the vehicle and
have begun to place production slot reservations for the Carbon
“E7”.  Carbon Motors is hoping to start full production by
2012.  For our investment, we received 200,000 shares of Series B
Preferred Stock of Carbon Motors and a warrant that is initially exercisable for
30,000 shares of Series B Preferred Stock at a price of $1.05 per share with a
term of 5 years.





Consus Ethanol,
LLC.  In January 2008, we loaned $500,000 to Consus Ethanol,
LLC, a start-up ethanol producer based in Pittsburgh, Pennsylvania, pursuant to
a convertible promissory note.  Consus has a permitted site in western
Pennsylvania where it plans to build the first of several ethanol
plants.  Its business model for that site calls for a cogeneration
plant using waste coal to power the companion ethanol plant.  The note
bears interest at the rate of 10% per annum and has an initial term of six
months.  Prior to the maturity date, the note can be extended for an
additional six months or can be converted to membership interests of Consus
Ethanol, LLC.  Additionally, 160,000 warrants were issued at a strike
price of $1.25 per unit and an expiration date of five years from the signing of
the note.  At December 31, 2008, we agreed to a new loan of $548,493
which included the prior years’ principal and interest.  The loan
matures on December 31, 2009 and bears an interest rate of 10% per
annum.  An additional 160,000 warrants were issued with a strike price
of $1.25 per unit and an expiration date four years from the signing of the
note.





Biomass
Business





Industry
Overview





Biomass power, also called biopower,
refers to electricity produced from biomass fuels, such as plant and animal
products.  Biomass feedstock includes, for example, residues and waste
from the wood and paper products industry, residues from food production and
processing, and trees and grasses and other crops grown as energy
crops.  Biopower technologies convert biomass fuels into electricity
(and heat).





There are several processes that can be
used to convert biomass into electricity, including boilers, gasifiers,
turbines, generators and fuel cells.  The majority
of  biomass electricity is generated today using a steam
cycle.  As shown in the diagram below, in this process, biomass is
combusted in a boiler to make steam, and the steam then turns a turbine
connected to a generator that produces electricity.





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Diagram:
In a direct combustion system, processed biomass is the boiler fuel that
produces steam to operate a steam turbine and generator to make electricity. –
Source: U.S. Department of Energy Distributed Energy Program
website.





Biomass can also be converted into a
fuel gas in a gasifier.  In this method, sand at a temperature of
approximately 1,500°F surrounds the biomass and creates a very hot,
oxygen-deprived environment.  Under these conditions, wood or other
biomass feedstock breaks apart and creates an energy-rich, flammable gas, which
can be co-fired with wood or other fuel to make steam.





According to the U.S. Department of
Energy, U.S. biopower plants have a combined capacity of 7,000 megawatts and use
roughly 60 million tons of biomass feedstock to generate 37 billion kilowatt
hours of electricity each year.  Modular biopower systems can also be
used to hook into existing weak electricity transmission lines located in remote
farming, ranching or industrial areas likely to produce biomass byproducts and
that are far from central power plants to improve electricity distribution in
such areas.





Biopower’s advantages include providing
new markets for the nation’s farmers by introducing a new outlet for biomass
byproducts.  Biomass is also sustainable and good for the
environment.  It can help offset independence on non-renewable fossil
fuels, help preserve crop land and, consequently, prevent soil
erosion.  It also makes productive use of waste products that may
otherwise be open-burned, left to rot or buried in
landfills.  Biopower is compatible with traditional electricity
production operations, and biomass fuel products can be co-fired with
traditional fuels such as coal.  Biomass feedstock is generally
available on demand.





Biopower production plants, however,
currently have high cost structures when compared to production plants relying
on traditional fuels such as coal and fossil fuels, in part, because biomass
feedstocks contain less concentrated energy, are less economical to transport
over long distances, and require more preparation than traditional
fuels.  Competition with natural gas, the need to input high-yield,
low-input energy crop farming practices, and the need for more research and
development to improve biopower technologies are further obstacles to successful
biopower operations.





Wood-Waste
Facility in Cherokee County, Georgia





On January 28, 2009, we entered into a
definitive agreement to acquire WoodTech, LLC and affiliated entities
(collectively, the “WoodTech Companies”), which operate a wood fuel and
landscape materials processing business in Cherokee County,
Georgia.  We expect the acquisition of the WoodTech companies to close
later this year.  Currently, the WoodTech Companies have the capacity
to produce over 900,000 tons of biomass annually, and our acquisition of the
WoodTech Companies would provide an immediate source of operating revenue to the
Company.




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The
WoodTech Companies are also developing a 38 acre biomass recycling center in
Ball Ground, Georgia, anticipated to be completed later this
year.  The recycling center is expected to have the capacity to
process annually over 1,225,000 tons of wood waste, which would otherwise be
landfilled.  This processed wood waste will initially be sold to paper
mills, or as mulch and potting soil.  The new biomass recycling center
would be a strategic fit to our biopower strategy.





Our
acquisition of the WoodTech Companies would also further our focus on biomass
gasification in that we plan to install adjacent to the WoodTech facility a wood
waste gasifier capable of converting up to 20% of the facility’s biomass into
syngas to be used to fuel a steam boiler that would power a steam turbine
generator to generate approximately 20 megawatts of “green” electricity for sale
to a local utility.





Under the
purchase agreement, either we or the Woodtech Companies can terminate the
purchase agreement if the acquisition is not completed on or prior to February
17, 2009 due to the other party’s failure to satisfy a closing
condition.  As of the date of this filing, we have not completed the
acquisition of the WoodTech Companies. We will need to obtain financing to
close the acquisition of the WoodTech Companies, which may not be
available, and the sellers may terminate the purchase agreement before we can
close the deal. While we plan to close our acquisition of the WoodTech
Companies later this year, there can be no assurances that it will close then or
that it will close at all.  Even assuming a successful closing of our
acquisition of the WoodTech Companies, our plans for the wood gasification
facility at the WoodTech site will require financing, and we cannot assure that
such financing will be readily available; see Item 1A, “Risk
Factors.”





Government
Regulation





Energy production and distribution is a
highly regulated industry, and our business is subject to extensive federal,
state and local, environmental, health, safety and transportation laws and
regulations, which are administered by federal, state and local
agencies.  Laws and regulations affecting our business deal with
electricity generation and distribution, restrictions on emissions of greenhouse
gasses and other pollutants into the atmosphere, and other environmental
controls.  In addition, certain biofuel products we plan to produce
are highly flammable and may be regulated under hazardous materials
regulations.  We are also subject to work safety and hazard
regulations and policies.





As part
of our regulatory compliance, we will likely be required to obtain various
permits and approvals, which can cost considerable money, time and
effort.  There cannot be any assurances that we will continue to be
able to obtain and maintain required permits and approvals, and once obtained,
permits are subject to renewal, modification, suspension or revocation by the
issuing governmental authority.  Compliance with regulatory and
permitting requirements could require us to make significant capital
expenditures, although most of these expenditures are made in the normal course
of business and do not place us at a competitive disadvantage with other similar
businesses.




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Some of the primary laws that affect
our business are summarized below:





·      Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA):  Under
CERCLA, analogous state laws, and other environmental laws and regulations, we
may become responsible for all or part of the costs of investigation and
remediation and/or damage to natural resources for environmental contamination
at sites where we operate or off-site locations where we arrange for the
disposal of hazardous materials.  CERCLA imposes strict liability for
cleanup of hazardous material disposal sites on current and former operators and
owners of the sites and on generators of the hazardous materials at the site,
and liability can result even from the lawful and non-negligent release of
hazardous materials.  Because our LFG operations are located on or
near landfill sites and because our biomass business deals with waste products,
we may have exposure to liability under CERCLA.  These matters could
result in significant expenditures by us for investigation and/or clean-up or
other costs.





·      Clean Air
Act:  Emissions from our operations will besubject to regulation
under the Federal Clean Air Act of 1970, as amended (“Clean Air Act”), and
similar state and local laws, regulations, and related air discharge permitting
requirements.  At the federal level, these regulations are
administered and enforced by the EPA.





·      OSHA:  Our
operations are regulated by the Occupational Safety and Health Act and its
regulations (OSHA).  OSHA requires us, as an employer, to maintain a
workplace free of recognized hazards likely to cause death or serious injury and
imposes various disclosure, reporting and record keeping obligations relating to
workplace safety conditions, accidents and injuries.





Several laws, regulations and
governmental programs act to promote the LFG and biomass energy industries by
providing incentives to users of renewable and alternative energies or imposing
requirements on energy consumers to increase use of alternative energy
sources.  The following are some of the primary laws, regulations and
governmental programs that promote the LFG and biomass energy
industries:





·      The Energy Policy Act of
2005:  The Energy Policy Act of 2005 (“EP Act 2005”) has had a
significant impact on the growth of the biofuel and ethanol
industry.  The EP Act of 2005 requires, among other things, that the
total amount of electric energy the federal government consumes during a fiscal
year includes the following amounts of renewable energy: (1) not less than 3% in
fiscal years 2007 through 2009, (2) not less than 5% in fiscal years 2010
through 2012, and (3) not less than 7.5% in fiscal year 2013 and each fiscal
year thereafter.  Renewable energy under the EP Act 2005 includes
electric energy generated from biomass and landfill gas, in addition to solar,
wind, ocean, geothermal and new hydroelectric generation.  This
portion of the EP Act 2005 could cause an increase in the demand for renewable
energy products, including biofuels and biopower.




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·      The Energy Independence and Security
Act of 2007.  The Energy Independence and Security Act of 2007
(“EISA”) provides that domestic sources of renewable energy should provide 25
percent of energy consumed in the United States by 2025.  EISA also
allocates funds for biofuels research and development.  These
provisions of EISA could increase the demand for the types of biopower we plan
to generate.  In addition to biofuel provisions, EISA requires that
total energy use in federal buildings, relative to 2005 levels, be reduced 30%
by 2015, and that new federal buildings and major renovations reduce fossil fuel
energy use, relative to 2003 levels, 55% by 2010 and 100% by
2030.  These provisions of EISA may create an increase in demand for
our UESC and renewable energy businesses.





·      EPA Landfill Methane Outreach
Program:  The Landfill Methane Outreach Program (LMOP) is a
voluntary assistance program administered by the EPA that encourages the
recovery and use of LFG as an energy resource.  LMOP forms
partnerships between communities, MSW landfill owner/operators, utilities, power
marketers, States, project developers, tribes and non-profit organizations to
overcome barriers to landfill gas-to-energy project development.  LMOP
provides assistance with project feasibility assessment, financing and marketing
of the benefits of LFG energy projects.  LMOP assistance can include
technical assistance, guidance materials, software to assess economic
feasibility of projects, help in creating partnerships and locating financing,
and informational and marketing materials to promote the benefits of LFG
energy.





·      The American Recovery and
Reinvestment Act of 2009:  A stated goal of the American
Recovery and Reinvestment Act of 2009 (“ARRA”) is to revive the renewable energy
industry and provide capital over the next three years to eventually double
domestic renewable energy capacity.  The following is a summary of
some provisions of the ARRA that we believe will be beneficial to the LFG and
biomass energy industries, although there are no assurances that the Company
will benefit directly or indirectly from these provisions:





§      ARRA
appropriates $16.8 billion to the U.S. Department of Energy’s Office of Energy
Efficiency and Renewable Energy, which funds will be used in part, to provide
research grants and loan guarantees.





§      ARRA
appropriates $6 billion for loan guarantees under Section 1705 of the EP Act
2005 for projects involving renewable energy, electricity transmission and
leading-edge biofuel technologies that will start construction by September 30,
2011.





·      Renewable Energy Production Tax
Credit:  The renewable energy tax credit under Section 45 of
the Internal Revenue Code allows a tax credit for each kilowatt hour of
electricity produced from biomass from qualified facilities and sold to
unrelated parties.  The tax credit is available for ten years from the
date the qualified facility is placed into service and is subject to adjustment
based on inflation and other factors.  For fiscal year 2008, the tax
credit for electricity produced from open loop biomass was $0.01 per kilowatt
hour.  ARRA extended the Section 45 tax credit to apply to qualified
facilities that are placed into service before January 1, 2014.




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While the
foregoing laws and governmental programs generally promote the LFG and biomass
power industries, there are no assurances that we will be able to directly or
indirectly benefit from such laws or governmental programs.





Competition





Landfill
Gas and Biomass Energy Business





We compete with utilities and energy
producers that use traditional fuel sources, such as coal, oil, natural gas and
nuclear energy, and other companies of varying size that produce LFG and biomass
energy.  Some of our competitors have greater financial and technical
resources than we do.  Also, lower costs of traditional fuel sources
can cause energy production from LFG and biomass to be uncompetitive in the
energy markets.





LFG and
biomass power operations require large upfront capital expenditures, and we lack
the economies of scale that some of our larger competitors have.  In
addition to traditional power generators, we compete with other producers of
biopower, and many well-established technology firms and traditional energy
producers are beginning to enter the biopower industry, including General
Electric, British Petroleum, Shell, Siemens and Conoco/Phillips, among
others.  These competitors have greater capital resources and market
exposure than the Company.





UESC
Business





Our
utilities clients (through which we engage in the UESC business) compete with
energy services companies in the turnkey energy efficiency market for federal
projects.  These companies can be much larger with higher overheads
and may be attached to a specific equipment manufacturer for controls or HVAC
equipment.   These companies include  Noresco, Chevron,
Honeywell, Siemens and Johnson Controls.  The utilities hold long
standing relationships with their largest customers and work diligently to
uphold superior customer service and maintain strong
relationships.  To the extent our UESC utilities clients are unable to
compete effectively with other energy service companies in the UESC industry,
our UESC business will be negatively impacted.





Research
and Development





We have
research and development agreements with leading national laboratories and
universities, such as the U.S. Department of Agriculture’s Forestry Products
Laboratory); the U.S. Department of Energy’s National Renewable Energy
Laboratory; Virginia Tech; and The University of North Dakota’s Energy &
Environmental Research Center.  To date, however, we have been unable
to commercialize any of the technologies identified under these
agreements.  We do not intend to continue to fund any of these
agreements.  We do not anticipate significant future research and
development expenses, as we plan to rely on existing technologies in our
business.  Our research and development expenses for the years ended
December 31, 2008 and 2007 were $235,000 and $861,000
respectively.  Our research and development expense in 2008 was due to
amortization on our research agreements and payments made under consulting
arrangements.




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Intellectual
Property Rights and Patents





New
Generation Biofuels Sublicense





We have entered into an amended and
restated sublicense agreement, dated June 15, 2006 (the “Sublicense Agreement”),
with New Generation Biofuels Holdings, Inc. (“NGBF”), pursuant to which we were
granted a sublicense to use patents and related intellectual property related to
a certain chemical additive for use in making bio-fuel for internal combustion
engines and related technology.  Under the Sublicense Agreement, we
have an exclusive license to make, use and sell products manufactured using the
NGBF fuel additive in Maine, Vermont, New Hampshire, Massachusetts, Connecticut,
Rhode Island, New York, Pennsylvania, Delaware, New Jersey, Virginia, West
Virginia, North Carolina, South Carolina, Georgia and Florida, and (b) a
non-exclusive license to sell those products anywhere else within North America,
Central America and the Caribbean.  NGBF granted us the Sublicense
Agreement pursuant to a license agreement between NGBF and the inventor of
the fuel additive and related technology.





Under the
Sublicense Agreement, NGBF must sell us additive in quantities sufficient to
meet our requirements for the production of product at the lower of its actual
cost or the price at which it sells additive to unrelated third parties, or at
such other price as we and NGBF may agree.  We are obligated to pay
certain royalties to NGBF based on sales of products by us or our
sublicensees.  The royalty that we must pay per gallon of product that
we or our distributors sell is the lesser of $0.10 per gallon or the lowest per
gallon royalty that NGBF charges to unrelated entities.  During the
initial term of the agreement, for each twelve-month period beginning on the
date (the “Trigger Date”) on which NGBF first notifies us that it can produce
and deliver additive in sufficient quantities to meet our requirements, is able
to do so and provides us with the technical and engineering specifications
necessary for a plant to produce the products, we are obligated to pay NGBF a
minimum royalty equal to the royalty that would have been paid had a specified
amount been sold during that twelve month period.  For the first
twelve-month period, the specified amount is 20,000,000 gallons of product and
for each succeeding twelve-month period the amount increases by 10,000,000
gallons.  Generally, if we fail to pay the minimum royalties, NGBF may
either terminate the Sublicense Agreement or convert our exclusive rights under
the Sublicense Agreement to non-exclusive rights.





The
initial term of the Sublicense Agreement is for ten years from the Trigger
Date.  Thereafter, the Sublicense Agreement automatically renews
for successive one-year periods provided there is no existing default at the
time of renewal.  As of March 31, 2009, the Trigger Date had not yet
occurred and accordingly, we had not recorded any royalty expense under the
Sublicense Agreement.  We do not presently intend to pursue the
manufacture and sale of a diesel biofuel based on NGBF’s
technology.  We have sold all of our shares of common stock of NGBF in
a series of market sales and one private resale transaction.  On March
17, 2009, as part of the private transaction, we also agreed to assign our
rights in the Sublicense Agreement to 2020 Energy, LLC, an Arizona limited
liability company, if 2020 Energy, LLC obtains the written consent of NGBF to
the assignment.




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Employees





We had 21
employees as of March 1, 2009, and all of these employees are full
time.  None of these employees is covered by a collective bargaining
agreement, and our management believes that our relations with our employees are
good.




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ITEM
1A.           RISK
FACTORS





Set
forth below are certain risk factors related to the Company’s
business.  The risk factors described below may not include all of the
risk factors that could affect the future results of our
business.   The occurrence of any of the following or other risks
could materially impair our business, financial condition and results of
operation.  In these circumstances, the market price of our common
stock could decline, and you may lose all or part of your
investment.





Risks
Related to Our Financial Condition and Capital Requirements





Our
capital resources are limited and we must raise substantial additional capital
to execute our business strategies and fund our operations.





As of December 31, 2008, we had working
capital (current assets in excess of current liabilities) of $1.5 million
compared to working capital as of December 31, 2007 of $10.8
million.  We will need to raise substantial additional capital to
implement the shift of our business strategy from ethanol production to
renewable energy production and to support our operations until (and if) we are
able to generate sufficient revenues to meet our capital needs.  There
can be no assurance that we will be able to raise the necessary capital to fund
our development and operations or generate sufficient revenues in the future to
fund our capital needs and achieve profitability.





We
have a history of net losses.  If we do not achieve significant
amounts of additional revenue and become profitable, we may be unable to
continue our operations.





We
incurred net losses of $13.3 million for the year ended December 31, 2008; $31.3
million for the year ended December 31, 2007; $20.2 million for the year ended
December 31, 2006; and $11.4 million for the year ended December 31,
2005.  We have funded our operations primarily through the sale of our
securities and our non-productive physical assets and expect to continue doing
so for the foreseeable future.  We expect to continue to incur net
losses for the foreseeable future as we continue to develop our renewable energy
projects and execute on our long-term strategies.  Our ability to
generate and sustain significant additional revenues or achieve profitability
will depend, in part, on the factors discussed elsewhere in this Item 1A, “Risk
Factors”.  We cannot assure you that we will be able to achieve or
sustain profitability or that our operating losses will not increase in the
future.  If we do not achieve significant amounts of additional
revenue and operate at a profit in the future, we may be unable to continue our
operations.  If we do achieve profitability, we cannot be certain that
we will be able to sustain or increase profitability on a quarterly or annual
basis in the future.





We
will need to raise additional funds to achieve our business objectives, and
financing may not be available when needed.  These matters raise
substantial doubt about the Company’s ability to continue as a going
concern.





As of
March 31, 2009, we had cash and cash equivalents of approximately $120,000,
compared to cash and cash equivalents of $9.5 million as of March 1,
2008.  We need substantial additional capital to implement our revised
business strategy to develop landfill gas and biomass energy
projects.  In particular, we intend to build and develop our Hickory
Ridge and Port Charlotte landfill sites, which will require considerable capital
expenditures.




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We
currently have no commitments for additional financing, and given the current
economic and financial climate, there can be no assurance that we will be able
to obtain additional debt or equity financing on commercially acceptable terms,
or at all.  Our failure to raise capital as needed would significantly
restrict our growth and hinder our ability to compete.  We have ceased
ethanol production at the Blairstown Facility and have taken other measures to
curtail our expenses and operating losses and may need to take further steps in
that regard.  We may also need to forego other business opportunities
if we are unable to raise additional funds to meet our capital
needs.  Additional equity financings are likely to be dilutive to
holders of our common stock, and debt financing, if available, may require
significant payment obligations and covenants that restrict how we operate our
business.  If we are unable to access the capital markets to finance
our various projects, we may be unable to continue our
operations.  These matters raise substantial doubt about the Company’s
ability to continue as a going concern.





We
may fail to produce sufficient operating revenues to meet our capital
needs.





The Company’s only source of revenue
during 2008 was from its sales of ethanol and related products produced at the
Blairstown Facility.  As of May 1, 2008, the Company has ceased
production of ethanol at the Blairstown Facility in order to reduce operating
losses, and we are actively seeking a buyer for that facility.  If we
close our acquisition of the WoodTech Companies as planned, we anticipate the
WoodTech Companies will provide an immediate source of revenue for the Company
going forward, but there can be no assurance that we will successfully close our
acquisition of the WoodTech Companies as planned or at all.  If we are
able to complete our acquisition of the WoodTech Companies, there can be no
assurances that the WoodTech Companies will produce sufficient revenues to meet
our capital needs.  We cannot be sure that we will be able to achieve
revenues from our landfill gas-to-energy projects, which are still in the
developmental stages.





We
face various risks as a result of the current “credit crisis” and the uncertain
economic environment.





The
current “credit crisis” has affected or may affect us in several
ways.  We will likely face difficulties in obtaining the necessary
debt and equity capital we need to pursue our business plan, which requires a
significant amount of capital.  The difficult credit environment may
also affect our plans to sell one or more of our facilities to the extent that
purchasers need to finance the purchase of those facilities.  The
recent bankruptcy filing of ethanol producer VeraSun Energy Corporation may also
depress the value of ethanol plants like the Blairstown Facility, which we are
trying to sell.  If we are unable to obtain acceptable financing for
our landfill gas-to-energy and biomass projects, or the economic climate
deteriorates further, we may be unable to pursue our business plan, which would
have a material adverse effect on our business, results of operations and
financial condition.




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We
may not be able to effectively manage our acquisition and construction
costs.





We may
suffer from rising costs in integrating new acquisitions and construction of new
facilities.  Both our Hickory Ridge and Port Charlotte landfill gas
sites require substantial construction to make the facilities
operational.  Upon a successful closing of our acquisition of the
WoodTech Companies, they will also require substantial integration and
development costs throughout 2009.  We may not be able to effectively
manage our fund raising, capital resources, and construction and integration
projects as we develop our landfill gas-to-energy and biomass projects, and a
failure to effectively manage these aspects of our business could have a
material adverse effect on our business, results of operations and financial
condition.





Risks
Related to Our Business





We
are shifting our business strategy from ethanol production to the development of
renewable energy projects such as landfill gas-to-energy and biomass energy
production.





We may encounter financial and
operational difficulties in shifting our business strategy from our legacy
ethanol business to renewable energy projects such as landfill gas-to-energy and
biomass energy production.  We anticipate our shift in strategy to
require significant capital expenditures and integration efforts as we bring new
projects online.  We cannot be certain that we will be able to obtain
necessary financing on commercially reasonable terms or otherwise, nor can we be
certain of the degree and scope of operational and integration problems that may
arise.  As part of our shift away from our ethanol business, we have
ceased production of ethanol at the Blairstown Facility, which was the only
source of revenue for the Company in 2008, and there can be no assurance that
our new projects will become operational and produce sufficient revenues to
support our business as a going concern.





We
may not be able to complete our acquisition of the WoodTech
Companies.





On January 28, 2009, we entered into a
definitive agreement to acquire WoodTech, LLC and affiliated entities, which
operate a wood fuel and landscape materials processing business in Cherokee
County, Georgia.  The acquisition of the WoodTech Companies is a key
part of our biomass business strategy.  The purchase agreement
provides that either the Company or the WoodTech Companies can terminate the
purchase agreement if the transaction does not close on or before February 17,
2009 due to the other party’s failure to satisfy a condition to
closing.  The Company did not complete the purchase of the WoodTech
Companies on or before February 17, 2009.  While the Company plans to
complete the acquisition of the WoodTech Companies later this year, it is
possible that the WoodTech Companies could terminate the purchase agreement
prior to closing, and there can be no assurance that the acquisition will be
completed as planned or at all.  Failure to complete the acquisition
of the WoodTech Companies could have a material adverse effect on our business,
results of operation and financial condition.




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There
are significant barriers to entry to the landfill gas-to-energy and biomass
energy industry, and we may not be able to successfully surmount those barriers
and establish a profitable renewable energy business.





There are significant barriers to entry
and other risks related to the landfill gas-to-energy and biomass energy
businesses, including high initial capital expenditure costs to develop and
construct functional processing facilities, the high cost and potential
regulatory and technical difficulties in integrating into local markets and
distribution systems, high transportation costs (such as construction of
dedicated pipeline and electricity transmission lines for relatively small
amounts of gas and electricity), an often limited or unstable marketplace,
competition from low oil and natural gas prices, regulatory difficulties
including obtaining necessary air discharge and other permits, difficulties in
negotiating power contracts with local utilities, educating the market regarding
the reliability and benefits of landfill gas and biomass energy products and
services, costs associated with environmental regulatory compliance, and
competing with larger, more established energy companies.  There can
be no assurance that we will be able to overcome these barriers to entry and
other risks as we develop our landfill gas-to-energy and biomass
businesses.





Our
new business strategy is in an early development stage, our business strategy
may not be accepted in the marketplace, and we may be unable to achieve
profitability.





We are in the early development stage
of our landfill gas and biomass energy businesses.  We currently have
plans to construct landfill gas-to-energy facilities at our Hickory Ridge,
Georgia and Port Charlotte, Florida sites, and we may pursue additional landfill
projects in the future.  If we successfully complete our acquisition
of the WoodTech Companies, we will also continue the WoodTech Companies’
development of a 38 acre biomass recycling center in Ball Ground, Georgia that
is currently in process, and we intend to implement a biomass gasification
operation there.  Our lack of operating history in the landfill
gas-to-energy and biomass recycling and gasification industries precludes us
from forecasting operating results based on historical results.  There
can be no assurances that the assumptions underlying our senior management’s
current analysis of potential markets, opportunities and difficulties that the
Company will face reflect current and future trends in our industry or the
market’s reaction to our products and services or that our operations will be
successful.  If we are unable to develop and implement our landfill
gas-to-energy facilities, complete the acquisition of the WoodTech Companies
and/or upon completion of the WoodTech Companies acquisition, develop and
implement the biomass recycling project (and any future projects the Company
undertakes), we may never achieve profitability.  Even if we do
achieve profitability, we cannot predict the level of such profitability, and it
may not be sustainable.





If
we are unable to complete development of our landfill gas-to-energy project at
Hickory Ridge, Georgia within required time frames, we may lose our rights to
landfill gas at that site and our investments in that project.





Pursuant to our Hickory Ridge Agreement
with Republic Services, Inc., we must complete the processing facility,
pipelines and ancillary facilities at the Hickory Ridge landfill site by
December 31, 2010, subject to our right to extend the completion date through
December 31, 2012 under certain circumstances.  If we fail to complete
the processing facility, pipelines and ancillary facilities by the completion
date, Republic will have the right to terminate the Hickory Ridge Agreement, and
we could lose our investment in the Hickory Ridge project.




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If we are unable to complete
development of our landfill gas-to-energy project at Zemel Road within required
time frames, we will become liable for liquidated damages that could have a
material adverse effect on our financial condition.





If
we fail to complete construction of the landfill gas collection system at our
Zemel Road project and the facility to convert the landfill gas at our Zemel
Road project into energy by January 22, 2010, we will become liable to Charlotte
County for liquidated damages equal to $1,000 per day for each day of delay in
completing the collection system and $200 per day for each day of delay in
completing the energy facility.  To the extent we incur these
liquidated damages, they could have a material adverse effect on our business
and financial condition.





We
may not be able to successfully negotiate and execute the engineering,
procurement and construction contracts with vendors necessary for completion and
financing of our landfill gas-to-energy projects and construction of the
expanded WoodTech Companies biomass recycling facility.





Development and construction of our
landfill gas-to-energy projects at the Hickory Ridge and Zemel Road landfills,
and, assuming successful completion of our acquisition of the WoodTech
Companies, completion of the WoodTech Companies’ 38 acre biomass recycling
center in Ball Ground, Georgia, will require that we negotiate acceptable
contracts with construction and other vendors.  We cannot assure that
we will be able to identify and enter into acceptable contracts with the
necessary construction and other vendors, and our failure to do so would limit
our ability to implement our business strategy, which would likely have a
materially adverse effect on our business, results of operations and financial
condition.





Failure
to make accretive acquisitions and successfully integrate them could adversely
affect our future financial results.  Any strategic acquisition we
make could have a dilutive effect on our current stockholders’
investment.





As part
of our growth strategy, we may seek to acquire or invest in complementary
businesses, facilities or technologies.  We intend, after we make an
acquisition, to integrate the acquired assets into our operations and reduce
operating expenses.  The process of integrating these acquired assets
into our operations may result in unforeseen operating difficulties and
expenditures, and may absorb significant management attention that would
otherwise be available for the ongoing management of our business.  We
can provide no assurances that we will in fact realize the anticipated benefits
of any acquisition we pursue or complete.  In addition, our planned
acquisition of the WoodTech Companies includes the issuance of 4 million shares
of our common stock to the sellers of the WoodTech Companies, and future
acquisitions could involve issuances of equity securities that could have a
dilutive effect on our current stockholders’ investment.  Furthermore,
the planned acquisition of the WoodTech Companies includes the issuance by us of
a $1.98 million promissory note and the assumption of the WoodTech Companies
debt and accounts payable, and future acquisitions could involve the incurrence
of debt, contingent liabilities and amortization expenses, any of which could
materially and adversely affect our operating results and financial
condition.  Acquisitions also involve other risks, including entering
geographic markets in which we have no or limited prior experience and the
potential loss of key employees.




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We
depend upon our officers and key personnel, and the loss of any of these persons
could adversely affect our operations and results.  We may not be able
to recruit and hire qualified personnel necessary for the successful growth of
our business.





We
believe that the implementation of our proposed expansion strategy and execution
of our business plan will depend to a significant extent upon the efforts and
abilities of our officers and key personnel.  We believe that the
personal contacts of our officers and key personnel within the industry and
within the scientific community engaged in related research are a significant
factor in our continued success.  Our failure to retain our officers
or key personnel, or to attract and retain additional qualified personnel, could
adversely affect our operations and results.  We do not currently
carry key-man life insurance on any of our officers.





The
energy industry is intensely competitive, and if we cannot gain market share, we
may not earn sufficient revenues to continue as a going concern.





The
energy industry is very competitive.  Among our competitors are large
multi-national corporations with substantially greater capital resources,
operating experience, research and development resources and market penetration
than us, and their activities in the marketplace may negatively affect our
operations and our ability to attract customers for our energy products and
services.  New competitors, some of which may have extensive
experience in the energy industry or greater financial resources than us, may
enter our market, and increased competition could hinder our ability to gain
market share.  In addition, if we are unable to develop and market
energy products and services that are superior to our competitors (including
competitors operating in both the traditional and renewable energy fields) in
quality, pricing and services, we may not be able to operate on a competitive
basis.  If we are unable to effectively compete with our competitors,
our business, operating results and financial condition could be seriously
harmed.





Fluctuations
in the price of natural gas and other traditional fuel sources can have an
adverse effect on the demand for our landfill gas.





Volatility
in the prices for natural gas and other traditional energy fuels, and in
particular, a drop in the prices for such traditional energy fuels, may cause
the production and sale of our landfill gas products to become uncompetitive and
adversely affect our business.  Also, the business viability of, and
political support for, environmentally friendly, renewable energy generally in
the past has been inversely correlated with the price of traditional energy
sources.





An
increase in demand for wood waste products could adversely affect our ability to
obtain wood waste feed stock for our biomass business.





