10-K/A 1 globalenter-10k_a123109.htm globalenter-10k_a123109.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 

 
Form 10-K/A 
 

 
o  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2009

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

Commission File number 000-49679

GLOBAL ENTERTAINMENT HOLDINGS, INC.
 (Name of small business issuer in its charter)

Nevada
93-1221399
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
2375 E. Tropicana Ave., Suite 8-259
 
Las Vegas, Nevada
89119
(Address of principal executive offices)
(Zip Code)
 
  Issuer's Telephone Number
 (702)  516-9684
 
Securities registered under Section 12(b) of the Exchange Act:  None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value
(Title if Class)
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No  x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.   Yes o No  x
 
 
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 shorter period that the registrant as required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x No  o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
 
 
Large accelerated filer            o
Accelerated filer                     o
 
Non-accelerated filer              o
Smaller reporting company    x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes o No  x
 
The aggregate market value of the voting and non-voting common equity held by non-affiliates (6,527,656 shares) computed by reference to the average bid and ask price as of March 31, 2010, was approximately $163,191, based on an averaged share value of $ 0.025.
 
The number of shares of Common Stock, $0.001 par value, outstanding on March 31, 2010, was 23,077,844.
 
 
GLOBAL ENTERTAINMENT HOLDINGS, INC.
For the Fiscal Year Ended
December 31, 2009

Form 10-K
 
PART I
 
Page
     
Item 1.
4
Item 1A.
14
Item 2.
17
Item 3.
17
Item 4.
17
     
PART II
   
     
Item 5.
18
Item 6.
21
Item 7.
21
Item 7A.
25
Item 8.
25
Item 9.
 26
Item 9A.
26
Item 9B.
27
     
PART III
   
     
Item 10.
28
Item 11.
34
Item 12.
38
Item 13.
40
Item 14.
40
Item 15
41

 
 
 

 
EXPLANATORY NOTE
 
Global Entertainment Holdings Inc. (the "Company") is hereby amending its filed Form 10-K for the year ended December 31, 2009 to comply with a notice received from the Securities and Exchange Commission ("SEC") advising us that our annual report must be re-audited because the Public Company Accounting Oversight Board (“PCAOB”) revoked the registration of our former independent auditing firm, Larry O’Donnell, CPA. P.C. Because O'Donnell is no longer registered with the PCAOB, the Company may not include O'Donnell's audit reports or consents in filings with the SEC.  Our 2009 annual report was originally prepared by O'Donnell and is required to be included with our 2010 annual report on Form 10-K.  Therefore, we engaged our current independent auditor, Malcolm L. Pollard, Inc. (“Pollard”), to re-audit the Company’s financial statements for the 2009 fiscal year.  That audit report is contained herein together with the consent of Pollard.
 
As reported by the Company on Form 8-K on November 10, 2010, the Company received notice from Larry O’Donnell, CPA. P.C. ("O'Donnell") on October 26, 2010, that he had resigned as our independent auditor. O'Donnell cited as the reason for his resignation that he had determined to reduce his firm's workload in public company audit work and focus more on tax reporting. O’Donnell’s reports on our financial statements as of and for the fiscal years ended December 31, 2009 and 2008 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles, except that its report for the fiscal years ended December 31, 2009 and 2008 contained a going concern qualification noting the Company’s ability to continue as a going concern. Concurrent with the resignation of O’Donnell as our independent auditor, our board of directors elected to engage Pollard as our independent registered public accounting firm to review its Form 10-Q for the quarter ended September 30, 2010 and to audit the Company's financial statements for the fiscal year ended December 31, 2010.
 
However, O'Donnell's letter of resignation was misleading, as the Company subsequently received notice from the SEC that the PCAOB revoked the registration of O'Donnell, effective December 14, 2010, and that our 2009 financial statements should be re-audited.
 
Additionally, on January 10, 2011, the Company received a comment letter from the SEC (originally dated November 22, 2010) requiring our response to 15 comments pertaining to our 2009 annual report on Form 10-K, as well as our quarterly report on Form 10-Q for the period ending June 30, 2010.  Accordingly, this annual report and related financial statements for the fiscal year 2009, have been amended to incorporate changes in response to the SEC's comment letter.
 
This amended Form 10-K for the year ended should be read in conjunction with the Company’s other filings made with the SEC subsequent to the filing of our original report on Form 10-K for the 2009 fiscal year.
 
 
 
 
 

 
 
FORWARD-LOOKING STATEMENTS
 
This Annual Report on Form 10-K includes certain forward-looking statements as defined within Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, relating to revenue, revenue composition, earnings, projected plans, performance, contract procurement, procurement of capital, demand trends, future expense levels, gross margins and the level of expected capital expenditures.  Such forward-looking statements are based on the beliefs of, estimates made by, and information currently available to the management of the Company, as well as the management of its subsidiaries, and are subject to certain risks, uncertainties and assumptions.  Any statements contained herein (including without limitation statements to the effect that the Company or management "estimates," "expects," "anticipates," "plans," "believes," "projects," "continues," "may," "will," "could," or "would" or statements concerning "potential" or "opportunity" or variations thereof or comparable terminology or the negative thereof) that are not statements of historical fact should be construed as forward-looking statements.  The actual results that may be achieved by the Company may vary materially from those expected or anticipated in these forward-looking statements.  The realization of any results described by such forward-looking statements may be significantly affected by certain unanticipated factors, including those discussed in "Risk Factors," under Item 1A, and in "Management's Discussion and Analysis of Financial Condition and Results of Operations," under Item 7.  Because of these factors and other uncertainties that may affect the Company’s operating results, past performance should not be considered as an indicator of future performance, and investors should not use historical results to anticipate results or trends in future periods.  The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of any unanticipated events.  Readers should carefully review the risk factors described in this and other documents that the Company files from time to time with the Securities and Exchange Commission ("SEC"), including subsequent Current Reports on Form 8-K, Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.
 
HOW TO OBTAIN COMPANY REPORTS FILED WITH THE SEC
 
All reports filed with the SEC by Global Entertainment Holdings, Inc. are available free of charge via EDGAR through the SEC website at www.sec.gov.  In addition, the public may read and copy materials filed with the SEC by the Company at the SEC's public reference room located at 450 Fifth Street, N.W., Washington, D.C.  20549.  Upon written request, the Company will provide investors with copies of its Forms 8-K, 10-Q and 10-K.  Additionally, the Company plans to make all such reports available through its website at: www.globaluniversal.com, as soon as reasonably practicable.

The 2009 information as well as the comparative 2008 information within this 10K is a summary of pertinent activity occurring over the previous year.  Detailed information concerning these activities as well as historical data reference the Company is available from past 10K’s, 10Q’s and 8K’s.  Such information is available and can be accessed as noted in the immediately above paragraph.

Throughout this Annual Report references to “we”, “our”, “us”, “Global Entertainment”, “the Company”, and similar terms refer to Global Entertainment Holdings, Inc. Corp.
 
 
PART I


(a)           Our Primary Business

Global Entertainment Holdings, through its wholly owned subsidiary companies of Global Universal Entertainment (“GUE”) and Global Universal Film Group (“GUFG”), as well as its 30% owned, Canadian affiliate, Global Universal Pictures (“GUP”), is in the business of producing and marketing low-budget, genre films with recognizable, name talent.  The Company’s management believes investment risk can be significantly reduced by utilizing Canadian, U.S. and other major countries Governmental and Territorial tax incentives to cover up to 40%, or more, of each film’s budget. Additional coverage of approximately 25%, or more, of a film’s budget can be derived from distributor financing, or pre-selling either foreign or U.S. rights to a film.  The balance of each film’s budgeted cost is obtained from private investment of debt, equity or “gap” financing, or a combination of such items.  Management intends to retain revenues generated from a significant ongoing, equity percentage of each film to provide cash flow for operating expenses and to maximize long-term growth for the Company and its shareholders.
 
OVERVIEW

We are committed to the development and production of commercially saleable feature-length motion pictures having budgets of up to $5 million, but which have enduring value in all media.  We anticipate not only producing motion pictures, but also acquiring the film asset to build a library and capitalizing on other marketing opportunities associated with the motion picture.

We currently do not have sufficient capital to independently finance our own productions.  We intend to rely on outside sources of financing, coupled with tax incentives and distributor involvement for all of our film production activities.  We plan to use most of our available resources to develop our “in-house” library of scripts and to conduct pre-production and marketing activities designed to attract sources of film financing.

At present, we rely on our management’s access to and extensive relationships with, creative talent, including writers, actors and directors, as well as distributors and other movie industry contacts to assist in developing our film projects.

We employ a flexible strategy in developing, financing and producing our motion picture and film properties.  We combine our own capital and financial resources with tax incentives and distributor advances to develop a project to the point where it is ready to go into production.  For each motion picture, we assemble a business plan for presentation to prospective investors and financiers, consisting of the screenplay, a budget, production schedule and the commitment by a recognizable actor and/or director.

We have been able to secure recognizable talent based on the attractiveness of the screenplay, but we may also offer, as an added incentive, grants of our stock or options to acquire our stock.  We endeavor to secure the financing to produce the movie and make it available for distribution. The financing may come from federal and provincial governments in the form of tax incentives, financial institutions for production loans, lenders with profit participation, advances or pre-sales from distribution companies, accredited investors or a combination of these outside sources.
 
 
Motion picture revenue is derived from the worldwide licensing of a film to several distinct markets, each having its own distribution network and potential for profit.  The selection of the distributor for each of our feature films will depend upon a number of factors.  Our most basic criterion is whether the distributor has the ability to achieve a high level of sales on satisfactory terms, as well as when and in what amount the distributor will make advances to us.  We consider the amount and manner of computing distribution fees and the extent to which the distributor will guarantee certain print, advertising and promotional expenditures.  We will not attempt to obtain financing for the production of a particular film unless we believe that adequate distribution arrangements for the film can be made.

No assurance can be given that our motion pictures, if produced, will be distributed and, if distributed, will return our initial investment or make a profit.  To achieve the goal of producing profitable feature films, we are extremely selective in our choice of literary properties and exercise a high degree of control over the cost of production.  Although we finance our films in a manner designed to help cover our entire production costs, we also endeavor to produce films that will exhibit consumer appeal to help support a theatrical release and drive cable and DVD sales. By keeping strict control of our production costs and capitalizing on the cost advantages of back-to-back production, we strive for consistent and profitable returns on our investment in films.

Feature Film Production

Essential to our success is the production of high quality films having budgets of $5 million or less that have the potential to be profitable.  We will not engage in the production of X-rated material.  We plan to make motion pictures that appeal to the tastes of the vast majority of the movie-going public. 