If we complete our planned acquisition
of the WoodTech Companies, wood waste will be an important feedstock for our
biomass business, and an increase in demand for wood waste products would likely
result in an increase in the demand and price for wood waste feed
stock.  Such an increase in demand for wood waste feedstock could
interfere with our ability to locate and purchase wood waste feedstock at
competitive prices, which could cause our planned wood waste biomass business to
be uncompetitive and have a material adverse effect on our
business.




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Our
results of operation may fluctuate.





Our operating results may fluctuate
significantly as a result of a variety of factors, some of which are outside our
control, including: (1) our ability to penetrate markets and obtain customers,
(2) the cost of competitive fuel sources, such as natural gas, coal and oil, (3)
the acceptance of LFG and biomass energy in the markets, (4) our ability to
obtain financing for our projects, (5) changes in laws and regulations
applicable to the energy industry and our ability to obtain and maintain
applicable governmental approvals, (6) general economic conditions as well as
conditions specific to the energy industry, and (7) our ability to produce an
energy product competitive on a quality, pricing and services basis compared to
other companies in the energy industry.





We
are currently party to a lawsuit, and this pending or future litigation could
result in material adverse consequences against the Company.





On July 28, 2008, the Company, one of
our subsidiaries and six of our current officers and employees, were sued by
Jacoby Energy Development, Inc. (“JEDI”) and other plaintiffs alleging, among
other things, breach of a mutual nondisclosure agreement, tortuous interfered
with the plaintiffs’ business and misappropriation of the plaintiffs’ trade
secrets.  See Item 3, “Legal Proceedings – Jacoby Energy Development,
Inc.”  A ruling in this case adverse to the Company could result in
permanent injunctive relief and liability for compensatory, general and punitive
damages, potentially in excess of $10 million.  In addition to the
JEDI case, we are party to litigation with Global Energy and Management, LLC
(see Item 3, “Legal Proceedings – Global Energy and Management, LLC Lawsuit”),
and we may become involved in other litigation matters in the ordinary course of
our business from time to time.  Litigation is subject to inherent
uncertainties.  An adverse result in the JEDI case, the Global Energy
and Management, LLC case or other matters that may arise from time to time could
involve adverse judgments or settlements against the Company that require
substantial payments and/or injunctive relief against the Company that restricts
the manner in which we conduct our business, which could have a material adverse
effect on our business, results of operations or financial
condition.  In addition, we may incur substantial legal and other
expenses, and our management may be significantly distracted by our current or
any future litigation matters.





Risks
Related to Government Regulation





Our
projects are subject to extensive governmental approval processes which could
delay the implementation of our business strategy.





The energy industry is highly regulated
in many markets.  We believe our projects will be supported by
regulatory authorities, particularly given rising interest in sustainable,
environmentally friendly energy sources.  However, new laws,
regulations and policy guidelines could alter applicable requirements or require
additional levels of approval, permitting or compliance standards, and if we are
unable to obtain and maintain applicable governmental approvals in the markets
where we operate, our financial condition and operating results could be
seriously harmed.




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Because
we operate on or near MSW landfill sites and use waste materials as feedstock
for our operations, we may have an increased exposure to environmental
liabilities.





Our operations are subject to stringent
laws and regulations governing the discharge of materials into the environment,
siting of facilities, remediation of contamination, and other matters relating
to environmental protection.  Compliance with these laws and
regulations can be difficult and costly.  We could become liable under
federal, state or local environmental laws and regulations for substantial
administrative, civil and criminal penalties, injunctive relief, and private
damages.  For example, under CERCLA, we could be held strictly liable
for the removal and remediation of any past or present hazardous substance
contamination at any of our facilities, at neighboring properties where
migration of hazardous substances from our facilities has occurred, or at third
party sites where we have arranged for hazardous substances to be
disposed.  We could also be held liable for environmental damage
and/or health consequences that arise as a result of contamination from
hazardous substances caused by our operations.  We may incur
substantial costs to comply with applicable environment, health and safety laws
and regulations, and we may discover currently unknown environmental problems or
conditions that could give rise to claims that may involve material liability
and expenditures for us.





Failure
to comply with laws, regulations and rules related to governmental contracts,
including passing audit inspections, and changes in governmental policies or
allocation of resources could adversely affect our UESC business.





The UESC
business, which we are pursuing as part of our new business strategy, relies on
contracts with governmental entities and is subject to specific rules,
regulations and approvals applicable to government contractors.  We
are subject to routine audits by governmental agencies to assure our compliance
with these requirements.  Failure to comply with these or other laws
and regulations could result in contract terminations, suspension or debarment
from contracting with the U.S. federal government, civil fines and damages and
criminal prosecution.  In addition, changes in procurement policies,
budget considerations, unexpected U.S. developments, such as terrorist attacks,
or similar political developments or events abroad that may change the U.S.
federal government’s national security defense posture may affect sales to
government entities.  This market can be affected by changes in energy
costs or governmental regulations that would decrease the incentive for
customers to update or improve their energy and water related
infrastructure.





Lax
enforcement of environmental and energy policy regulations by federal, state and
local governments could adversely affect the demand for our renewable energy
products and services.





Our
success will depend, in part, on effective enforcement of existing environmental
and energy policy regulations against the producers and consumers of energy
produced from conventional fuel sources such as fossil fuels and
coal.  Many of our potential customers are unlikely to switch from the
use of conventional fuels unless compliance with applicable regulatory
requirements leads, directly or indirectly, to the use of renewable
energy.  Both additional regulation and enforcement of such regulatory
provisions are likely to be vigorously opposed by the entities affected by such
requirements.  Even if the current trend toward cleaner energy sources
continues, our future prospects will depend on the ability of our renewable
energy products to satisfy regulatory and market standards for “green” energy
more efficiently than other alternative products and technologies offered by our
competitors.




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Risks
Related to an Investment in Our Common Stock





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





The
market price of our common stock has fluctuated in the past, and may continue to
fluctuate significantly in response to factors, some of which are beyond our
control.  For example, since our reverse merger in February 2005 and
through March 13, 2009, the high and low closing sale price for our common stock
has been $15.19 and $0.07 per share, respectively.  Factors that could
affect the market price of our common stock include the following:





·
            our
      inability to integrate our acquisitions as efficiently as we
      expect;


·
            market
      factors affecting the demand and price for electricity and natural
      gas;


·
            discontinuation
      or limitations on state and federal tax credits for renewable
      energy;


·
            our
      inability to construct our facilities as efficiently as we
      expect;


·
            environmental
      restrictions increasing the costs and liabilities of renewable energy;
      and


·
            changes
      in market valuations of similar companies, and fluctuations in stock
      market prices and volumes generally, and more particularly, in securities
      of energy companies.





The
market prices of securities of fuel-related companies have experienced
fluctuations that often have been unrelated or disproportionate to the operating
results of these companies.  Continued market fluctuations could
result in extreme volatility in the price of our common stock, which could cause
a decline in the value of our common stock.  Price volatility might be
intensified under circumstances where the trading volume of our common stock is
low.





We
are unlikely to attract the attention of major brokerage firms for research and
support, which may adversely affect the market price of our common
stock.





Securities
analysts of major brokerage firms have not published research on our common
stock.  The number of securities competing for the attention of those
analysts is large and growing.  Moreover, because we went public
through a “reverse merger,” some major brokerage firms may be reluctant to
publish research on us regardless of our results of
operations.  Coverage of a security by analysts at major brokerage
firms increases the investing public’s knowledge of and interest in the issuer,
which may stimulate demand for and support the market price of the issuer’s
securities.  The failure of major brokerage firms to cover our common
stock may adversely affect the market price of our common stock.




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Our
common stock is subject to "penny stock” rules promulgated under the Securities
Exchange Act of 1934, as amended, which may make transactions in our stock
cumbersome and may reduce the value of an investment in our stock.





The
Securities and Exchange Commission has adopted Rule 15g-9 under the Securities
Exchange Act of 1934, as amended, which establishes the definition of a "penny
stock," for the purposes relevant to us, as any equity security that has a
market price of less than $5.00 per share or option to acquire any equity
security with an exercise price of less than $5.00 per share, subject to certain
exceptions.  For any transaction involving a penny stock, unless
exempt, the rules require that a broker or dealer approve the investor’s account
for transactions in penny stocks, and the broker or dealer must have received
from the investor a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be purchased.  In order to
approve an investor’s account for transactions in penny stocks, the broker or
dealer must obtain financial information and investment experience objectives of
the investor, and make a reasonable determination that the transactions in penny
stocks are suitable for that investor and the investor has sufficient knowledge
and experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks.  In addition, the broker or dealer must
provide certain disclosures to the investor related to the risks involved in
penny stock investments.  Generally, brokers and dealers may be less
willing to execute transactions in securities subject to the "penny stock"
rules.  This may make it more difficult for investors to dispose of
our common stock and depress the market value of our stock.





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





We are
currently authorized to issue up to 100,000,000 shares of common stock, of which
29,070,103 shares were issued and outstanding as of March 1, 2009, and an
additional 9,792,764 were reserved for issuance as of March 1,
2009.  Of the shares of common stock we have reserved for issuance,
92,930 shares were reserved for issuance for options that have not yet been
granted under our 2005 Incentive Compensation Plan.  Our board of
directors has the authority, without further action or vote of our stockholders,
to issue any or all of the 61,137,133 authorized shares of our common stock that
are not outstanding or reserved for issuance and to grant options or other
awards under our 2005 Incentive Compensation Plan.  The board may
issue shares or grant options or warrants to purchase shares of our common stock
at a price that reflects a discount from the then-current market price of our
common stock.  In addition, the planned acquisition of the WoodTech
Companies includes the issuance of shares of our common stock to the
sellers.  The issuance of shares (or options or warrants to purchase
shares) of our common stock and the exercise of any of the options or warrants
described above will dilute the percentage ownership interests of our current
stockholders and may adversely affect the prevailing market price of our common
stock.




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We
may issue shares of preferred stock without stockholder approval that may
adversely affect the economic interest and voting rights of holders of our
common stock.





Our
certificate of incorporation authorizes us to issue up to 1,000,000 shares of
preferred stock with such designations, rights and preferences as may be
determined from time to time by our board of directors.  Accordingly,
our board of directors is empowered, without stockholder approval, to issue
preferred stock with rights to receive dividends and distributions upon
liquidation in preference over any dividends or distributions upon liquidation
to holders of our common stock and with conversion, redemption, voting or other
rights that could dilute the economic interest and voting rights of holders of
our common stock.  The issuance of preferred stock could also be used
as a method of discouraging, delaying or preventing a change in control of our
Company or making removal of our management more difficult, which may not be in
the interest of our holders of common stock.





Failure
to achieve and maintain effective internal controls over financial reporting in
accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a
material adverse effect on our operating results, financial condition and stock
price.





Effective
internal controls are necessary for us to provide reliable financial reports and
effectively prevent fraud.  If we cannot provide reliable financial
reports or prevent fraud, we could be subject to regulatory action or other
litigation and our operating results could be harmed.  Beginning with
our 2007 fiscal year, we are required to document and test our internal control
procedures to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act
of 2002 (“SOX”), which, among other things, requires our management to assess
annually the effectiveness of our internal controls over financial
reporting.  Beginning with our annual report on Form 10-K for our
fiscal year ending December 31, 2009, our independent registered public
accounting firm will be required to issue an attestation report on our internal
controls over financial reporting.





During
the course of our testing, we may identify deficiencies that we may not be able
to remediate in time to meet the deadline imposed by SOX for compliance with the
requirements of Section 404.  In addition, if we fail to maintain the
adequacy of our internal accounting controls, as those standards are modified,
supplemented or amended from time to time, we may not be able to ensure that we
can conclude on an ongoing basis that we have effective internal controls over
financial reporting in accordance with Section 404.  Failure to
achieve and maintain an effective internal control environment could cause us to
face regulatory action and also cause investors to lose confidence in our
reported financial information, either of which could have an adverse effect on
our operations, financial condition and stock price.





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





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





Our
officers and directors have significant voting power and may take actions that
may not be in the best interest of all other stockholders.





If our
current directors and executive officers exercise all of their stock options,
they would, as a group, own 14.2% of our currently outstanding shares of common
stock, which, if acting collectively, could permit them to exert significant
control over our management and affairs requiring stockholder approval,
including approval of significant corporate transactions, which in turn could
result in delaying or preventing a change in control and might adversely affect
the market price of our common stock.




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





As noted
above, our certificate of incorporation authorizes us to issue up to 1,000,000
shares of preferred stock with such designations, rights and preferences as our
board of directors may determine from time to time.  Our bylaws limit
who may call a special meeting of stockholders and establish advance notice
requirements for nominations for election to our board of directors or for
proposing matters that can be acted upon at stockholder
meetings.  Each of these provisions may have the effect of
discouraging, delaying or preventing a change in control of the Company or
making removal of our management more difficult, which may not be in the
interest of the holders of our common stock.  Delaware law also could
make it more difficult for a third party to acquire us.  Specifically,
Section 203 of the General Corporation Law of the State of Delaware may have an
anti-takeover effect with respect to transactions not approved in advance by our
board of directors, including discouraging take-over attempts that might result
in a premium over the market price for the shares of our common
stock.  These provisions could also limit the price that investors
might be willing to pay in the future for shares of our common
stock.





ITEM
1B.           UNRESOLVED
STAFF COMMENTS.





Not applicable.





ITEM
2.              PROPERTIES





We maintain our principal executive and
administrative offices at 3348 Peachtree Road, NE, Suite 250, Tower 200,
Atlanta, Georgia 30326, where we lease 6,354 square feet of office
space.  The lease commenced on June 15, 2007 and has a term of 42
months, scheduled to expire on December 15, 2010.  We rented an
additional 5,030 square feet of office space pursuant to a lease that commenced
September 9, 2008.  Both leases are scheduled to expire February 28,
2014.  The base monthly rent for this office space is
$26,000.





Upon the completion of our acquisition
of the WoodTech Companies, which we plan to complete later this year, we will
acquire certain real property and enter into two office leases with respect to
property related to that business.





We
assumed the site lease agreement at the Zemel Road Landfill on January 20,
2009.  This site lease will be used for a facility to convert landfill
gas into electricity and is on the Zemel Road landfill owned by Charlotte
County, Florida.  The lease is coterminous with the Zemel Road
Agreement, and the rent under the lease is $100 per year.




- 37
-





We no longer maintain our office in New
York City.  We had sublet office space under a month-to-month sublease
for a monthly rental rate of approximately $17,000 from a company of which one
of our former directors is the managing member.  See Item 13, “Certain
Relationships and Related Transactions – Office Space” for a more detailed
discussion of this arrangement.  We terminated the New York office
sublease on June 1, 2008.





We own our corn-based ethanol facility
located in Blairstown, Iowa (the “Blairstown Facility”).  The
Blairstown Facility consists of a 24,728 square foot ethanol plant on 25.5 acres
of land, a 20.9 acre vacant lot adjoining the property, and includes warehouse
and distribution facilities.  As of May 1, 2008, we ceased production
of ethanol at the Blairstown Facility and suspended expansion plans at the
facility.  We are seeking to sell the Blairstown Facility, but we can
offer no assurances regarding how long it will take to sell the facility or the
price we might receive upon its sale.





We own a former pharmaceutical
manufacturing complex in Augusta, Georgia, where we had planned to develop a
plant for the production of ethanol (the “August Facility”).  The
Augusta Facility consists of multiple buildings on 40.8 acres.  We
purchased the Augusta Facility in August 2006 for approximately $8.4 million in
cash.  In October 2006, we sold surplus equipment from the Augusta
Facility for $3.1 million in cash.  We also own a former medium
density fiberboard plant in Spring Hope, North Carolina that consists of 200,000
square feet of factory building on 212 acres (the “Spring Hope
Facility”).  We purchased the Spring Hope Facility in November 2006 as
part of our acquisition of the assets of Carolina Fiberboard Corporation,
LLC.





We have reevaluated the Augusta
Facility and the Spring Hope Facility and have decided that they no longer fit
within our long-term corporate strategy.  On March 30, 2008, our board
of directors authorized management to pursue the sale of the Augusta Facility
and the Spring Hope Facility.  We estimate that the sale of the
Augusta Facility would reduce our annual overhead by approximately $500,000 and
the sale of the Spring Hope Facility would reduce our annual overhead by
approximately $150,000.  Before we can sell the Spring Hope Facility
(or as a term of its sale), we will have to resolve certain liens on the
property filed by companies that performed, or have claimed to have performed,
environmental remediation and demolition work on the facility.  We can
offer no assurances regarding how long it will take to sell either of the
Augusta Facility or the Spring Hope Facility or what price we might receive for
the sale of either facility.





In December 2006, we entered into a
lease for a residential condominium unit located in New York City to be used by
our Chief Executive Officer and other officers and employees who reside outside
the greater New York City area.  The term of the lease was one year
beginning on January 1, 2007, and monthly rent under the lease was
$6,400.  We terminated this condominium lease in August
2008.


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ITEM
3.              LEGAL
PROCEEDINGS





We are a
party to the Jacoby Energy Development and Global Energy and Management lawsuits
described below.  We were also party to a class action lawsuit
described below, which was settled on October 6, 2008.





Jacoby Energy Development, Inc.
Lawsuit.  On July 28, 2008, Jacoby Energy Development, Inc.
(“JEDI”), Geoplasma, LLC and Georecover−Live Oak, LLC filed an action in the
Superior Court of Fulton County of the State of Georgia against the Company, our
subsidiary Global Energy Systems, Inc. (“GES”), and six current officers and
employees.  The six individual defendants are Romilos Papadopoulos,
our Chief Operating Offer, Chief Financial Officer, Executive Vice President and
Secretary; Michael Ellis, President of GES; and four other employees of
GES.  The complaint alleges, among other things, that we breached a
mutual nondisclosure agreement related to previous negotiations for a possible
merger between us and JEDI and its affiliates.  The plaintiffs allege
that we breached the agreement by soliciting and hiring the six individual
defendants, who were previously employed by the plaintiffs, and by using the
plaintiffs’ confidential and proprietary information for our own business
purposes.  The plaintiffs also allege that we tortuously interfered
with the plaintiffs’ business and misappropriated the plaintiffs’ trade
secrets.  The plaintiffs seek, among other things, a permanent
injunction, unspecified compensatory damages plus costs and expenses incurred in
connection with the litigation, including attorneys’ fees, and general and
punitive damages in an amount not less than $10 million.  We have
denied the allegations in the complaint, and the individual defendants have
asserted counterclaims against the plaintiffs.  Pursuant to a
scheduling order entered by the court on December 30, 2008, discovery is
schedule to end on July 31, 2009, and dispositive motions, including motions for
summary judgment, must be filed by August 17, 2009.  The parties have
refrained from conducting discovery while they attempt to reach a business
resolution of the issues, but as of the date of this report, the parties have
not yet reached a settlement.  The parties are continuing their
discussions, but we may resume discovery shortly if a resolution is not
reached.





Global Energy and Management, LLC
Lawsuit.  In December 2007, Global Energy and Management, LLC
(“GEM”) filed an action in the federal court for the Southern District of New
York against the Company and nine of our current or former officers, directors
and affiliates entitled Global Energy and Management v. Xethanol Corporation, et
al.  The lawsuit alleges fraud by the defendants in connection with
GEM’s alleged investment of $250,000 in NewEnglandXethanol, LLC, a joint venture
of the Company and GEM.  Initially, GEM sought more than $10,000,000
in damages plus pre-judgment interest and costs.  After the Company
asked the District Court in May 2008 for leave to move to dismiss the complaint,
GEM served the Company with its third amended complaint, seeking damages of only
$250,000.  Upon the Company’s motion, the Court dismissed that
complaint on February 23, 2009, holding that GEM could file an amended complaint
only upon payment to the Company of $5,000 towards its legal fees.  On
March 17, 2009, GEM paid the Company $5,000 and filed its Fourth Amended
Complaint against the Company and four former directors and officers seeking in
damages repayment of its alleged $250,000 investment, lost profits,
consequential damages, interest and costs.  The Company has asked the
Court for leave to move to dismiss the Fourth Amended Complaint and intends to
defend against this action vigorously.




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-





Class Action
Lawsuit.  In October 2006, a shareholder class action complaint
was filed in the United States District Court for the Southern District of New
York, purportedly brought on behalf of all purchasers of our common stock during
the period January 31, 2006 through August 8, 2006.  The complaint
alleged, among other things, that the Company and some of its former officers
and directors made materially false and misleading statements regarding the
Company's operations, management and internal controls in violation of Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule
10b−5 promulgated thereunder.  The individual defendants were Lawrence
S. Bellone, a former director, Executive Vice President, Corporate Development,
principal accounting officer and Chief Financial Officer; Christopher
d’Arnaud−Taylor, a former director, Chairman, President and Chief Executive
Officer; and Jeffrey S. Langberg, a former director.  The plaintiffs
sought, among other things, unspecified compensatory damages and reasonable
costs and expenses, including counsel fees and expert fees.  Six
nearly identical class action complaints were thereafter filed in the same
court, all of which were later consolidated into one action, In re Xethanol
Corporation Securities Litigation, 06 Civ. 10234 (HB) (S.D.N.Y.).  The
plaintiffs filed their amended consolidated complaint on March 23,
2007.  On November 28, 2007, the defendants, including the Company,
reached an agreement in principle with the plaintiffs’ lead counsel to settle
the class action.  On October 6, 2008, the District Court Judge
dismissed the class action with prejudice.  In connection with the
settlement, the plaintiffs received $2.8 million, of which we paid $400,000 and
our insurance carriers paid $2.4 million.  In addition, our insurance
carriers paid $300,000 in legal costs.





Litigation
is subject to inherent uncertainties, and an adverse result in this or other
matters that may arise from time to time could have a material adverse effect on
our business, results of operations and financial condition.  We may
incur material legal and other expenses, and our management may be
distracted.





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





Proposals Submitted to Stockholders
at 2008 Annual Meeting





We held
our annual meeting of stockholders on December 11, 2008.  We asked our
stockholders to vote on two proposals, which are described in more detail in the
proxy statement dated November 10, 2008 that we sent to our stockholders and
filed with the SEC:





1.
            to
      elect seven directors to serve until the 2009 annual meeting of
      stockholders or until their successors have been duly elected and
      qualified; and,


2.
            to
      ratify the appointment of Imowitz Koenig & Co., LLP as our independent
      registered public accounting firm for the fiscal year ending December 31,
      2008.





We
solicited proxies for the meeting pursuant to Section 14(a) of the Securities
Exchange Act of 1934, as amended, and there was no solicitation in opposition to
management’s solicitations.




- 40
-





Election
of Directors





All of
management’s nominees for directors as listed in the proxy statement were
elected with the following votes (there were no abstentions or broker non-votes)
to serve until the 2009 annual meeting of stockholders or until their successors
have been duly elected and qualified:





Votes For
                  
                  
                  Votes WithheldDavid
      R. Ames
                  
                  
                  17,578,358
                  
                  
                  
                  1,294,304William
      P. Behrens
                  
                  
                  17,328,499
                  
                  
                  
                  1,544,163Gil
      Boosidan
                  
                  
                  16,876,012
                  
                  
                  
                  1,996,650Richard
      D. Ditoro
                  
                  
                  17,127,183
                  
                  
                  
                  1,745,479Robert
      L. Franklin
                  
                  
                  16,613,523
                  
                  
                  
                  2,259,139Edwin
      L. Klett
                  
                  
                  17,015,396
                  
                  
                  
                  1,857,266Steven
      H. Townsend
                  
                  
                  17,583,678
                  
                  
                  
                  1,288,984





Ratification
of the appointment of Imowitz Koenig & Co., LLP





The
appointment of Imowitz Koenig & Co., LLP as our independent registered
public accounting firm for the fiscal year ending December 31, 2008 was approved
and ratified with the following votes:





Votes For
              
              Votes Against
              
              Abstentions
              
              Broker Non-Votes18,306,811
              
              490,024
              
              75,825
              
              0


- 41
-


PART
II





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





Holders





As of March 31, 2009, there were
approximately 132 record holders of our common stock and 29,070,103 shares of
our common stock issued and outstanding.





Market
Information





Our
shares of common stock are listed on the NYSE Amex exchange under the trading
symbol GNH.  Prior to our name change on October 27, 2008 we were
listed on the American Stock Exchange under the trading symbol XNL.





The
following table sets forth, with respect to our fiscal years ended December 31,
2007 and 2008, the high and low sales prices for our common stock for the
periods indicated as reported by the American Stock Exchange and the NYSE Amex
exchange.  These quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commissions, and may not represent actual
transactions.





High
                  
                  
                  LowYear Ended December 31,
      2007First
      Quarter
                  
                  $
                  4.14
                  
                  
                  $
                  1.95Second
      Quarter
                  
                  
                  2.57
                  
                  
                  
                  1.12Third
      Quarter
                  
                  
                  1.93
                  
                  
                  
                  0.65Fourth
      Quarter
                  
                  
                  0.99
                  
                  
                  
                  0.30Year Ended December 31,
      2008First
      Quarter
                  
                  $
                  1.17
                  
                  
                  $
                  0.32Second
      Quarter
                  
                  
                  0.99
                  
                  
                  
                  0.31Third
      Quarter
                  
                  
                  0.55
                  
                  
                  
                  0.25Fourth
      Quarter
                  
                  
                  0.28
                  
                  
                  
                  0.07





Dividend
Policy





We have
not previously declared or paid any dividends on our common stock and do not
anticipate declaring any dividends in the foreseeable future.  The
payment of dividends on our common stock is within the discretion of our board
of directors.  We intend to retain any earnings for use in our
operations and the expansion of our business.  Payment of dividends in
the future will depend on our future earnings, future capital needs and our
operating and financial condition, among other factors that our board of
directors may deem relevant.  We are not under any contractual
restriction as to our present or future ability to pay dividends.




- 42
-





Securities
Authorized for Issuance Under Equity Compensation Plans




See Item
12, “Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters – Equity Compensation Plan Information.”





ITEM
      6.
            SELECTED
      FINANCIAL DATA.





Not
required for smaller reporting companies.


- 43
-





ITEM
      7.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATION.





This
Management’s Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements that involve future events, our
future performance and our expected future operations and actions.  In
some cases, you can identify forward-looking statements by the use of words such
as “may,” “will,” “should,” “anticipate,” “believe,” “expect,” “plan,” “future,”
“intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” or
the negative of these terms or other similar expressions.  These
forward-looking statements are only our predictions and involve numerous
assumptions, risks and uncertainties.  Our actual results or actions
may differ materially from these forward-looking statements for many reasons,
including the matters discussed in this report under the caption “Risk
Factors.”  We urge you not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
report.  We undertake no obligation to publicly update any forward
looking-statement, whether as a result of new information, future events or
otherwise.





You
should read the following discussion of our financial condition and results of
operation in conjunction with our financial statements and the related notes
included in this report.





Overview





Change
in Name and New Corporate Structure





On
October 27, 2008, we changed our name to Global Energy Holdings Group, Inc. from
Xethanol Corporation.  The Company’s principal operating division is
Global Energy Systems, Inc. (“GES”), which is developing renewable energy
projects, including biomass projects, such as gasification, and
landfill-gas-to-energy projects.





Source
of Revenue until May 1, 2008





Our only
source of revenue has been from our sales of ethanol and related products at our
corn-based ethanol plant in Blairstown, Iowa.  As a result of high
prices for corn and natural gas, on May 1, 2008 we ceased production of ethanol
at our Blairstown plant to reduce our operating losses, and we are actively
seeking a purchaser of the Blairstown plant.  As of December 31, 2008,
we had no source of revenue.  It is anticipated that our future
revenues will be generated from assets and businesses that we acquired and plan
to acquire in 2009.





Cash
and Liquidity Position





We had
cash, cash equivalents and short-term marketable securities of approximately
$3.6 million as of December 31, 2008 and approximately $120,000 of cash at March
31, 2009.  Approximately $3,153,000 of the Company’s cash as of
December 31, 2008 was held in the Reserve U.S. Government Fund (a money market
fund).  In September 2008, redemptions were temporarily suspended from
the reserve fund so that an orderly liquidation could be effected for the
protection of the reserve fund’s investors.  On January 20, 2009, the
Company received substantially all of its current holdings in the reserve fund
at no loss.




- 44
-





In light
of the foregoing, we reclassified $3,153,000 of our assets in the reserve fund
from cash and cash equivalents to short-term marketable securities on the
Company’s consolidated balance sheet at December 31, 2008 because the investment
in the reserve fund no longer met the definition of a cash
equivalent.  In addition, we reflected the effect of that
reclassification on the Company’s consolidated statement of cash flows for the
year ended December 31, 2008 as a reclassification from cash equivalents to
short-term marketable securities.





Investment
Activities





For the
year ended December 31, 2008, net cash of $1.6 million was used in connection
with investment activities.  During 2008, we made a $500,000
convertible loan to Consus Ethanol, LLC, invested $250,000 in Carbon Motors
Corporation and purchased property and equipment for $71,000.  The
2008 convertible loan made to Consus Ethanol, LLC was due and payable January 1,
2009.  We entered into a new convertible loan in 2009 with Consus
Ethanol, LLC for $548,493 which includes all principal and interest of the 2008
convertible loan.  Also during the year ended December 31, 2008, we
sold 548,700 shares of the common stock of NGBF for $2,392,000 in net
cash.  At December 31, 2008, we held 5,301,300 shares of common stock
in NGBF, which represented approximately 26.1% of its outstanding common stock
based on 20,280,614 shares reported to be outstanding as of January 14, 2009 in
NGBF’s Pre-Effective Amendment No. 1 to its Registration Statement on Form S-3
filed with the SEC on January 15, 2009.  As discussed below under
“Possible Asset Sales,” we completed the sale of our 5,301,300 shares of NGBF
stock on March 18, 2009.





Possible
Asset Sales





We have
reevaluated our Augusta, Georgia and Spring Hope, North Carolina facilities and
have decided that they no longer fit within our long-term corporate
strategy.  On March 20, 2008, our board authorized management to
pursue the sale of each facility, which we are doing.  We are also
pursuing the sale of our ethanol facilities in Blairstown, Iowa.  We
can offer no assurance regarding how long it will take to sell any of these
facilities or the price we might receive for them.  In the interim,
while we still hold these real estate assets, we are also seeking to obtain a
credit facility secured by these assets.





On March
17, 2009, the Company entered into a Stock Purchase Agreement (the “NGBF
Purchase Agreement”) with 2020 Energy, LLC, an Arizona limited liability company
(“2020 Energy”), pursuant to which the Company sold to 2020 Energy, in a private
sale transaction, all of the Company’s 5,301,300 shares of common stock of New
Generation Biofuels Holdings, Inc. (“NGBF”).  We completed the sale of
the NGBF shares to 2020 Energy on March 18, 2009, and 2020 Energy paid us an
aggregate purchase price of $583,143 for the NGBF shares.  Based on
the number of shares of NGBF common stock reported to be outstanding in NGBF’s
Pre-Effective Amendment No. 1 to NGBF’s Registration Statement on Form S-3 filed
with the SEC on January 15, 2009,  the 5,301,300 NGBF shares sold by us to
2020 Energy constituted approximately 26.1% of NGBF’s outstanding common
stock.




- 45
-





In
addition to the sale and purchase of the NGBF shares described above, under the
Purchase Agreement, we agreed to assign to 2020 Energy all of our interest in
and rights under that certain Amended and Restated Sublicense Agreement, dated
as of June 15, 2006, between us and NGBF (the “Sublicense Agreement”), pursuant
to which NGBF granted us a sublicense to certain technology and rights related
to the manufacture of a vegetable oil based biodiesel product.  The
assignment of the Sublicense Agreement, however, is conditioned on 2020 Energy
obtaining the written consent of NGBF to the assignment.





Going
Concern and Anticipated Funding Needs





The
Company will need substantial additional capital to pursue its plans and
projects, and given the current economic and financial climate, the Company can
give no assurance that it will be able to raise the additional capital that it
needs on commercially acceptable terms, or at all.  The Company will
need to reduce costs and raise additional financing to fund operations and long
term business objectives.  The Company’s continued existence is
dependent upon several factors, including obtaining additional debt or equity
financing and developing and completing renewable energy
projects.  Management is investigating various sources of debt or
equity financing and is developing marketing and production plans for its
products.  These matters raise substantial doubt about the Company’s
ability to continue as a going concern.