The low budgets within which we operate serve the dual purpose of being low enough to limit our downside exposure and high enough to pay for a feature film with accomplished actors or directors that appeal to the major markets.  The market pull of the talent to be used must justify their fees by helping to attract advances.  Our budgets must remain small enough so that a large percentage of capital is not put at risk.  We intend to produce projects with built-in break-even levels that can be reached with ancillary and foreign distribution revenue.  If the movie crosses-over into a wide national distribution release, we can potentially generate a large profit because our share is not limited as with ancillary and foreign revenue.

In order to produce quality motion pictures for relatively modest budgets, we seek to avoid the high operating expenses that are typical of major U.S. studio productions.  We do not plan on having high overhead caused by large staff, interest charges, substantial fixed assets, and investment in a large number of projects that are never produced.  We believe that by maintaining a smaller, more flexible staff, with fewer established organizational restrictions we can further reduce costs through better time management than is possible in a major studio production.

We also enter into co-productions with experienced and qualified production companies in order to become a consistent supplier of motion pictures to distributors in the world markets.  With dependable and consistent delivery of product to these markets, we believe that distribution arrangements can be structured that will be equivalent to the arrangements made by major studios. Our first co-production film was Blue Seduction, co-produced with Image In Media, a Canadian film production company.   During 2009, we were successful at producing additional feature films and are now earning a reputation of quality, on-time and on-budget performance in the production of feature films.  The additional completed motion pictures are discussed below.
 
 
Primary responsibility for the overall planning, financing and production of each motion picture rests with our management.  For each motion picture we employ an independent film director who will be responsible for, or involved with, many of the creative elements, such as direction, photography, and editing.  All decisions will be subject to budgetary restrictions and our business control, although we will permit an independent director to retain reasonable artistic control of the project, consistent with its completion within strict budget guidelines and the commercial requirements of the picture.

Distribution Arrangements

Effective distribution is critical to the economic success of a feature film, particularly when made by an independent production company.  We are releasing our films for distribution in the worldwide marketplace through existing distribution companies, primarily independent distributors.  We may retain the right for ourselves to market the film to selected territories, and to possibly market television and other uses separately.  In many instances, depending upon the nature of distribution terms available to us, it may be advantageous or necessary for us to license all, or substantially all, distribution rights through one or more major distributors.  It is not possible to predict, with certainty, the nature of the distribution arrangements, if any, that we may secure for our motion pictures.

Presently, our management is negotiating with several film distribution companies to assist us in financing and marketing additional feature-length films.  The distribution companies will typically charge a fee of 15% to 25% for foreign distribution, and 20% to 30% for U.S. distribution.  The Company negotiates for the distribution company to provide some financing participation in each film’s budget, which, when combined with tax incentives and debt financing and/or equity participation from an investor, will provide 100% of the cost to produce each film.

Because of the financing incentives noted previously, it is possible that profitability can be realized even for a direct-to-video release, followed by pay, cable, satellite, free and syndicated television exhibition.  The Company is hopeful that a minimum of two of its films will warrant and receive a theatrical release, prior to their video distribution.  There is, of course, no guarantee of a theatrical release for any film that may be produced by the Company.

Current Film Operations

Blue Seduction
On September 22, 2008, the Company entered into an Exclusive License Agreement with its Canadian affiliate, Global Universal Pictures, Inc. (“GUP”), whereby the Company granted a world-wide exclusive license to GUP to use the work entitled “Blue Seduction” (the “Film”), starring Billy Zane and Estella Warren.  The license included: (1) the right to promote the Film throughout the world in all languages and in all distribution markets, including TV, home video, DVD and non-theatrical and theatrical markets, and (2) merchandise rights relating to all goods and services appearing in the Film. In April, 2008, the Company acquired a thirty percent (30%) equity interest in GUP. Jacqueline Giroux is the founder and President of GUP and owns the balance of the equity of this entity.  Ms. Giroux is also the founder and President of Global Universal Film Group, a wholly-owned subsidiary of the Company, and is a major shareholder of the Company by virtue of her holdings of the Company’s Series B and Series C Preferred Stock.  (See Item 12.)

 
As a condition to the license, GUP agreed to credit the Company as the source of the original concept for the Film and to appoint Gary Rasmussen, the Company’s CEO, as Executive Producer for the Film.

Subject to financing of the Film, GUP agreed to pay the Company a one-time fee of (i) U.S. $150,000, plus (ii) an ongoing fee equal to 50% of GUP’s “Net Receipts” from the sale of rights to Blue Seduction.

Also, on September 27, 2008, GUP transferred, through an intermediary Canadian company formed for this purpose, its right to develop, produce and exploit the Film to B & J Pictures, Inc. (“Transferee”), and, on October 2, 2008, the Company agreed to subscribe to $150,000 (Canadian) of preferred shares in the share capital of Transferee as its “Producer Investment” in the Film, subject to the closing of a bank loan between National Bank of Canada and Transferee.

The original rights to the Film were acquired by the Company from Ms. Jacqueline Giroux in connection with her employment as President of Global Universal Film Group. Ms. Giroux will receive a fee as Producer of the Film directly from B & J Pictures.

On October 2, 2008, National Bank of Canada agreed to fund approximately $1.1M Canadian for the production of Blue Seduction. The bank financing was contingent upon the bank's receipt of a Completion Bond that would guarantee that the film is actually produced and delivered; in order that the bank could collect on certain available tax credits and distribution advances.
 
The Completion Bond Company, Film Finances of Canada, Ltd., requested that the Company provide a guarantee for any amounts that they may lose in connection with the transaction. The contingent liability of the Company is difficult to determine at this time because, in essence, the completion bond company is backing up the bank loan, and the bank loan is structured as a credit facility that provides B & J Pictures with periodic draws in both U.S and Canadian currencies.  The bank agreed to advance up to $613,000 in Canadian dollars (including an interest reserve and costs), and up to $425,000 in U.S. currency.

In February of 2009, this film was delivered to Starz Media for international distribution, to Anchor Bay Entertainment for U.S. distribution, and to The Super Channel for exhibition in Canada. This film was produced with the assistance of Image In Media, who secured the involvement of Starz Media as the foreign distributor. Image In Media received a fee as co-producer and was appointed as the Canadian distributor for Blue Seduction.

The story of Blue Seduction centers on a former 80’s rock star who finds himself trapped in the seductive web of a young, sexy vocalist, looking for her own fifteen minutes of fame. Blue Seduction stars Billy Zane and Estella Warren and takes you on a ride of trickery, lies, suspense and murder. At the end, the film poses the simple questions; how far would you go to get what you want… and is fifteen minutes of fame worth a lifetime of health and happiness?
 

Blue Seduction was showcased for industry buyers and distributors at the American Film Market, held in Santa Monica, California, during November of 2009.

American Sunset
This film was produced by GUP in Canada using a combination of Canadian tax incentives, bank financing and investor equity participation. GUP signed a bank financing commitment for a loan of up to $440,000, secured by the Canadian tax credits, plus a personal guarantee from Jacqueline Giroux.  The Company provided certain services in obtaining and structuring the financial arrangements for the film, as well as selected intellectual property rights.  The Company received $150,000 (Canadian), which was re-invested in the film production as part of GUP’s “Producer’s Investment.”  The Company will receive a back-end participation in the upside potential of American Sunset by virtue of its equity ownership of 30% of GUP.

As with the Company’s first feature film, Blue Seduction, the production strategy of attracting name talent to encourage a wider distribution and thus, a larger viewing clientele continues with Corey Haim and Frank Molina starring in this second motion picture.  Mr. Haim unexpectedly passed away in early 2010, after production was completed.

GUP has strategically positioned itself in the market of thriller genre films with the completion of American Sunset.  Back dropped against rich scenery, the intention of the film is to take the audience on an adventure to a shocking conclusion wherein they discover that the story is quite different from what it first appeared.  While vacationing in a foreign country, a husband awakens to find that his wife is missing.  He must then follow a series of clues to get her back.  With the help of a Private Eye, he embarks on a treasure hunt where the ultimate prize is his wife’s life.  A challenging undertaking with over twenty locations, this film has many plot twists, turns, riddles and clues.  American Sunset stars the late Corey Haim, and Frank Molina.

American Sunset was showcased for industry buyers and distributors at the American Film Market, held in Santa Monica, California, during November of 2009, and is scheduled to be shown at the prestigious Cannes International Film Festival held in Cannes, France, during May of 2010.

Plaster Rock
The third major motion picture, Plaster Rock, produced by GUP in Canada again made use of Canadian and Territorial tax credits to underwrite a significant portion of the costs of production.
The continuing strategy of advantageous use of government tax credits and name talent thereby mitigating financial risks is attracting quality distribution and investment partners.

The completion of Plaster Rock strategically positions the Company in the horror genre of films.  This film opens with 4 young women and 4 young men being boated to a hunting lodge in the wilds of northern New Brunswick, Canada, to partake in a cross-country ski race. One by one, they begin to realize that the competition isn’t to win the race; but it’s to stay alive. As they attempt to survive a landscape filled with booby traps and pitfalls, they soon begin to realize that they all have something in common… and that “something” may lead to their demise.  An ensemble cast of young actors star in this fast-paced thriller-horror film where it is shockingly obvious from the very beginning,  that in the remote wilderness of Northern Canada; you need more than luck to survive.
Filming Plaster Rock in the wilderness at the New Brunswick location near where the actual events of the true story took place adds to the “magic” that we hope the audience will experience when they see this entertaining film.
 
 
The Company has established a website located at: www.PlasterRockMovie.com.

The Night
The fourth major motion picture, The Night, produced by GUP in Canada again made use of Canadian and Territorial tax credits to underwrite a significant portion of the costs of production.
 
The continuing strategy of advantageous use of government tax credits and name talent thereby mitigating financial risks is facilitating our ability to attract quality distribution and investment partners.

GUP strategically positions itself in the ghost story/thriller genre of films with the pending completion of The Night.  This film is currently in post production.

Many years have passed since the disappearance of a child, but the child’s spirit returns to exact revenge upon those who aided in his untimely demise.  The dark secrets of the past surface, and we see characters caught in a web of fear as they cannot escape their past mistakes. With each sunset, they are a step closer to becoming a victim themselves.

Other Films Planned
The Company has several films in the planning stage that it intends to produce as “Co-Production” films, either in combination with a distribution company or in partnership with an investor or another production company.  These films will be produced with government incentives from Canada and one or more additional production company partners.  (See “Significant Events Related to Film Financing” below.)  GUE plans to continue its market driven slate of films by developing and financing the following projects:  Sweetwater, the engaging story of the first black NBA star; The Richard Pryor Story (based on the novel-Jokes My Father Never Taught Me),by his daughter, Rae Pryor; and The Final Reel/The Pool , from the creators of the Final Destination franchise, Western Wind, a thriller with supernatural elements set in the Old West, Seeing Things, a thriller based upon the true events from one of America’s most famous haunted houses and Leslie, based on the novel by New York Times bestselling author Omar Tyree.  