As noted
above, in June 2008, we formed a new operating division, Global Energy Systems,
Inc. (“GES”).  We will need substantial additional capital to pursue
our plans, which, among other things, include the construction of landfill gas
capture and processing facilities in Georgia and Florida and completion of our
acquisition of WoodTech, LLC and its affiliates (the “WoodTech Companies”) and
the subsequent development of the WoodTech Companies’ new biomass recycling
center and gasification facility.  We have decided not to pursue our
previously announced plans to construct a demonstration plant for converting
citrus peel waste into ethanol, and we sold the remaining fixed assets
associated with the demonstration plant project to our lender, Renewable
Spirits, LLC, in exchange for the forgiveness of $279,000 in debt on January 19,
2009.  We also ceased production of ethanol at our Blairstown ethanol
plant to reduce our operating losses.  Our capital requirements,
however, remain substantial in order to pursue our business
strategy.





GES
generated no revenues during the year ended December 31, 2008.  As
discussed above, we ceased production of ethanol at our Blairstown ethanol plant
in May 2008, which was our only revenue producing facility, and we currently
have no operating source of revenue.  We also currently have no
commitments for additional financing.  Our only recent source of cash
was from the sale of all of our 5,301,300 shares of NGBF common stock on March
18, 2009 to 2020 Energy for an aggregate purchase price of $583,143, and there
can be no assurance that we will be able to obtain additional debt or equity
financing on commercially acceptable terms, or at all, when
needed.  If we are unable to access the capital markets to finance our
various projects, we may be unable to continue our operations.  See
Item 1A, “Risk Factors.”  We are pursuing the sale of the Blairstown
ethanol plant and our facilities in Augusta, Georgia and Spring Hope, North
Carolina, as discussed above, although we can provide no assurance regarding how
long it will take to sell these facilities or the price we will receive for
them.




- 46
-





Subsequent
Acquisitions and Potential Acquisition





On
February 2, 2009, we acquired the right to purchase from a subsidiary of
Republic Services, Inc. (“Republic”) all of the landfill gas generated at
Republic’s Hickory Ridge landfill located in Conley (DeKalb County), Georgia
(“Hickory Ridge”) through December 31, 2029.  The Company intends to
process and convert the landfill gas collected at Hickory Ridge into a saleable
energy product.  The Company paid an aggregate purchase price of
$3,350,000 to acquire the Hickory Ridge landfill gas purchase
rights.  Our plans for the Hickory Ridge facility will require
financing, and we cannot assure that such financing will be readily available;
see Item 1A, “Risk Factors.”





On
January 28, 2009, we entered into an agreement to acquire the WoodTech
Companies, which include a wood fuel recycler and landscape materials
manufacturing business that recycles wood waste into mulch, topsoil, potting
soils and fuel for industrial customers and the generation of renewable
energy.  Under the agreement, we plan to purchase approximately 82
acres of real estate located in Cherokee County, Alabama and equity interests in
several associated companies.  One of the companies we are acquiring,
Ball Ground Recycling, LLC, leases real property in Ball Ground, Georgia on
which a new wood fuel recycling plant (the “Recycling Plant”) is being
constructed.  Under the terms of the acquisition, we agreed to pay
$2,000,000 in cash to the sellers, less the transaction expenses and issue a
total of 4,000,000 shares of our common stock and a $1,980,000 promissory note
payable to the sellers.





Under the
agreement, either we or the WoodTech Companies can terminate the agreement under
certain circumstances if the acquisition is not completed on or prior to
February 17, 2009 due to the other party’s failure to satisfy closing
conditions.  As of the date of this filing, we have not completed the
acquisition of the WoodTech Companies.  While we plan to close our
acquisition of the WoodTech Companies later this year, there can be no
assurances that it will close then or that it will close at all.  Even
assuming a successful closing of our acquisition of the WoodTech Companies, our
plans for the wood gasification facility at the WoodTech site will require
financing, and we cannot assure that such financing will be readily available;
see Item 1A, “Risk Factors.”





On
January 20, 2009, we entered into a project assignment agreement with North
American Natural Resources—Southeast, LLC (“NANR”) to acquire (1) rights to
purchase from Charlotte County, Florida all the landfill gas generated by or at
its Zemel Road Landfill site (“Zemel Road”) and (2) the exclusive right to
construct and operate a landfill gas-to-energy project at the Zemel Road
landfill.





Under the
terms of the agreement, the aggregate purchase price for the rights related to
the Zemel Road gas project was $350,000, subject to certain conditions as
described in more detail below.  At the closing, we paid NANR
$100,000, which included a credit for our previous non-refundable deposit of
$10,000.  In addition, we agreed to pay the remaining balance of
$250,000 to NANR in cash upon the occurrence of each event or milestone that
triggers our obligation to make payments as follows:




- 47
-





·
            a
      $100,000 payment within 10 business days after we procure the air
      construction permit and solid waste permit for the
  project;


·
            a
      $50,000 payment upon our installation of a landfill gas collection system
      as provided in the assigned
contracts;


·
            a
      $50,000 payment upon our execution of a purchase power agreement with a
      local electric utility and the agreement with that utility for the
      construction of the necessary interconnect;
and


·
            a
      $50,000 payment within 10 business days after the first anniversary of the
      commencement of operation of the
project.





Our
failure to complete construction of the landfill gas collection system and the
facility to convert the landfill gas at Zemel Road into energy by January 22,
2010 will result in us becoming liable to Charlotte County for liquidated
damages equal to $1,000 per day for each day of delay in completing the
collection system and $200 per day for each day of delay in completing the
energy facility.  Our plans for the Port Charlotte site will require
financing, and we cannot assure that such financing will be readily available;
see Item 1A, “Risk Factors.”





Possible
Effects of Current Business Climate





The
current “credit crunch” has affected or may affect us in several
ways.  We face difficulties in obtaining the necessary debt and equity
capital we need to pursue our business plan, which requires a significant amount
of capital.  The difficult credit environment may also affect our
plans to sell one or more of our facilities to the extent that purchasers need
to finance the purchase of those facilities with borrowings.  In
addition, the recent bankruptcy filing of ethanol producer VeraSun Energy
Corporation may also further depress the value of ethanol plants like our
Blairstown ethanol facilities, which we are trying to sell.  The
substantial and rapid decline in the price of natural gas and other traditional
energy sources, including coal and oil, may also affect our business adversely
by causing our landfill gas products to become uncompetitive from a pricing
standpoint and given that the business viability of, and political support for,
renewable energy has generally in the past been inversely correlated with the
price of traditional energy fuels.  In summary, like many businesses
in America, we face a difficult and uncertain market.





Results
of Operations





Year
Ended December 31, 2008 Compared to Year Ended December 31, 2007





Net Loss.  We
incurred a net loss of $13.3 million, or $.46 per share, for the year ended
December 31, 2008 versus a net loss of $31.3 million, or $1.09 per share, for
the year ended December 31, 2007.  Included in the net losses for the
years ended December 31, 2008 and 2007 were non-cash charges totaling $5.2
million and $18.3 million or 39.1% and 58.5% of our net losses,
respectively.  Significant 2008 non-cash charges
included:





·
            $3.7
      million of impairment losses on property and research and license
      agreements;


·
            $731,000
      in depreciation and amortization
expenses;




- 48
-




·
            $618,000
      of losses on equity of New Generation Biofuels Holdings,
      Inc. and


·
            $147,000
      in compensation expense related to stock options granted to employees and
      directors under our 2005 Incentive Compensation
  Plan.





The
decrease in net loss of $18.0 million for the year ended December 31, 2008 as
compared to the prior year resulted primarily from:





·
            an
      $8.6 million decrease in impairment
losses;


·
            a
      $3.8 million decrease in equity compensation
  expenses;


·
            a
      $2.4 million increase in gain on sales of
  investments;


·
            a
      $1.6 million decrease in loss on marketable
  securities;


·
            a
      $618,000 decrease in loss on equity of New Generation
      Biofuels;


·
            a
      $626,000 decrease in research and development
  expenses;


·
            a
      $181,000 decrease in general and administrative
  expenses;


·
            a
      $377,000 gain on sales of grain inventory;
and


·
            a
      $400,000 decrease in legal settlement
costs;





partially
offset by





·
            a
      $558,000 decrease in interest
income.





Net Sales.  Net
sales for the year ended December 31, 2008 decreased to $3.8 million from $11.0
million for the year ended December 31, 2007.  This decrease was due
to the May 1, 2008 cessation of ethanol production at our Blairstown
plant.  During the year ended December 31, 2008, our Blairstown plant
sold 1.7 million gallons of ethanol at monthly prices ranging between $1.84 and
$2.15 per gallon at an average price of $1.98 per gallon, and generated revenue
of $463,000 from the sales of by-products.  Total average revenue per
gallon including by-products was $2.23.  In 2007, our Blairstown plant
sold 5.4 million gallons of ethanol at monthly prices ranging between $1.51 and
$2.09 per gallon with an average price of $1.87 per gallon and generated revenue
of $1.0 million from the sales of by-products.  In 2007, total average
revenue per gallon including by-products was $2.06.





Cost of Sales.  Cost
of sales is comprised of direct materials, direct labor and factory
overhead.  Included in factory overhead are energy costs,
depreciation, and repairs and maintenance.  Cost of sales for the year
ended December 31, 2008 was $5.4 million compared to $12.7 million for the year
ended December 31, 2007.  The decrease in cost of sales was due to the
May 1, 2008 cessation of ethanol production at our Blairstown
plant.  The average monthly cost of sales during the year ended
December 31, 2008 was $3.20 per gallon compared to $2.36 for the prior
year.  The increase in cost per gallon in 2008 was due to factory
overhead expenses incurred since we ceased ethanol production at our Blairstown
plant on May 1, 2008.





Gross Loss.  Gross
loss for the year ended December 31, 2008 was $1.6 million, or 43% of net sales,
versus a gross loss of $1.6 million, or 15% of net sales, for the year ended
December 31, 2007.  The loss remained the same due to the May 1, 2008
cessation of ethanol production at our Blairstown plant.  The increase
in the percentage of gross loss to net sales was also due to the cessation of
ethanol production at our Blairstown plant.




- 49
-





General and Administrative
Expenses.  General and administrative expenses (“G&A”) were
$9.9 million for the year ended December 31, 2008 compared to $10.1 for the year
ended December 31, 2007, reflecting a $0.2 million decrease from the prior
year.  The primary components of 2008 G&A expenses
were:





·
            $2.5
      million for accounting and legal services or 25% of
    G&A;


·
            $2.6
      million of payroll expenses or 26% of
G&A;


·
            $853,000
      for fees to outside advisors, professionals and other service providers or
      9% of G&A;


·
            $731,000
      for travel and entertainment expenses or 7% of
  G&A;


·
            $500,000
      for acquisition costs or 5% of
G&A;


·
            $539,000
      for expenses of CoastalXethanol or 5% of
  G&A;


·
            $398,000
      for insurance expenses or 4% of
G&A;


·
            $421,000
      for expenses of the Spring Hope facility or 4% of G&A;
    and


·
            $324,000
      of G&A expenses related to our Blairstown facility or 3% of
      G&A.





Significant increases and decreases in
components of G&A in 2008 compared to 2007 were primarily attributable
to:





·
            a
      $770,000 decrease in expenses of our Spring Hope
  facility;


·
            a
      $724,000 decrease in expenses of our CoastalXethanol subsidiary (which
      owns our Augusta facility) resulting primarily from the termination in
      September 2007 of our joint venture with Coastal Energy Development, Inc.
      and cost saving procedures instituted by
      management;  and


·
            a
      $165,000 decrease in travel and entertainment
  expenses;





partially
offset by





·
            a
      $1.1 million increase in payroll expenses due principally to the new GES
      management team we hired in June 2008 and the $150,000 bonus paid to our
      chief executive officer; and


·
            a
      $500,000 increase in acquisition
costs.





Equity
Compensation.  Equity compensation for the year ended December
31, 2008 was $147,000 compared to $4.0 million for the year ended December 31,
2007.  The significant items in equity compensation
include:





·
            $40,000
      in compensation expense for the year ended December 31, 2008 related to
      stock options and shares of restricted common stock granted to employees
      and consultants under the 2005 Incentive Compensation Plan, representing a
      decrease of $2.6 million in similar expenses from the prior
      year;


·
            $107,000
      in compensation expense for the year ended December 31, 2008 related to
      stock options granted to outside directors under the 2005 Incentive
      Compensation Plan, representing a decrease of $835,000 from $942,000 in
      the prior year; and




- 50
-




·
            no
      compensation expense for the year ended December 31, 2008 related to
      warrants issued, representing a decrease of $421,000 from the prior
      year.





Depreciation and
Amortization.  Depreciation expense for the year ended December
31, 2008 was $65,000 compared to $65,000 for the year ended December 31, 2007,
resulting in no increase or decrease for the year.





Amortization
expense for the year ended December 31, 2008 was $9,000 compared to $13,000 for
the prior year.  The $4,000 decrease was a result of amortization on
our license agreement for nine months in 2008 as compared to an entire year of
amortization in 2007.





Impairment Loss – Property and
Research and License Agreements.We recorded impairment losses of $3.7
million during the year ended December 31, 2008 consisting of a $3.3 million
impairment loss on property and equipment and a $418,000 impairment loss of on
our research and license agreements.  For the year ended December 31,
2007, we recorded impairment losses of $12.2 million on our fixed
assets.





Research and
Development.  Research and development expenses for the year
ended December 31, 2008 decreased by $626,000 to $235,000 as compared to
$861,000 for the year ended December 31, 2007.  Our research and
development expense in 2008 was due to amortization on our research agreements
and payments made under consulting arrangements.  We have fully
satisfied all financial obligations due to National Renewable Energy Laboratory,
the USDA Forest Products Laboratory, Virginia Tech and the Energy &
Environmental Research Center under existing research agreements.





Interest
Income.  Interest income for the year ended December 31, 2008
was $188,000, representing a decrease of $558,000 from $746,000 for the year
ended December 31, 2007.  This decrease is primarily due to the
decrease in our average cash and cash equivalents balances compared to the prior
year.





Interest
Expense.  Interest expense was $58,000 for the year ended
December 31, 2008, a slight increase from $55,000 for the prior
year.





Loss on Marketable
Securities.  We had no losses on marketable securities during
the year ended December 31, 2008.  We recorded a loss of $1.6 million
for the year ended December 31, 2007 due to the sale of auction rate securities
at less than par.





Gain on Sale of Grain
Inventory.  We recorded a gain of $377,000 on sales of grain
inventory during the year ended December 31, 2008.  These sales were
as a result of the May 2008 cessation of ethanol manufacturing at our Blairstown
facility.  We had no sales of grain inventory in the prior
year.





Gain on Sale of Investment in New
Generation Biofuels.  We recorded a gain of $2.4 million on the
sale of 548,700 shares of the common stock of New Generation Biofuels during the
year ended December 31, 2008.  We sold none of our shares in New
Generation Biofuels in the prior year.




- 51
-





Loss on Equity of New Generation
Biofuels.  We recorded a loss on equity of New Generation
Biofuels of $618,000 for the year ended December 31, 2008, compared to a loss on
equity of New Generation Biofuels of $1.2 million for the year ended December
31, 2007.  This loss represents our portion of New Generation
Biofuels’ net losses, based on the equity method of accounting for the years
ended December 31, 2008 and December 31, 2007, respectively.





Legal Settlement
Costs.  We had no legal settlement costs for the year ended
December 31, 2008 as compared to $400,000 of legal settlement costs for the year
ended December 31, 2007 that resulted from the settlement of a class action
lawsuit against us.





Other Income.Other
income for the year ended December 31, 2008 decreased by $1,000 to $177,000 from
$178,000 for the corresponding period in 2007.





Liquidity
and Capital Resources





We had
cash, cash equivalents and short-term marketable securities of approximately
$3.6 million as of December 31, 2008 and approximately $120,000 as of March 31,
2009.  Our working capital as of December 31, 2008 was $1.5 million,
representing a decrease in working capital of $9.3 million compared to $10.8
million at December 31, 2007.





During
the year ended December 31, 2008, we used net cash of $10.3 million for
operating activities.  During the year ended December 31, 2008, we
used net cash of $1.6 million in connection with investment
activities.  During the year ended December 31, 2008, we made a
$500,000 convertible loan to Consus Ethanol, LLC, invested $250,000 in Carbon
Motors Corporation and purchased property and equipment for
$71,000.  At December 31, 2008, we reclassified cash and cash
equivalents of $3,153,000 to short-term marketable securities, resulting in a
use of cash.  Also during the year ended December 31, 2008, we sold
548,700 shares of the common stock of New Generation Biofuels Holdings, Inc. for
$2.4 million.  During the year ended December 31, 2008, we made
$16,000 in principal payments under a note payable and $9,000 in capitalized
lease payments.





In
December 2006, we formed a joint venture to invest in a research project to
produce ethanol from citrus waste.  We agreed to pay $600,000 to our
joint venture partner over the next ten years.  We have decided not to
pursue the construction of a demonstration plant for converting citrus peel
waste into ethanol.  On January19, 2009, we sold our fixed assets
associated with this project, and the buyer cancelled the remaining $279,000 of
debt we had outstanding at December 31, 2008.





We will
need substantial additional capital to fund the business of the Company,
including the development of energy-related projects and the funding of any
other growth opportunities we pursue.  If we are unable to obtain
sufficient additional capital, we may lose our investments in our energy-related
projects, including our Hickory Ridge and Port Charlotte landfill gas projects,
and we may lose our opportunity to complete our acquisition of the WoodTech
Companies, which we otherwise expect to close later this year – See Item 1A,
“Risk Factors.”  Our primary sources of capital are as
follows:




- 52
-





·
            As
      of December 31, 2008, we held 5,301,300 shares of New Generations Biofuels
      Holdings, Inc. (“NGBF”) common stock.  Given that we owned more
      than 27% of the outstanding shares of NGBF, we relied on Rule 144 under
      the Securities Act of 1933, as amended, to sell 548,700 shares of NGBF
      common stock in 2008.  Under Rule 144, the volume of our sales
      of shares of NGBF common stock on the market in any given three month
      period was limited to 1% of the outstanding common shares of NGBF then
      outstanding.  On March 17, 2009, the Company entered into a
      stock purchase agreement with 2020 Energy, pursuant to which we sold to
      2020 Energy, in a private sale transaction, all of our 5,301,300 shares of
      NGBF common stock.  We completed the sale of our NGBF shares to
      2020 Energy on March 18, 2009, and 2020 Energy paid us an aggregate
      purchase price of $583,143 for the shares.  In addition to the
      sale and purchase of the NGBF shares described above, under the Purchase
      Agreement, we agreed to assign to 2020 Energy all of our interest in and
      rights under our Sublicense Agreement with NGBF.  The assignment
      of the Sublicense Agreement, however, is conditioned on 2020 Energy
      obtaining the written consent of NGBF to the
  assignment.





·
            We
      have reevaluated our Augusta, Georgia and Spring Hope, North Carolina
      facilities and have decided that they no longer fit within our long-term
      corporate strategy.  On March 20, 2008, our board of directors
      authorized our management to pursue the sale of each facility, which we
      are doing.  We are also pursuing the sale of our ethanol
      facilities in Blairstown, Iowa.  We can offer no assurance
      regarding the proceeds we may receive from the sales of one or more of
      these facilities or the timing of any such sale or
  sales.





We may
also seek to raise capital through additional equity offerings, debt financing,
bond financing or a combination of these methods.





To
conserve our cash and cash equivalents or generate positive cash flow, we have
taken or expect to take several actions:





·
            If
      we are successful in selling our Augusta, Georgia facility, we estimate
      that such sale would reduce our annual overhead by approximately
      $500,000.


·
            If
      we are successful in selling our Spring Hope, North Carolina facility, we
      estimate that such sale would reduce our annual overhead by
      approximately $150,000.


·
            We
      vacated our New York office effective August 31, 2008, which will save us
      approximately $250,000 annually.


·
            As
      a result of the high prices for corn and natural gas, on May 1, 2008 we
      ceased production of ethanol at our Blairstown plant to reduce our
      operating losses.




- 53
-




·
            We
      are pursuing utility energy service projects for organizations that
      include government agencies and the U.S. military, and we expect that any
      project of that nature will generate positive cash
  flow.





We
currently have no commitments for any additional financing, and we can give no
assurance that we will be able to raise the additional capital we need on
commercially acceptable terms or at all. We are seeking to obtain one or more
credit facilities secured by one or more of our real estate
properties.  Our only recent source of funding was on March 18, 2009,
when we completed the sale of our 5,301,300 shares of NGBF common stock to 2020
Energy for a purchase price of $583,143.  We are also seeking debt and
equity financing for projects that GES is pursuing for our facilities at the
Hickory Ridge and Port Charlotte landfills and to close our acquisition of the
WoodTech Companies.  Our failure to raise capital as needed would
significantly restrict our growth and hinder our ability to continue as a viable
business.  We will need to curtail expenses further, reduce
investments we would otherwise make through Global Energy Ventures and defer or
forgo business opportunities.  Additional equity financings may be
dilutive to holders of our common stock, and debt financing, if available, may
involve significant payment obligations and covenants that restrict how we
operate our business.  See Item 1A, “Risk Factors.”





Off-Balance
Sheet Arrangements





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





Critical
Accounting Policies





The
preparation of our consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities.  We evaluate our estimates on an ongoing basis, including
those related to valuation of intangible assets, investments, property and
equipment; contingencies and litigation; and the valuation of shares issued for
services or in connection with acquisitions.  We base our estimates on
historical experience and on various other assumptions that we believe are
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources.  Actual results may differ
from these estimates under different assumptions or conditions.  The
accounting policies that we follow are described in Note 2 to our audited
consolidated financial statements included in this report.





With
regard to our policies surrounding the valuation of shares issued for services
or in connection with acquisitions, we rely on the fair value of the shares at
the time they were issued.  After considering various trading aspects
of our stock, including volatility, trading volume and public float, we believe
that the price of our stock as reported on NYSE Amex exchange (formerly known as
the American Stock Exchange) is the most reliable indicator of fair
value.  The fair value of options and warrants issued for services is
determined at the grant date using a Black-Scholes option pricing model and is
expensed over the respective vesting periods.  A modification of the
terms or conditions of an equity award is treated as an exchange of the original
award for a new award in accordance with SFAS No. 123R.




- 54
-





We
evaluate impairment of long-lived assets in accordance with SFAS No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets.”  We assess the impairment of
long-lived assets, including property and equipment and purchased intangibles
subject to amortization, whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.  The
asset impairment review assesses the fair value of the assets based on the
future cash flows the assets are expected to generate.  We recognize
an impairment loss when estimated undiscounted future cash flows expected to
result from the use of the asset plus net proceeds expected from the disposition
of the asset (if any) are less than the related asset’s carrying
amount.  Impairment losses are measured as the amount by which the
carrying amounts of the assets exceed their fair values.  Property
held for sale is recorded at the lower of its carrying amount or fair value less
costs to sell.  Estimates of future cash flows are judgments based on
management’s experience and knowledge of our operations and the industries in
which we operate.  These estimates can be significantly affected by
future changes in market conditions, the economic environment, capital spending
decisions of our customers and inflation.





Our
remaining intangible assets at December 31, 2008 consisted of research and
license agreements relating to our 2006 acquisition of Advanced Biomass
Gasification Technologies, Inc.  We have determined that these
agreements have been impaired because we do not anticipate using them under our
current business plan.  During the year ended December 31, 2008, we
recorded an impairment charge of $418,000 on these agreements, and the carrying
value of these agreements is $0 (zero dollars) at December 31,
2008.





ITEM
      7A.
            QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.





Not
required for smaller reporting companies.


- 55
-





ITEM
      8.
            FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA.





Our
financial statements are filed as part of this annual report on the pages
indicated.





Consolidated
Financial Statements for the years ended December 31, 2008 and 2007





Report of
      Independent Registered Public Accounting Firm
                F-2Consolidated
      Balance Sheets
                F-3Consolidated
      Statements of Operations
                F-4Consolidated
      Statements of Changes in Stockholders’ Equity
                F-5Consolidated
      Statements of Cash Flows
                F-6Notes
      to Consolidated Financial Statements
                F-7


F-1




Report
of Independent Registered Public Accounting Firm





To the
Board of Directors and Stockholders of
 Global
Energy Holdings Group, Inc.
 
 We have
audited the accompanying consolidated balance sheets of Global Energy Holdings
Group, Inc. (the “Company”) as of December 31, 2008 and 2007 and the related
consolidated statements of operations, stockholders’ equity, and cash flows for
the years then ended.  These consolidated financial statements are the
responsibility of the Company’s management.  Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement.  The Company is not 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 purposes 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 the amounts and
disclosures in the consolidated financial statements.  An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as, evaluating the overall consolidated financial
statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of December
31, 2008 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.
 
 The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern.  As discussed in Note 1
to the consolidated financial statements, the Company has incurred recurring
losses and negative cash flows from operations that raise substantial doubt
about its ability to continue as a going concern.  Management’s plans
in regard to these matters are also described in Note 1.  The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
 
 /s/
Imowitz Koenig & Co., LLP
 
 New York,
New York
 April 14,
2009


F-2


Global
Energy Holdings Group, Inc.


Consolidated
Balance Sheets


(in
thousands, except share data)


December 31,
                  2008
                
                
                December 31,
                  2007ASSETSCurrent
      assets:Cash
      and cash equivalents
                
                $
                443
                
                
                $
                12,322Short-term
      marketable securities
                
                
                3,153
                
                
                
                -Receivables
                
                
                -
                
                
                
                564Inventories
                
                
                -
                
                
                
                294Other
      current assets
                
                
                520
                
                
                
                879Total
      current assets
                
                
                4,116
                
                
                
                14,059Property
      and equipment, net
                
                
                2,110
                
                
                
                4,316Property
      held for sale
                
                
                3,500
                
                
                
                4,054Property
      previously held for development
                
                
                966
                
                
                
                1,916Investment
      in and advances to New Generation Biofuels Holdings, Inc.
                
                
                -
                
                
                
                647Research
      and license agreements, net of amortization of $409 in
2007
                
                
                -
                
                
                
                623Other
      assets
                
                
                1,619
                
                
                
                403TOTAL
      ASSETS
                
                $
                12,311
                
                
                $
                26,018LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable and accrued expenses
                
                $
                2,647
                
                
                $
                3,221Total
      current liabilities
                
                
                2,647
                
                
                
                3,221Note
      payable
                
                
                279
                
                
                
                295Minority
      interest
                
                
                116
                
                
                
                116Capitalized
      lease obligation
                
                
                5
                
                
                
                14Total
      liabilities
                
                
                3,047
                
                
                
                3,646Commitments
      and contingenciesStockholders'
      equity:Preferred
      stock, $0.01 par value, 1,000,000 shares authorized; 0 shares issued and
      outstanding
                
                
                -
                
                
                
                -Common
      stock, $0.001 par value, 100,000,000 shares authorized; 29,070,103
      and 28,609,103 shares issued and outstanding in 2008 and 2007,
      respectively
                
                
                29
                
                
                
                29Additional
      paid-in-capital
                
                
                89,318
                
                
                
                89,171Accumulated
      deficit
                
                
                (80,083
                )
                
                
                (66,828
                )Total
      stockholders' equity
                
                
                9,264
                
                
                
                22,372TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                
                $
                12,311
                
                
                $
                26,018





See
Notes to Consolidated Financial Statements


F-3


Global
Energy Holdings Group, Inc.


Consolidated
Statements of Operations


(in
thousands, except per share data)


Year Ended December 31,2008
                    
                    
                    2007Net
      sales
                    
                    $
                    3,759
                    
                    
                    $
                    11,037Cost
      of sales, including depreciation of $462 and $461 for 2008 and 2007,
      respectively
                    
                    
                    5,385
                    
                    
                    
                    12,686Gross
      loss
                    
                    
                    (1,626
                    )
                    
                    
                    (1,649
                    )Operating
      expenses:General
      and administrative expenses
                    
                    
                    9,929
                    
                    
                    
                    10,110Equity
      compensation
                    
                    
                    147
                    
                    
                    
                    3,974Depreciation
      and amortization
                    
                    
                    74
                    
                    
                    
                    78Impairment
      losses on property and research and license agreements
                    
                    
                    3,672
                    
                    
                    
                    12,249Research
      and development
                    
                    
                    235
                    
                    
                    
                    861Total
      operating expenses
                    
                    
                    14,057
                    
                    
                    
                    27,272Loss
      from operations before other income (expense)
                    
                    
                    (15,683
                    )
                    
                    
                    (28,921
                    )Other
      income (expense):Interest
      income
                    
                    
                    188
                    
                    
                    
                    746Interest
      expense
                    
                    
                    (58
                    )
                    
                    
                    (55
                    )Loss
      on marketable securities
                    
                    
                    -
                    
                    
                    
                    (1,589
                    )Gain
      on sale of grain inventory
                    
                    
                    377
                    
                    
                    
                    -Gain
      on sale of stock in New Generation Biofuels Holdings, Inc.
                    
                    
                    2,362
                    
                    
                    
                    -Loss
      on equity of New Generation Biofuels Holdings, Inc.
                    
                    
                    (618
                    )
                    
                    
                    (1,236
                    )Legal
      settlement costs
                    
                    
                    -
                    
                    
                    
                    (400
                    )Other
      income
                    
                    
                    177
                    
                    
                    
                    178Total
      other income (expense)
                    
                    
                    2,428
                    
                    
                    
                    (2,356
                    )Net
      loss
                    
                    $
                    (13,255
                    )
                    
                    $
                    (31,277
                    )Basic
      and diluted net loss per share
                    
                    $
                    (0.46
                    )
                    
                    $
                    (1.09
                    )Weighted
      average number of shares outstanding
                    
                    
                    28,609,103
                    
                    
                    
                    28,592,919





See Notes to Consolidated Financial
Statements




F-4





Global
Energy Holdings Group, Inc.


Consolidated
Statements of Stockholders’ Equity


(in
thousands)





Common Stock
                        
                        
                        Additional
                        
                        
                        AccumulatedShares
                        
                        
                        Amount
                        
                        
                        Paid-in-Capital
                        
                        
                        Deficit
                        
                        
                        TotalBalance
      at December 31, 2006
                        
                        
                        28,498
                        
                        
                        $
                        28
                        
                        
                        $
                        84,975
                        
                        
                        $
                        (35,551
                        )
                        
                        $
                        49,452Shares
      issued for exercise of warrants
                        
                        
                        111
                        
                        
                        
                        1
                        
                        
                        
                        223
                        
                        
                        
                        
                        
                        
                        
                        224Options
      granted under 2005 Incentive Compensation Plan
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        3,552
                        
                        
                        
                        
                        
                        
                        
                        3,552Warrants
      issued for services
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        421
                        
                        
                        
                        
                        
                        
                        
                        421Net
      loss
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        (31,277
                        )
                        
                        
                        (31,277
                        )Balance
      at December 31, 2007
                        
                        
                        28,609
                        
                        
                        
                        29
                        
                        
                        
                        89,171
                        
                        
                        
                        (66,828
                        )
                        
                        
                        22,372Options
      granted under 2005 Incentive Compensation Plan
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        147
                        
                        
                        
                        -
                        
                        
                        
                        147Net
      loss
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (13,255
                        )
                        
                        
                        (13,255
                        )Balance
      at December 31, 2008
                        
                        
                        28,609
                        
                        
                        $
                        29
                        
                        
                        $
                        89,318
                        
                        
                        $
                        (80,083
                        )
                        
                        $
                        9,264





See
Notes to Consolidated Financial Statements


F-5


Global
Energy Holdings Group, Inc.


Consolidated
Statements of Cash Flows


(in
thousands)


Year Ended December 31,2008
                
                
                2007Cash
      flows from operating activitiesNet
      loss
                
                $
                (13,255
                )
                
                $
                (31,277
                )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
                
                
                731
                
                
                
                798Issuance
      of common stock, stock options and warrants for services
      rendered
                
                
                147
                
                
                
                3,974Gain
      on sale of stock in New Generation Biofuels Holdings, Inc.
                