Additionally, the Company may enter into one or more Co-Production Treaty arrangements for the production of films. For example, a Canadian-France or Canadian-U.K. co-production would entail both Canada, France or the U.K. investing Government monies or tax incentives totaling approximately 50% plus of each film’s budget.  For making this investment, Canada, France or the U.K. would retain ownership rights to the film in their respective countries; however, they never participate in revenues via any sales in the rest of the world, including the U.S.  The contracts issued from each Country are endorsed by the Government and fully bankable. Therefore, the Company would have the option of discounting the contract at the bank and utilizing each sale for production funds, or hold onto the contract to be paid 100% of the 50% of the budget at the completion of each film.  With 50% plus of the budget expenses underwritten by such incentives, the producer and investor are more likely to realize a profit.
 
Global Universal’s per film budget is expected to range between a low of $1.5 and $2 million (if no advertising and delivery items are included) and up to $5 million (U.S.), with approximately 35% to 50% of each budget underwritten by the respective country’s investment (e.g., Canada, U.K, France, Germany, Ireland, etc.).  All financing fees, marketing and advertising costs, completion bond fees and a contingency reserve will be included in the average film budget.
 
 
On a “straight to video” release, the Company estimates that the net bottom-line from worldwide television will range from an estimated low of $500,000 to as much as $2 million. The Company’s investment in each film is structured to provide strong downside risk protection while simultaneously offering an uncapped upside potential, either thru video releases that over perform or through theatrically released titles.

Recent examples of pictures which were produced utilizing these types of government incentives include CABIN FEVER, HOSTEL, SAW, OPEN WATER, WRONG TURN, and SWIMFAN. (Lions Gate released the first 4 films; Twentieth Century Fox released the last 2 films).
 
GLOBAL UNIVERSAL ENTERTAINMENT, INC.

The Company plans to develop this subsidiary as its U.S. presence in developing and producing films and has recently hired Daniel Sherkow to manage the business affairs of this subsidiary as its Chief Operating Officer.  Global Universal Entertainment will also serve as the liaison for the joint venture the Company has established with Global Renaissance Funding, LLC.

FINANCING STRATEGY

In the negotiations the Company is currently conducting with the distribution companies, management will endeavor to form a strategic alliance with a strong financial partner to provide a credit facility of an amount to be determined. It is intended that such a financial partner will release funds on an “as needed” basis to produce a planned slate of six or more films, with distribution for each film in place, in advance, by the selected distribution company.  No assurance can be made that the Company will be successful in its endeavors to consummate an agreement with any distribution company, or to secure a credit facility to support production of the Company’s planned films.

SIGNIFICANT EVENTS RELATED TO FILM FINANCING

In October, 2009, the Company and Arthur Wylie Enterprises, Inc. (AWE) www.arthurwylie,com announced the formation of Global Renaissance Funding, LLC. (“GRF”), a joint venture entity organized by the Company for the purpose of financing the production of a slate of feature-length films developed by the Company and Global Renaissance Entertainment Group, Inc. (“GREG”). GRF is 51% owned by the Company and 49% owned by GREG. GREG was recently formed by Arthur Wylie and Omar Tyree, the New York Times bestselling author, and holds the film rights for a significant number of Mr. Tyree’s novels, such as Leslie, Flyy Girl, etc.

Mr. Wylie and Mr. Tyree have structured an exclusive opportunity to adapt his popular novels into motion pictures.  Leslie, a supernatural thriller set in New Orleans, is the first of Mr. Tyree’s novels that will be financed by GRF and produced by GREG and one of the Company’s subsidiaries as a co-production. The Company estimates that it will commence pre-production activities on Leslie in the third quarter of 2010.

The Company anticipates that GRF will raise sufficient capital to finance the production of up to five feature films through a proposed offering.


LOW BUDGET GENRE PRODUCTION & DISTRIBUTION
 
Genre pictures allow for production at low budget levels for two basic reasons. First, these types of pictures are sold and marketed on the basis of concept rather than cast.  Costs associated with “named stars” are not required.  Second, these genres allow for inexpensive settings, shorter filming schedules with less expensive casts in more controlled environments, significantly lowering production costs.

These film productions may utilize completion bonds. These bonds are a form of insurance against unanticipated and unapproved cost overruns, as well as unforeseen events such as illness, natural disasters, etc.  This insurance will protect the production against over-budget costs. The cost of a completion bond is included in the budget and generally costs between 3% and 4% of budget of the film.

Most major video distribution companies have unused capacity and a desire to distribute third party films to add to their own internally produced product. Third party product can often be distributed less expensively since it does not have to incorporate a studio’s overhead or involve using studio facilities. Such products also require less studio management oversight during production. The worldwide home video market plus cable television, continues to show strong demand, particularly in the Company’s targeted film genres, which include “edgy” thrillers and “specialty” pictures.

The Company owns the rights “in house” to screenplays that it intends to produce as films. Therefore, the Company is able to by-pass the script optioning process for these films.  The option and the development of screenplays can be a costly and time-consuming process.  Such proprietary ownership significantly reduces development costs and the time necessary to move from development to production.

The films the Company produces will eventually become part of the Company’s film library. The Company holds a small library of films, which it obtained when it acquired Global Universal Film Group, Inc. (“GUFG”), a company owned by Gary Rasmussen (our CEO) and Jackelyn Giroux (President of GUFG and GUP in Canada).

 A film library, over time, is expected to build asset value for the Company.  Following the license term of each picture (7 years for direct-to-video releases and 20 years for theatrical releases), the film distribution rights and eventual ownership will become part of the Company’s assets.  Therefore, the Company can build a significant film library that may be re-licensed on either an “ad-hoc” or “packaged” basis, or sold to a third party. Film libraries are typically valued by estimating future revenues from future sale cycles and then calculating a net present valuation. Pay, free and syndication broadcasters are continually re-licensing titles. Future revenues will also be derived from new sources such as cell phones, iPods, video on demand, Internet broadcasts etc.

MOTION PICTURE INDUSTRY OVERVIEW
 
Background
 
The motion picture industry consists of two principal activities: production, which involves the development and production of motion pictures; and distribution, which involves the promotion and exploitation of feature-length motion pictures in a variety of media, including theatrical exhibition, home video, television and other ancillary markets, including airlines, cruise ships and new technology platforms such as video-on-demand, both in the U.S. and internationally.

 
Motion Picture Production
 
The production of motion pictures occur in four distinct stages prior to initial release: development, pre-production, principal photography and post-production. The creation of a motion picture begins with the development of an original screenplay by a writer, the screenplay adaptation of a novel, other literary or dramatic work. Once the screenplay material is identified, the production process begins.

The development stage includes acquiring the material in question, writing the screenplay and obtaining commitments from key talent such as the director, principal cast members and other creative personnel.

The pre-production stage includes securing the necessary production facilities and personnel, finalizing the motion picture budget and production schedule, selecting filming locations and the building, if necessary, of required sets. The production stage essentially is the period of principal photography.

The post-production stage includes the picture editing, the creation of special visual and optical effects, if necessary, the composition and recording of the musical score, the sound editing, and synchronization of dialogue, sound effects, the musical score and the “final cut” of the picture. The “final cut” then results in the production of a negative from which release prints and/or a video master are created.

Motion Picture Distribution
 
The distribution of a motion picture involves the licensing of the motion picture for exploitation in various markets both domestically and internationally. Timing patterns of distribution, commonly referred to as “windows”, are calculated to ensure that a film is released during what are believed to be optimal market conditions.

Distribution of a motion picture involves commercial exploitation in the U.S. and international markets including theatrical exhibition, home video distribution (DVDs, videocassettes, etc.), television exhibition (including pay-per-view, pay, network, syndication and basic cable), merchandising and other ancillary rights in the motion picture (such as books, soundtracks, and video games) and “non-theatrical exhibition” (such as airlines, cruise ships, hotels and armed forces facilities).

Films may be released initially into the theatrical exhibition market or, as has become more prominent recently, initially into the video distribution market. Following these releases, films are then released into the pay television market, and then followed by the free television market (CBS, NBC, ABC, FOX etc.).

The initial theatrical, home video, pay-per-view, pay television, and free television, including network, syndication and basic cable, comprise what is typically referred to as the first distribution “cycle”.  While a substantial portion of a motion picture’s total revenues are generated during the first “cycle”, significant revenues can be generating in succeeding “cycles.” For example, re-pricing and re-packaging of video releases and re-licensing of television exhibitions.  Some motion pictures may generate revenues from the creation of derivative works such as remakes, sequels, and spin-offs.
 
 
Theatrical Exhibition Market
 
The theatrical exhibition of motion pictures entails the promotion and release of the film in theatres. The theatrical distribution of a motion picture, both in the U.S. and internationally, involves the licensing and booking of the film to theatrical exhibitors (movie theatres), the advertising and publicity campaigns to support the release and the manufacture of release prints from the film negative. The distributor and the exhibitor typically enter into an agreement to determine the payment arrangements from the box-office to the distributor, generally as a percentage of gross box office receipts. This percentage is referred to as the “rental” rate, which is typically within the range of 35% to 60%. These “rental” rates vary among countries.

Releasing costs include advertising campaigns, trailers, publicity campaigns, print advertising, and other forms of promotional media, including the Internet.
 
Home Video Distribution
 
The film’s distributor sells, in most cases, DVDs and cassettes to local, regional and national video wholesalers and retailers, which then sell and/or rent these DVDs and cassettes to consumers. There remain some revenue sharing agreements, though this business has been declining, whereby the wholesaler or retailer purchases the DVDs and cassettes at reduced prices in return for which the distributor shares in the rental income. Certain mass merchants, including Wal-Mart and Target, occupy a significant and important retail position in the DVD and cassette sale market.
 
Television Distribution
 
Television rights to motion pictures are generally licensed first to pay-per-view television following initial video release, then to pay television, and thereafter to free television such as network, syndication and basic cable for an exhibition period, and then, in many cases, back to pay television again. In addition, many films are licensed for subsequent “cycles” of pay and free television exhibitions.

Pay-per-view allows subscribers to pay for individual programs. Pay television allows cable and satellite subscribers to view such services as HBO, Showtime, Starz/Encore, Canal+, BSkyB, Premiere, JSB and other services for a monthly subscription fee.

Basic cable networks and local broadcast stations may purchase exhibition rights for a specified number of telecasts over a specific license period.
 
Non-Theatrical and Ancillary Rights Distribution
 
Motion pictures may be licensed for “non-theatrical” use by outlets such as airlines, ships, oilrigs, schools, public libraries and government groups such as the armed forces.
 