                
                (2,362
                )
                
                
                -Loss
      on marketable securities
                
                
                -
                
                
                
                1,589Loss
      on equity of New Generation Biofuels Holdings, Inc.
                
                
                618
                
                
                
                1,236Impairment
      loss on investments
                
                
                -
                
                
                
                14Impairment
      losses on property and equipment
                
                
                3,254
                
                
                
                12,249Impairment
      losses on research and license agreements
                
                
                418
                
                
                
                -Changes
      in operating assets and liabilities:Receivables
                
                
                564
                
                
                
                18Inventories
                
                
                294
                
                
                
                (4
                )Other
      assets
                
                
                (107
                )
                
                
                46Accounts
      payable and accrued expenses
                
                
                (574
                )
                
                
                1,993Accounts
      payable-related parties
                
                
                -
                
                
                
                (318
                )Net
      cash used in operating activities
                
                
                (10,272
                )
                
                
                (9,682
                )Cash
      flows from investing activitiesPurchase
      of property and equipment
                
                
                (71
                )
                
                
                (1,517
                )Purchase
      of property held for development
                
                
                -
                
                
                
                (328
                )Investment
      in Carbon Motors Corp.
                
                
                (250
                )
                
                
                -Investment
      in note receivable Consus Ethanol, LLC
                
                
                (500
                )
                
                
                -Investment
      in marketable securities
                
                
                -
                
                
                
                (38,100
                )Redemption
      of marketable securities
                
                
                -
                
                
                
                36,511Reclassification
      from cash and cash equivalents to short-term marketable
      securities
                
                
                (3,153
                )
                
                
                -Cash
      received from sales of fixed assets
                
                
                -
                
                
                
                1,054Cash
      received from sales of investment in New Generation Biofuels Holdings,
      Inc.
                
                
                2,392
                
                
                
                -Net
      cash used in investing activities
                
                
                (1,582
                )
                
                
                (2,380
                )Cash
      flows from financing activitiesCash
      received for common stock
                
                
                -
                
                
                
                224Payment
      of note payable
                
                
                (16
                )
                
                
                (15
                )Payment
      of capitalized lease obligation
                
                
                (9
                )
                
                
                (8
                )Net
      cash (used in) provided by financing activities
                
                
                (25
                )
                
                
                201Net
      decrease in cash and cash equivalents
                
                
                (11,879
                )
                
                
                (11,861
                )Cash
      and cash equivalents - beginning of year
                
                
                12,322
                
                
                
                24,183Cash
      and cash equivalents - end of year
                
                $
                443
                
                
                $
                12,322Supplemental
      DisclosuresInterest
      paid
                
                $
                58
                
                
                $
                55Income
      taxes paid
                
                
                19
                
                
                
                124





See
Notes to Consolidated Financial Statements


F-6





Global
Energy Holdings Group, Inc.





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE
      1.
            DESCRIPTION
      OF BUSINESS, ORGANIZATION AND GOING
CONCERN





Global
Energy Holdings Group, Inc. (the “Company”), formerly named Xethanol
Corporation, is a diversified renewable energy company based in Atlanta,
Georgia.  The Company’s principal operating division is Global Energy
Systems, Inc. (“GES”), which is developing renewable energy projects, including
biomass projects, such as gasification, and landfill-gas-to-energy
projects.





The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern, which contemplates the realization
of assets and the liquidation of liabilities in the normal course of
business.  However, the Company has reported net losses of $13.3
million and $31.3 million and negative cash flows from operations of $10.3
million and $9.7 million for the years ended December 31, 2008 and 2007,
respectively.  The Company will need substantial additional cash to
pursue its plans and projects, and given the current economic and financial
climate, the Company can give no assurance that it will be able to raise the
additional capital it needs on commercially acceptable terms, or at
all.  The Company will need to reduce costs and raise additional
financing to fund operations and long term business objectives.  The
Company’s continued existence is dependent upon several factors, including
obtaining additional debt or equity financing, and developing and completing
renewable energy projects.  Management is investigating various
sources of debt or equity financing and is developing marketing and production
plans for its products.  The matters discussed above, however, raise
substantial doubt about the Company’s ability to continue as a going
concern.  The Company’s consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.





The
Company’s properties and investments currently include: (1) a former
pharmaceutical plant in Augusta, Georgia and a former fiberboard manufacturing
facility in Spring Hope, North Carolina, both of which the Company is seeking to
sell; (2) an ethanol plant in Blairstown, Iowa that produced ethanol from corn
until May 1, 2008, when the Company ceased ethanol production, and which the
Company is currently trying to sell; and (3) minority investments in other
renewable energy or clean tech businesses.  The Company’s only source
of revenue has been from its sales of ethanol and related products at its
Blairstown corn-based ethanol plant.  As mentioned above, due to the
high prices for corn and natural gas, the Company ceased production of ethanol
at the Blairstown plant on May 1, 2008 to reduce its operating losses and is
actively seeking a purchaser of the Blairstown plant.





NOTE
      2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES





Basis
of Presentation





The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries.  All significant intercompany accounts and
transactions have been eliminated in consolidation.




F-7


Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




The
accompanying consolidated financial statements and related footnotes are
presented in accordance with accounting principles generally accepted in the
United States of America (“GAAP”).  Certain reclassifications to the
fixed assets on the Company’s consolidated balance sheets and to depreciation
and amortization expenses and research and development expenses on the Company’s
statements of operations have been made to previously reported amounts to
conform to the current presentation, with no effect on the Company’s
consolidated financial position, results of operations or cash
flows.





Use
of Estimates





The
preparation of consolidated financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenues and expenses and related disclosures of
contingent assets and liabilities.  Significant estimates include the
valuation of shares and options issued for services or in connection with
acquisitions and the valuation of investments, fixed assets and intangibles,
their estimated useful lives and accruals for litigation and other
contingencies.  The Company evaluates its estimates on an ongoing
basis.  Actual results could differ from those estimates in the near
term under different assumptions or conditions.





Cash,
Cash Equivalents and Short-Term Marketable Securities





The
Company invests its excess cash in money market funds and in highly liquid debt
instruments of the U.S. government and its agencies.  All highly
liquid investments with stated maturities of three months or less from date of
purchase are classified as cash equivalents; all investments with stated
maturities of greater than three months are classified as marketable
securities.





Approximately
$3,153,000 of the Company’s cash as of December 31, 2008 was held in the Reserve
U.S. Government Fund (a money market fund).  In September 2008,
redemptions were temporarily suspended from the reserve fund so that an orderly
liquidation could be effected for the protection of the reserve fund’s
investors.  On January 20, 2009, the Company received substantially
all of its current holdings in the reserve fund at no loss.





Accordingly,
the Company has reclassified the fair value of this fund of $3,153,000 from cash
and cash equivalents to short-term marketable securities on the consolidated
balance sheet at December 31, 2008 because the investment in the reserve fund
did not meet the definition of a cash equivalent.  In addition, the
Company reflected the effect of that reclassification on the Company’s
consolidated statement of cash flows for the year ended December 31, 2008 as a
reclassification from cash equivalents to short-term marketable
securities.





Loss
per Common Share





Loss per
share (“EPS”) is computed based on the weighted average number of common shares
outstanding and excludes any potential dilution.  Diluted EPS reflects
the potential dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock or resulted in
the issuance of common stock, which would then share in the earnings of the
Company.  The shares issuable upon the exercise of stock options and
warrants are excluded from the calculation of net loss per share, as their
effect would be antidilutive.




F-8




Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




During
the periods presented, the Company had securities outstanding that could
potentially dilute basic earnings per share in the future, but were excluded
from the computation of diluted earnings per share, as their effect would have
been anti-dilutive.  The anti-dilutive securities are as
follows:





Balance at December 31,2008
                      
                      2007Employee
      stock options
                      
                      5,709,000
                      
                      
                      5,245,000Unvested
      restricted stock
                      
                      461,000
                      
                      
                      -Series
      A warrants
                      
                      1,517,383
                      
                      
                      1,517,383Series
      B warrants
                      
                      758,735
                      
                      
                      758,735Placement
      agent warrants
                      
                      606,938
                      
                      
                      606,938Other
      warrants
                      
                      1,187,778
                      
                      
                      1,248,09010,240,834
                      
                      
                      9,376,146





Concentration
of Credit Risk





Cash that
is deposited with major financial institutions or invested in money market funds
is not insured by the Federal Deposit Insurance Corporation.





Costs
Associated with Issuance of Stock





Investment
banking fees and related costs associated with the sale of stock are charged to
stockholders’ equity.





Stock
Issued for Non-Cash Consideration





Shares of
common stock issued for services, and in connection with acquisitions, have been
valued at the estimated fair value of the shares at the time they were
issued.





Receivables





The
Company records trade accounts receivable at net realizable
value.  This value includes an allowance for estimated uncollectible
accounts, if necessary, to reflect any loss anticipated on the trade accounts
receivable balance.  At December 31, 2008, the Company has determined
that an allowance for estimated uncollectible accounts is not
necessary.




F-9




Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




Investments





The
Company accounts for its investments in accordance with FASB Interpretation 46R,
Consolidation of Variable Interest Entities, an Interpretation of Accounting
Research Bulletin No. 51 (“FIN 46R”).  A variable interest entity
(“VIE”) is a corporation, partnership, trust, or any other legal structure used
for business purposes where equity investors do not provide sufficient financial
resources for the entity to support its activities as described in FIN
46R.  FIN 46R requires a VIE to be consolidated by a company if that
company is the primary beneficiary of the VIE.  The primary
beneficiary of a VIE is an entity that is subject to a majority of the risk of
loss from the VIE’s activities, or entitled to receive a majority of the
entity’s residual returns, or both.





For
investments that are not required to be consolidated, the Company follows the
guidance provided by APB 18 “The Equity Method of Accounting for Investments in
Common Stock.”





Costs
of Start-up Activities





Start-up
activities are defined broadly in Statement of Position 98-5, Reporting on the Costs of Start-Up
Activities, as those one-time activities related to opening a new
facility, introducing a new product or service, conducting business in a new
territory, conducting business with a new class of customer or beneficiary,
initiating a new process in an existing facility, commencing some new operation
or activities related to organizing a new entity.  The Company’s
start-up activities consist primarily of costs associated with new or potential
sites for renewable energy projects, including biomass gasification and landfill
gas-to-energy projects.  All the costs associated with a potential
site are expensed, until the site is considered viable by management, at which
time costs would be considered for capitalization based on authoritative
accounting literature.  These costs are included in selling, general,
and administrative expenses in the consolidated statement of
operations.





Inventories





Raw
materials are carried at average cost.  Work in process is based on
the amount of average product costs currently in the production
pipeline.  Finished goods are carried at the lower of cost using the
average cost method or market.





Inventories
consist of the following:





December 31,
                    2008
                  
                  
                  December 31,
                    2007Raw
      materials
                  
                  
                  -
                  
                  
                  $
                  85,000Work
      in process
                  
                  
                  -
                  
                  
                  
                  109,000Finished
      goods
                  
                  
                  -
                  
                  
                  
                  100,000-
                  
                  
                  $
                  294,000




F-10




Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




Property,
Plant and Equipment





Property,
plant and equipment are recorded at cost.  Major additions are
capitalized and depreciated over their estimated useful
lives.  Repairs and maintenance costs are expensed as
incurred.  Depreciation is computed using straight-line and
accelerated methods over the estimated useful lives of the
assets.  The range of useful lives for each category of fixed assets
is as follows: buildings and land improvements – 20 years, process equipment –
10 years, lab equipment – 7 years, office equipment – 5 years, and computers – 3
years.





Impairment
of Long-Lived Assets





The
Company evaluates impairment of long-lived assets in accordance with SFAS No.
144, Accounting for the
Impairment or Disposal of Long-Lived Assets.  The Company
assesses the impairment of long-lived assets, including property and equipment
and purchased intangibles subject to amortization, whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable.  The asset impairment review assesses the fair value of
the assets based on the future cash flows the assets are expected to
generate.  An impairment loss is recognized when estimated
undiscounted future cash flows expected to result from the use of the asset plus
net proceeds expected from the disposition of the asset (if any) are less than
the related asset’s carrying amount.  Impairment losses are measured
as the amount by which the carrying amounts of the assets exceed their fair
values.  Property held for sale is recorded at the lower of its
carrying amount or fair value less costs to sell.  Estimates of future
cash flows are judgments based on management’s experience and knowledge of the
Company’s operations and the industries in which the Company
operates.  These estimates can be significantly affected by future
changes in market conditions and the economic environment.





Goodwill
and License Agreements





Goodwill
represents the excess of cost of an acquired entity over the net of the amounts
assigned to net assets acquired and liabilities assumed.  The Company
accounts for goodwill and license agreements with indefinite lives in accordance
with SFAS No. 142, Goodwill
and Other Intangible Assets, which requires an annual review for
impairment or more frequently if impairment indicators arise.  At each
of December 31, 2008 and 2007, the Company had no goodwill.





License
agreements owned by the Company are reviewed for possible impairment whenever
events or circumstances indicate the carrying amount may be
impaired.  License agreements are amortized using the straight-line
method over the shorter of the estimated useful life or legal term of the
agreement.





The
Company’s remaining intangible assets at December 31, 2008 consisted of both a
research agreement and license agreement relating to the Company’s 2006
acquisition of Advanced Biomass Gasification Technologies, Inc.
(“ABGT”).  In accordance with SFAS 144, the Company has determined
that these agreements have been impaired because the Company does not anticipate
utilizing them under the Company’s current business plan.  During the
year ended December 31, 2008, the Company recorded an impairment charge of
$418,000 on these agreements.  The carrying value of these agreements
at December 31, 2008 is $0 (zero dollars).




F-11




Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




The value
of the research agreement was amortized over its three-year term.  The
Company recorded amortization expense of the AGBT license and research agreement
of $204,000 for the year ended December 31, 2008 and $273,000 for the year ended
December 31, 2007.  The license agreement was amortized over 20
years.





The
amortized values of the intangible assets of ABGT as of December 31, 2008 and
2007 are as follows:





December 31,
                      2008
                    
                    
                    December
      31,
                      2007License
                    
                    $
                    -
                    
                    
                    $
                    233,000Research
      Agreement
                    
                    
                    -
                    
                    
                    
                    390,000$
                    -
                    
                    
                    $
                    623,000





Revenue
Recognition





The
Company follows a policy of recognizing sales revenue at the time the product is
shipped to its customers.





Research
and Development





Research
and development costs are expensed as incurred.  Research and
development costs, including $195,000 and $260,000 in amortization expense
relating to the ABGT research agreement, were $235,000 and $861,000 for the
years ended December 31, 2008 and 2007, respectively.





Income
Taxes





Deferred
tax assets and liabilities are computed based on the difference between the book
and income tax bases of assets and liabilities using the enacted marginal tax
rate.  Deferred income tax expenses or credits are based on changes in
the assets and liabilities from period to period.  These differences
arise primarily from the Company’s net operating loss.  Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized.





Fair
Value of Financial Instruments





The
carrying amount of cash and cash equivalents, trade receivables, accounts
payable and accrued expenses approximate fair value because of the short-term
nature of these instruments.




F-12




Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




Segment
Reporting





The
Company has operated as a single segment.  The Company’s only source
of revenue has been from its sales of ethanol and related products at its
Blairstown corn-based ethanol plant, which has ceased ethanol
production.





Recently
Issued Accounting Standards





In
September 2006, the FASB issued Statement of Financial Accounting Standards No.
157, Fair Value Measurements (“SFAS 157”), which clarifies that fair value is
the amount that would be exchanged to sell an asset or transfer a liability in
an orderly transaction between market participants.  Further, the
standard establishes a framework for measuring fair value in generally accepted
accounting principles and expands certain disclosures about fair value
investments.  SFAS 157 became effective for financial assets and
liabilities on January 1, 2008.  This standard did not materially
affect how the Company determined fair value during 2008.  The FASB
has deferred the implementation of the provisions of SFAS 157 relating to
certain nonfinancial assets and liabilities until January 1,
2009.  The Company does not expect that this standard will materially
affect how the Company determines fair value in 2009.





In
December 2007, the FASB issued Statement No. 141R, Business Combinations (“SFAS
141R”).  SFAS 141R broadens the guidance of SFAS 141, extending its
applicability to all transactions and other events in which one entity obtains
control over one or more other businesses.  It broadens the fair value
measurement and recognition of assets acquired, liabilities assumed, and
interests transferred as a result of business combinations; and stipulates that
acquisition related costs be expensed rather than included as part of the basis
of the acquisition.  SFAS 141R expands required disclosures to improve
the ability to evaluate the nature and financial effects of business
combinations.  SFAS 141R is effective for all transactions entered
into on or after January 1, 2009.  The adoption of this standard on
January 1, 2009 could materially impact the Company’s future financial results
to the extent that the Company makes significant acquisitions, as related
acquisition costs will be expensed as incurred compared to the Company’s current
practice of capitalizing those costs and amortizing them over the estimated
useful life of the assets acquired.





In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interest in
Consolidated Financial Statements (“SFAS No. 160”).  SFAS No. 160 will
require noncontrolling interests (previously referred to as minority interests)
to be treated as a separate component of equity, not as a liability or other
item outside of permanent equity.  SFAS No. 160 is effective for
periods beginning on or after December 15, 2008.  The adoption of this
statement will result in minority interest currently classified in the
“mezzanine” section of the balance sheet to be reclassified as a component of
stockholders’ equity, and minority interest expense will no longer be recorded
in the consolidated statement of operations.





In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and
Hedging Activities (“SFAS No. 161”).  The new standard is intended to
improve financial reporting about derivative instruments and hedging activities
by requiring enhanced disclosures to enable investors to better understand their
effects on an entity’s financial position, results of operations and cash
flows.  SFAS No. 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15,
2008.  The Company does not expect this standard to have a material
impact on its financial position, results of operations or cash
flows.




F-13




Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




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 the principles used in
the preparation of financial statements that are presented in conformity with
GAAP.  SFAS 162 became effective on November 15, 2008.  The
Company does not expect the adoption of SFAS 162 to have a material impact on
its financial position, results of operations or cash flows.





NOTE
      3.
            LOSS
      ON SALE OF AUCTION RATE SECURITIES





At August
1, 2007, the Company had a net investment in marketable securities of $13.3
million, which was composed of two auction rate securities for which Deutsche
Bank Securities Inc. served as initial purchaser and
broker-dealer.  Each auction rate security held a fixed portfolio of
corporate bonds.  Until the summer of 2007, the securities were
purchased and sold through an auction-type mechanism at a 28-day
interval.  Deutsche Bank Securities Inc. also facilitated the purchase
and sale of the securities at par between auction dates.  The Company
learned in late August 2007 that the most recent auctions of each of the two
securities had failed.  The Company also learned that Deutsche Bank
Securities Inc. was no longer facilitating the purchase and sale of the
securities at par between auction dates and that the securities could be sold
only at a discount to par.





In light
of the then current credit markets and the inability of the Company to sell the
securities at par, the Company sold all of the securities at a discount to
par.  The sales resulted in a loss of $1.6 million of the Company’s
$13.3 million total investment in the securities.  The Company has
reflected a $1.6 million loss resulting from the sale of the securities for the
year ended December 31, 2007.





NOTE
      4.
            IMPAIRMENTS





Site
in Blairstown, Iowa





Effective
May 1, 2008, the Company ceased operations at its ethanol manufacturing plant at
Blairstown, Iowa (“Blairstown I”) as a result of the changing ethanol market and
high prices for corn. At December 31, 2008, the Company recorded a $1.75 million
impairment loss on the Blairstown I facility.  At December 31, 2008
and 2007, the carrying amount of Blairstown I was $1.9 million and $4.1 million,
respectively, and is included on the Company’s consolidated balance sheets in
property and equipment.




F-14




Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




At
December 31, 2008 and 2007, $3.7 million of costs, including the purchase of
land, had been expended on the previously planned second ethanol facility at
Blairstown, Iowa (“Blairstown II”).  During 2007, the Company
terminated its expansion project at the Blairstown II site as a result of the
changing ethanol market, high prices for corn and its inability to arrange debt
or equity financing for the project.  At December 31, 2007, the
Company recorded an impairment loss of $2.6 million on its Blairstown II
site.  At December 31, 2008, the Company recorded an additional $.95
million impairment loss on the Blairstown II site.  At December 31,
2008 and 2007, the carrying amount of Blairstown II was $110,000 and $1,060,000,
respectively, and is included on the Company’s consolidated balance sheets in
property previously held for development.





Site in Spring
Hope, North Carolina





On
November 7, 2006, the Company purchased all of the fixed assets of a former
fiberboard manufacturing facility in Spring Hope, North Carolina from Carolina
Fiberboard Corporation LLC.  The assets included 212 acres of land,
manufacturing and office space, and machinery and equipment.  Total
consideration paid for the facility was $7.9 million.  At June 30,
2007, the Company recorded a $2.8 million impairment loss on this
facility.  Based upon discussions with a party potentially interested
in acquiring the assets, the Company determined that it should record an
impairment loss on these assets.  The discussions with the party that
was interested in purchasing the property have not materialized into a purchase
agreement.  The Company performed an analysis of the estimated fair
market value of the property at December 31, 2007 and determined that it should
record an impairment loss of $4.2 million at December 31, 2007.  The
Company also performed an analysis of the estimated fair market value of the
property at December 31, 2008 and determined that no additional impairment loss
was necessary.  The Company has determined that the Spring Hope
facility does not fit within its long-term corporate strategy, and on March 20,
2008, the Company’s board of directors authorized the Company’s management to
pursue the sale of the facility, which it is doing.  Before the
Company sells the property (or as a term of its sale), the Company expects that
it will have to resolve certain liens on the property filed by companies that
performed, or have claimed to have performed, environmental remediation and
demolition work on the property.  The Company has accrued $500,000 to
settle claims and $450,000 for environmental clean-up at December 31, 2008 and
2007.  During 2008, the Company completed an environmental
study.  The contaminated soils at the site were
remediated.  The asbestos within the building has been contained as
long as there is no further disturbance of the structures.These estimates may
require adjustment.  The Company can offer no assurance regarding how
long it will take to sell the facility or the price the Company might
receive.  The carrying value of this property at December 31, 2008 and
2007 after an impairment charge of $7.0 million in 2007 is $856,000 and was
classified as property previously held for development.




F-15




Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  Site
in Augusta, Georgia





The
Company owns a former pharmaceutical manufacturing complex located in Augusta,
Georgia for which it paid approximately $8.4 million in cash.  Later
in 2006, the Company sold certain surplus equipment at the Augusta site for
$3,100,000 in cash to a buyer that also agreed to perform certain demolition
work valued at $1,600,000.  The Company initially recorded the
$4,700,000 value of the consideration received under this agreement as a
reduction in machinery and equipment with a corresponding offset to cash and a
deferred asset for the value of the demolition work.  As of December
31, 2007, the Company reduced the deferred asset by $1,600,000 with a
corresponding increase to construction in progress.  The demolition
work was substantially completed during the fourth quarter of
2007.  The Company performed an analysis of the estimated fair market
value of the property at December 31, 2007 and determined that it should record
an impairment loss of $2.1 million at December 31, 2007.  The Company
also performed an analysis of the estimated fair market value of the property at
December 31, 2008 and determined that no additional impairment loss was
necessary.  The Company has determined that the Augusta facility does
not fit within its long-term corporate strategy, and on March 20, 2008, the
Company’s board of directors authorized the Company’s management to pursue the
sale of the facility, which it is doing.  The Company can offer no
assurance regarding how long it will take to sell the facility or the price the
Company might receive.  The carrying value of this property at
December 31, 2008 and 2007 after an impairment charge of $2.1 million in 2007 is
$3.5 million and was classified as property held for sale.





Permeate
Facility





During
2007, the Company recorded an impairment loss of $522,000, on fixed assets
related to its Permeate assets.  On November 9, 2007, the Company sold
the Permeate facility, at no gain or loss, for $500,000 in cash.





NOTE
      5.
            PROPERTY
      AND EQUIPMENT





Property
and equipment at the Company’s ethanol plant in Blairstown, Iowa, consists of
the following:





December 31,
                                    2008
                                  
                                  
                                  December 31,
                                    2007Land
                                  
                                  $
                                  28,000
                                  
                                  
                                  $
                                  28,000Buildings
                                  
                                  
                                  732,000
                                  
                                  
                                  
                                  732,000Machinery
      and equipment
                                  
                                  
                                  2,162,000
                                  
                                  
                                  
                                  3,906,000Land
      improvements
                                  
                                  
                                  569,000
                                  
                                  
                                  
                                  569,0003,491,000
                                  
                                  
                                  
                                  5,235,000Less
      accumulated depreciation   and amortization
                                  
                                  
                                  1,587,000
                                  
                                  
                                  
                                  1,125,000$
                                  1,904,000
                                  
                                  
                                  $
                                  4,110,000




F-16


Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


Property
and equipment at the Company’s corporate office consists of the
following:





December 31,
                    2008
                  
                  
                  December 31,
                    2007Furniture,
      fixtures and equipment
                  
                  $
                  324,000
                  
                  
                  $
                  259,000Less
      accumulated depreciation and amortization
                  
                  
                  118,000
                  
                  
                  
                  53,000$
                  206,000
                  
                  
                  $
                  206,000





NOTE
      6.
            PROPERTY
      HELD FOR SALE AND PROPERTY PREVIOUSLY HELD FOR
  DEVELOPMENT





Property
held for sale at the Augusta, Georgia and Bartow, Florida sites consists of the
following fixed assets:





December 31,
                              2008
                            
                            
                            December 31,
                              2007Land
                            
                            $
                            371,000
                            
                            
                            $
                            371,000Buildings,
      machinery and equipment
                            
                            
                            3,129,000
                            
                            
                            
                            3,683,000$
                            3,500,000
                            
                            
                            $
                            4,054,000





Property
held for sale included machinery and equipment purchased in connection with the
proposed citrus waste-to-ethanol demonstration plant in Bartow,
Florida.  During the year ended December 31, 2008, the Company
recorded an impairment charge of $554,000 on the fixed assets purchased in
connection with the proposed citrus waste-to-ethanol demonstration plant in
Bartow, Florida.  The carrying value of this property at December 31,
2008 and 2007 was $0 (zero dollars) and $554,000, respectively.





Property
previously held for development at the Blairstown II and Spring Hope sites
consists of the following fixed assets:





December
      31,
                              2008
                            
                            
                            December 31,
                              2007Land
                            
                            $
                            966,000
                            
                            
                            $
                            966,000Buildings,
      machinery and equipment
                            
                            
                            -
                            
                            
                            
                            950,000$
                            966,000
                            
                            
                            $
                            1,916,000




F-17


Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      7.
            OTHER
      INVESTMENTS





In
January 2008, the Company invested $250,000 in Carbon Motors Corporation, a
development stage American automaker developing a specially-built law
enforcement vehicle featuring a clean diesel engine that can run on biodiesel
fuel.  For its investment, the Company received 200,000 shares of
Carbon Motors’
Series B Preferred Stock and a warrant that is initially exercisable for 30,000
shares of Series B Preferred Stock at a price of $1.05 per share with a term of
five years.  This amount is included in other assets in the
consolidated balance sheet at December 31, 2008.





In
January 2008, the Company made a $500,000 investment in Consus Ethanol, LLC of
Pittsburgh, Pennsylvania, a development stage company, pursuant to a convertible
promissory note.  Consus Ethanol has a permitted site in western
Pennsylvania, where it plans to build the first of several ethanol
plants.  Its business model calls for a cogeneration plant using waste
coal to power the companion ethanol plant.  The note bears interest at
the rate of 10% per annum and had an initial term of six
months.  During July 2008, the Company and Consus agreed to extend the
note an additional six months through December 31, 2008.  At December
31, 2008, the Company and Consus agreed to extend the note, including accrued
interest to date, until December 31, 2009.  An additional 160,000
warrants were issued with a strike price of $1.25 per unit and an expiration
date four years from the signing of the note. The Company may also convert the
outstanding principal and accrued interest to shares of common stock by
providing 30 days written notice to Consus before the maturity date or in the
event Consus proposes to enter into certain transactions.  The Company
recorded interest income of approximately $50,000 on the note for the year ended
December 31, 2008.  Northeast Securities, Inc. is a financial advisor
to Consus Ethanol; the chairman of the Company’s board of directors was also
vice chairman of Northeast Securities until September 2008.  The
Company’s investment in Consus is included in other assets in the consolidated
balance sheet at December 31, 2008.





NOTE
      8.
            GAIN
      ON SALE OF NEW GENERATION BIOFUELS HOLDINGS, INC.
  SHARES





The
Company considered its investment in New Generation Biofuels Holdings, Inc.
(“NGBF”), formerly named H2Diesel Holdings, Inc., as a variable interest in a
variable interest entity (“VIE”).  NGBF is the licensee of a
proprietary vegetable oil-based diesel biofuel to be used as a substitute for
conventional petroleum diesel and biodiesel, heating and other fuels under an
exclusive license agreement with the inventor of the biofuel.  NGBF
had in turn sublicensed this technology to the Company.  Because the
Company was not the primary beneficiary of the VIE, the Company had accounted
for its investment in NGBF utilizing the equity method of accounting pursuant to
Accounting Principles Board (“APB”) Opinion No. 18, The Equity Method of Accounting for
Investments in Common Stock.  At December 31, 2008, the Company
owned 5,301,300 shares of NGBF common stock. During the year ended December 31,
2008, the Company sold 548,700 shares of NGBF’s common stock for net proceeds
and gains on saleof approximately $2.4
million.  The Company sold its remaining 5,301,300 shares of NGBF
common stock, which represented 26.1% of the outstanding common stock of NGBF,
based on 20,280,614 shares reported to be outstanding as of January 14, 2009
in NGBF’s Pre-Effective Amendment No.1 to its Registration Statement on
Form S-3 filed with the SEC on January 15, 2009, to 2020 Energy, LLC, an
Arizona limited liability company, on March 18, 2009 for an aggregate purchase
price of $583,143.  In connection with the March 18, 2009 stock sale,
the Company agreed to assign its rights in the sublicense for the NGBF additive
technology to 2020 Energy, LLC, conditioned upon 2020 Energy, LLC obtaining the
written consent of NGBF to the assignment.




F-18


Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      9.
            INCENTIVE
      COMPENSATION PLAN





The
Company’s 2005 Incentive Compensation Plan (the “Plan”) provides for grants of
stock options, stock appreciation rights or SARs, restricted or deferred stock,
other stock-related awards and performance awards that may be settled in cash,
stock or other property.  On February 12, 2008, at the Company’s
annual meeting, the Company’s stockholders approved an amendment to the Plan to
increase the number of shares of common stock available for issuance under the
Plan from 4,000,000 to 6,500,000, which covered options that were previously
granted under the Plan subject to stockholder approval of the increase in the
number of shares available under the Plan.  Persons eligible to
receive awards under the Plan are the officers, directors, employees and
consultants to the Company and its subsidiaries.





During
the year ended December 31, 2008, the compensation committee granted to the
Company’s executive officers and other key members of management, 461,000 shares
of restricted common stock under the Plan.  The fair value of these
shares on the date of grant was $88,000 using the closing price of the common
stock on the date of grant, or $.19 per share, and is being amortized as
compensation expense over the estimated vesting period of the grant. During the
year ended December 31, 2008, compensation expense related to these Plan stock
awards was $15,000.





During
the years ended December 31, 2008 and 2007, options to purchase 1,114,000 and
915,000 shares of common stock, respectively, were granted to executive officers
and employees.  These options vest up to seven years from the date of
grant and are exercisable over periods ranging from three to ten years from the
date of grant with exercise prices ranging from $.19 to $11.04 per
share.  During the years ended December 31, 2008 and 2007, options to
purchase 650,000 and 100,000 shares of common stock expired or were forfeited,
respectively, by various directors, employees and independent
contractors.  The fair value of options granted during the years ended
December 31, 2008 and 2007, is $170,000 and $1,666,000, respectively, and was
determined at their grant date using a Black-Scholes option pricing model and is
being recorded as compensation expense over their respective estimated vesting
periods.  The Company recorded net compensation expense for
outstanding stock options of $132,000 and $3,552,000 for the years ended
December 31, 2008 and 2007, respectively.