We anticipate incurring operating losses over the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving technology markets. Such risks include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks we must, among other things, implement and successfully execute our business and marketing strategy, continue to develop and upgrade technology and products, respond to competitive developments, and continue to attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.


We have a limited operating history and have never been profitable.

We still have limited operating history having begun business in the year 2000.  During that time, we have incurred losses in every quarter since inception except for the extraordinary gain realized in December 2004 and we remain subject to the risks and uncertainties usually encountered by early stage companies. Our focus on Motion Picture production adds additional risks to our business.

We will require additional funds to achieve our current business strategy of producing films and our inability to obtain additional financing could cause us to cease our business operations.

We will need to raise additional funds through public or private debt or sale of equity to achieve our current business strategy with respect to the production of feature-length films. Such financing may not be available when needed. Even if such financing is available, it may be on terms that are materially adverse to your interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. Our capital requirements to implement our business strategy will be significant. However, at this time, we can not determine the amount of additional funding necessary to implement such plan. We intend to assess such amount at the time we will implement our business plan. Furthermore, we intend to effect future acquisitions with cash and the issuance of debt and equity securities. The cost of anticipated acquisitions may require us to seek additional financing. We anticipate requiring additional funds in order to fully implement our business plan to significantly expand our operations. We may not be able to obtain financing if and when it is needed on terms we deem acceptable. Our inability to obtain financing would have a material negative effect on our ability to implement our acquisition strategy, and as a result, could require us to diminish or suspend our acquisition strategy.

If we are unable to obtain financing or to obtain financing on reasonable terms, we could be forced to delay, scale back or eliminate certain film projects. In addition, such inability to obtain financing on reasonable terms could have a material negative effect on our business, operating results, or financial condition to such extent that we are forced to restructure, file for bankruptcy, sell assets or cease operations, any of which could put an investment in our Company at significant risk.
 
 
We have historically had losses from operations and losses may continue in the future, which may cause us to curtail operations.

Since our inception we have not been profitable and have lost money on both a cash and non-cash basis.  For the year ended December 31, 2009, we incurred net losses of $183,076.  Our accumulated deficit at the end of December 31, 2009, was $12,114,518.  Future losses, before extraordinary gain, are likely to occur, as we are dependent on spending money to pay for our operations. No assurances can be given that we will be successful in reaching or maintaining profitable operations.  Accordingly, we may experience liquidity and cash flow problems.  If our losses continue, our ability to operate may be severely impacted or alternatively we may be forced to terminate our operations.

We could fail to attract or retain key personnel, which could be detrimental to our operations.

Our success largely depends on the efforts and abilities of our Officers and Directors. The loss of their services at this point in our development could materially harm our business because of the cost and time necessary to find successors. Additionally, we are dependant upon the services of the officers of our subsidiary and affiliate companies, Global Universal Film Group, Global Universal Entertainment and Global Universal Pictures.  We do not have other key employees who could manage Global Universal’s film operations. Such a loss would also divert management attention away from operational issues. To the extent that we are smaller than our competitors and have fewer resources, we may not be able to attract a sufficient number and quality of personnel, when required.
 
Because our common stock is deemed a low-priced “Penny” stock, an investment in our common stock should be considered high risk and subject to marketability restrictions.

Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment even if and when a substantial and liquid market develops for the common stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:

· 
Deliver to the customer, and obtain a written receipt for, a disclosure document;
· 
Disclose certain price information about the stock;
· 
Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;
· 
Send monthly statements to customers with market and price information about the penny stock; and
· 
In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.

Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future.
 

It is likely that additional shares of our stock will be issued in the normal course of our business development, which will result in a dilutive effect on our existing shareholders

We will issue additional stock as required to raise additional working capital in order to undertake Company acquisitions, recruit and retain an effective management team, compensate our officers and directors, engage industry consultants and for other business development activities and to pay expenses.  Such issuances will have a dilutive effect on existing shareholders.

If we acquire, invest in, or make alliances with other businesses we face risks inherent in such transactions

We cannot make assurances that alliances or ventures will be consummated in a timely manner.  Failure to meet such objectives could have a negative effect on revenues.

Shareholders controlled by current management own a controlling interest in the Company’s voting stock and investors may not have any voice in the management of the Company.

In connection with the acquisition of our stock by Rochester Capital Partners (RCP), RCP holds well over 51% of our outstanding shares of common stock, plus an additional, estimated 9.2% that may be acquired by conversion of our Series B Convertible Preferred Stock (“Series B”). Gary Rasmussen, our CEO, is the General Partner of RCP and exercises sole voting control over its shares. In addition, Mr. Rasmussen directly holds 3.5 million shares of our Series C Convertible Preferred Stock (“Series C”), which is non-dilutive and convertible at any time into 35% of our common stock, computed immediately after such conversion.  The Series C has voting rights equal to the estimated amount of shares that would be realized if converted. Additionally, Jacqueline Giroux, President of our wholly-owned subsidiary Global Universal Film Group, directly holds 2.5 million shares of Series B, convertible into a like number of common shares, which would result in her ownership of approximately 18.9% of our common stock. The Series B has no voting rights.  Also, Ms. Giroux holds 3 million shares of our Series C, convertible at any time into 30% of our then outstanding common stock.

Thus, these two stockholders, acting together, will have the absolute ability to control substantially all matters submitted to our stockholders for approval, including:
 
·  
election of our board of directors;
 
·  
removal of any of our directors;
 
·  
amendment of our certificate of incorporation or bylaws; and
 
·  
adoption of measures that could delay or prevent a change in control or impede a merger, takeover or any other business combination involving the Company and its subsidiaries.
 
Risk Factors Associated with the Film Production Industry

Competition from providers of similar products and services could materially adversely affect our revenues and financial condition.

The industry in which we compete is a rapidly evolving, highly competitive and fragmented market, which is based on consumer preferences and requires substantial human and capital resources. We expect competition to intensify in the future. There can be no assurance that we will be able to compete effectively.  We believe that the main competitive factors in the film industry include access to capital, efficient distribution channels and effective marketing and sales of the film, and its ancillary rights. Many of our competitors are well established, profitable and have strong management and access to capital. We may be perceived as relatively too small or untested to be awarded capital and other business resources relative to the competition. Failure to compete successfully against current or future competitors could have a material adverse effect on the Company’s business, operating results and financial condition. 
 

The speculative nature of the film production industry may result in our inability to produce film content or services that receive sufficient market acceptance for us to be successful.

Certain aspects of the film production industry are highly speculative and historically have involved a substantial degree of risk. For example, the success of a particular film depends largely upon unpredictable and changing factors, including the public’s acceptance or appreciation, the success of marketing efforts, the availability of competing films, general economic conditions and other tangible and intangible factors, many of which are beyond our control.

 
On January 10, 2011, the Company received a comment letter from the SEC (originally dated November 22, 2010) requiring our response to 15 comments pertaining to our 2009 annual report on Form 10-K, as well as our quarterly report on Form 10-Q for the period ending June 30, 2010.  Accordingly, this annual report and related financial statements for the fiscal year 2009, has been amended to incorporate changes in response to the SEC's comment letter.


The Company, through its wholly-owned subsidiary, Global Universal Film Group, maintains offices on the lot at Raleigh Studios, a film studio located in the Los Angeles area.  This office is approximately 500 square feet in size and leased on a monthly basis at a rate of $900 per month. The offices are located at 650 N. Bronson Avenue, Suite B-116, Los Angeles, California 90004.

In addition, the Company utilizes the private offices of its Controller, Terry Gabby, to support his services for the Company, and retains a mailing address of 2375 E. Tropicana Avenue, Suite 8-259, Las Vegas, Nevada 89119, at an annual cost of approximately $250.


In connection with our former business of LitFunding USA, we were named a defendant in several matters in litigation, many of which are in the normal course of business, including litigation for payment of consulting and professional fees. The corporate business unit conducting the operations of LitFunding USA was sold by the Company to Iscom, Inc. in March of 2008.  Accordingly, these claims are the responsibility of, and answered by Iscom, Inc.


None.
 
 
PART II
 

(a)            Market Information

Our common stock was quoted under the symbol “GBHL.OB” on the OTC Bulletin Board.

The OTC Bulletin Board is a network of security dealers who buy and sell stock.  The dealers are connected by a computer network which provides information on current “bids” and “asks” as well as volume information.  The OTC Bulletin Board is not considered a “national exchange.”  Our common shares originally commenced trading on the OTC Bulletin Board on July 11, 2002.  The following table sets forth the quarterly high and low closing sale prices for our common stock during our last two fiscal years as reported by the National Quotations Bureau and the Pink Sheets.  These quotations reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.

   
2009
   
2008
 
   
High
   
Low
   
High
   
Low
 
1 st Quarter
   
0.02
     
0.02
     
0.75
     
0.08
 
2 nd Quarter
   
0.04
     
0.02
     
0.30
     
0.09
 
3 rd Quarter
   
0.03
     
0.01
     
0.09
     
0.02
 
4 th Quarter
   
0.08
     
0.01
     
0.04
     
0.02
 

(b)            Holders of Common Stock

As of March 31, 2010, we had approximately 227 stockholders of record of the 23,077,844 shares issued and outstanding.

(c)            Dividends

The Company has never declared or paid any cash dividends on its common stock. For the foreseeable future, the Company intends to retain any earnings to finance the development and expansion of its business, and the Company does not anticipate paying any cash dividends on its common stock. Any future determination to pay dividends will be at the discretion of the Company’s Board of Directors.

(d)            Securities Authorized for Issuance under Equity Compensation Plans
 

2002 Employee Stock Compensation Plan

Effective August 15, 2002, we adopted a 2002 Employee Stock Compensation Plan, as amended, with a maximum number of 150,000 shares that may be issued.  As of December 31, 2009, 53,750 options and 96,000 warrants had been issued under this plan.

2004 Stock Option Plan

Effective March 9, 2004, we adopted a 2004 Stock Option Plan.  The total number of shares of our common stock which may be purchased pursuant to the exercise of options shall not exceed, in the aggregate, 30% of the issued and outstanding shares of the Company’s common stock.  As of December 31, 2009, 149,000 options are outstanding under this plan.