As of
December 31, 2008 and 2007, options to purchase 5,709,000 and 5,245,000 shares
of common stock were outstanding under the Plan, respectively.  As of
December 31, 2008, 778,070 shares of common stock were outstanding under the
Plan, and a total of 12,930 shares were available for future awards under the
Plan.  At December 31, 2008 and 2007, the weighted average exercise
price of outstanding options was $2.53 and $3.36, respectively.




F-19


Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


A summary
of stock option activity under the Plan for the years ended December 31, 2008
and 2007 is as follows:





2008
                    
                    
                    2007Shares
                    
                    
                    Weighted
                      Average
                      Exercise
                      Price
                    
                    
                    Shares
                    
                    
                    Weighted
                      Average
                      Exercise
                      PriceOutstanding
      at beginning of year
                    
                    
                    5,245,000
                    
                    
                    $
                    3.36
                    
                    
                    
                    4,430,000
                    
                    
                    $
                    3.47Options
      granted
                    
                    
                    1,114,000
                    
                    
                    
                    .25
                    
                    
                    
                    915,000
                    
                    
                    
                    2.70Options
      expired
                    
                    
                    (150,000
                    )
                    
                    
                    3.83
                    
                    
                    
                    –
                    
                    
                    
                    –Options
      forfeited
                    
                    
                    (500,000
                    )
                    
                    
                    5.74
                    
                    
                    
                    (100,000
                    )
                    
                    
                    2.44Outstanding
      at end of year
                    
                    
                    5,709,000
                    
                    
                    $
                    2.53
                    
                    
                    
                    5,245,000
                    
                    
                    $
                    3.36Exercisable
      at end of year
                    
                    
                    4,520,000
                    
                    
                    $
                    3.02
                    
                    
                    
                    4,762,500
                    
                    
                    $
                    3.43





A summary
of outstanding stock options at December 31, 2008 is as follows:





Options ExercisableNumber
                    Outstanding
                  
                  Range of
                    Exercise
                    Price
                  
                  
                  Weighted
                    Average
                    Exercise
                    Price
                  
                  
                  Weighted
                    Remaining
                    Life
                    In Years
                  
                  
                  Number
                    Exercisable
                  
                  
                  Weighted
                    Average
                    Exercise
                    Price1,114,000
                  
                  
                  $.19
      –$1.18
                  
                  
                  $
                  .25
                  
                  
                  
                  7.4
                  
                  
                  
                  137,500
                  
                  
                  $
                  .423,895,000
                  
                  
                  1.19
      – 3.99
                  
                  
                  
                  2.67
                  
                  
                  
                  5.2
                  
                  
                  
                  3,682,500
                  
                  
                  
                  2.67630,000
                  
                  
                  4.00
      – 5.56
                  
                  
                  
                  4.74
                  
                  
                  
                  1.9
                  
                  
                  
                  630,000
                  
                  
                  
                  4.7470,000
                  
                  
                  5.57
      – 11.04
                  
                  
                  
                  11.04
                  
                  
                  
                  2.4
                  
                  
                  
                  70,000
                  
                  
                  
                  11.045,709,000
                  
                  
                  
                  
                  
                  $
                  2.53
                  
                  
                  
                  5.2
                  
                  
                  
                  4,520,000
                  
                  
                  $
                  3.02





The
weighted average fair value of stock options is estimated at the grant date
using the Black-Scholes option-pricing model with the following weighted average
assumptions:





Year Ended
                          December 31,2008
                        
                        
                        2007Risk-free
      interest rate
                        
                        
                        3.07
                        %
                        
                        4.84
                        %Expected
      life of options (in years)
                        
                        
                        7.74
                        
                        
                        9.73Expected
      dividend yield
                        
                        
                        0
                        %
                        
                        0
                        %Expected
      volatility
                        
                        
                        55.0
                        %
                        
                        55.0
                        %




F-20


Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE
      10.
            WARRANTS





During
the years ended December 31, 2008 and 2007, the Company issued no
warrants.  At December 31, 2008 and 2007, there were warrants to
purchase 4,070,834 and 4,131,146 shares of common stock, with weighted average
exercise prices of $5.81 and $5.78, respectively, outstanding.





During
the year ended December 31, 2008 the Company recorded no compensation expense
related to warrants granted for services rendered.  The fair value of
warrants issued as compensation for services rendered for the year ended
December 31, 2007 was estimated at the grant date using the Black-Scholes option
pricing model and recorded as expense over their respective vesting
periods.  During the year ended December 31, 2007, the Company
recorded compensation expense of $421,426 related to warrants granted for
services rendered.





During
the year ended December 31, 2007, warrants to purchase 111,455 shares of common
stock were exercised for total cash proceeds of $224,000.  No warrants
were exercised during the year ended December 31, 2008.





A summary
of stock warrant activity is as follows:





2008
                  
                  
                  2007Shares
                  
                  
                  Weighted
                    Average
                    Exercise
                    Price
                  
                  
                  Shares
                  
                  
                  Weighted
                    Average
                    Exercise
                    PriceOutstanding,
      beginning of year
                  
                  
                  4,131,146
                  
                  
                  $
                  5.78
                  
                  
                  
                  5,197,776
                  
                  
                  $
                  5.06Exercised
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  (111,455
                  )
                  
                  
                  2.00Forfeited
                  
                  
                  (60,312
                  )
                  
                  
                  3.85
                  
                  
                  
                  (955,175
                  )
                  
                  
                  2.28Outstanding,
      end of year
                  
                  
                  4,070,834
                  
                  
                  $
                  5.81
                  
                  
                  
                  4,131,146
                  
                  
                  $
                  5.78Exercisable,
      end of year
                  
                  
                  4,070,834
                  
                  
                  $
                  5.81
                  
                  
                  
                  4,131,146
                  
                  
                  $
                  5.78




F-21


Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




The
following table summarizes warrant information as of December 31,
2008:





Numberof
                          Warrants
                        
                        Exercise
                          Prices
                        
                        
                        Expiration
                          Date300,000
                        
                        $
                        4.00
                        
                        
                        20092,217,099
                        
                        
                        4.50
                        
                        
                        2009120,000
                        
                        
                        5.25
                        
                        
                        2010-201120,000
                        
                        
                        5.50
                        
                        
                        2009958,735
                        
                        
                        6.85
                        
                        
                        2009125,000
                        
                        
                        8.32
                        
                        
                        2011330,000
                        
                        
                        12.50
                        
                        
                        20094,070,834
                        
                        $
                        5.81




NOTE
      11.
            INCOME
      TAXES





As of
December 31, 2008 and 2007, the Company had unused net operating loss
carryforwards approximating $35 million and $26.0 million, respectively, which
may be applied against future taxable income.  The net operating loss
carryforwards expire in the years 2020 through 2028.  Portions of
these carryforwards may be subject to annual limitations, including Section 382
of the Internal Revenue Code.  At December 31, 2008 and 2007,
respectively, the deferred tax assets (representing the potential future tax
savings) related to the carryforwards were as follows:





2008
                  
                  
                  2007Deferred
      tax asset
                  
                  $
                  13,900,000
                  
                  
                  $
                  10,500,000Less:
      Valuation allowance
                  
                  
                  13,900,000
                  
                  
                  
                  10,500,000Net
      deferred tax asset
                  
                  $
                  0
                  
                  
                  $
                  0





As a
result of the uncertainty that net operating loss carryforwards will be used in
the foreseeable future, a 100% valuation allowance had been
provided.  At December 31, 2008 and 2007, a wholly owned subsidiary of
the Company had an unused net operating loss carry forward of approximately
$226,000 that may be applied against future taxable income.  This net
operating loss carry forward expires in 2023.  A 100% valuation
allowance has been provided for against this amount.




F-22




Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE
      12.
            MAJOR
      CUSTOMER





Since
July 1, 2005, all of the Company’s ethanol sales have been to one
customer.  The Company has an exclusive marketing agreement with this
customer.  This customer represented 88% and 91% of the Company’s net
sales for the years ended December 31, 2008 and 2007,
respectively.  Due to the high prices for corn and natural gas, the
Company ceased ethanol production in May 2008 to reduce its operating
losses.  The Company is currently pursuing the sale of our Blairstown
ethanol plant, which is the Company’s only ethanol producing
facility.





NOTE
      13.
            JOINT
      VENTURE





Organization
of CoastalXethanol LLC





In April
2006, the Company entered into a letter of intent with Coastal Energy
Development, Inc., a Georgia corporation (“CED”), to jointly develop plants for
the production of ethanol in the State of Georgia and in the South Carolina
counties in which the cities of Charleston and Georgetown are
located.  In April 2006, the Company formed a subsidiary,
CoastalXethanol LLC (“CoastalXethanol”), for the purpose of implementing the
projects contemplated by that letter of intent.  CoastalXethanol was a
joint venture with CED.  The Company originally acquired an 80%
membership interest in CoastalXethanol for a capital contribution of $40,000,
and CED acquired a 20% membership interest in CoastalXethanol for a capital
contribution of $10,000.  In connection with the formation of
CoastalXethanol, the Company issued to CED a warrant to purchase 200,000 shares
of the Company’s Common Stock at a purchase price of $6.85 per share that first
became exercisable on May 30, 2007 and was exercisable until May 30,
2010.  The fair value of this warrant was $1,011,420, which was
amortized over its one-year vesting period.





On August
23, 2006, CoastalXethanol purchased the assets of a former pharmaceutical
manufacturing complex located in Augusta, Georgia from Pfizer,
Inc.  The purchased assets included 40 acres of land, buildings,
machinery and equipment.  Under the purchase agreement,
CoastalXethanol, through its newly-formed, wholly-owned subsidiary, Augusta
BioFuels, LLC, paid approximately $8.4 million in cash for the
facility.  The Company provided the cash to acquire the
facility.





The
organizational agreement of CoastalXethanol permitted CoastalXethanol to advance
to CED funds for working capital to the extent necessary for CED to provide the
services it was required to perform under the agreement.  Those
advances bore interest at the prime rate, and were repayable from any
distribution by CoastalXethanol to CED with respect to CED’s membership interest
in CoastalXethanol.  As of December 31, 2007, the Company had advanced
$630,000 to CoastalXethanol for the purposes of funding working capital advances
to CED.  In 2007, CoastalXethanol wrote off 100% of the outstanding
loans, and any interest thereon, in conjunction with the CED settlement
described below.  The Company consolidates the operations of
CoastalXethanol.




F-23


Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




On March
5, 2007, the Company, along with CoastalXethanol, initiated an action against
CED in the Supreme Court of the State of New York.  On April 3, 2007,
CED filed an answer and counterclaim.  On September 14, 2007, the
Company reached a settlement with CED and agreed to pay CED $400,000 in exchange
for CED’s 20% interest in CoastalXethanol.  The parties executed
releases and replaced the warrant described above with a warrant to purchase
200,000 shares of the Company’s common stock that is exercisable at an exercise
price of $6.85 per share through May 30, 2009.  The payment and
purchase of CED’s 20% interest in CoastalXethanol was completed on September 24,
2007, at which time CoastalXethanol became a wholly-owned subsidiary of the
Company.





NOTE
      14.
            RELATED
      PARTY TRANSACTIONS





On
December 1, 2006, the Company entered into a consulting agreement with
Christopher d’Arnaud-Taylor, a former member of the Company’s board and the
Company’s former Chairman, President and Chief Executive Officer, under which
Mr. d’Arnaud-Taylor agreed to provide strategic advice to the Company’s
Chief Executive Officer.  During the term of the agreement, the
Company agreed to pay Mr. d’Arnaud-Taylor $15,000 per month (payable monthly in
advance) and reimburse him for reasonable and appropriately documented business
expenses he incurred in the performance of his duties under the
agreement.  The term of the agreement expired on November 25,
2007.  The agreement includes covenants by Mr. d’Arnaud-Taylor
regarding confidentiality.





During
2007, the Company recognized $165,000 in cash compensation expense, and actual
payments made to Mr. d’Arnaud-Taylor during 2007 were $256,000.





On
October 1, 2006, the Company entered into an advisory agreement with Northeast
Securities, Inc. (“Northeast”) under which Northeast agreed, on a non-exclusive
basis, to assist the Company in various corporate matters including advice
relating to general capital raising, mergers and acquisition matters,
recommendations relating to business operations and strategic
planning.  William P. Behrens, one of the Company’s directors, was the
Vice Chairman of Northeast Securities, Inc.  In consideration of these
services, the Company agreed to pay Northeast an advisory fee of $10,000 per
month during the term of the agreement and to reimburse Northeast for all
necessary and reasonable out-of-pocket costs and expenses it incurred in the
performance of its obligations under the agreement.  The scheduled
term of the agreement was one year, subject to earlier termination by the
Company in the event of a material breach by Northeast of any of its obligations
under the agreement.  In May 2007, the Company informally amended its
agreement with Northeast to eliminate the advisory fee of $10,000 per month,
although Northeast continued to perform advisory services for the
Company.  On July 25, 2007, the Company formally agreed with Northeast
to terminate the agreement.





During
2007, the Company paid and recorded consulting expense of $40,000 pursuant to
the agreement.  In addition, Northeast received a $5,100 fee in
connection with the Company’s purchase of auction rate securities during
2007.




F-24


Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




Until
April 30, 2008, the Company had an arrangement with one of its former advisory
board members to act as the Company’s chief technology strategist, and the
Company paid him a monthly consulting fee of $8,000 plus
expenses.  For the years ended December 31, 2008 and 2007, $33,000 and
$101,000, respectively, had been paid under this arrangement.





On
February 19, 2009, the Company borrowed $111,000 from David Ames, President and
CEO.  Mr. Ames received a promissory note bearing interest at 8% per
annum.  The note has a maturity date of December 31,
2009.





NOTE
      15.
            LEGAL
      PROCEEDINGS





The
Company is a party to the Jacoby Energy Development lawsuit as described
below.  The class action lawsuit described below was settled on
October 6, 2008.  An adverse result in the Jacoby Energy Development
lawsuit could have a material adverse effect on the Company’s business, results
of operations and financial condition.





Class Action
Lawsuit.  In October 2006, a shareholder class action complaint
was filed in the United States District Court for the Southern District of New
York, purportedly brought on behalf of all purchasers of the Company’s common
stock during the period January 31, 2006 through August 8, 2006.  The
complaint alleged, among other things, that the Company and some of its former
officers and directors made materially false and misleading statements regarding
the Company’s operations, management and internal controls in violation of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder.  The individual defendants were Lawrence S.
Bellone, a former director, Executive Vice President, Corporate Development,
principal accounting officer and Chief Financial Officer; Christopher
d’Arnaud-Taylor, a former director, Chairman, President and Chief Executive
Officer; and Jeffrey S. Langberg, a former director.  The plaintiffs
sought, among other things, unspecified compensatory damages and reasonable
costs and expenses, including counsel fees and expert fees.  Six
nearly identical class action complaints were thereafter filed in the same
court, all of which were later consolidated into one action, In re Xethanol
Corporation Securities Litigation, 06 Civ. 10234 (HB) (S.D.N.Y.).  The
plaintiffs filed their amended consolidated complaint on March 23,
2007.  On November 28, 2007, the defendants, including the Company,
reached an agreement in principle with the plaintiffs’ lead counsel to settle
the class action.  On October 6, 2008, the District Court Judge
dismissed the class action with prejudice.  In connection with the
settlement, the plaintiffs received $2.8 million, of which the Company paid
$400,000 and the Company’s insurance carriers paid $2.4 million.  In
addition, the Company’s insurance carriers paid $300,000 in legal
costs.




F-25


Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




Jacoby Energy Development, Inc.
Lawsuit.  On July 28, 2008, Jacoby Energy Development, Inc.
(“JEDI”), Geoplasma, LLC and Georecover-Live Oak, LLC filed an action in the
Superior Court of Fulton County of the State of Georgia (File No. 2008CV154224)
against the Company, its subsidiary Global Energy Systems, Inc. (“GES”), and six
current officers and employees.  The six individual defendants are Romilos
Papadopoulos, the Company’s Chief Operating Offer, Chief Financial Officer,
Executive Vice President and Secretary; Michael Ellis, President of GES; and
four other employees of GES.  The complaint alleges, among other things,
that the Company breached a mutual nondisclosure agreement related to previous
negotiations for a possible merger between the Company and JEDI and its
affiliates.  The plaintiffs allege that the Company breached the agreement
by soliciting and hiring the six individual defendants, who were previously
employed by the plaintiffs, and by using the plaintiffs’ confidential and
proprietary information for its own business purposes.  The plaintiffs also
allege that the Company tortiously interfered with the plaintiffs’ business and
misappropriated the plaintiffs’ trade secrets.  The plaintiffs seek, among
other things, a permanent injunction, unspecified compensatory damages plus
costs and expenses incurred in connection with the litigation, including
attorneys’ fees, and general and punitive damages in an amount not less than $10
million.  The Company denied the allegations in the complaint, and the
individual defendants have asserted counterclaims against the
plaintiffs.  Pursuant to a scheduling order entered by the court on
December 30, 2008, discovery is scheduled to end on July 31, 2009, and
dispositive motions, including motions for summary judgment, must be filed by
August 17, 2009.  The parties have refrained from conducting discovery
while they attempt to reach a business resolution of the issues, but as of the
date of this report, the parties have not yet reached a
settlement.  The parties are continuing their discussions, but the
discovery may resume shortly if a resolution is not reached.





Global Energy and Management, LLC
Lawsuit.  In December 2007, Global Energy and Management, LLC
(“GEM”) filed an action in the federal court for the Southern District of New
York against the Company and nine of the Company’s current or former officers,
directors and affiliates entitled Global Energy and Management v. Xethanol
Corporation, et al.  The lawsuit alleges fraud by the defendants in
connection with GEM’s alleged investment of $250,000 in NewEnglandXethanol, LLC,
a joint venture of the Company and GEM.  Initially, GEM sought more
than $10,000,000 in damages plus pre-judgment interest and
costs.  After the Company asked the District Court in May 2008 for
leave to move to dismiss the complaint, GEM served the Company with its third
amended complaint, seeking damages of only $250,000.  Upon the
Company’s motion, the Court dismissed that complaint on February 23, 2009,
holding that GEM could file an amended complaint only upon payment to the
Company of $5,000 towards its legal fees.  On March 17, 2009, GEM paid
the Company $5,000 and filed its Fourth Amended Complaint against the Company
and four former directors and officers seeking in damages repayment of its
alleged $250,000 investment, lost profits, consequential damages, interest and
costs.  The Company has asked the Court for leave to move to dismiss
the Fourth Amended Complaint and intends to defend against this action
vigorously.





NOTE
      16.
            COMMITMENTS
      AND CONTINGENCIES





The
Company entered into several letters of intent for energy-related projects
during 2008 under which it had paid a total of $910,000 in good faith deposits
that it could lose if the Company did not acquire the projects as
planned.  Deposits of $510,000 were used toward closing the Hickory
Ridge and Port Charlotte Landfill deals, as described in Note 17
below.  The Company will require debt and/or equity financing in order
to pursue its projects.  Obtaining financing will be difficult in the
current credit and business environment.  The Company expensed
$400,000 of non-refundable deposits at December 31, 2008.




F-26


Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


The
Company leases office space in Atlanta, Georgia with a lease term expiring on
February 28, 2014.  The Company also leased space in New York City,
which lease expired during 2008.  Rent expense was $306,197 and
$388,290 for the years ended December 31, 2008 and 2007
respectively.





Minimum
future lease payments are as follows:





Years Ended December 31
                        
                        Lease Payment2009
                        
                        $
                        255,8722010
                        
                        
                        322,4232011
                        
                        
                        332,1562012
                        
                        
                        342,1462013
                        
                        
                        352,449Thereafter
                        
                        
                        60,051Total:
                        
                        $
                        1,665,097




NOTE
      17.
            SUBSEQUENT
      EVENTS





Landfill Gas Sale and Purchase
Agreement.  On February 2, 2009, an indirect wholly owned
subsidiary of the Company acquired, pursuant to a Landfill Gas Sale and Purchase
Agreement dated November 14, 2008 (as amended, the “Hickory Ridge Agreement”)
the right to purchase from a subsidiary of Republic Services, Inc. (“Republic”)
all of the landfill gas generated at Republic’s Hickory Ridge landfill located
in Conley (DeKalb County), Georgia (“Hickory Ridge”) through December 31,
2029.  The Company intends to process the landfill gas collected at
Hickory Ridge to convert it into a saleable energy product.  The
Company paid an aggregate purchase price of $3,350,000 to acquire the Hickory
Ridge landfill gas purchase rights.





Pursuant
to the Hickory Ridge Agreement, the Company will lease a portion of the Hickory
Ridge property on which the Company will be required at the Company’s cost to
acquire or construct a processing facility to process the landfill gas collected
at Hickory Ridge.  The Company is also required, at the Company’s
cost, to obtain all necessary permits and to construct all required pipelines
and ancillary facilities to transport the collected landfill gas to the
processing facility and the processed gas to any purchaser, as well as to
install all metering and measuring equipment.  If the Company does not
complete the processing facility, pipelines and ancillary facilities by December
31, 2010, subject to the Company’s right to extend the completion date through
December 31, 2012 under certain circumstances, Republic will have the right to
terminate the Hickory Ridge Agreement.





Once the
Company’s processing facility commences commercial operation, the Company will
pay Republic for landfill gas received at the processing facility a percentage
royalty on the sum of the revenue that the Company collects from the sale of gas
from the processing facility plus the value of certain environmental allowances,
credits and offsets attributable to the Company’s processing facility’s
displacement of conventional energy generation. If the Company is unsuccessful
in obtaining financing to complete this project, it could lose its rights under
the agreement.




F-27


Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS




North American Natural
Resources-Southeast, LLC Agreement.On January 20, 2009,
GES-Port Charlotte, LLC, an indirect wholly-owned subsidiary of the Company,
entered into a project assignment agreement (the “Port Charlotte Project
Assignment Agreement”) with North American Natural Resources-Southeast, LLC
(“NANR”).  Under the Port Charlotte Project Assignment Agreement, the
Company acquired (a) all of NANR’s rights to purchase from Charlotte County,
Florida all the landfill gas generated by or at its Zemel Road Landfill site
(the “Port Charlotte landfill”) and (b) the exclusive right to construct and
operate a landfill gas-to-energy project at the Port Charlotte
landfill.





In
consideration of payments the Company agreed to make as described in the
paragraph below, NANR transferred and assigned to the Company all of its rights
related to the Port Charlotte landfill gas project, which it had previously
acquired from Charlotte County in July 2008 pursuant to an Agreement Between
Charlotte County and North American Natural Resources-Southeast for Landfill Gas
Purchase and a Site Lease Agreement (the “assigned contracts”).  The
Company, Charlotte County and NANR subsequently approved the assignment and
executed a novation agreement substituting GES-Port Charlotte for NANR as the
party to each of the assigned contracts.





Under the
terms of the Port Charlotte Project Assignment Agreement, the aggregate purchase
price for the rights related to the Port Charlotte landfill gas project is
$350,000, subject to certain conditions as described below.  At the
closing, the Company paid NANR $100,000, which included a credit for the
Company’s previous non-refundable deposit of $10,000.  In addition,
the Company agreed to pay the remaining balance of $250,000 to NANR in cash upon
the occurrence of each event or milestone that triggers the
Company’s  obligation to make payments as follows:





·
            a
      $100,000 payment within 10 business days after the Company procures the
      air construction permit and solid waste permit for the
      project;


·
            a
      $50,000 payment on the Company’s installation of a landfill gas collection
      system as provided in the assigned
contracts;


·
            a
      $50,000 payment on the Company’s execution of a purchase power agreement
      with a local electric utility and the agreement that utility for the
      construction of the necessary interconnect;
and


·
            a
      $50,000 payment within 10 business days after the first anniversary of the
      commencement of operation of the
project.




F-28


Global
Energy Holdings Group, Inc.
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


For
purposes of the last $50,000 payment, the “commencement of operation” means the
day upon which the project has been generating electricity for sale to a local
utility for at least 24 hours per day for 7 consecutive days.  If any
of the events or milestones listed in the bullet points above is unachievable or
unattainable within a reasonable period of time due to no fault of the Company,
the Company is not obligated to make the payment to NANR associated with the
event or milestone, and the Company will not be obligated to pursue, nor make
any payments associated with, any subsequent events or
milestones.  However, if the Company fails to complete construction of
the landfill gas collection system and the facility to convert the landfill gas
at Zemel Road into energy by January 22, 2010, the Company will become liable to
Charlotte County for liquidated damages equal to $1,000 per day for each day of
delay in completing the collection system and $200 per day for each day of delay
in completing the energy facility.





In
connection with the Port Charlotte Project Assignment Agreement, the Company
assumed and agreed to perform all commitments and obligations of NANR under the
assigned contracts as of the close of business on January 23,
2009.  Subject to certain conditions, NANR and the individual who is
its sole member agreed to indemnify us for up to $350,000 for a period of 5
years after the commencement of operation for any loss the Company incurs as a
result of fees and expenses imposed on NANR and any breach of representation,
warranty or covenant made by NANR under the Port Charlotte Project Assignment
Agreement.  If the Company is unsuccessful in obtaining financing to
complete this project, it could lose its rights under the
agreement.





Sale of Southeast Biofuels
Interest.  On January 19, 2009, the Company entered into an
agreement with Renewable Spirits, LLC to exchange the Company’s 78% interest in
Southeast Biofuels, LLC in return for cancellation of the remaining balance on
the note the Company issued to Renewable Spirits in connection with the 2006
acquisition of Renewable Spirits’ assets.  The remaining balance on
the note at the time of the 2008 agreement was $279,000.  As a result
of this agreement and transaction, the Company no longer has an interest in
Southeast Biofuels.




F-29




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





None.





ITEM
      9A(T).
            CONTROLS
      AND PROCEDURES.





Disclosure
Controls and Procedures





Based on
our management’s evaluation, with the participation of our Chief Executive
Officer and Chief Financial Officer, as of December 31, 2008, the end of the
period covered by this report, our Chief Executive Officer and Chief Financial
Officer have concluded that our disclosure controls and procedures (as defined
in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, (the
“Exchange Act”)) were effective to ensure that information required to be
disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the U.S. Securities and Exchange Commission (the
“SEC”) and is accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure.





Management’s
Report on Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting and for the assessment of the effectiveness of
internal control over financial reporting.  Our internal control over
financial reporting is a process designed, as defined in Rule 13a-15(f) under
the Exchange Act, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of consolidated financial statements for
external purposes in accordance with generally accepted accounting
principles.





Our
internal control over financial reporting is supported by written policies and
procedures that:





1.
            pertain
      to the maintenance of records that, in reasonable detail, accurately and
      fairly reflect the transactions and dispositions of our
      assets;


2.
            provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of consolidated financial statements in accordance with
      generally accepted accounting principles, and that our receipts and
      expenditures are being made only in accordance with authorizations of our
      management and directors; and


3.
            provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use, or disposition of our assets that could
      have a material effect on the consolidated financial
      statements.





Because
of its inherent limitations, our internal control over financial reporting may
not prevent or detect misstatements.  Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.




- 56
-




In
connection with the preparation of our annual consolidated financial statements,
our management assessed the effectiveness of our internal control over financial
reporting as of December 31, 2008.  Management based this assessment
on the criteria established in “Internal Control over Financial
Reporting—Guidance
for Smaller Public Companies” issued by the Committee of Sponsoring
Organizations of the Treadway Commission (which is sometimes referred to as the
COSO Framework).  Management’s assessment included an evaluation of
the design of our internal control over financial reporting and testing of the
operational effectiveness of our internal control over financial
reporting.  Based on this assessment, our management has concluded
that our internal control over financial reporting was effective as of December
31, 2008.





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 us to provide only management’s report in this annual
report.





Changes
in Internal Controls





There was
no change in our internal control over financial reporting that occurred during
the quarter ended December 31, 2008 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.





The
design of any system of controls and procedures is based in part upon certain
assumptions about the likelihood of future events.  There can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote.




ITEM
      9B.
            OTHER
      INFORMATION.





Agreement with Renewable Spirits,
LLC.  In December 2006, Southeast Biofuels, LLC, a subsidiary
of our now wholly owned subsidiary, CoastalXethanol, LLC, acquired certain
assets from Renewable Spirits, LLC consisting of equipment and intellectual
property associated with an experimental system for the production of ethanol
and other marketable co-products from waste citrus biomass.  In
exchange for these assets, we (1) paid Renewable Spirits $100,000 in cash, (2)
issued Renewable Spirits a $600,000 note payable over 120 month, and (3) granted
Renewable Spirits a 22% membership interest in Southeast Biofuels.  In
January 2008, the Florida Department of Agriculture and Consumer Services
approved a $500,000 grant to Southeast Biofuels, and through Southeast Biofuels,
we intended to build a demonstration plant for converting citrus peel waste into
ethanol.  However, we have reevaluated our investment in Southeast
Biofuels and have decided that it no longer fits within our long-term corporate
strategy.  On January 19, 2009, we entered into an agreement with
Renewable Spirits to exchange our 78% interest in Southeast Biofuels in return
for cancellation of the remaining balance on the note we issued to Renewable
Spirits in connection with the 2006 acquisition of Renewable Spirit’s
assets.  The remaining balance on the note at the time of the 2008
agreement was $279,000.  As a result of this agreement and
transaction, we no longer have an interest in Southeast Biofuels.




- 57
-




Port Charlotte Novation
Agreement.  On January 20, 2009, GES-Port Charlotte, LLC, an
indirect wholly-owned subsidiary of the Company, entered into a project
assignment agreement (the “Port Charlotte Project Assignment Agreement”) with
North American Natural Resources-Southeast, LLC (“NANR”), under which GES-Port
Charlotte acquired (a) all of NANR’s rights to purchase from Charlotte County,
Florida all of the landfill gas generated by or at its Zemel Road Landfill site
(the “Port Charlotte landfill”) and (b) the exclusive right to construct and
operate a landfill gas-to-energy project at the Port Charlotte landfill – See
Item 1, “Description of Business – Landfill Gas-To-Energy Business – Port Charlotte, Florida Landfill
Gas-to-Energy Project.”  NANR acquired its rights with respect
to the landfill gas at the Port Charlotte landfill in July 2008 pursuant to an
Agreement Between Charlotte County and North American Natural
Resources-Southeast for Landfill Gas Purchase and a Site Lease Agreement (the
“assigned contracts”), and the assigned contracts were assigned to us pursuant
to the Port Charlotte Project Assignment Agreement.  On January 22,
2009, GES Port-Charlotte, Charlotte County and NANR entered into a novation
agreement substituting GES-Port Charlotte for NANR as the party to each of the
assigned contracts.





Loan from Mr.
Ames.  On February 19, 2009, the Company borrowed $111,000 from
David Ames, our President and CEO.  Mr. Ames received a promissory
note from the Company in the principal amount of the loan bearing interest at 8%
per annum.  The loan has a maturity date of December 31,
2009.




- 58
-




PART
III




ITEM
      10.
              DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.




Directors
and Executive Officers





The
following table provides information regarding the members of our board of
directors and our executive officers.  All directors hold office until
the next annual meeting of stockholders and the election and qualification of
their successors.  Officers of our company are elected annually by the
board of directors and serve at the discretion of the board.  There
are no family relationships among our directors and executive
officers.





Name
                
                Age
                
                PositionDavid
      R. Ames
                
                60
                
                Chief
      Executive Officer, President and DirectorRomilos
      Papadopoulos
                
                50
                
                Chief
      Financial Officer, Executive Vice President and
  SecretaryMichael
      E. Ellis
                
                52
                
                President
      Global Energy Systems, Executive Vice PresidentWilliam
      P. Behrens
                
                70
                
                Director
      and Non-Executive Chairman of the BoardGil
      Boosidan
                
                36
                
                DirectorSteven
      H. Townsend
                
                55
                
                DirectorRichard
      D. Ditoro
                
                71
                
                DirectorRobert
      L. Franklin
                
                71
                
                DirectorEdwin
      L. Klett
                
                73
                
                Director





The
principal occupations for the past five years (and, in some instances, for prior
years) of each of our directors and executive officers are as
follows:





David R. Ames became our Chief
Executive Officer and President on November 9, 2006 and has served as a member
of our board of directors since October 1, 2006.  Mr. Ames has been an
active venture capital investor in alternative energy companies, technologies,
processes and services.  He is currently a member of ACORE (American
Council On Renewable Energy) and a member of its CEO Council.  He is
also a member of NEVC (National Ethanol Vehicle Coalition).  In 2004,
Mr. Ames co-founded the alternative energy working group Alterna Energy to make
investments in alternative energy companies.  From 1994 through 1999,
Mr. Ames served as Chairman, President and Chief Executive Officer of
Convergence.com, a provider of high-speed cable modem broadband internet access
and other data services over cable systems that was founded by Mr. Ames in 1994
and acquired by C-COR Incorporated in 1999.  Mr. Ames is also a member
of the Board of Trustees of Ithaca College.