   
Stock
   
Exercise
           
Amount
Owner name
Type
Option Plan
Grant Date
Vested
Through
 
Grant Price
   
Amount
 
Exercised
Cohen, David
Option
YES
21-Dec-04
Immediate
21-Dec-14
 
$
3.00
     
35,000
 
none
Guerrero, Jonathan
Option
YES
21-Dec-04
Immediate
21-Dec-14
 
$
3.00
     
1,000
 
none
Reed, Morton
Option
YES
21-Dec-04
Immediate
21-Dec-14
 
$
3.00
     
25,000
 
none
Weiner, Stanley
Option
YES
21-Dec-04
Immediate
21-Dec-14
 
$
3.00
     
35,000
 
none
Reed, Morton
Option
YES
20-Jan-05
Immediate
20-Jan-15
 
$
5.30
     
50,000
 
none
Amira, Bob
Option
YES
11-Mar-05
Immediate
11-Mar-15
 
$
8.950
     
1,000
 
none
Ryan, Dermot
Option
YES
11-Mar-05
Immediate
11-Mar-15
 
$
8.950
     
1,000
 
none
Stein, Vera
Option
YES
20-Jan-05
Immediate
20-Jan-15
 
$
4.80
     
1,000
 
none
                       
149,000
   
Weighted average of exercise price $3.86
                         
 
 
2006 Non-Qualified Stock Compensation Plans

Effective February 22, 2006, we adopted the “2006 Non-Qualified Stock Compensation Plan .” The maximum number of shares that may be issued pursuant to the plan is 600,000 shares.  As of December 31, 2009, a total of 600,000 shares had been issued under this plan.

Effective September 29, 2006, we adopted the “2006-B Non-Qualified Stock Compensation Plan.” The maximum number of shares that may be issued pursuant to the plan is 600,000 shares.  As of December 31, 2009, a total of 600,000 shares had been issued under this plan.

Officers (including officers who are members of the board of directors), directors (other than members of the stock option committee to be established to administer the stock option plans) and other employees and consultants and its subsidiaries (if established) will be eligible to receive options under the stock option plans.  The committee will administer the stock option plans and will determine those persons to whom options will be granted, the number of options to be granted, the provisions applicable to each grant and the time periods during which the options may be exercised.  No options may be granted more than ten years after the date of the adoption of the stock option plans.

Non-qualified stock options will be granted by the committee with an option price equal to the fair market value of the shares of common stock to which the non-qualified stock option relates on the date of grant.  The committee may, in its discretion, determine to price the non-qualified option at a different price.  In no event may the option price with respect to an incentive stock option granted under the stock option plans be less than the fair market value of such common stock to which the incentive stock option relates on the date the incentive stock option is granted.

Each option granted under the stock option plans will be exercisable for a term of not more than ten years after the date of grant.  Certain other restrictions will apply in connection with the plans when some awards may be exercised.  In the event of a change of control (as defined in the stock option plans), the date on which all options outstanding under the stock option plans may first be exercised will be accelerated.  Generally, all options terminate 90 days after a change of control.

The table below sets forth information as of December 31, 2009 regarding outstanding options granted under the plans, warrants issued to consultants and options reserved for future grant under the plan.

   
Number
of shares to be issued upon exercise of outstanding options, warrants and rights
(a)
   
Weighted-average exercise price of outstanding options, warrants and rights
(b)
   
Number of shares remaining available for future issuance under equity compensation plans (excluding shares reflected in column (a))
(c)
 
Equity compensation plans approved by stockholders
    -     $ -       -  
                         
Equity compensation plans not approved  by stockholders
    472,750     $ 2.84       250 (1)
                         
Total
    472,750     $ 2.84       250 (1)
 

Note: These plans are intended to encourage directors, officers, employees and consultants to acquire ownership of common stock.  The opportunity so provided is intended to foster in participants a strong incentive to put forth maximum effort for our continued success and growth, to aid in retaining individuals who put forth such effort, and to assist in attracting the best available individuals to the Company in the future.

As of December 31, 2009, there were 250 shares that remained available for issuance under the 2002 employee stock compensation plan.  As of December 31, 2009, no shares remained available under the 2006 Non-Qualified Stock Compensation Plan, the Attorney’s and Accountant Stock Plan Non-Qualified Stock Compensation Plan 2006 and the 2006-B Non-Qualified Stock Compensation Plan.
 

For the years ended December 31, 2009 and December 31, 2008, the Company incurred net losses, of $ 183,076 and $ 207,627, respectively.  The Company accumulated deficit at the end of December 31, 2009, was $ 12,114,518.
 
See Index to Financial Statements and Schedules appearing under Item 8 of this Form 10-K.
 

This report contains forward-looking statements.  Actual results and events could differ materially from those projected, anticipated, or implicit, in the forward-looking statements as a result of the risk factors set forth below and elsewhere in this report.

With the exception of historical matters, the matters discussed herein are forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements concerning anticipated trends in revenues and net income, the date of introduction or completion of our products, projections concerning operations and available cash flow. Our actual results could differ materially from the results discussed in such forward-looking statements. The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto appearing elsewhere herein.
 

OVERVIEW AND OUTLOOK

During 2009, we were in the business developing and producing motion pictures.

Results of Operations

The following overview provides a summary of key information concerning our financial results for the years ended December 31, 2009 and 2008.

Revenues:

 
Year Ended
December 31st
   
Increase (Decrease)
 
 
2009
 
2008
   
Amount
 
Percent
 
Net Revenue
$
 
$
25,000
   
$
(25,000
)
(100
)% 

Revenue : Total revenue was $ 0 and $ 25,000 for the fiscal years ended December 31, 2009, and 2008, respectively.  Our decrease in revenue of $25,000 is a direct result of not having received any revenue from the sale of film rights for films that we have recently completed. We cannot guarantee with any certainty when we will generate revenue sufficient to fund ongoing operations. Our future revenues will be reliant upon our ability to produce and market film and entertainment products.

Operating expenses:
   
Year Ended
December 31st
   
Increase (Decrease)
 
   
2009
   
2008
   
Amount
   
Percentage
 
General and administrative expenses
   
154,228
     
154,684
   
$
(456
)
   
(.003
)%
                                 
Financing expense
   
17,000
     
60,721
     
(43,721
)
   
(72.0
)%
Depreciation and amortization
   
8,279
     
6,463
     
(1,816
)
   
(28.0
)%
                             
-
 
                                 
Total operating expenses
   
179,507
   
$
211,573
   
$
(32,066
)
   
(15.1
)%
 
Total operating expenses for the year ended December 31, 2009 decreased by $32,066 from the year ended December 31, 2008, because of the cost cutting procedures that management has implemented.
 
Other income (expense):
   
Year Ended
December 31st
   
Increase (Decrease)
 
   
2009
   
2008
   
Amount
   
Percentage
 
Other income
 
$
16,439
   
$
3,699
   
$
12,740
 
   
344
 %
Interest (expense)
   
(20,008
)
   
(14,459
)
   
5,549
 
   
38.3
 %
     
-
                     
-
 
                             
-
 
                                 
     Total other income (expense)
   
(3,569
)
   
(10,760
)
   
(7,191
)
   
(66.8
)%
 
 
Our interest expense was $5,549 higher in 2009, than in 2008, because we issued short-term notes to provide working capital.
 Net (loss):
 
   
Year Ended
December 31st
   
Increase (Decrease)
 
   
2009
   
2008
               
Net (loss)
 
$
(183,076
   
(181,377
 
$
1,699
   
.01
%
 
Our net loss was approximately 0.01% higher in the year ended December 31, 2009, as compared to the year ended December 31, 2008, because our G & A expenses remained flat and we had no revenue generation.  A substantial portion of our accrued payroll expense was reduced as a result of our CEO agreeing to waive any accrual of his yearly salary.

Operation Plan

Global Entertainment Holdings, operating through its wholly owned subsidiaries of Global Universal Entertainment and Global Universal Film Group, and its 30% owned, Canadian affiliate, Global Universal Pictures (collectively, these entities are sometimes hereinafter referred to as “Global Universal”), is a development stage company engaged in the development of low-budget genre pictures.  The Company’s management believes investment risk in such films can be significantly reduced by utilizing Canadian, U.S. and other major countries Governmental and territorial tax incentives to cover up to 40%, or more, of each film’s budget. Additional coverage of about 25%, or more, of a film’s budget can be derived from distributor financing, or pre-selling either foreign or U.S. rights to a film.  The balance of each film’s budgeted cost will be obtained from private investment of debt, equity or “gap” financing, or a combination of such items.  Management intends to retain revenues generated from a significant ongoing, equity percentage of each film to provide cash flow for operating expenses and to maximize long-term growth for the Company and its shareholders.

Liquidity and Capital Resources

We had cash on hand of $10,913, as of December 31, 2009.  In the opinion of management, our available funds will not satisfy our working capital requirements for the next twelve months.  We will need to raise funds to continue to implement our business plan. We plan to raise these funds through private and institutional debt or equity offerings, including interest bearing convertible debentures.  There can be no assurance that the Company will be able to obtain such financing.

Auditor’s ‘Going Concern’ Opinion
 
The Independent Auditor’s Report issued in connection with the audited financial statements of the Company for the calendar years ending December 31, 2009 and 2008, expresses “substantial doubt about [our] ability to continue as a going concern,” due to the Company’s lack of profitable operations, our working capital deficit, and our retained earnings deficit. The Company has not had a profitable operating history, and we have no current sources of revenue. We cannot guarantee that we will become profitable.
 

Current Working Capital

We are subject to a working capital deficit, which means that our current assets on December 31, 2009, were not sufficient to satisfy our current liabilities and, therefore, our ability to continue operations is at risk.  We had a working capital deficit for the year ended December 31, 2009, which means that our current liabilities exceeded current assets on December 31, 2009, by $621,874.  Current assets are assets that are expected to be converted to cash within one year and, therefore, may be used to pay current liabilities as they become due.  Our working capital deficit means that our current assets on December 31, 2009, were not sufficient to satisfy all of our current liabilities on December 31, 2009.  If our ongoing operations do not begin to provide sufficient profitability to offset the working capital deficit, we may have to raise capital or debt to fund the deficit or curtail future operations.

Summary of Product and Research & Development That We Will Perform for the Term of Our Plan

We do not anticipate performing any significant product research and development under our plan of operation until such time as we complete a merger or acquisition that may require it.

Expected Purchase or Sale of Plant and Significant Equipment

We do not anticipate the purchase or sale of any plant or significant equipment, as such items are not required by us at this time, nor are they anticipated to be needed within the next twelve months.

Significant Changes in the Number of Employees

We currently employ 4 full time employees.  In the event that we are successful in generating revenues and expanding our present operations in the film production business, we will need to hire additional employees or independent contractors in the future.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.
 
 
Critical Accounting Policies and Estimates
 
Our Management's Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value 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 most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources, primarily allowance for doubtful accounts receivables, accruals for other costs, and the classification of net operating loss and tax credit carry forwards between current and long-term assets. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the financial statements included in this report.
 
Not Applicable to smaller reporting companies.
 
 
 
TABLE OF CONTENTS





MALCOLM L. POLLARD, Inc.
4845 W. LAKE ROAD, # 119
ERIE, PA 16505
 
(814)838-8258                                FAX (814838-8452
 
 
Report of Independent Registered Public Accounting Firm
 
 
Board of Directors
Global Entertainment Holdings, Inc.
 
 
Las Vegas, Nevada
 
We have audited the accompanying balance sheets Of Global Entertainment Holdings, Inc. as of December 31, 2010,  and December 31, 2009 and the related statements of operations, changes in stockholders’ deficiency, and cash flows for the years then ended.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conduct 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 financial statements are free of material misstatement.  An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.
 
 
The Company has not generated significant revenues or profits to date. This factor, among others, raises substantial doubt about its ability to continue as a going concern.  The Company’s continuation as a going concern depends upon its ability to generate sufficient cash flow to conduct its operations and its ability to obtain additional sources of capital and financing.  The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company at December 31, 2010 and December 31, 2009  and  the results of its operations, changes in stockholders’ deficiency,  and its cash flows for year then ended, in conformity with U.S. generally accepted accounting standards.
 
Malcolm Pollard
 
Malcolm L. Pollard, Inc.
Erie, Pennsylvania
April 14, 2011
 
 
Global Entertainment Holdings Inc.
Consolidated Balance Sheet
   
December 31,
   
2009
Assets
   
     
Current assets:
   
  Cash and cash equivalents
 
$
10,913
 
Accounts Receivable
   
10,000
 
 Note receivable
   
87,450
 
Accrued Interest Income
   
14,918
 
         
  Total current assets
   
123,281
 
         
Fixed assets, net
   
12,425
 
Total fixed assets
   
12,425
 
         
         
         
         
Other assets
       
  Book Rights
   
1,864
 
  TV Game/Reality Show
   
5,966
 
  Film Rights
   
189,175
 
   Movies
   
33,850
 
  Website Software: Less Amortization
   
2,000
 
  Other Assets
   
17,695
 
  Producer Investment
   
150,000
 
         
 Total other assets
   
400,550
 
 Total assets
 
$
536,256
 
         
Liabilities and Stockholders' Equity
       
         
Current Liabilities
       
Accounts payable
 
$
97,180
 
Accrued expenses
   
206,707
 
 Deferred Revenue
   
150,000 
 
Notes payable
   
251,268
 
Debentures     40,000  
         
Total current liabilities
   
745,155
 
         
Stockholders' Equity:
       
         
         
Series B Convertible preferred Stock, par value $0.001, 4.000,000 shares authorized,
     3,990,314 shares issued and outstanding
   
 3,990
 
         
Series C Convertible preferred stock , par value $0.001, 6,500,000 shares authorized,
     6,500,000 shares issued and outstanding
   
6,500
 
         
  Common stock, $0.001 par value, 230,000,000 shares authorized,
       
  22,567,844, and 11,812,844 shares issued and
       
  outstanding at December 31, 2009 and 2008, respectively
   
105,582
 
  Shares authorized & unissued
       
  Subscription Payable
   
  10,000
 
         
  Additional paid-in capital
   
11,180,765
 
  Additional paid-in capital Preferred B
   
 271,425
 
         
         
  Accumulated (deficit)
   
(12,114,518
     
(208,899
         
   
$
536,256
 
 
 
 
Global Entertainment Holdings, Inc.
Consolidated Statement of Operations
 
   
2009
   
2008
 
             
Net Revenue
 
$
     
$
25,000
 
                 
Expenses:
               
General and administrative expenses
   
154,228
     
154,684
 
                 
Financing expense
   
17,000
     
60,721
 
Depreciation & Amortization
   
8,279
     
6,463
 
                 
Total operating expenses
   
179,507
     
211,573
 
                 
Net operating (loss)
   
(179,507
)
   
(196,867
)
                 
Other income (expenses):
               
Other income
   
16,439
     
3,699
 
Interest expense
   
(20,008
)
   
(14,459
)
Rental Income
               
                 
Total other income (expenses)
   
(3,569
)
   
(10,760
)
                 
Loss before reorganization items
    (183,076    
(207,627
                 
  Gain on debt restructure
           
26,250
 
                 
                 
Income (Loss) before Income taxes
   
(183,076
)
   
(181,377
)
                 
                 
Net Income (loss)
 
$
(183,076
)
 
$
(181,377
)
Basic Earnings (loss) per share:
   
(0.01
)
   
(0.02
)
 Before Gain on Debt restructure item
     
 
   
(0.02
)
     Gain on Debt restructure
   
 
     
0.002
 
Total
   
(0.01
)
   
(0.02
)
                 
                 
Weighted average number of common shares outstanding:
               
  Basic
   
19,916,351
     
10,954,988
 
 

 
 Statements of Changes in Stockholders' Equity
 
 
Common Stock
   
Preferred Stock
   
Preferred Stock
                           
 
Shares
 
 
Amount
   
Shares
 
Amount
   
Shares
 
Amount
 
Shares
 
Amount
 
Amount
 
Paid in
Capital
 
Paid in
Capital
   
Subscription
Payable
 
Shares Authorized
Unissued
 
Accumulated
(Deficit)
 
Total Stockholders
Equity
Balance, December 31,2007
9,258,511
   
92,584
                   
3,990,314
   
3,990
 
500,000
   
500
 
3,990
   
10,745,821
   
271,425
     
-171,000
 
(11,858,700) 
   
(11,858,700)
   
(898,381)
 
 Shares issued for Warrants
100,000 
   
100 
                                                                           
100 
 
Shares issued in settlement of debt
1,534,333
   
1,534
                                             
328,965
                           
330500
 
Shares issued for services
400,000
   
400
                                             
31,600
                           
32,000
 
Shares issued for financing
120,000
   
120
                                             
9,480
                           
9,600
 
Value of warrants issued
                                                     
42,800
                           
42,800
 
Shares issued for cash
400,000
   
400
                                             
34,600
                           
35,000
 
Shares Issued C Preferred
             
6,500,000
   
6,500 
                                                                 
Net Loss for the year December 31, 2008
                                                                             
(181,377
)
 
(181,377
)
Balance, December 31, 2008
11,812,844
   
94,282
                   
3,990,314
   
3990
 
500,000
   
500
       
11,339,215
   
271,425
     
0
       
(12,040,077
)
 
(109,618
)
Shares authorized & unissued adjustment
                                                     
(200,000)
                               
Shares issued in settlement of contract
10,000,000
   
10,000
                                                                           
10,000
 
Value of warrants issued
                                                     
6,000
                           
6,000
 
Shares issued for services
30,000
   
30
                                             
1,470
                           
1,470
 
Shares issued for financing
                                                                                       
Shares authorized & unissued
100,000
                                                   
10,000
                           
10,000
 
Shares issued for cash
725,000
   
725
                                             
31,280
                           
32,005
 
Net Loss  for the year ended December 31,2009
                                                                             
(175,386)
   
(183,076)
 
Balance, December 31, 2009
22,667,844
   
105,037
     
  6,500,000
   
  6,500
     
3,990,314
   
3,990
 
500,000
   
500
       
11,180,765
   
271,425
               
(12,114,518)
   
(183,076)
 
 
 
 
Global Entertainment Holdings Inc.
Consolidated Statements of Cash Flow
 
   
For the years ending December 31,
 
   
2009
   
2008
 
Cash flows from operating activities
           
   Net income (loss)
 
$
(183,076
 
$
(181,377
Adjustments to reconcile net income to net cash
               
provided by (used in operating activities)
               
Extraordinary gain on settlement with IEP creditors
               
Gain on forgiveness of capital lease obligation
               
Gain on Discount of pre-petition debt
               
   Depreciation and amortization
   
8,279
     
6,463
 
   Reserve for unsuccessful resolution of lawsuits
           
226,663
 
   Reserve for Doubtful Receivables
           
159,838
 
Loss on disposal of asset
               
   Share-based compensation
   
1,500
     
765,616
 
   Common stock issued in settlements
           
360,966
 
Share-based interest payments
               
   Shares cancelled
           
4,176
 
   Gain on participation obligation
           
940
 
                 
Debt discount amortization
               
Changes in assets and liabilities:
               
   Trade and other accounts receivable
   
(10,000
   
222,279
 
   Other assets
   
(5,500
   
(139,030
Contingent advances
               
   Accounts payable and accrued expenses
   
55,243
     
9,581
 
                 
Trade and other claims subject to compromise
               
   Note receivable
   
72,550
     
(160,000
Deferred revenue
           
(150,000
    Net cash (used in) operating activities
           
(272,559
                 
Cash flows from investing activities:
               
Purchases of property and equipment
               
Net cash (used in) investing activities
               
                 
Cash flows from financing activities:
               
   Cash from issuance of common stock
   
55,000
     
35,300
 
Cash from exercise of options & warrants
           
100
 
Cash from issuance of preferred stock
               
                 
Proceeds from notes payable
   
7,664
     
76,600
 
Subscription Payable
               
Proceeds from investor participation borrowings
               
   Proceeds from investor obligations
           
22,210
 
Principal repayments on capital lease obligations
               
   Value of Warrants issued
   
7,000
     
160,554
 
   Net cash provided by financing activities
           
272,554
 
                 
Increase (decrease) in cash
   
8,660
     
(5
Cash - beginning of period
   
2,253
     
2,258
 
Cash - ending of period
 
$
10,913
   
$
2,253
 
                 
Supplemental disclosures:
               
   Interest paid
               
   Income taxes paid
 
$
-
   
$
-
 
                 
   Shares issued for services
 
$
1,500
     
32,000
 
   Number of shares issued for services
   
30,000
     
400,000
 
   Shares issued for debt
 
$
       
360,966
 
   Number of shares issued for debt
           
1,534,333
 
                 
All share after 10 to 1 reverse split
               


Global Entertainment Holdings Inc.
Notes To Consolidated Financial Statements
 
Note 1 Summary of Accounting Policies
 
Cash and cash equivalents
 
Cash includes all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less. At times cash deposits may exceed government insured limits.  At December 31, 2009, there were no cash deposits that exceeded those insured limits.

Principles of consolidation
 
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, California LitFunding, LitFunding USA Easy Money Express, Inc., Global Universal Film Group, Inc. and its wholly owned LLC's and a dormant company, E. Evolution Expeditions whose name was changed to Silver Dollar Productions on January 21, 2005. All significant inter-company accounts and transactions are eliminated.

Fixed Assets
 
Fixed assets are stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over a period of the shorter of the related applicable lease term or the estimated useful lives of the assets ranging from 3 to 5 years. Depreciation expense for the years ended December 31, 2009 and 2008, was $8,279 and $6,463 respectively.
 
The Book, TV and Film Rights costs are recorded as assets as required by the AICPA Statement of Position 00-2. The costs will be amortized using the individual film forecast computation method.
 