Romilos Papadopoulos became
our Chief Financial Officer, Executive Vice President and Secretary on July 18,
2008.  Prior to joining the Company, Dr. Papadopoulos served as
Managing Director of The Jacoby Group, a diversified investment group
headquartered in Atlanta, Georgia, with investments in real estate, renewable
energy, education, healthcare and media.  From August 2005 through
July 2007, he was a founder and the Managing Partner of The Intuitus Group LLC,
a merchant banking firm based in Atlanta that specialized in healthcare and
alternative energy consulting and advisory services.  From August 2002
through July 2005, Dr. Papadopoulos was a Managing Director of Caymus Partners,
an Atlanta based middle market investment banking firm.  Dr.
Papadopoulos has extensive experience in capital raising activities with
corresponding deal sizes of $10 to $50 million and buy or sell side merger and
acquisition transactions with deal sizes up to $250 million across a broad range
of industries including the energy, chemical, and pharmaceutical/biotech
industries.  He is currently a member of the Board of Advisors of
Caymus Partners.




- 59
-




Michael E. Ellis became our
Executive Vice President and President of Global Energy Systems, Inc. on June 9,
2008.  Mr. Ellis was formerly the Chief Operating Officer of Jacoby
Energy Development beginning on April 1, 2007.  While at Jacoby
Energy, he developed the High-BTU Live Oak Landfill project.  Mr.
Ellis previously served with Energy Systems Group, a division of Vectren
Corporation (NASDQ:VVC), from 2003 to 2007, where he opened the Atlanta Regional
office and was responsible for more than $65 million in sales, the majority of
which were in the renewable energy sector.  Mike also worked 23 years
for the Southern Company. In 2001, he was a founding executive of its energy
services company, Southern Company Energy Solutions.  Ellis led
Southern Company Energy Solutions to annual sales of over $100 million before
leaving to join Energy Systems Group.  He has managed and developed
renewable energy projects relating to High-BTU landfill gas, biomass, solar
energy and gasification.





William P. Behrens became a
member of our board of directors on October 1, 2006 and was appointed our
non-executive Chairman of the Board on November 9, 2006.  Since
October 2008, Mr. Behrens has served as Vice Chairman of Fulcrum Securities,
Inc., manager of its New York City office and member of its management
committee.  From October 2001 until September 2008, Mr. Behrens served
as the Vice Chairman of Northeast Securities, Inc., where he built a significant
presence in private-client advisory services and institutional
brokerage.  He joined Northeast Securities with over 30 years of
experience from Ernst & Company, most recently as Chairman and CEO of
Investec Ernst & Company (a wholly owned subsidiary of Investec Group,
Ltd.).  Mr. Behrens currently serves as an official for the NYSE Amex
exchange (formerly the American Stock Exchange), has served as a member of the
Self-Regulatory Organizations Task Force on Options Reform and has held a
variety of senior positions in the financial services industry, including the
Securities Industry Association, the Options Clearing Corporation, the American
Stock Exchange, and the National Association of Securities Dealers (now
FINRA).  He is also a director of Volumetric Fund, Inc. (VOLMX) and
ProPapa Missions America.





Gil Boosidan became a member
of our board of directors on January 29, 2007.  Until February 2007,
Mr. Boosidan served as Senior Vice President of IDT Corporation (NYSE: IDT), as
well as Treasurer of IDT Investments, Inc., a subsidiary of IDT that managed a
substantial portion of IDT’s cash and investments.  In that role, Mr.
Boosidan managed its multi-million dollar fixed income portfolio, and he
coordinated IDT’s commercial banking relationships, borrowing, trading and risk
management.  Currently, Mr. Boosidan invests and advises in private
equity transactions.




- 60
-




Steven H. Townsend became a
member of our board of directors on October 22, 2008. Mr. Townsend is currently
a Managing Partner of Northeast Development Company, LLC and Townsend
Development Associates, LLC, which are engaged in the real estate development
business. Mr. Townsend has served in various executive positions, including from
2001 to 2005 as Chairman of the Board of Directors, President and Chief
Executive Officer, with United Natural Foods, Inc. (NASDAQ GS: UNFI), a
distributor of natural and organic food and related products. Mr. Townsend began
his career with United Natural Foods in 1981. Mr. Townsend is also a member of
the Board of Directors of SI Financial Group, Inc. (NASDAQ GM: SIFI), the parent
holding company of Savings Institute Bank and Trust Company, a
community-oriented financial institution located in eastern Connecticut. Mr.
Townsend resigned from the Company’s
board of directors effective April 1, 2009.





Richard D. Ditoro became a
member of our board of directors on September 7, 2006. Mr. Ditoro previously
served as a member of our board of directors from July 28, 2005 through August
10, 2006, but did not stand for reelection at our 2006 annual stockholders’
meeting.  Mr. Ditoro is currently a principal in the consulting firm
Merestone Development.  In this capacity, Mr. Ditoro provides due
diligence, financial modeling, market research, acquisition candidate profiling
and strategic partnering advice and assistance to clients in the life sciences
and specialty chemical sectors.  Before forming Merestone Development
in 1998, Mr. Ditoro held numerous senior management positions, including Vice
President of Corporate Development, with Lonza Group, an international chemical
conglomerate based in Basle, Switzerland.





Robert L. Franklin became a
member of our board of directors on January 29, 2007.  Mr. Franklin is
a career investment banker who has served on numerous corporate and
not-for-profit boards of directors.  On the Company’s board, he is a
member of the Executive Committee, the Audit Committee, and Chairman of the
Venture, Science and Technology Committee.  In 2005, he was a founder
of Ariel Savannah Angel Partners, LLC, which makes angel risk investments for
its members from Savannah, Hilton Head and other Low Country
communities.  He is chairman emeritus of Hellcat, LLC, the managing
member of the Savannah Angels.  In July 2003, Mr. Franklin was
appointed by Massachusetts Governor Romney as a member of the Massachusetts
Public Education Nominating Council, on which he served until February
2005.  In 2003 he was vice chairman, and in 2004 he was chairman of
the Council.  From 1994 to 1999, he was a trustee of the Massachusetts
Maritime Academy, a four-year state college.  In November 2004, he
joined the Advisory Board of the Institute for Effective Governance, a
Washington, DC service organization for responsible trustees.  From
1998 to 2001, he was a member of the Advisory Board of Directors of the
Association of the United States Army.  In June 2004, Mr. Franklin
completed a term as a director of Berthel Fisher & Company, a diversified
financial services company headquartered in Cedar Rapids, Iowa.  Mr.
Franklin received his Bachelor of Arts degree from Boston University in 1959 and
served as a Regular Army officer until 1962.




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-




Edwin L. Klett became a member
of our board of directors on December 7, 2006.  Mr. Klett is currently
senior counsel with the law firm of Buchanan Ingersoll & Rooney, in
Pittsburgh, Pennsylvania, where he focuses his practice on corporate
litigation.  He was a partner in the law firm of Klett Rooney Lieber
& Schorling from its formation in April 1989 until its merger with Buchanan
Ingersoll in July 2006.  He has over 40 years of experience in
practicing law.  A trial attorney with a background in corporate law,
banking, securities and business matters, Mr. Klett was selected by the
Pennsylvania Supreme Court to a four-year term on the Judicial Conduct Board of
Pennsylvania in 2006.  Mr. Klett is a fellow of the International
Academy of Trial Lawyers, the American College of Trial Lawyers, the American
Board of Trial Advocates, the American Bar Foundation and the American Law
Institute.  He is a member of the American Bar Association and
previously served as a member of the ABA House of Delegates.  Mr.
Klett is also a former member of the House of Delegates of the Pennsylvania Bar
Association and previously served as chairman of the Securities and Class Action
Committee of the Civil Litigation Section of the state
association.  Mr. Klett is also a director of Northeast Securities,
Inc.





Audit
Committee





Our board
of directors has established an audit committee composed of Mr. Boosidan, its
chairman, Mr. Franklin, and Mr. Klett.  The board has determined that
Mr. Boosidan is an “audit committee financial expert” as defined under
applicable rules of the U.S. Securities and Exchange Commission and is
“independent” under the listing standards of the NYSE Amex exchange, on which
the shares of our common stock are listed.





Section
16(a) Beneficial Ownership Reporting Compliance





Section 16(a) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), requires our directors
and executive officers and persons who own beneficially more than 10% of our
outstanding common stock to file with the SEC initial reports of ownership and
reports of changes in their ownership of our common stock.  Directors,
executive officers and greater than 10% shareholders are required by SEC
regulations to furnish us with copies of the forms they file.  To our
knowledge, based solely on a review of the copies of such reports furnished to
us, during the fiscal year ended December 31, 2008, none of our directors,
officers, or beneficial owners of more than 10% of our common stock failed to
file on a timely basis reports required by Section 16(a) of the Exchange Act
during the year ended December 31, 2008, except for the following:





·
            Mr.
      Richard Ditoro, one of our directors, filed a late Form 4 on February 15,
      2008 to report a stock option grant on February 12,
  2008.


·
            Mr.
      Michael Ellis, our Executive Vice President and President of Global Energy
      Systems, Inc., filed a late Form 3 and Form 4 on July 2,
      2008.  The Form 3 should have been filed within ten business
      days following his becoming an executive officer of the Company on June 9,
      2008.  The late Form 4 was to report a stock purchase on June
      13, 2008.


·
            Mr.
      William P. Behrens, our Non-Executive Chairman of the Board, filed a late
      Form 4 on February 4, 2009 to report a stock option grant on January 30,
      2009.




- 62
-




Code
of Business Conduct and Ethics and Guidelines on Governance Issues





Our board of directors has adopted a
code of ethics applicable to all officers, directors and employees, a copy of
which is available on our website at www.gnhgroup.com.  We will
provide a copy of this code to any person, without charge, upon request, by
writing to us at Global Energy Holdings Group, Inc., 3348 Peachtree Road NE,
Suite 250, Tower 200, Atlanta, Georgia 30326, Attention: Chief Financial
Officer.  We intend to satisfy the disclosure requirement under Item
5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the
code of ethics by posting such information on our website at the address
specified above.




- 63
-




ITEM 11.
            EXECUTIVE
      COMPENSATION.





The
following Summary Compensation Table sets forth for the years ended December 31,
2008 and 2007 all plan and non-plan compensation paid, distributed or accrued
for services, including salary and bonus amounts, rendered in all capacities by
all individuals who served as our principal executive officer during 2008, our
two most highly compensated executive officers other than the principal
executive officer who were serving as executive officers at the end of 2008, and
two of our executive officers serving at the end of 2007.  These
individuals are our “named executive officers.”





Summary
Compensation Table for 2008 and 2007





Name and Principal Position
                                  
                                  Year
                                  
                                  Salary
                                    ($)
                                  
                                  
                                  Bonus
                                    ($)
                                  
                                  
                                  StockAwards
                                    ($) (1)
                                  
                                  
                                  OptionAwards
                                    ($) (1)
                                  
                                  
                                  NonEquityIncentive PlanCompensation
                                    ($)
                                  
                                  
                                  NonqualifiedDeferredCompensationEarnings
                                    ($)
                                  
                                  
                                  AllOtherCompen-sation
                                    ($)
                                  
                                  
                                  Total
                                    ($)(a)
                                  
                                  (b)
                                  
                                  (c)
                                  
                                  
                                  (d)
                                  
                                  
                                  (e)
                                  
                                  
                                  (f)
                                  
                                  
                                  (g)
                                  
                                  
                                  (h)
                                  
                                  
                                  (i)
                                  
                                  
                                  (j)David
      Ames
                                  
                                  2008
                                  
                                  
                                  84,808
                                  
                                  
                                  
                                  150,000
                                  
                                  
                                  
                                  4,117
                                  (3)
                                  
                                  
                                  2,227
                                  (3)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  241,152President
      and Chief Executive Officer(2)
                                  
                                  2007
                                  
                                  
                                  1
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,340,201
                                  (4)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,340,202Romilos
      Papadopoulos
                                    Chief
      Financial Officer and Executive Vice President(5)
                                  
                                  2008
                                  
                                  
                                  126,923
                                  
                                  
                                  
                                  25,000
                                  
                                  
                                  
                                  3,008
                                  (3)
                                  
                                  
                                  1,625
                                  (3)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  156,556Michael
      Ellis
                                    President
      Global Energy Systems and Executive Vice President(6)
                                  
                                  2008
                                  
                                  
                                  129,808
                                  
                                  
                                  
                                  35,000
                                  
                                  
                                  
                                  2,533
                                  (3)
                                  
                                  
                                  1,300
                                  (3)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  168,641Gary
      Flicker
                                  
                                  2008
                                  
                                  
                                  144,231
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  34,758
                                  (8)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  50,000
                                  
                                  
                                  
                                  228,989Former
      Chief Financial Officer and Former Executive Vice President(7)
                                  
                                  2007
                                  
                                  
                                  245,296
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  382,342
                                  (8)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  627,638Thomas
      Endres
                                  
                                  2008
                                  
                                  
                                  57,692
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (16,668
                                  )(10)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  41,024Former
      Chief Operating Officer and Former Executive Vice President, Operations(9)
                                  
                                  2007
                                  
                                  
                                  176,528
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  133,207
                                  (10)
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  309,735




(1)
            The
      amounts in columns (e) and (f) reflect the dollar amount of awards under
      the Company’s
      2005 Incentive Compensation Plan (the “Plan”) that we recognized for
      financial statement reporting purposes for the fiscal years ended
      December 31, 2008 and 2007 in accordance with FAS
      123(R).  Assumptions used in the calculations of these amounts
      are included in Note 9 to our consolidated financial statements in
      this report.




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-




(2)
            Mr.
      Ames has served as our President and Chief Executive Officer since
      November 9, 2006.





(3)
            On
      October 9, 2008, we granted to our executive officers, Mr. Ames, Mr.
      Papadopoulos and Mr. Ellis, and other key members of our management shares
      of restricted stock and non-qualified stock options under the
      Plan.  Our executive officers, Mr. Ames, Mr. Papadopoulos and
      Mr. Ellis were awarded in the aggregate 305,000 shares of restricted stock
      and non-qualified stock options to purchase 555,000 shares of our common
      stock with an exercise price equal to the closing price of our common
      stock on the American Stock Exchange (now the NYSE Amex exchange) on the
      date of grant, which was $0.19 per share.  Under the terms of
      the respective agreements, the restricted stock and the stock options have
      a 7-year term and will vest, expire or be forfeited at earlier dates based
      on the Company’s stock price.  The amounts in columns (e) and
      (f) for each of Mr. Ames, Mr. Papadopoulos and Mr. Ellis for 2008
      represent the compensation expenses we incurred in 2008 in connection with
      the October 9, 2008 grant.





(4)
            On
      December 7, 2006, we granted an option to purchase 1,350,000 shares of our
      common stock to Mr. Ames at an exercise price of $2.44 per share (the
      closing price per share of our common stock on the date of grant as
      reported by the American Stock Exchange, now the NYSE Amex exchange) in
      consideration of his service as our President and Chief Executive Officer,
      and 200,000 shares vested on the grant date.  The remaining
      1,150,000 were initially scheduled to vest on the first anniversary of the
      date of grant.  On February 1, 2007, our compensation committee
      agreed to revise the vesting of the option for those 1,150,000 shares so
      that they vested in equal monthly installments on the seventh day of each
      month, with the final installment vesting on December 7,
      2007.  The option expires on the fifth anniversary of the date
      of grant.  The amount in the table represents the compensation
      expense we incurred in 2007 for Mr. Ames in connection with the December
      7, 2006 option grant.





(5)
            Mr.
      Papadopoulos became our Chief Financial Officer, Executive Vice President
      and Secretary on July 18, 2008.





(6)
            Mr.
      Ellis became our President of Global Energy Systems and Executive Vice
      President on June 9, 2008.





(7)
            Mr.
      Flicker became our Chief Financial Officer, Executive Vice President and
      Secretary on January 29, 2007.  On July 17, 2008, Mr. Flicker’s
      employment with the Company ended.





(8)
            On
      February 1, 2007, we granted an option under the Plan to purchase 425,000
      shares of our common stock to Mr. Flicker at an exercise price of $2.79
      per share, the closing price per share of our common stock on the date of
      grant as reported by the American Stock Exchange (now the NYSE Amex
      exchange), in consideration of his service as our Chief Financial Officer,
      Executive Vice President and Secretary; 212,500 shares were vested on
      February 1, 2008 and the remainder of the option vests in two equal
      installments of 106,250 shares each on the second and third anniversaries
      of the date of grant.  The option expires on the fifth
      anniversary of the date of grant.  The amount in the table
      represents the compensation expense we incurred in 2008 and 2007 for Mr.
      Flicker in connection with the February 1, 2007 grant.  The
      options granted to Mr. Flicker in the February 1, 2007 grant were
      forfeited in January 2009.




- 65
-




(9)
            Mr.
      Endres became our Senior Vice President, Operations on September 7, 2006,
      our Executive Vice President, Operations on March 15, 2007 and our Chief
      Operating Officer on June 19, 2007.  On March 12, 2008, Mr.
      Endres informed our board of directors of his decision not to renew his
      employment agreement, which expired on March 6, 2008.  Mr.
      Endres resigned as our Chief Operating Officer and Executive Vice
      President effective April 12, 2008.





(10)
              On
      December 7, 2006, we granted an option to purchase 100,000 shares of our
      common stock to Mr. Endres at an exercise price of $2.44 per share, the
      closing price per share of our common stock on the date of grant as
      reported by the American Stock Exchange (now the NYSE Amex exchange), in
      consideration of his continued service as our Senior Vice President,
      Operations.  All shares under this option vested on the first
      anniversary of the grant, and the option expires on the fifth anniversary
      of the grant date.  On June 19, 2007, we granted an option to
      purchase 50,000 shares of our common stock to Mr. Endres at an exercise
      price of $1.19 per share, the closing price per share of our common stock
      on the date of grant as reported by the American Stock Exchange (now the
      NYSE Amex exchange), in consideration of his service as our Chief
      Operating Officer, and all shares vested on the first anniversary of the
      date of grant.  The option expires on the fifth anniversary of
      the date of grant.  The amount in the table includes (x)
      $116,539 in compensation expense we incurred in 2007 for Mr. Endres in
      connection with the December 7, 2006 grant; and (y) $16,668 in
      compensation expense we incurred in 2007 for Mr. Endres in connection with
      the June 19, 2007 grant.  The June 2007 option grant to Mr.
      Endres was forfeited upon the effective date of his termination on April
      12, 2008, and $16,668 of compensation expense recorded during 2007 on this
      option was reversed in 2008.




- 66
-




Employment
Agreement with Thomas Endres
 
 In
connection with Mr. Endres’ appointment as Chief Operating Officer, we entered
into an amended and restated employment agreement with him on June 19,
2007.  The agreement provided for an annual base salary of $200,000
and had a term of eighteen months commencing on September 7, 2006 and ending on
March 6, 2008.  On March 12, 2008, Mr. Endres informed our board of
directors of his decision not to renew his employment agreement.  He
resigned as our Chief Operating Officer and Executive Vice President effective
April 12, 2008.  His employment agreement provided for our previous
grants to Mr. Endres of (a) an option to purchase 30,000 shares of our common
stock at an exercise price of $3.62 per share (the closing price per share of
our common stock on September 7, 2006, the date of grant as reported by the
American Stock Exchange, now the NYSE Amex exchange), of which all shares vested
on December 31, 2006, and (b) an option to purchase 100,000 shares of our common
stock at an exercise price of $2.44 per share (the closing price per share of
our common stock on December 7, 2006, the date of grant, as reported by the
American Stock Exchange, now the NYSE Amex exchange).  The option to
purchase 100,000 shares of our common stock that was granted on December 7, 2006
vested on the first anniversary of the date of grant and expires on the fifth
anniversary of the date of grant.  Under the agreement, we also
granted Mr. Endres on June 19, 2007 an additional option to purchase 50,000
shares of our common stock at an exercise price of $1.19 per share (the closing
sales price of the common stock on the date of grant as reported on the American
Stock Exchange, now the NYSE Amex exchange).  Because this option was
not scheduled to vest until the first anniversary of the date of grant, it was
forfeited when Mr. Endres employment with us ended.
 
 Outstanding
Equity Awards for Named Executive Officers at Fiscal Year-End
 
 The
following table sets forth certain information with respect to outstanding
equity awards at December 31, 2008 for each of our named executive officers
listed in the Summary Compensation Table above.  Unless otherwise
noted in the footnotes, options are fully vested.  As noted below, the
number of shares issuable upon exercise of the options granted in December 2006,
February 2007 and June 2007, to the extent that such amount exceeded the number
then available under the Plan, was subject to approval by our stockholders of an
amendment to the Plan to increase the number of shares available for award under
the Plan to cover those excess options.  On February 12, 2008, at our
annual meeting of the stockholders, our stockholders approved an amendment to
the Plan to increase the number of shares of common stock available for issuance
under the Plan from 4,000,000 to 6,500,000.  The Plan, as amended,
provides that the total number of shares of common stock that may be subject to
awards granted under the Plan is 6,500,000 shares (plus the number of shares
with respect to which awards previously granted thereunder are forfeited,
expire, terminate without being exercised or are settled with property other
than shares, and the number of shares that are surrendered in payment of any
awards or any tax withholding requirements).  The table below reflects
the outstanding stock options held on December 31, 2008, giving effect to the
stockholder approval on February 12, 2008 of the increase in the number of
shares issuable under the Plan that covered those excess
options.
  - 67
-
 
 Outstanding
Equity Awards at Fiscal Year-End (December 31, 2008)
 
 Option Awards
                                            
                                            Stock AwardsName
                                            
                                            Number of
                                              Securities
                                              Underlying
                                              Unexercised
                                              Options —
                                              Exercisable
                                              (#)
                                            
                                            
                                            Number of
                                              Securities
                                              Underlying
                                              Unexercised
                                              Options —
                                              Unexercisable
                                              (#)
                                            
                                            
                                            Option
                                              Exercise
                                              Price
                                              ($)
                                            
                                            Option
                                              Expiration
                                              Date
                                            
                                            Number of
                                              Shares or
                                              Units of
                                              Stock
                                              That Have
                                              Not
                                              Vested
                                              (#)
                                            
                                            
                                            Market
                                              Value of
                                              Stock or
                                              Units of
                                              Stock That
                                              Have Not
                                              Vested
                                              ($)
                                            
                                            
                                            Number of
                                              Unearned
                                              Shares,
                                              Units or
                                              Other
                                              Rights
                                              that Have
                                              not Vested
                                              (#)
                                            
                                            
                                            Market
                                              Value or
                                              Payout
                                              Value of
                                              Unearned
                                              Shares,
                                              Units or
                                              Other
                                              Rights
                                              That Have
                                              Note
                                              Vested
                                              ($)David
      Ames
                                            
                                            
                                            -
                                            
                                            
                                            
                                            240,000
                                            (1)
                                            
                                            $
                                            0.19
                                            (2)
                                            10/9/2015
                                            
                                            
                                            130,000
                                            (1)
                                            
                                            $
                                            15,705.30
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -175,000
                                            (3)
                                            
                                            
                                            
                                            
                                            
                                            
                                            3.00
                                            (4)
                                            10/5/20161,350,000
                                            (5)
                                            
                                            
                                            
                                            
                                            
                                            
                                            2.44
                                            (2)
                                            12/7/2011Romilos Papadopoulos
                                            
                                            
                                            -
                                            
                                            
                                            
                                            175,000
                                            (1)
                                            
                                            
                                            0.19
                                            (2)
                                            10/9/2015
                                            
                                            
                                            95,000
                                            (1)
                                            
                                            
                                            11,476.95
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Michael
      Ellis
                                            
                                            
                                            -
                                            
                                            
                                            
                                            140,000
                                            (1)
                                            
                                            
                                            0.19
                                            (2)
                                            10/9/2015
                                            
                                            
                                            50,000
                                            (1)
                                            
                                            
                                            6,040.50
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Gary
      Flicker
                                            
                                            
                                            212,500
                                            (6)
                                            
                                            
                                            212,500
                                            (6)
                                            
                                            
                                            2.79
                                            (2)
                                            2/1/2012
                                            
                                            
                                            -
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -Thomas
      Endres
                                            
                                            
                                            30,000
                                            (7)
                                            
                                            
                                            -
                                            
                                            
                                            
                                            3.62
                                            (2)
                                            9/7/2011
                                            
                                            
                                            -
                                            
                                            
                                            
                                            
                                            
                                            
                                            
                                            -
                                            
                                            
                                            
                                            -100,000
                                            (7)
                                            
                                            
                                            
                                            
                                            
                                            
                                            2.44
                                            (2)
                                            9/7/2011
 
 (1)
              On
      October 9, 2008, the compensation committee of our board of directors
      granted to our executive officers, Mr. Ames, Mr. Papadopoulos, and Mr.
      Ellis, shares of restricted stock and non-qualified stock options under
      our 2005 Incentive Compensation Plan.  The shares of restricted
      stock and stock options have a term of seven years and vest as follows:
      (a) 50% of the shares of restricted stock and the stock options shall vest
      if the closing price of our common stock, as reported on the NYSE Amex
      exchange, equals or exceeds $1.50 per share for ten consecutive trading
      days on or before October 9, 2011, and if such threshold price is not
      achieved by such date, then all restricted stock and stock options under
      the award are forfeited; (b) provided the threshold price is met by the
      deadline in paragraph (a) above, then 25% of the shares of restricted
      stock and stock options shall vest if the closing price of our common
      stock equals or exceeds $2.00 per share for ten consecutive trading days
      on or before October 9, 2015; and (c) provided the threshold price is met
      by the deadline in paragraph (a) above, then 25% of the shares of
      restricted stock and stock options shall vest if the closing price of our
      common stock equals or exceeds $2.50 per share for ten consecutive trading
      days on or before October 9, 2015.  All of a recipient’s
      unvested shares of restricted stock will be forfeited immediately if the
      recipient’s employment is terminated for any reason, and all unexercised
      stock options will be terminated immediately if the recipient’s employment
      is terminated for cause, as defined in the 2005 Incentive Compensation
      Plan.
  - 68
-
  (2)
              Based
      on the closing price per share of our common stock on the date of grant as
      reported by the NYSE Amex exchange (formerly the American Stock
      Exchange).
 
 (3)
              On
      October 5, 2006, we granted an option to purchase 205,000 shares of our
      common stock to Mr. Ames in consideration of his service as a director,
      and 175,000 shares were vested on the date of grant and the remainder of
      the option vested in two installments of 15,000 shares each on the
      six-month and one-year anniversaries of the date of grant.  On
      November 9, 2006, upon Mr. Ames becoming our President and Chief Executive
      Officer, the option for the remaining 30,000 shares that was granted as
      part of the October 5, 2006 grant was forfeited as a result of his
      resigning as a member of the governance and compensation
      committees.
 
 (4)
              Based
      on the closing price per share of our common stock on the day before the
      date of grant as reported by the NYSE Amex exchange (formerly the American
      Stock Exchange).
 
 (5)
              On
      December 7, 2006, we granted options to purchase a total of 1,350,000
      shares of our common stock to Mr. Ames in consideration of his service as
      our President and Chief Executive Officer, and the option for 200,000
      shares vested on the grant date.  The option to purchase the
      remaining 1,150,000 shares was initially scheduled to vest on the first
      anniversary of the date of grant.  On February 1, 2007, our
      compensation committee agreed to revise the vesting of the option for
      those 1,150,000 shares so that they would vest in equal monthly
      installments on the seventh day of each month, with the final installment
      vesting on December 7, 2007.  411,750 of the shares issuable on
      exercise of the option granted to Mr. Ames on December 7, 2006 were
      subject to stockholder approval of an amendment to the Plan, which was
      subsequently approved as of February 12,
2008.
 
 (6)
              On
      February 1, 2007, we granted an option to purchase 425,000 shares of our
      common stock to Mr. Flicker in consideration of his service as our Chief
      Financial Officer, Executive Vice President and Secretary.  The
      option to purchase 212,500 of these shares vested on February 1,
      2008.  The remainder of the option to purchase 212,500 shares
      was scheduled to vest in two equal installments on each of the second and
      third anniversaries of the grant date.  The 425,000 shares
      issuable on exercise of the option granted to Mr. Flicker on February 1,
      2007 were subject to stockholder approval of an amendment to the Plan,
      which was subsequently approved as of February 12, 2008.  The
      options granted to Mr. Flicker in the February 1, 2007 grant were
      forfeited in January 2009.
 
 (7)
              In
      consideration of his service as our Senior Vice President, Operations, on
      September 7, 2006, we granted to Mr. Endres an option to purchase 30,000
      shares of our common stock that vested on December 31, 2006.  On
      December 7, 2006, we granted Mr. Endres an option to purchase 100,000
      shares of our common stock that vested on December 7,
      2007.  30,500 of the shares issuable on exercise of the option
      granted to Mr. Endres on December 7, 2006 were subject to stockholder
      approval of an amendment to the Plan, which was subsequently approved as
      of February 12, 2008.
  - 69
-




Employment
Agreement with Mr. Endres.





As
discussed above, pursuant to an employment agreement with Mr. Endres, on June
19, 2007, we granted an option to purchase 50,000 shares of our common stock to
Mr. Endres in consideration of his service as our Chief Operating Officer, and
all shares were scheduled to vest on the first anniversary of the date of grant
and were subject to stockholder approval of an amendment to the Plan, which was
subsequently approved as of February 12, 2008.  On March 12, 2008, Mr.
Endres informed our board of directors of his decision not to renew his
employment agreement.  He resigned as our Chief Operating Officer and
Executive Vice President effective April 12, 2008.  Accordingly, these
options were forfeited when Mr. Endres’ employment with us ended.





Compensation
of Directors





The
following table sets forth a summary of the compensation we paid in 2008 to our
directors.  The table includes any person who served during 2008 as a
director (other than named executive officers), even if he is no longer serving
as a director.  For information about the compensation we paid to Mr.
Ames for serving as a director, see the notes to the Summary Compensation Table
above.  Mr. Bellone, who served as a director from October 5, 2006
until his resignation on January 16, 2008, did not receive any compensation
related to his service as a director in 2008.





Director
Compensation for 2008





Name
                
                Fees Earned
                  or Paid in
                  Cash
                  ($)
                
                
                Stock Awards
                  ($)
                
                
                Option
                  Awards (1)
                  ($)
                
                
                Non-Equity
                  Incentive Plan
                  Compensation
                  ($)
                
                
                Nonqualified
                  Deferred
                  Compensation
                  Earnings
                  ($)
                
                
                All Other
                  Compensation
                  ($)
                
                
                Total
                  ($)(a)
                
                (b)
                
                
                (c)
                
                
                (d)
                
                
                (e)
                
                
                (f)
                
                
                (g)
                
                
                (h)William P. Behrens
      (2)
                
                $
                27,500
                
                
                
                -
                
                
                
                11,858
                (3)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                39,358Richard D. Ditoro
      (4)
                
                
                27,500
                
                
                
                -
                
                
                
                14,312
                (3)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                41,812Edwin L. Klett (5)
                
                
                27,500
                
                
                
                -
                
                
                
                18,103
                (3)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                45,603Steven Townsend (6)
                
                
                7,500
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                7,500Gil Boosidan (7)
                
                
                27,500
                
                
                
                -
                
                
                
                31,226
                (3)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                58,726Robert L. Franklin
      (8)
                
                
                27,500
                
                
                
                -
                
                
                
                31,226
                (3)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                58,726








(1)
            The
      amounts in column (d) reflect the dollar amount of awards under the Plan
      that we recognized for financial statement reporting purposes for the
      fiscal year ended December 31, 2008 in accordance with FAS
      123(R).  Assumptions used in the calculation of this amount are
      included in Note 9 to our audited consolidated financial statements
      in this report.