Global Universal Film Group, Inc., purchased the majority of the Books, TV and Movie Rights in January, 2006, for approximately $160,000. The total as of December 31, 2009 and December 31, 2008 respectively is $232,855 and $223,855.  The expenditures that are related to specific Film, TV or Book projects are capitalized as a long-term asset.  The capitalized costs will be amortized using the individual film forecast computation method as film revenues are obtained.
 
The expenditures that have been incurred during the year 2007 for the slate of seven films was approximately $26,850 in fees to obtain the Louisiana tax credits. These expenditures have been capitalized as required by AICPA SOP 00-2.
 
The Company adheres to the AICPA Statement of Position 98-1 Accounting for the Cost Of computer software Developed or Obtained for Internal Use. During the year 2007 the Company had expenditures of $6,000 for Global Universal film Group Inc. our subsidiary for the development of its website. Software purchased will be amortized over a period of three years straight-line basis. The amortization will begin in the year 2008. T he amortized amount for the year 2008 was $2,000.  The amortized amount for the year 2009 was $2,000.

Revenue recognition
 
Film revenue from licensing agreements is recognized when the license period begins and the licensee and the Company become contractually obligated under a non-cancellable agreement. All revenue recognition for license agreements is in compliance with the AICPA's Statement of Position 00-2, Accounting by Producers or Distributors of Films.  To date, Global Universal has not realized any revenue from the sale of films. However, it has received revenue from the licensing of story/screenplay rights.
 
We recognize revenue when all of the following conditions are met:
 
·  
Persuasive evidence of an arrangement exists;
·  
The products or services have been delivered; for feature film content products (DVDs, Blue-ray Discs, etc.) released or sold by our Global Universal Film Group subsidiary, we believe this condition is met when the film product is complete and, in accordance with the terms of our contractual arrangement, has been delivered or is available for immediate and unconditional sales and/or delivery;
·  
The license or sales period has begun;
·  
Collection of the arrangement fee or selling commission is fixed or determinable and reasonably assured.
 
Deferred Revenue
 
On September 22, 2008, the Company entered into an Exclusive License Agreement with its Canadian affiliate, Global Universal Pictures, Inc. (“GUP”), whereby the Company granted a worldwide, exclusive license to GUP to use the work entitled "Blue Seduction" (the "Film"). The license includes: (1) the right to promote the Film throughout the world in all languages and in all distribution markets, including TV, home video, DVD and non-theatrical and theatrical markets, and (2) merchandise rights relating to all goods and services appearing in the Film. The Company owns a thirty percent (30%) equity interest in GUP.

As a condition to the license, GUP agreed to credit the Company as the source of the original concept for the Film and Mr. Gary Rasmussen, the Company's President, as Executive Producer.

Subject to financing of the Film, GUP agreed to pay the Company an all inclusive one-time fee of (i) U.S. $150,000, evidenced by a Promissory Note due March 31, 2009 (the "Fee"), and (ii) revenue representing 50% of GUP's "Net Receipts" from the sale of the Film rights in the worldwide marketplace.

The $150,000 fee has been recorded as deferred revenue and will be amortized as a percentage of the net receipts from the sale of the film rights.

Income taxes
 
The Company provides for income taxes based on the provisions of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, which, among other things, requires that recognition of deferred income taxes be measured by the provisions of enacted tax laws in effect at the date of financial statements. The company is a cash basis taxpayer.

Tax Credits
 
The grant for $20 million in pre-authorized tax credits from the Louisiana Department of Economic Development can be applied towards 30% (formerly 25%) of the total production costs, plus 5% (formerly 10%) of any Louisiana labor expense and an additional 5% for costs incurred in selected territories (e.g., the City of New Orleans), of the budgets of the seven films that Global Universal intended to produce with the financing from PGH.  PGH failed to provide the financing. At the end of production of each film, an audit must be conducted to ascertain the exact amount spent on the film within the State of Louisiana. The State will then issue an appropriate final tax credit for amounts spent on production of films.

Financial Instruments
 
Financial instruments consist primarily of cash, accounts receivable, contingent advances, and obligations under accounts payable, accrued expenses, debentures, notes payable and investor participation obligations. The carrying amounts of cash, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short maturity of those instruments. The carrying value of the Company's contingent advances approximate fair value because the Company provides allowances for any estimated uncollectible amounts. The carrying value of debentures and notes payable approximate fair value because they contain market value interest rates and have specified repayment terms. The participation obligations at December 31, 2007 are carried at the expected repayment amounts as determined by the individual notes.  The Company has applied certain assumptions in estimating these fair values. The use of different assumptions or methodologies may have a material effect on the estimates of fair values.
 
 
Use of Estimates
 
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in connection with the preparation of the accompanying financial statements include the carrying value of accounts receivable and contingent advances.

Stock-based Compensation
 
In December 2004, the FASB issued SFAS No. 123 (revised 2004) Share-Based Payment which is a revision of SFAS No. 123 Accounting for Stock-Based Compensation. SFAS No. 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees and amends SFAS No. 95, Statement of Cash Flows. Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative.  The Company adopted SFAS No. 123(R) as of December 31, 2005.   Stock issued for services totaled $1,500 and $32,000 for the years ended December 31, 2009 and 2008, respectively.

In 2005, the Company accounted for its employee stock-based compensation arrangements in accordance with provision of Accounting Principles Board (“APB”) Opinion No. 25, “ Accounting for stock Issued to Employees”, and related interpretations. As such, compensation expense under fixed plans is recorded only if the market value of the underlying stock at the date of grant exceeds the exercise price. The Company recognized compensation expense for stock options, common stock and other equity instruments issued to non-employees for services received based upon the fair value of the equity instruments issued as the services are provided and the securities earned.
 
The Company accounted for stock-based compensation associated with the re-pricing of employee stock options in accordance with the provision of FASB Interpretation No. 44, “ Accounting for Certain Transactions Involving Stock Compensation” (“FIN 44”). For accounting purposes, the re-pricing of existing stock options requires variable accounting for the new options granted from the date of modification. Variable accounting requires that the intrinsic value, being the excess of the current market price at the end of each reporting period in excess of the exercise price of the re-priced options, be expensed as non-cash stock-based compensation expense until such time as the re-priced options are exercised, expire or are otherwise forfeited. Any increase in the intrinsic value of the re-priced options will decrease reported earnings, and any subsequent decreases in value will increase reported earnings.

 SFAS No. 123, “ Accounting for Stock-Based Compensation ”, requires the continued application of APB Opinion No. 25 for transactions with employees to provide pro forma net earnings (loss) and pro forma earnings (loss) per share disclosures for employee stock option grants as if the fair value based method defined in SFAS 123 has been applied to these transactions.

The following table represents the effect on net (loss) and (loss) per share if the Company had applied the fair value based method and recognition provisions of SFAS No. 123:

   
2009
   
2008
 
Net (loss), as reported
 
$
(183,076
)
 
$
181,377
)
Add:   Employee stock-based compensation Expense, as reported
               
Deduct:  Total stock-based employee compensation expense determined under fair value method
               
Pro forma net (loss)
 
$
(183,076
)
 
$
(181,377
)
Net (loss) per common share
               
Basic (loss) per share, as reported
 
$
(0.01
)
 
$
(0.02
)
Basic per share, pro forma
 
$
(0.01
)
 
$
(0.02
)
 
 
As required, the pro forma disclosures above include options granted during each fiscal year. Consequently, the effects of applying SFAS No. 123 for providing pro forma disclosures may not be representative of the effects on reported net income for future years until all options outstanding are included in the pro forma disclosures.

Impairment of long-lived assets

The Company assesses impairment of long-lived assets whenever there is an indication that the carrying amount of the asset may not be recoverable. Recoverability of these assets is determined by comparing the forecasted undiscounted cash flows generated by those assets to the assets' net carrying value. The amount of impairment loss, if any, is measured as the difference between the net book value of the assets and the estimated fair value of the related assets.

Net Loss per Share
 
Net loss per share is calculated using the weighted average number of shares of common stock outstanding during the year. The Company has adopted the provisions of SFAS No. 128, Earnings per Share.

Recently Issued Accounting Pronouncements
 
In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections” (“SFAS No. 154”) which supersedes APB Opinion No. 20, “Accounting Changes” and SFAS No. 3 “Reporting Accounting Changes in Interim Financial Statements”. SFAS No. 154 changes the requirements for accounting for and reporting of changes in accounting principle. The statement requires the retroactive application to prior periods’ financial statements of changes in accounting principles, unless it is impracticable to determine either the period specific effects or the cumulative effect of the change. SFAS No. 154 does not change the guidance for reporting the correction of an error in previously issued financial statements or the change in an accounting estimate. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company does not believe SFAS No. 154 will have a significant impact on its financial position or results of operations.
 
 
 
The Company’s primary liabilities are summarized in the following paragraphs:
 
Current Liabilities are recorded in the Balance Sheet as follows:
 
Accounts Payable totaling $97,180. These are obligations that are uncured during the normal course of the operating cycle.
 
Accrued Expenses totaling $206,707 are obligations that have been uncured during the operating cycle but may not be immediately payable. The categories of this line item are:  general accrued expenses $11,339, accrued interest $38,972 and accrued payroll $156,394.
 
Deferred Revenue On September 22, 2008, the Company entered into an Exclusive License Agreement with its Canadian affiliate, Global Universal Pictures, Inc. (“GUP”), whereby the Company granted a worldwide, exclusive license to GUP to use the work entitled "Blue Seduction" (the "Film"). The license includes: (1) the right to promote the Film throughout the world in all languages and in all distribution markets, including TV, home video, DVD and non-theatrical and theatrical markets, and (2) merchandise rights relating to all goods and services appearing in the Film. The Company owns a thirty percent (30%) equity interest in GUP.
 
As a condition to the license, GUP agreed to credit the Company as the source of the original concept for the Film. Subject to financing of the Film, GUP agreed to pay the Company an all inclusive one-time fee of (i) U.S. $150,000, evidenced by a Promissory Note due March 31, 2009 (the "Fee"), and (ii) revenue representing 50% of GUP's "Net Receipts" from the sale of the Film rights in the worldwide marketplace.
 
The $150,000 fee has been recorded as Deferred Revenue in the Current Liabilities and will be amortized as a percentage of the net receipts from the sale of the film rights.
 
Notes Payable are the current portion of the obligations due in the future year. The total Notes Payable are recorded in the balance sheet line item as $251,269. Each note payable is listed in Note 9 –Debt.
 