- 70
-




(2)
            Mr.
      Behrens was elected to the board on October 1, 2006, and is currently
      serving as a director.





(3)
            The
      table below summarizes the outstanding stock options held on December 31,
      2008 by any person who served during 2008 as a director (other than named
      executive officers), even if such person is no longer serving as a
      director.  The number of shares issuable upon exercise of the
      options granted in December 2006 and February 2007, to the extent that
      such amount exceeded the number then available under the Plan, was subject
      to approval by our stockholders of an amendment to the Plan to increase
      the number of shares available for award under the Plan to cover those
      excess options.  On February 12, 2008, at our annual meeting of
      stockholders, our stockholders approved an amendment to the Plan to
      increase the number of shares of common stock available for issuance under
      the Plan from 4,000,000 to 6,500,000.  The table below reflects
      the outstanding stock options held on December 31, 2008 by our
      non-executive directors, giving effect to the stockholder approval on
      February 12, 2008 of the increase in the
      number of shares issuable under the Plan that covered those excess
      options.





Name
                                          
                                          Grant Date
                                          
                                          Number
                                            of
                                            Options
                                            Granted
                                          
                                          
                                          Number of
                                            Securities
                                            Underlying
                                            Unexercised
                                            Options —
                                            (#)
                                            Exercisable
                                          
                                          
                                          Number of
                                            Securities
                                            Underlying
                                            Unexercised
                                            Options —
                                            (#)
                                            Unexercisable
                                          
                                          
                                          Option
                                            Exercise
                                            Price
                                            ($) (a)
                                          
                                          Option
                                            Expiration
                                            DateWilliam
      P. Behrens (b)
                                          
                                          3/20/2008
                                          
                                          
                                          55,000
                                          
                                          
                                          
                                          27,500
                                          
                                          
                                          
                                          27,500
                                          
                                          
                                          $
                                          0.42
                                          
                                          3/20/201810/5/2006
                                          
                                          
                                          215,000
                                          
                                          
                                          
                                          215,000
                                          
                                          
                                          
                                          –
                                          
                                          
                                          
                                          3.00
                                          
                                          10/5/2016Richard
      D. Ditoro (c)
                                          
                                          3/20/2008
                                          
                                          
                                          55,000
                                          
                                          
                                          
                                          27,500
                                          
                                          
                                          
                                          27,500
                                          
                                          
                                          
                                          0.42
                                          
                                          3/20/20187/28/2005
                                          
                                          
                                          80,000
                                          
                                          
                                          
                                          80,000
                                          
                                          
                                          
                                          –
                                          
                                          
                                          
                                          4.00
                                          (d)
                                          7/28/20109/7/2006
                                          
                                          
                                          55,000
                                          
                                          
                                          
                                          55,000
                                          
                                          
                                          
                                          –
                                          
                                          
                                          
                                          3.62
                                          
                                          9/7/201110/5/2006
                                          
                                          
                                          5,000
                                          
                                          
                                          
                                          5,000
                                          
                                          
                                          
                                          –
                                          
                                          
                                          
                                          3.00
                                          
                                          10/5/201612/7/2006
                                          
                                          
                                          125,000
                                          
                                          
                                          
                                          125,000
                                          
                                          
                                          
                                          –
                                          
                                          
                                          
                                          2.44
                                          
                                          12/7/20162/1/2007
                                          
                                          
                                          15,000
                                          
                                          
                                          
                                          15,000
                                          
                                          
                                          
                                          –
                                          
                                          
                                          
                                          2.79
                                          
                                          2/1/2017Edwin
      L. Klett (e)
                                          
                                          3/20/2008
                                          
                                          
                                          55,000
                                          
                                          
                                          
                                          27,500
                                          
                                          
                                          
                                          27,500
                                          
                                          
                                          
                                          0.42
                                          
                                          3/20/201812/7/2006
                                          
                                          
                                          40,000
                                          
                                          
                                          
                                          40,000
                                          
                                          
                                          
                                          –
                                          
                                          
                                          
                                          2.44
                                          
                                          12/7/201612/7/2006
                                          
                                          
                                          175,000
                                          
                                          
                                          
                                          175,000
                                          
                                          
                                          
                                          –
                                          
                                          
                                          
                                          2.44
                                          
                                          12/7/20162/1/2007
                                          
                                          
                                          25,000
                                          
                                          
                                          
                                          25,000
                                          
                                          
                                          
                                          –
                                          
                                          
                                          
                                          2.79
                                          
                                          2/1/2017Gil
      Boosidan (f)
                                          
                                          3/20/2008
                                          
                                          
                                          55,000
                                          
                                          
                                          
                                          27,500
                                          
                                          
                                          
                                          27,500
                                          
                                          
                                          
                                          0.42
                                          
                                          3/20/20182/1/2007
                                          
                                          
                                          200,000
                                          
                                          
                                          
                                          200,000
                                          
                                          
                                          
                                          –
                                          
                                          
                                          
                                          2.79
                                          
                                          2/1/2017Robert
      L. Franklin (g)
                                          
                                          3/20/2008
                                          
                                          
                                          55,000
                                          
                                          
                                          
                                          27,500
                                          
                                          
                                          
                                          27,500
                                          
                                          
                                          
                                          0.42
                                          
                                          3/20/20182/1/2007
                                          
                                          
                                          200,000
                                          
                                          
                                          
                                          200,000
                                          
                                          
                                          
                                          –
                                          
                                          
                                          
                                          2.79
                                          
                                          2/1/2017




- 71
-





(a)
              Except
      as noted otherwise, the exercise price of each option in this column is
      equal to the closing price per share of our common stock on the date of
      grant as reported by the NYSE Amex exchange (formerly the American Stock
      Exchange).





(b)
              We
      granted options to purchase shares of our common stock to Mr. Behrens in
      consideration of his service as a director.  The amount in the
      Director Compensation Table includes $11,858 in compensation expense we
      incurred in 2008 for Mr. Behrens in connection with the March 20, 2008
      grant.





(c)
              We
      granted options to purchase shares of our common stock to Mr. Ditoro in
      consideration of his service as a director.  The amount in the
      Director Compensation Table includes (y) $2,454 in compensation expense we
      incurred in 2008 for Mr. Ditoro in connection with the February 1, 2007
      grant and (z) $11,858 in compensation expense we incurred in 2008 for Mr.
      Ditoro in connection with the March 20, 2008
  grant.





(d)
              As
      reported by the OTC Bulletin Board, the high and closing prices per share
      of our common stock on the date of grant were $4.20 and the low price was
      $3.51.





(e)
              We
      granted options to purchase shares of our common stock to Mr. Klett in
      consideration of his service as a director.  The amount in the
      Director Compensation Table includes (y) $4,089 in compensation expense we
      incurred in 2008 for Mr. Klett in connection with the February 1, 2007
      grant and (z) $14,014 in compensation expense we incurred in 2008 for Mr.
      Klett in connection with the March 20, 2008
  grant.





(f)
              We
      granted options to purchase shares of our common stock to Mr. Boosidan in
      consideration of his service as a director.  The amount in the
      Director Compensation Table includes (y) $20,446 in compensation expense
      we incurred in 2008 for Mr. Boosidan in connection with the February 1,
      2007 grant and (z) $10,780 in compensation expense we incurred in 2008 for
      Mr. Boosidan in connection with the March 20, 2008
  grant.





(g)
              We
      granted options to purchase shares of our common stock to Mr. Franklin in
      consideration of his service as a director.  The amount in the
      Director Compensation Table includes (y) $20,446 in compensation expense
      we incurred in 2008 for Mr. Franklin in connection with the February 1,
      2007 grant and (z) $10,780 in compensation expense we incurred in 2008 for
      Mr. Franklin in connection with the March 20, 2008
  grant.





(4)
            Mr.
      Ditoro, who is currently serving as a director, served as a director from
      July 28, 2005 through August 10, 2006 and again became a director on
      September 7, 2006.





(5)
            Mr.
      Klett was elected a director on December 7, 2006, and is currently serving
      as a director.




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(6)
            Mr.
      Townsend was elected as a director on October 22, 2008, and resigned from
      the board of directors effective April 1,
2009.





(7)
            Mr.
      Boosidan was elected as a director on January 29, 2007, and is currently
      serving as a director.





(8)
            Mr.
      Franklin was elected as a director on January 29, 2007, is currently
      serving as a director.





We
compensate non-employee members of the board through a mixture of cash and
equity-based compensation.  Commencing October 1, 2006, we adopted a
policy of paying each independent, non-employee director a quarterly retainer of
$5,000 for his services as a director.  On March 20, 2008, we revised
this policy to increase this quarterly retainer to $7,500.





On the
date each independent, non-employee director is elected to the board of
directors for his or her first time, our current policy is to grant to the
director an option to purchase shares of our common stock at an exercise price
equal to the fair market value of our common stock on the date of
grant.  Directors also receive stock option grants for serving on the
audit, governance, compensation and science committees.  The number of
shares underlying each annual option grant is: 25,000 shares for chairing the
compensation, governance or science committees; 50,000 shares for chairing the
audit committee; 15,000 shares for being a member of the governance,
compensation or science committees; and 25,000 shares for being a member of the
audit committee.  Annual grants to reelected directors are at the
discretion of the board.





On
January 30, 2009, as detailed in the following table and in accordance with the
policy described in the previous paragraph, we granted to our non-employee
directors options to purchase a total of 345,000 shares at a purchase price per
share equal to the closing price of the common stock on the NYSE Amex exchange
on the date of grant (which was $0.25 per share).  This grant covers
the first six months service by the directors for 2009.  The options
granted to each director vested half on March 31, 2009 and the remaining
half vests on the date of our next annual meeting.  The options have a
term of 10 years.





Name
                                            
                                            Position
                                            
                                            Number of
                                              OptionsWilliam
      Behrens
                                            
                                            Chairman
      of the Board
                                            
                                            
                                            25,000Member
      of Compensation Committee
                                            
                                            
                                            7,500Member
      of Governance Committee
                                            
                                            
                                            7,500Gil
      Boosidan
                                            
                                            Chair
      of Audit Committee
                                            
                                            
                                            25,000Richard
      Ditoro
                                            
                                            Chair
      of Compensation Committee
                                            
                                            
                                            12,500Member
      of Governance Committee
                                            
                                            
                                            7,500Member
      of Science & Technology Committee
                                            
                                            
                                            7,500Robert
      Franklin
                                            
                                            Chair
      of Technology Committee
                                            
                                            
                                            12,500Member
      of Audit Committee
                                            
                                            
                                            12,500Member
      of Executive Committee
                                            
                                            
                                            12,500Edwin
      Klett
                                            
                                            Chair
      of Governance Committee
                                            
                                            
                                            12,500Member
      of Compensation Committee
                                            
                                            
                                            7,500Member
      of Audit Committee
                                            
                                            
                                            12,500Member
      of Executive Committee
                                            
                                            
                                            12,500Steven
      Townsend
                                            
                                            Board
      Membership
                                            
                                            
                                            150,000Member
      of Technology Committee
                                            
                                            
                                            7,500Member
      of Executive Committee
                                            
                                            
                                            12,500TOTAL
                                            
                                            
                                            
                                            
                                            345,000




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Directors
who are also our employees do not receive cash or equity compensation for
service on the board in addition to compensation payable for their service as
our employees.





Change-in-Control
Arrangements





The Plan
provides that if and only to the extent provided in the award agreement, or to
the extent otherwise determined by the compensation committee, subject to
certain limitations, on the occurrence of a “Change-in-Control”, (a) any option
or stock appreciation right that was not previously vested and exercisable as of
the time of the Change-in-Control, shall become immediately vested and
exercisable, (b) any restrictions, deferral of settlement, and forfeiture
conditions applicable to a restricted stock award, deferred stock award or other
stock-based award subject only to future service requirements granted under the
Plan shall lapse and such awards shall be deemed fully vested as of the time of
the Change-in-Control, and (c) with respect to any outstanding award subject to
achievement of performance goals and conditions under the Plan, the compensation
committee may, in its discretion, deem such performance goals and conditions as
having been met as of the date of the Change-in-Control.





For this
purpose, a “Change-in-Control” includes:





·
            consummation
      of a reorganization, merger, statutory share exchange or consolidation or
      similar corporate transaction involving the Company or any of its
      subsidiaries, a sale or other disposition of all or substantially all of
      the assets of the Company, or the acquisition of assets or stock of
      another entity by the Company or any of its subsidiaries (each a “Business
      Combination”), in each case, unless, following such Business Combination,
      (A) all or substantially all of the individuals and entities who were the
      beneficial owners, respectively, of the outstanding voting securities of
      the Company immediately prior to such Business Combination beneficially
      own, directly or indirectly, more than 50% of the then outstanding shares
      of common stock and the combined voting power of the then outstanding
      voting securities entitled to vote generally in the election of directors,
      as the case may be, of the corporation resulting from such Business
      Combination (including, without limitation, a corporation which as a
      result of such transaction owns the Company or all or substantially all of
      our assets either directly or through one or more subsidiaries) in
      substantially the same proportions as their ownership, immediately prior
      to such Business Combination, of the voting securities of the Company, (B)
      no person (excluding any employee benefit plan (or related trust) of the
      Company or such corporation resulting from such Business Combination or
      any person that as of the effective date of the Plan owns beneficial
      ownership of a controlling interest) beneficially owns, directly or
      indirectly, fifty percent (50%) or more of the then outstanding shares of
      common stock of the corporation resulting from such Business Combination
      or the combined voting power of the then outstanding voting securities of
      such corporation except to the extent that such ownership existed prior to
      the Business Combination and (C) at least a majority of the members of the
      Board of Directors of the corporation resulting from such Business
      Combination were members of our incumbent board at the time of the
      execution of the initial agreement, or of the action of the Board,
      providing for such Business
Combination;




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·
            the
      acquisition, directly or indirectly, by any person or related group of
      persons (other than the Company or a person that directly or indirectly
      controls, is controlled by, or is under common control with, the Company),
      of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange
      Act) of securities possessing more than 50% of the total combined voting
      power of our outstanding securities, with certain
    exceptions;





·
            during
      any consecutive two-year period, individuals who at the beginning of that
      two-year period constituted the Board of Directors (together with any new
      directors whose election to the Board of Directors, or whose nomination
      for election by the stockholders of the Company, was approved by a vote of
      a majority of the directors then still in office who were either directors
      at the beginning of such period or whose elections or nominations for
      election were previously so approved) cease for any reason to constitute a
      majority of the Board of Directors then in office;
  or





·
            approval
      by our stockholders of a complete liquidation or dissolution of the
      Company.


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





The table
below sets forth information regarding the number of shares of our common stock
beneficially owned as of March 1, 2009 by:





·
            each
      person who is known by us to beneficially own 5% or more of our common
      stock;


·
            each
      of our directors and named executive officers (other than Mr. Flicker and
      Mr. Endres who are no longer executive officers);
  and


·
            all
      of our directors and executive officers, as a
  group.





Beneficial
ownership is determined in accordance with the rules of the SEC and generally
includes voting or investment power with respect to
securities.  Shares of our common stock that may be acquired on
exercise of stock options or warrants that are currently exercisable or that
become exercisable within 60 days after the date indicated in the table are
deemed beneficially owned by the option holders.  Subject to any
applicable community property laws, the persons or entities named in the table
below have sole voting and investment power with respect to all shares indicated
as beneficially owned by them.





Except as
otherwise provided below, the address of each of the persons listed below is c/o
Global Energy Holdings Group, Inc., 3348 Peachtree NE, Suite 250, Tower Place
200, Atlanta, Georgia 30326, and the title and class of securities reported is
our common stock, par value $0.001 per share (our “Common Stock”).





Name and Address of Beneficial Owner
                
                Number of Shares
                  Beneficially Owned
                  (1)
                
                
                Percentage of
                  Shares
                  Beneficially
                  OwnedDavid
      R. Ames (2)
                
                
                1,892,010
                (3)
                
                
                6.2
                %William
      P. Behrens
                
                
                428,891
                (4)
                
                
                1.5
                %Gil
      Boosidan
                
                
                291,391
                (5)
                
                
                1.0
                %Richard
      D. Ditoro
                
                
                357,578
                (6)
                
                
                1.2
                %Robert
      L. Franklin
                
                
                268,750
                (7)
                
                
                *Edwin
      L. Klett
                
                
                577,500
                (8)
                
                
                2.0
                %Steven
      H. Townsend
                
                
                585,000
                (9)
                
                
                2.0
                %Romilos
      Papadopoulos (2)
                
                
                95,000
                (10)
                
                
                *Michael
      E. Ellis (2)
                
                
                85,600
                (11)
                
                
                *Gary
      W. Flicker
                
                
                40,000
                
                
                
                *Thomas
      J. Endres
                
                
                133,300
                (12)
                
                
                *Directors
      and executive officers as a group
                
                
                4,755,020
                (13)(14)
                
                
                14.7
                %(14)







* Less
than 1% of outstanding shares.





(1)
            Unless
      otherwise indicated, includes shares owned by a spouse, minor children and
      relatives sharing the same home, as well as entities owned or controlled
      by the named person.  Also includes shares if the named person
      has the right to acquire those shares within 60 days after March 1, 2009
      by the exercise of any warrant, stock option or other
      right.  Unless otherwise noted, shares are owned of record and
      beneficially by the named person.




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(2)
            On
      October 9, 2008, the compensation committee of our board of directors
      granted, pursuant to the Plan, (a) to Mr. Ames 130,000 unvested shares of
      restricted stock and an option to purchase 240,000 shares, (b) to Mr.
      Papadopoulos 95,000 unvested shares of restricted stock and an option to
      purchase 175,000 shares, and (c) to Mr. Ellis 80,000 unvested shares of
      restricted stock and an option to purchase 140,000 shares.  The
      shares of restricted stock and stock options have a term of seven years
      and vest as follows: (a) 50% of the shares of restricted stock and the
      stock options shall vest if the closing price of our common stock, as
      reported on the NYSE Amex exchange, equals or exceeds $1.50 per share for
      ten consecutive trading days on or before October 9, 2011, and if such
      threshold price is not achieved by such date, then all restricted stock
      and stock options under these awards are forfeited; (b) provided the
      threshold price is met by the deadline in paragraph (a) above, then 25% of
      the shares of restricted stock and stock options shall vest if the closing
      price of our common stock equals or exceeds $2.00 per share for ten
      consecutive trading days on or before October 9, 2015; and (c) provided
      the threshold price is met by the deadline in paragraph (a) above, then
      25% of the shares of restricted stock and stock options shall vest if the
      closing price of our common stock equals or exceeds $2.50 per share for
      ten consecutive trading days on or before October 9, 2015.  All
      of a recipient’s unvested shares of restricted stock will be forfeited
      immediately if the recipient’s employment with the Company is terminated
      for any reason, and all unexercised stock options will be terminated
      immediately if the recipient’s employment with the Company is terminated
      for cause, as defined in the 2005 Incentive Compensation
      Plan.  Due to the contingent nature of the recipients’ ability
      to acquire these shares of restricted stock and to exercise these options,
      these shares of restricted stock and options are not reflected in this
      table.





(3)
            Includes
      1,525,000 shares of our Common Stock issuable to Mr. Ames on the exercise
      of stock options, 237,010 shares of our Common Stock and 130,000 shares of
      our restricted Common Stock that were granted to Mr. Ames on October 9,
      2008 (see footnote 2 above).





(4)
            Includes
      290,000 shares of our Common Stock issuable to Mr. Behrens on the exercise
      of stock options, 47,223 shares of our Common Stock, 41,668 shares of our
      Common Stock issuable on exercise of warrants held by Mr. Behrens and
      50,000 shares of our Common Stock issuable on exercise of warrants held by
      Northeast Securities, Inc.  Mr. Behrens was Vice Chairman of
      Northeast Securities through September 2008, at which time he left
      Northeast Securities to join Fulcrum Securities, and disclaims beneficial
      ownership of the portion of the shares held by Northeast Securities, in
      which he has no pecuniary interest.





(5)
            Includes
      262,500 shares of our Common Stock issuable upon the exercise of stock
      options, 22,223 shares of our Common Stock and 6,668 shares of our Common
      Stock issuable on exercise of warrants held by GBAF Capital, LLC, an
      entity controlled by Mr. Boosidan.  Mr. Boosidan disclaims
      beneficial ownership of the portion of the shares held by GBAF Capital,
      LLC, in which he has no pecuniary
interest.




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(6)
            Includes
      348,750 shares of our Common Stock issuable to Mr. Ditoro on the exercise
      of stock options and 8,828 shares of our Common
  Stock.





(7)
            These
      shares of our Common Stock are issuable to Mr. Franklin on the exercise of
      stock options.





(8)
            Includes
      327,500 shares of our Common Stock issuable to Mr. Klett on the exercise
      of stock options and 250,000 shares of our Common
  Stock.





(9)
            Includes 85,000
      shares of our Common Stock issuable to Mr. Townsend on the exercise of
      stock options, 200,000 shares of our Common Stock held by Mr. Townsend,
      200,000 shares of our Common Stock held byMarjolaine Townsend
      Trust of 1996, of which Mr. Townsend's wife is the sole trustee and
      beneficiary and of which Mr. Townsend has shared investment power,and 100,000 shares
      of our Common Stock held byTownsend Family Investment Co., LLC, of
      which Mr. Townsend owns a majority of the member interests and is the sole
      manager.Mr.
      Townsend disclaims beneficial ownership of the portion of the shares held
      byMarjolaine Townsend Trust of 1996 andTownsend
      Family Investment Co., LLC.





(10)
              These
      are shares of our restricted Common Stock granted to Mr. Papadopoulos on
      October 9, 2008 (see footnote 2
above).





(11)
              Includes
      5,600 shares of our Common Stock and 80,000 shares of our restricted
      Common Stock that were granted to Mr. Ellis on October 9, 2008 (see
      footnote 2 above).





(12)
            These
      shares include 130,000 shares of our Common Stock issuable to Mr. Endres
      on the exercise of stock options and 3,300 shares of our Common
      Stock.





(13)
            These
      shares include 3,335,836 shares of our Common Stock issuable on the
      exercise of warrants and stock
options.





(14)
            The
      4,775,020 shares of our Common Stock reported include 173,300 shares
      beneficially owned by Mr. Flicker and Mr. Endres, who are no longer
      executive officers of the Company, but who were included in our “named
      executive officers” for purposes of Item 11 of this Report in accordance
      with SEC rules.  Excluding their shares, our current directors
      and executive officers owned 4,581,720 shares of our Common Stock,
      representing 14.2% of our shares of Common Stock outstanding, at March 1,
      2009.





Equity
Compensation Plan Information





At the
time of the reverse merger described in Item 1 of this report, neither we nor
Old Xethanol had any outstanding stock options.  On February 2, 2005,
following the completion of the reverse merger, our board of directors adopted
the Company’s 2005 Incentive Compensation Plan (the “Plan”), which our
stockholders subsequently approved.  The Plan is the only equity
compensation plan approved by our stockholders.




- 78
-





The terms
of the Plan provide for grants of stock options, stock appreciation rights (or
“SARs”), restricted stock, deferred stock, other stock-related awards and
performance awards that may be settled in cash, stock or other
property.  The persons eligible to receive awards under the Plan are
the officers, directors, employees and consultants of the Company and our
subsidiaries.  Until August 10, 2006, the total number of shares of
our common stock that were subject to the granting of awards under the Plan was
equal to 2,000,000 shares, plus the number of shares with respect to which
awards previously granted thereunder were forfeited, expired, terminated without
being exercised or were settled with property other than shares, and the number
of shares that were surrendered in payment of any awards or any tax withholding
requirements.  On August 10, 2006, at the annual meeting of
stockholders, the stockholders voted to amend the Plan (a) to increase the
number of shares of common stock available for awards under the Plan from
2,000,000 to 4,000,000 and (b) to eliminate a provision limiting to 250,000 the
number of shares with respect to which each type of award may be granted to any
participant during any fiscal year.





The total
number of shares of common stock issuable on exercise of options granted on
December 7, 2006, February 1, 2007 and June 19, 2007 exceeded the number of
shares then available under the Plan by 1,652,070 shares (the “excess
options”).  The excess options were granted expressly subject to
subsequent stockholder approval of an increase in the 4,000,000 shares available
for issuance under the Plan to cover those options.  On February 12,
2008, at our annual meeting of stockholders, our stockholders approved an
amendment to the Plan to increase the number of shares of common stock available
for issuance under the Plan from 4,000,000 to 6,500,000, which covered all of
the options granted subject to stockholder approval.  The following
table provides information regarding the status of our existing equity
compensation plans at December 31, 2008, giving effect to the stockholder
approval on February 12, 2008 of the increase in the number of
shares issuable under the Plan.  As described above,on January
30, 2009, we granted to our non-employee directors options to purchase a total
of 345,000 shares.





Equity
Compensation Plan Information





Number of
                                  securities
                                  to be issued
                                  upon exercise of
                                  outstanding
                                  options, warrants
                                  and rights
                                
                                
                                Weighted-average
                                  exercise price of
                                  outstanding
                                  options, warrants
                                  and rights
                                
                                
                                Number of securities
                                  remaining available for future
                                  issuances under equity
                                  compensation plans (excluding
                                  securities reflected in column (a))Plan category
                                
                                (a)
                                
                                
                                (b)
                                
                                
                                (c)Equity
      compensationplans
      approved bysecurity
      holders
                                
                                
                                5,709,000
                                
                                
                                $
                                2.53
                                
                                
                                
                                12,930Equity
      compensationplans
      not approvedby
      security holders (1)
                                
                                
                                482,778
                                
                                
                                
                                6.57
                                
                                
                                
                                0Total
                                
                                
                                6,191,778
                                
                                
                                $
                                2.85
                                
                                
                                
                                12,930





(1)
            We
      have issued warrants to purchase shares of our common stock in exchange
      for consideration in the form of goods or services as described in
      Statement of Financial Accounting Standards No. 123, Accounting for
      Stock-Based Compensation.  These warrants are described
      below:


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-





(a)
            On
      December 20, 2006, we agreed with Mr. Jeffrey S. Langberg, a former
      director, to cancel the warrants we granted to him on June 12, 2006, and
      to issue to him a fully vested five-year warrant to purchase 125,000
      shares of our common stock at an exercise price of $8.32 per
      share.  For more information about those warrants, please see
      Item 13, “Certain Relationships and Related Transactions – Consulting
      Agreements with Jeffrey S.
Langberg.”





(b)
            On
      June 29, 2006, we issued to an entity a fully vested warrant to purchase
      25,000 shares of our common stock at an exercise price of $5.25 per
      share.  The warrant expires on November 6, 2010.  We
      issued this warrant for investor relations
  services.





(c)
            On
      April 13, 2006, we issued to an entity a fully vested three-year warrant
      to purchase 17,778 shares of our common stock at an exercise price of
      $4.50 per share.  The warrant expired on March 31,
      2009.  We issued this warrant for private placement advisory
      services.





(d)
            On
      March 31, 2006, we granted to three members of our advisory board warrants
      to purchase a total of 95,000 shares of our common stock.  The
      warrants have a three-year term, are fully vested and have a weighted
      average exercise price of $4.71 per
share.





(e)
            We
      issued to Coastal Energy Development, Inc. (“CED”) a warrant to purchase
      200,000 shares of our common stock at an exercise price of $6.85 per share
      to replace the warrant previously issued on May 30, 2006, which was first
      exercisable on May 30, 2007 and was exercisable until May 30,
      2010.  We issued this warrant as part of a settlement agreement
      with CED.  The new warrant is exercisable through May 30,
      2009.


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





Termination
and Consulting Agreements with Christopher d’Arnaud-Taylor





Termination
Agreement.  On August 24, 2006, we entered into a termination
agreement with Christopher d’Arnaud-Taylor, our former director, Chairman,
President and Chief Executive Officer, under which his employment by us and his
position as an officer of our company was terminated effective as of August 22,
2006 (the “Termination Date”).  The agreement provided that Mr.
d’Arnaud-Taylor would continue to serve as a member of our board of directors
for the remainder of his term.  Under the termination agreement, we
continued to pay Mr. d’Arnaud-Taylor his salary and maintained his employment
benefits in effect immediately before the Termination Date through September 30,
2006, and we paid Mr. d’Arnaud-Taylor $100,000 in severance on the three-month
anniversary of the Termination Date.  The agreement provides that,
subject to Mr. d’Arnaud-Taylor’s compliance with the terms of the termination
agreement, the exercise periods of the options to purchase 250,000 shares of
Common Stock at an exercise price of $5.56 per share and 450,000 shares of
Common Stock at an exercise price of $8.32 per share that were granted to Mr.
d’Arnaud-Taylor on February 28, 2006 and June 12, 2006, respectively, are
extended until the third anniversary of the Termination Date with respect to one
half of each option.  The options are otherwise
terminated.  The agreement also provides that we will reimburse Mr.
d’Arnaud-Taylor for any reasonable and appropriately documented business
expenses he may have incurred before the Termination Date in the performance of
his duties as an employee of the Company.





Under the
termination agreement, Mr. d’Arnaud-Taylor agreed to provide us with advisory
and consulting services as we reasonably requested during the three months after
the Termination Date to permit the orderly transfer of his duties to other
personnel and not to solicit our employees during the period beginning on the
Termination Date and ending on the first anniversary of the Termination
Date.  The agreement also provides for mutual releases from all claims
arising before the date of the agreement, other than claims based on the
released party’s willful acts, gross negligence or dishonesty and, with respect
to Mr. d’Arnaud-Taylor’s release of the Company, claims vested before the date
of the agreement for benefits under our employee benefit plans and claims for
indemnification for acts as an officer of our company.





Consulting
Agreement.  On December 1, 2006, we entered into a consulting
agreement with Mr. d’Arnaud-Taylor under which Mr. d’Arnaud-Taylor agreed
to provide strategic advice to our Chief Executive Officer.  During
the term of the agreement, we paid Mr. d’Arnaud-Taylor $15,000 per month
(payable monthly in advance) and reimbursed him for any reasonable and
appropriately documented business expenses he incurred in the performance of his
duties under the agreement.  The term of the agreement expired on
November 25, 2007.  During 2007, we paid Mr. d’Arnaud-Taylor $256,000
and recognized $165,000 in cash compensation expense.





Consulting
Agreements with Jeffrey S. Langberg





In
February 2005, we entered into a consulting services agreement with Jeffrey S.
Langberg, then one of our directors, under which Mr. Langberg agreed to provide
general business advisory services.  Under this agreement, we agreed
to pay Mr. Langberg a consulting fee of $15,000 per month and a sign-on bonus of
$225,000.  Under the consulting agreement, Mr. Langberg was also
eligible to receive performance bonuses at the discretion of the board of
directors as well as equity-based awards under the Plan.  We also paid
rent to an entity controlled by Mr. Langberg as described below under “Office
Space.”  Mr. Langberg agreed to waive any compensation otherwise
payable to him while he was a director of our company.




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On June
12, 2006, Mr. Langberg resigned from our board of directors.  On that
date, we issued to Mr. Langberg warrants to purchases 250,000 shares of Common
Stock at an exercise price of $8.32 per share that were originally scheduled to
vest upon the date on which NewEnglandXethanol, LLC had approved and commenced
its initial project.  For these purposes, the project was to be deemed
to have been approved and commenced when (a) the project had been approved, (b)
financing for construction of the project had been obtained and closed and (c)
our chief executive officer had notified our board of directors or our
compensation committee that conditions (a) and (b) had been met.  Due
to the contingent nature of these warrants, we did not reflect an expense for
them in our financial statements.  In September 2006, we entered into
an agreement with Mr. Langberg that terminated our consulting agreement with
him.  Mr. Langberg continued to provide consulting services directly
to our board of directors under the terms of the terminated agreement until
December 20, 2006, when we entered into another agreement with Mr. Langberg that
terminated the September 2006 agreement.  In the December 20, 2006
agreement with Mr. Langberg, we agreed as follows:





·
            to
      pay Mr. Langberg $15,000 on December 20, 2006 and $100,000 on January 2,
      2007;


·
            to
      pay him six monthly payments of $15,000 each, beginning on December 25,
      2006 and continuing on the 25th
      day of each month thereafter through May 25, 2007 (in addition to payments
      in that amount previously made on September 25, 2006 and October 25,
      2006), although we are no longer using Mr. Langberg’s services as a
      consultant;


·
            to
      cancel the warrants we granted to him on June 12, 2006, and to issue to
      him a fully vested five-year warrant to purchase 125,000 shares of our
      common stock at an exercise price of
$8.32;


·
            to
      continue paying or reimbursing him for health insurance through May 25,
      2007; and


·
            to
      amend the sublease arrangement with a company controlled by Mr. Langberg
      to reflect the terms described in “Office Space”
  below.





During
2007, we paid Mr. Langberg $187,549 under the December 2006 agreement including
$12,549 in health insurance and benefits on his behalf.





Office
Space





In
October 2004, Old Xethanol began sharing office space in New York City with
other affiliated companies under a sublease with Xethanol Management Services,
LLC, a single member limited liability company controlled by Jeffrey S.
Langberg, then one of our directors.  Under this arrangement as
amended pursuant to the December 20, 2006 agreement with Mr. Langberg described
above, we paid approximately $17,000 per month, plus reimbursements of other
costs, in sublease payments on a month-to-month basis.  We terminated
this sublease in June, 2008.  Total payments under the sublease were
$108,530 and $216,964 for the years ended December 31, 2008 and 2007,
respectively.




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Agreement
with Northeast Securities, Inc.





On
October 1, 2006, we entered into an advisory agreement with Northeast
Securities, Inc., a multi-line financial services firm serving institutional and
individual investors, under which Northeast Securities agreed, on a
non-exclusive basis, to assist us in various corporate matters including advice
relating to general capital raising, mergers and acquisition matters,
recommendations relating to business operations and strategic
planning.  At the time of the advisory agreement, our current director
and Non-Executive Chairman of our Board, William P. Behrens, was Vice Chairman
of Northeast Securities.  Mr. Behrens joined our board as a director
on October 1, 2006.  In consideration of its services under the
advisory agreement, we agreed to pay Northeast Securities an advisory fee of
$10,000 per month during the term of the agreement and to reimburse Northeast
Securities for all necessary and reasonable out-of-pocket costs and expenses it
incurred in the performance of its obligations under the
agreement.  The scheduled term of the agreement was one year, subject
to earlier termination by us in the event of a material breach by Northeast
Securities of any of its obligations under the agreement.  The
agreement provided that if, within twelve months after the termination of the
agreement, we either (a) consummated a financing transaction with any investor
that Northeast Securities introduced to us before the termination or (b) entered
into a definitive agreement to consummate a financing transaction with any such
investor and the financing transaction is consummated within six months
thereafter, then we were obligated to pay Northeast Securities a cash fee in
line with industry standard rates.  In the agreement, we also agreed
to indemnify Northeast Securities against any losses, claims, damages and
liabilities it may incur as a result of its engagement as an advisor under the
agreement, other than losses, claims, damages and liabilities resulting solely
from Northeast Securities’ gross negligence or willful misconduct.  In
May 2007, we informally amended our agreement with Northeast Securities to
eliminate the advisory fee of $10,000 per month, although Northeast Securities
continued to perform advisory services for us.  On July 25, 2007, we
formally agreed with Northeast Securities to terminate the agreement, including
the tail provision.  Total payments to Northeast Securities under this
advisory agreement in 2007 were $40,000.





Loan
from Mr. Ames





On February 19, 2009, the Company
borrowed $111,000 from David Ames, our President and CEO.  Mr. Ames
received a promissory note of the Company bearing interest at 8% per annum
maturing on December 31, 2009.





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Determination
of Independent Directors





Our board
of directors has determined that each of Mr. Behrens, Mr. Boosidan, Mr. Ditoro,
Mr. Franklin, Mr. Townsend and Mr. Klett is an “independent” director within the
meaning of Rule 10A-3(b)(1)(ii) under the Exchange Act and Section 803(A)(2) of
the NYSE Amex exchange Company Guide.  Mr. Ames is not an
“independent” director.





In
evaluating Mr. Behrens’ independence, our board considered that, prior to
October 2008, Mr. Behrens was the Vice Chairman of Northeast Securities, Inc.,
the placement agent for our April 2006 private placement.  There were
no transactions, relationships, or arrangements not disclosed in this
Item 13 pursuant to Item 404(a) of Regulation S-K that our board
considered in making the determinations of independence described in this
paragraph.


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ITEM
14.            Principal
Accounting Fees and Services.





Independent
Registered Public Accounting Firm’s Fees




The
following table shows the fees accrued for audit and other services provided by
Imowitz Koenig & Co., LLP, our independent registered public accounting
firm, for the years ended December 31, 2008 and 2007.




Year
                    
                    Audit Fees (1)
                    
                    
                    Audit Related Fees (2)
                    
                    
                    Tax Fees (3)
                    
                    
                    All Other Fees
                    
                    
                    Total Fees2008
                    
                    $
                    221,358
                    
                    
                    
                    –
                    
                    
                    $
                    93,757
                    
                    
                    
                    –
                    
                    
                    $
                    315,1152007
                    
                    $
                    238,227
                    
                    
                    $
                    89,057
                    
                    
                    $
                    92,394
                    
                    
                    
                    –
                    
                    
                    $
                    419,678







(1)
            “Audit
      Fees” consist of fees for professional services provided in connection
      with the audit of our financial statements and review of our quarterly
      financial statements and audit services provided in connection with other
      statutory or regulatory filings.  The amount shown for 2008 is
      an estimate and is subject to
adjustment.




(2)
            “Audit
      Related Fees” consist of fees billed for assurance and related services
      that are reasonably related to the performance of the audit or review of
      our financial statements and are not reported under “Audit
      Fees.”  During 2007, these fees primarily related to accounting
      research in connection with our current reports on Form 8-K that we filed
      with the SEC.




(3)
            “Tax
      Fees” consist of fees associated with tax compliance, including tax return
      preparation.




Pre-Approval
Policies and Procedures




Applicable
SEC rules require the audit committee of our board of directors to pre-approve
audit and non-audit services provided by Imowitz Koenig & Co., LLP, our
independent registered public accounting firm.  On November 28, 2005,
our audit committee began pre-approving all services by Imowitz Koenig &
Co., LLP and has pre-approved all new services since that time.  The
audit committee does not delegate its responsibilities under the Exchange Act to
our management.  The audit committee has determined that the rendering
of the services other than audit services by Imowitz Koenig & Co., LLP is
compatible with maintaining Imowitz Koenig & Co., LLP’s
independence.


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PART
IV





ITEM
      15.
            EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES.





(a)(1)
            Consolidated
      Financial Statements (See Item 8):





Report
      of Independent Registered Public Accounting
Firm




Consolidated
      Balance Sheets as of December 31, 2008 and
2007




Consolidated
      Statements of Operations for years ended December 31, 2008 and
      2007




Consolidated
      Statements of Change in Stockholders’ Equity for years ended December 31,
      2008 and 2007




Consolidated
      Statements of Cash Flows for years ended December 31, 2008 and
      2007




Notes
      to Consolidated Financial
Statements





(b)
            Exhibits
      Required by Item 601 of Regulation
S-K:





Exhibit
                  No.
                
                Description of Exhibit3.1
                
                Certificate
      of Incorporation of Global Energy Holdings Group, Inc. [Incorporated by
      reference to Exhibit 3.3 in our Quarterly Report on Form 10-Q for the
      quarter ended September 30, 2008, filed with the SEC on November 14,
      2008.]3.2
                
                Second
      Amended and Restated By-Laws of Global Energy Holdings Group, Inc.
      [Incorporated by reference to Exhibit 3.2 of our current report on Form
      8-K dated October 22, 2008 and filed with the SEC on October 28,
      2008.]4.1
                
                Specimen
      Common Stock Certificate.  [Incorporated by reference to Exhibit
      4.1 in our Quarterly Report on Form 10-Q for the quarter ended September
      30, 2008, filed with the SEC on November 14, 2008.]4.2
                
                Form
      of Series A Warrant issued by Xethanol Corporation (now Global Energy
      Holdings Group, Inc.) to certain Investors and to Goldman Sachs &
      Co.  [Incorporated by reference to Exhibit 4.3 in Amendment No.
      3 to Registration Statement on Form SB-2 (File No. 333-135121) filed with
      the SEC on March 26, 2007.]4.3
                
                Form
      of Series B Warrant issued by Xethanol Corporation to the Investors and to
      Goldman Sachs & Co.  [Incorporated by reference to Exhibit
      4.4 in Amendment No. 3 to Registration Statement on Form SB-2 (File No.
      333-135121) filed with the SEC on March 26, 2007.]4.4
                
                Promissory
      Note issued to David Ames by the Company, dated February 19,
      2009.


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Exhibit
                  No.
                
                Description of ExhibitMiscellaneous
      Corporate Agreements10.1
                
                Agreement
      of Merger and Plan of Reorganization dated February 2, 2005 by and among
      Zen Pottery Equipment, Inc., Zen Acquisition Corp. and Xethanol
      Corporation.  [Incorporated by reference to Exhibit 2.1 in our
      current report on Form 8-K dated February 2, 2005, filed with the SEC on
      February 3, 2005.]10.2
                
                Form
      of Agreement and Plan of Merger by and between Zen Pottery Equipment, Inc.
      and Xethanol Corporation.  [Incorporated by reference to Exhibit
      1 in our Definitive Information Statement on Schedule 14C filed with the
      SEC on March 9, 2005.]10.3
                
                Ethanol
      Marketing Agreement dated May 20, 2005 by and between Xethanol BioFuels,
      LLC and Aventine Renewable Energy, Inc.  [Incorporated by
      reference to Exhibit 10.41 in our Amendment No. 1 to Registration
      Statement on Form SB-2 (File No. 333-135121) filed with the SEC on
      September 15, 2006.]10.4
                
                Amendment
      dated July 2006 to Ethanol Marketing Agreement dated May 20, 2005 by and
      between Xethanol BioFuels, LLC and Aventine Renewable Energy,
      Inc.  [Incorporated by reference to Exhibit 10.44 in our
      Amendment No. 2 to Registration Statement on Form SB-2 (File No.
      333-135121) filed with the SEC on November 28, 2006.]10.5
                
                Subcontractor
      Agreement dated October 22, 2008 between AGL Services Company and Global
      Energy Systems, Inc. for Energy Conservation Measures.10.6
                
                Master
      Agreement for Contract Services by and between Gulf Power Company and
      Global Energy Systems, Inc., dated September 19, 2008.10.7
                
                Amendment
      One, dated March 11, 2009, to Master Agreement for Contract Services by
      and between Gulf Power Company and Global Energy Systems,
    Inc.**10.8
                
                Landfill
      Gas Sale and Purchase Agreement dated November 14, 2008 between GES Live
      Oak Hickory Ridge, LLC, an indirect wholly owned subsidiary of Global
      Energy Holdings Group, Inc. and BFI Waste Systems of North America, LLC, a
      subsidiary of Republic Services, Inc.]10.9
                
                Project
      Assignment Agreement dated January 20, 2009 by and between GES-Port
      Charlotte, LLC, an indirect wholly owned subsidiary of Global Energy
      Holdings Group, Inc., and North American Natural Resources-Southeast,
      LLC.10.10
                
                Landfill
      Gas Purchase Agreement dated July 22, 2008 by and between Charlotte
      County, Florida and North American Natural Resources-Southeast, LLC
      dated.


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-





Exhibit
                  No.
                
                Description of Exhibit10.11
                
                Site
      Lease Agreement dated July 22, 2008 by and between Charlotte County,
      Florida and North American Natural Resources-Southeast, LLC.10.12
                
                Novation
      Agreement dated January 22, 2009, by and among Charlotte County, Florida,
      North American Natural Resources-Southeast, LLC, and Global Energy
      Holdings Group, Inc.10.13
                
                Equity
      Interest Purchase Agreement dated January 28, 2009 by and among Global
      Energy Holdings Group, Inc., Ball Ground Recycling, LLC, Wood-Tech, LLC,
      Bobo Grinding Equipment, LLC, Georgia National Trucking, LLC, BGR
      Trucking, LLC, Prime Management, LLC, Bobo Grinding Inc., Jimmy Bobo,
      David Bobo, and BG Land, LLC.Agreements
      with or Related to Related Parties10.14
                
                Xethanol
      Corporation (now Global Energy Holdings Group, Inc.) 2005 Incentive
      Compensation Plan, as amended on August 10, 2006 and February 12, 2008,
      including Form of Non-Qualified Stock Option
      Agreement.  [Incorporated by reference to Exhibit 10.1 in our
      Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, filed
      with the SEC on May 15, 2008.]10.15
                
                Form
      of Non-Qualified Stock Option Agreement (for options granted on December
      7, 2006).  [Incorporated by reference to Exhibit 10.9 in
      Amendment No. 6 to Registration Statement on Form SB−2 (File No.
      333-135121) filed with the SEC on August 8, 2007.]10.16
                
                Form
      of Non-Qualified Stock Option Agreement (for options granted during 2007).
      [Incorporated by reference to Exhibit 10.10 in Amendment No. 6 to
      Registration Statement on Form SB-2 (File No. 333-135121) filed with the
      SEC on August 8, 2007.]10.17
                
                Termination
      Agreement dated August 24, 2006 by and between Xethanol Corporation and
      Christopher d’Arnaud-Taylor.  [Incorporated by reference to
      Exhibit 10.9 in Amendment No. 3 to Registration Statement on Form SB-2
      (File No. 333-135121) filed with the SEC on March 26,
    2007.]10.18
                
                Indemnification
      Agreement dated October 1, 2006 by and between Xethanol Corporation and
      William P. Behrens.  [Incorporated by reference to Exhibit 10.45
      in Amendment No. 2 to Registration Statement on Form SB-2 (File No.
      333-135121) filed with the SEC on November 28, 2006.]  (The
      identical form of Indemnification Agreement was subsequently executed by
      Xethanol Corporation and each of the following
      directors:  Lawrence S. Bellone, David R. Ames, Edwin L. Klett,
      Gil Boosidan and Robert L.
Franklin.)


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-





Exhibit
                  No.
                
                Description of Exhibit10.19
                
                Consulting
      Agreement dated December 1, 2006 by and between Xethanol Corporation and
      Christopher d’Arnaud-Taylor.  [Incorporated by reference to
      Exhibit 10.13 in Amendment No. 3 to Registration Statement on Form SB-2
      (File No. 333-135121) filed with the SEC on March 26,
    2007.]10.20
                
                Amended
      and Restated Employment Agreement dated June 19, 2007 by and between
      Xethanol Corporation and Thomas J. Endres.  [Incorporated by
      reference to Exhibit 10.16 in Amendment No. 6 to Registration Statement on
      Form SB−2 filed with the SEC on August 8, 2007.]10.21
                
                Form
      of Stock Option Agreement (for options granted on October 9,
      2008).  [Incorporated by reference to Exhibit 10.1 in our
      current report on Form 8-K dated October 7, 2008, filed with the SEC on
      October 14, 2008.]10.22
                
                Form
      of Restricted Stock Agreement (for restricted stock awards granted on
      October 9, 2008).  [Incorporated by reference to Exhibit 10.2 in
      our current report on Form 8-K dated October 7, 2008, filed with the SEC
      on October 14, 2008.]Financing
      Documents10.23
                
                Form
      of Private Placement Subscription Agreement. [Incorporated by reference to
      Exhibit 10.4 in our current report on Form 8-K dated February 2, 2005,
      filed with the SEC on March 15, 2005.]10.24
                
                Common
      Stock Purchase Agreement dated October 18, 2005 by and between the Fusion
      Capital Fund II, LLC and Xethanol Corporation.  [Incorporated by
      reference to Exhibit 10.1 in our current report on Form 8-K dated October
      18, 2005, filed with the SEC on October 19, 2005.]10.25
                
                Form
      of Warrant.  [Incorporated by reference to Exhibit 4.2 in our
      Amendment No. 1 to Registration Statement on Form SB-2 (File No. 333-
      129191) filed with the SEC on December 6, 2005.]10.26
                
                Securities
      Purchase Agreement dated April 3, 2006 by and among Xethanol Corporation
      and certain Investors named therein.  [Incorporated by reference
      to Exhibit 1.1 in our current report on Form 8-K dated April 3, 2006,
      filed with the SEC on April 7, 2006.]10.27
                
                Registration
      Rights Agreement dated April 3, 2006 by and among Xethanol Corporation and
      the Investors named therein.  [Incorporated by reference to
      Exhibit 1.2 in our current report on Form 8-K dated April 3, 2006, filed
      with the SEC on April 7,
2006.]


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Exhibit
                  No.
                
                Description of Exhibit10.28
                
                Securities
      Purchase Agreement dated April 3, 2006 by and among Xethanol Corporation
      and Goldman Sachs & Co.  [Incorporated by reference to
      Exhibit 1.6 in our current report on Form 8-K dated April 3, 2006, filed
      with the SEC on April 7, 2006.]10.29
                
                Fund
      Warrant dated April 21, 2006 issued to Lucas Energy Total Return Master
      Fund, Ltd. by Xethanol Corporation.  [Incorporated by reference
      to Exhibit 3.1 in our current report on Form 8-K dated April 7, 2006,
      filed with the SEC on April 26, 2006.]10.30
                
                Partners
      Warrant dated April 21, 2006 issued to Lucas Energy Total Return Partners,
      Ltd. by Xethanol Corporation.  [Incorporated by reference to
      Exhibit 3.2 in our current report on Form 8-K dated April 7, 2006, filed
      with the SEC on April 26, 2006.]10.31
                
                Mutual
      Termination Agreement by and between Xethanol Corporation and Fusion
      Capital Fund II, LLC dated November 14, 2007.  [Incorporated by
      reference to Exhibit 10.1 in our current report on Form 8-K dated November
      12, 2007, filed with the SEC on November 16, 2007.]Documents
      Related to Joint Ventures10.32
                
                Organizational
      Agreement dated May 30, 2006 by and among Xethanol Corporation, Coastal
      Energy Development, Inc. and CoastalXethanol LLC.  [Incorporated
      by reference to Exhibit 1.1 in our current report on Form 8-K dated May
      30, 2006, filed with the SEC on June 2, 2006.]10.33
                
                Operating
      Agreement of CoastalXethanol, LLC dated May 30, 2006 by and among Xethanol
      Corporation and Coastal Energy Development, Inc.  [Incorporated
      by reference to Exhibit 1.2 in our current report on Form 8-K dated May
      30, 2006, filed with the SEC on June 2, 2006.]10.34
                
                Form
      of Warrant dated September 17, 2007 issued by Xethanol Corporation to
      Coastal Energy Development, Inc.10.35
                
                Organizational
      Agreement dated June 23, 2006 by and among Xethanol Corporation, Global
      Energy and Management, LLC and NewEnglandXethanol,
      LLC.  [Incorporated by reference to Exhibit 1.1 in our current
      report on Form 8-K dated June 23, 2006, filed with the SEC on June 29,
      2006.]


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Exhibit
                  No.
                
                Description of Exhibit10.36
                
                Operating
      Agreement of NewEnglandXethanol, LLC dated June 23, 2006 by and among
      Xethanol Corporation, Global Energy and Management, LLC and
      NewEnglandXethanol, LLC.  [Incorporated by reference to Exhibit
      1.2 in our current report on Form 8-K dated June 23, 2006, filed with the
      SEC on June 29, 2006.]10.37
                
                Warrant
      dated June 23, 2006 issued by Xethanol Corporation to Global Energy and
      Management LLC.  [Incorporated by reference to Exhibit 3.1 in
      our current report on Form 8-K dated June 23, 2006, filed with the SEC on
      June 29, 2006.]10.38
                
                First
      Amendment to Organizational Agreement and Operation Agreement dated August
      22, 2006 by and among Xethanol Corporation, Coastal Energy Development,
      Inc. and CoastalXethanol LLC.  [Incorporated by reference to
      Exhibit 10.32 in Amendment No. 6 to Registration Statement on Form SB-2
      (File No. 333-135121) filed with the SEC on August 8,
    2007.]10.39
                
                Membership
      Interest Purchase Agreement by and between Renewable Spirits, LLC,
      Southeast Biofuels, LLC, and Coastal Xethanol, LLC, dated January 19,
      2009.Agreements
      Related to Acquisitions of Facilities10.40
                
                Purchase
      and Sale Agreement dated August 4, 2006 by and among Augusta BioFuels,
      LLC, an indirect subsidiary of Xethanol Corporation, Pfizer Inc., G.D.
      Searle LLC and CoastalXethanol LLC.  [Incorporated by reference
      to Exhibit 10.29 in Amendment No. 3 to Registration Statement on Form SB-2
      (File No. 333-135121) filed with the SEC on March 26,
    2007.]10.41
                
                Asset
      Purchase Agreement dated August 7, 2006 by and among Xethanol Corporation,
      Carolina Fiberboard Corporation LLC and Victor
      Kramer.  [Incorporated by reference to Exhibit 10.30 in
      Amendment No. 3 to Registration Statement on Form SB-2 (File No.
      333-135121) filed with the SEC on March 26, 2007.]10.42
                
                Amended
      and Restated Asset Purchase Agreement dated November 7, 2006 by and among
      Xethanol Corporation, Carolina Fiberboard Corporation, LLC and Victor
      Kramer.  [Incorporated by reference to Exhibit 10.47 in our
      Amendment No. 2 to Registration Statement on Form SB-2 (File No.
      333-135121) filed with the SEC on November 28, 2006.]10.43
                
                Escrow
      Agreement dated November 7, 2006 by and between Ellis, Painter, Ratterree
      & Adams LLP, Xethanol Corporation and Carolina Fiberboard
      Corporation.  [Incorporated by reference to Exhibit 10.32 in
      Amendment No. 3 to Registration Statement on Form SB-2 (File No.
      333-135121) filed with the SEC on March 26,
  2007.]


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Exhibit
                  No.
                
                Description of ExhibitTechnology-Related
      Agreements(for
      Agreements Related to New Generation
                  Biofuels
      Holdings, Inc., see below)10.44
                
                Strategic
      Alliance Agreement dated April 1, 2004 by and between UTEK Corporation and
      Xethanol Corporation.  [Incorporated by reference to Exhibit
      10.31 in our Amendment No. 1 to Registration Statement on Form SB-2 (File
      No. 333-135121) filed with the SEC on September 15,
  2006.]10.45
                
                Letter
      Agreement dated March 17, 2005 by and between UTEK Corporation and
      Xethanol Corporation.  [Incorporated by reference to Exhibit
      10.32 in our Amendment No. 1 to Registration Statement on Form SB-2 (File
      No. 333-135121) filed with the SEC on September 15,
  2006.]10.46
                
                Letter
      Agreement dated April 12, 2006 by and between UTEK Corporation and
      Xethanol Corporation.  [Incorporated by reference to Exhibit
      10.33 in our Amendment No. 1 to Registration Statement on Form SB-2 (File
      No. 333-135121) filed with the SEC on September 15,
  2006.]10.47
                
                Agreement
      and Plan of Acquisition dated June 13, 2006 by and among Advanced Biomass
      Gasification Technologies, Inc., UTEK Corporation and Xethanol
      Corporation.  [Incorporated by reference to Exhibit 10.4 in our
      current report on Form 8-K dated June 12, 2006, filed with the SEC on June
      16, 2006.]10.48
                
                License Agreement
      dated June 24, 2005 by and between Virginia Tech Intellectual Properties,
      Inc. and Advanced Bioethanol Technologies, Inc., a wholly owned subsidiary
      of UTEK Corporation.  [Incorporated by reference to Exhibit
      10.34 in our Amendment No. 1 to Registration Statement on Form SB-2 (File
      No. 333-135121) filed with the SEC on September 15,
  2006.]10.49
                
                Research
      Agreement dated December 6, 2005 between Virginia Polytechnic Institute
      and State University and Xethanol.  [Incorporated by reference
      to Exhibit 10.35 in our Amendment No. 1 to Registration Statement on Form
      SB-2 (File No. 333-135121) filed with the SEC on September 15,
      2006.]10.50
                
                Exclusive
      Patent License by and between Midwest Research Institute, Management and
      Operating Contractor for the National Renewable Energy Laboratory, and
      Superior Separation Technologies, Inc. [Incorporated by reference to
      Exhibit 10.37 in our Amendment No. 1 to Registration Statement on Form
      SB-2 (File No. 333-135121) filed with the SEC on September 15,
      2006.]


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Exhibit
                  No.
                
                Description of Exhibit10.51
                
                Cooperative
      Research and Development Agreement dated May 1, 2006 by and between
      Midwest Research Institute, Operator of the National Renewable Energy
      Laboratory, and Xethanol Corporation.  [Incorporated by
      reference to Exhibit 10.38 in our Amendment No. 1 to Registration
      Statement on Form SB-2 (File No. 333-135121) filed with the SEC on
      September 15, 2006.]10.52
                
                Non-Exclusive
      License Agreement dated June 30, 2005 by and between Wisconsin Alumni
      Research Foundation and Xylose Technologies, Inc.  [Incorporated
      by reference to Exhibit 10.39 in our Amendment No. 1 to Registration
      Statement on Form SB-2 (File No. 333-135121) filed with the SEC on
      September 15, 2006.]10.53
                
                Marketing
      and License Agreement dated October 19, 2005 by and between Xethanol
      Corporation and DDS Technologies USA, Inc.  [Incorporated by
      reference to Exhibit 10.42 in our Amendment No. 1 to Registration
      Statement on Form SB-2 (File No. 333-135121) filed with the SEC on
      September 15, 2006.]10.54
                
                Cooperative
      Research and Development Agreement dated November 30, 2005 between USDA,
      Forest Service Forest Products Laboratory and Xylose Technologies,
      Inc.  [Incorporated by reference to Exhibit 10.40 in our
      Amendment No. 1 to Registration Statement on Form SB-2 (File No.
      333-135121) filed with the SEC on September 15, 2006.]10.55
                
                Base
      Research Agreement dated May 24, 2006 by and between the University of
      North Dakota Energy and Environmental Research Center and Advanced Biomass
      Gasification Technologies, Inc. [Incorporated by reference to Exhibit 10.5
      in our current report on Form 8-K dated June 12, 2006, filed with the SEC
      on June 16, 2006.]10.56
                
                Exclusive
      Patent and Know-How Final License Agreement dated May 24, 2006 by and
      between the Energy and Environmental Research Center Foundation and
      Advanced Biomass Gasification Technologies, Inc.  [Incorporated
      by reference to Exhibit 10.6 in our current report on Form 8-K dated June
      12, 2006, filed with the SEC on June 16, 2006.]Agreements
      Related to New Generation Biofuels
                  Technologies,
      Inc. (formerly H2Diesel, Inc.)10.57
                
                Management
      Agreement dated April 14, 2006 by and between Xethanol Corporation and
      H2Diesel, Inc.  [Incorporated by reference to Exhibit 1.3 in our
      current report on Form 8-K dated April 14, 2006, filed with the SEC on
      April 20, 2006.]10.58
                
                Investment
      Agreement dated April 14, 2006 by and among Crestview Capital Master, LLC,
      TOIBB Investment, LLC, H2Diesel, Inc. and  Xethanol
      Corporation.  [Incorporated by reference to Exhibit 1.1 in our
      current report on Form 8-K dated April 14, 2006, filed with the SEC on
      April 20, 2006.]


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Exhibit
                  No.
                
                Description of Exhibit10.59
                
                Registration
      Rights Agreement dated April 14, 2006 by and among Xethanol Corporation,
      Crestview Capital Master, LLC, and TOIBB Investment,
      LLC.  [Incorporated by reference to Exhibit 1.2 in our current
      report on Form 8-K dated April 14, 2006, filed with the SEC on April 20,
      2006.]10.60
                
                First
      Amendment to Investment Agreement dated May 17, 2006 by and among Xethanol
      Corporation, H2Diesel, Inc., Crestview Capital Master, LLC and TOIBB
      Investment, LLC.  [Incorporated by reference to Exhibit 10.1 in
      our current report on Form 8-K dated June 12, 2006, filed with the SEC on
      June 16, 2006.]10.61
                
                Amended
      and Restated Sublicense Agreement dated June 15, 2006 by and between
      Xethanol Corporation and H2Diesel, Inc.  [Incorporated by
      reference to Exhibit 10.2 in our current report on Form 8-K dated June 12,
      2006, filed with the SEC on June 16, 2006.]10.62
                
                Technology
      Access Agreement dated June 15, 2006 by and between Xethanol Corporation
      and H2Diesel, Inc.  [Incorporated by reference to Exhibit 10.3
      in our current report on Form 8-K dated June 12, 2006, filed with the SEC
      on June 16, 2006.]10.63
                
                Stock
      Purchase and Termination Agreement dated October 5, 2007 by and among
      H2Diesel Holdings, Inc., H2Diesel, Inc. and Xethanol
      Corporation.  [Incorporated by reference to Exhibit 10.1 in our
      current report on Form 8-K dated October 5, 2007, filed with the SEC on
      October 10, 2007.]10.64
                
                Stock
      Purchase Agreement, dated March 17, 2009, by and between Global Energy
      Holdings Group, Inc. and 2020 Energy, LLC.  [Incorporated by
      reference to Exhibit 10.1 in our current report on Form 8-K dated March
      17, 2009, filed with the SEC on March 20, 2009.]21
                
                Subsidiaries
      of Global Energy Holdings Group, Inc.23
                
                Consent
      of Imowitz Koenig & Co., LLP.24
                
                Power
      of Attorney (contained on the signature page hereof).31
                
                Certifications
      of David R. Ames and Romilos Papadopoulos pursuant to Section 302 of the
      Sarbanes-Oxley Act of
2002.


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Exhibit
                  No.
                
                Description of Exhibit32
                
                Certifications
      of David R. Ames and Romilos Papadopoulos pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.  This exhibit is not “filed” for
      purposes of Section 18 of the Securities Exchange Act of 1934 but is
      instead furnished as provided by applicable rules of the Securities and
      Exchange Commission.





**
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment, and the omitted portions have been filed separately with
the Securities and Exchange Commission.


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-


SIGNATURES





Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.





GLOBAL
ENERGY HOLDINGS GROUP, INC.




Date:
      April 15, 2009
                  By:
                  /s/ David R. AmesDavid
      R. Ames
                    Chief
      Executive Officer and President
                    (principal
      executive officer)Date:
      April 15, 2009
                  By:
                  /s/ Romilos PapadopoulosRomilos
      Papadopoulos
                    Chief
      Financial Officer and Executive Vice President
                    (principal
      financial
officer)


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-


POWER
OF ATTORNEY





KNOW ALL
MEN BY THESE PRESENTS, that each director and officer whose signature appears
below constitutes and appoints each of David R. Ames and Romilos Papadopoulos,
either of them signing individually, as his true and lawful attorney-in-fact and
agent, with full powers of substitution and resubstitution, for him and in his
name, place and stead, to sign in any and all capacities any and all amendments
to this annual report on Form 10-K and to file the same, with all exhibits
thereto and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that such
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.





Pursuant
to the requirements of Securities Exchange Act of 1934, as amended, this report
has been signed by the following persons in the capacities and on the date
indicated.





Signature
                        
                        Title
                        
                        Date/s/ David R. Ames
                        
                        Director, Chief
      Executive Officer
                        
                        April
      15, 2009David
      R. Ames
                        
                        and
      President/s/
      Romilos Papadopoulos
                        
                        Chief
      Financial Officer
                        
                        April
      15, 2009Romilos
      Papadopoulos
                        
                        and
      Executive Vice President/s/
      William P. Behrens
                        
                        Chairman
      of the Board of Directors
                        
                        April
      15, 2009William
      P. Behrens/s/
      Gil Boosidan
                        
                        Director
                        
                        April
      15, 2009Gil
      Boosidan/s/
      Richard D. Ditoro
                        
                        Director
                        
                        April
      15, 2009Richard
      D. Ditoro/s/
      Robert L. Franklin
                        
                        Director
                        
                        April
      15, 2009Robert
      L. Franklin/s/
      Edwin L. Klett
                        
                        Director
                        
                        April
      15, 2009Edwin
      L. Klett


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