Debenture notes totaling $40,000 are recorded in Current Liabilities as they are in default as of June 1, 2008 and are currently due. Two debentures were issued in 2002 for $10,000 each and two debentures were issued 2003 for $10,000 each. The Company has not made the semi annual interest payments in the years 2009, 2008 and 2007. The accrued interest is $13,500 as of December 31, 2009.
 
Note 2 – Note Receivable
On October 16, 2006, the Company issued a demand promissory note in the amount of $174,000 bearing interest at 6% per annum to Global Universal Film Group Inc. The principal and interest are due 180 days after the Spin-off transaction described in the Merger Agreement, if the Spin-off does not occur on or before June 30, 2007 no payment shall be due. The Spin-off transaction has not been consummated causing the promissory note to be cancelled.

On September 22, 2008, the Company entered into an Exclusive License Agreement with its Canadian affiliate, Global Universal Pictures, Inc. (“GUP”), whereby the Company granted a worldwide, exclusive license to GUP to use the work entitled "Blue Seduction" (the "Film"). The license includes: (1) the right to promote the Film throughout the world in all languages and in all distribution markets, including TV, home video, DVD and non-theatrical and theatrical markets, and (2) merchandise rights relating to all goods and services appearing in the Film. The Company owns a thirty percent (30%) equity interest in GUP.
 
 
As a condition to the license, GUP agreed to credit the Company as the source of the original concept for the Film and Mr. Gary Rasmussen, the Company's President, as Executive Producer.

Subject to financing of the Film, GUP agreed to pay the Company an all inclusive one-time fee of (i) U.S. $150,000, evidenced by a Promissory Note due March 31, 2009 (the "Fee"), and (ii) revenue representing 50% of GUP's "Net Receipts" from the sale of the Film rights in the worldwide marketplace.

Note 3 – Income taxes

The Company recognizes deferred income taxes for the difference between financial accounting and tax bases of assets and liabilities. Income taxes for the years ended December 31, 2009 and 2008 consisted of the following:

   
As of December 31,
 
   
2009
   
2008
 
             
Current tax benefit (provision)
 
$
0
   
$
0
 
Deferred (benefit) provision
   
0
     
0
 
                 
Total income tax provision
 
$
0
   
$
0
 

Net deferred income tax assets of $3,467,088 are fully offset by a valuation allowance of $3,467,088. The valuation allowance was increased by $370,088 in the year ended December 31, 2005. The increase in the valuation allowance in the year ended December 31, 2005, primarily is the result of the increased of net operating loss for the year ended December 31, 2005.

Net operating loss carry forwards of approximately $10,197,319 expire from 2020 through 2025. Due to the change in control of the Company as discussed in Note 1, future utilization of net operating losses may be restricted.

The differences between the statutory and effective tax rates are as follows for the year ended December 31, 2009:

   
December 31,
   
2008
 
2008
Federal statutory rates
 
$
(183,076)
(34%)
 
$
(181,377)
34%
State income taxes
   
0
     
0
 
Valuation allowance for operating loss carry forwards
   
(183,076)
34%
   
(181,377)
34%
Permanent difference for discharge of debt
   
0
0%
   
0
0%
Other
   
0
0%
   
0
0%
Effective rate
 
$
0
0%
 
$
-0-
0%

Note 4- Debentures

During the years ended December 31, 2002, the Company issued 5-year 9% convertible debentures amounting to $200,000, due January 1, 2007. Included is one debenture due to a related party for $10,000. Interest is due semi-annually on the first day of June and December of each year, commencing June 1, 2003 until fully paid. As part of the plan of reorganization, these debentures have an amended maturity to June 2008. In December 2007, the Company converted $150,000 principal amount of the debentures, plus approximately $21,000 in accrued interest, into 17,100 shares of Common Stock.  At December 31, 2009, the Company had accrued interest totaling $ 13,500.
 

The registered holders of the debentures have the right, after one year prior to maturity, to convert the principal at the original conversion price of $10 for one Common share or at the adjusted conversion price. If and whenever on or after the date of this debenture, the Company issues or sells any share of common stock for a consideration per share less than the initial conversion rate, then upon such issue or sale, the initial conversion rate shall be reduced to the lowest net price per share at which such share of common stock have been issued. The debentures are subordinated to all the senior indebtedness, including debts under equity participation agreements.

Note 5 - Debt
 
In 2005, certain of the note holders elected to convert unsecured notes totaling $700,000 to 109,100 common shares. At December 31, 2005 the Company has issued 60,000 shares and recorded subscription of $250,606 and they were issued at September 30, 2006.

During the three months ended March 31, 2006, certain debtors in (note 2) above elected to convert $64,684 to promissory notes with a maturity date of June 15, 2006. These notes have been verbally extended.
Notes payable at December 31, 2009 is comprised of the following:

Note payable to entity, original balance of $19,181.   Principal and interest due June 15, 2006. The Note is unsecured. In default.
 
$
9,591
       
Note payable to entity, original balance $32,187. This note is unsecured.  Due May 15,2006. In default.
 
$
6,094
       
Note payable to entity, original balance of $15,000 due in three monthly installments of $5,000 beginning April 15, 2006. The Note is unsecured. In default.
 
$
10,000
       
Note payable to entity, original balance of $30,502 due in two monthly installments of $15,251 beginning April 15, 2006. The Note is unsecured. In default.
 
$
15,251
       
Advances to be converted into notes.  Net of EME advances of $10,330
 
$
2,080
       
Notes payable face amounts totaling $42,500, with various interest rates and due dates. The notes have been verbally extended. 
 
$
42,500
       
Note payable face amount $40,000, dated May 1, 2008, interest rate 12% due date April 30, 2009. Currently in default. An extension is being pursued.
 
$
40,000
       
Note payable face amount $20,000, dated May 1,2008, interest rate 12% due date April 30, 2009. Currently in default.  An extension is being pursued.
 
$
  20,000
       
Note payable face amount $8,000, dated July 7, 2008, interest rate 12% due date March 31,2009. Currently in default. An extension is being pursued.
 
$
8,000
       
Note payable face amount $4,500, dated July 8, 2008, interest rate 12% due date March 31, 2009. Currently in default. An extension is being pursued.
 
$
4,500
       
Note payable face amount $4,500 date August 19, 2008, interest rate 12% due date March 31, 2009. Currently in default. An extension is being pursued.
 
$
4,500
       
Global Notes with no specified due dates and varying interest rates. 
 
$
60,253
       
Note payable face amount $25,000 date January 13, 2009, interest rate 10% due date March 31, 2009 with a 30-day grace period. Currently in default. An extension is being pursued.
 
$
25,000
       
Note payable face amount $2,000 date February 17, 2009, interest rate 6% due date April 15, 2010.
 
$
2,000
       
Note payable face amount $1,500 date March  6, 2009, interest rate 6% due date April 15, 2010.
 
$
1,500
       
Total
 
$
251,269


NOTE 6 - Going Concern

The Company has suffered significant losses the past two years. Unless significant additional cash flows come into the Company, or a major reduction in operating losses occur, the Company could be in jeopardy of continuing operations. The Company seeks to generate needed funds to continue on going operations from joint ventures, the sale of Company stock through a Private Placement and/or advances from the primary shareholder.
 
Note 7 – Stockholders’ Equity

Common Stock

As discussed in Note 1, the Company entered into a merger agreement in January 2003, whereby 759,225 shares of its common stock were issued in exchange for all the issued and outstanding shares of the common stock of California LitFunding. The acquisition was a reverse acquisition of the Company by California LitFunding, under the purchase method of accounting, and was treated as a recapitalization with California LitFunding as the acquirer. Accordingly, the historical financial statements have been restated after giving effect to the January 23, 2003, acquisition of the Company.

In the year ended December 31, 2004, the Company declared and issued an 11 for 10 stock dividend. As a result, a total of 1,042,501 shares were issued. The trading value of the shares on the declaration date of November 1, 2004, was $0.70. The aggregate value of the new shares issued of $729,751 was reclassified from the accumulated deficit to additional paid-in capital.

During the year ended December 31, 2005, the Company issued 99,195 shares of its $.001 par value common stock for cash totaling $406,700.  Additionally, the Company issued 130,000 shares of its common stock to certain unrelated qualified investors in exchange for $533,000 of stock subscriptions. These subscriptions were due on or before December 31, 2005. The Company does not have reasonable expectation that these notes will be paid. At of December 31, 2005, $35,000 had been paid, and the Company wrote off $498,000 to bad debt.
 
Recent Sales of Unregistered Securities
 
Common Stock Issued in 2008

During the quarter ended March 31, 2008, we issued a total of 171,000 shares to 2 individuals for conversion of $150,000 in debentures they held, with accrued interest of $21,000, or an aggregate of $171,000. The shares were issued at a value of $1.00 per share.  We believe that the issuance of these shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended, by virtue of Section 4(2).

On March 5, 2008, the Company authorized the issuance of 283,333 shares of its $0.001, par value, restricted common stock for the conversion of a note in the amount of $42,500 held by Davric Corporation relating to LFC 104. The conversion share price was $0.15. These shares were issued April 22, 2008. On March 5, 2008, the Company authorized 180,000 shares of its $0.001 par value restricted common stock for the conversion of a note in the amount of $27,000 held by Davric Corporation relating to LFC 105. The conversion share price was $0.15. These shares were issued April 22, 2008.

On March 27, 2008, the Company authorized 400,000 shares of its $0.001 par value restricted common stock to Virginia Perfili, a Board Member, for services performed as a Board Member and for past services performed for Global Universal Film Group during 2007.  The shares were valued at $0.08 per share totaling $32,000. These shares were issued April 22, 2008.

On March 31, 2008, the Company authorized 500,000 shares of its $0.001 par value restricted common stock for the conversion of a note in the amount of $50,000 held by Green Realty Corp. relating to LFC 101. The conversion share price was $0.10. These shares were issued April 25, 2008.

On April 30, 2008, 100,000 shares of restricted common stock was issued to Worldwide financial Solutions Inc., in connection with the exercise of warrants issued at $0.001 par value.

On May 9, 2008 100,000 shares of unrestricted common stock, par value $0.001, were issued to Imperial Capital Holdings pursuant to the terms of the Equity Investment Agreement that requires the cash purchase of the Company’s common stock. The share price was $0.09.  These shares were issued pursuant to our registration statement on form SB-2, effective on June 5 2007.
 
On May 19, 2008, we issued 40,000 shares of restricted common stock, par value $0.001, to Jerry E. Polis as an enticement for a $20,000 loan, the share price was $0.08.

On May 19, 2008, we issued 80,000 shares of restricted common stock, par value $0.001, to Davric Corp. as an enticement for a $40,000 loan, the share price was $0.08.

On May 21, 2008 100,000 shares of unrestricted common stock, par value $0.001, were issued to Imperial Capital Holdings pursuant to the terms of the Equity Investment Agreement that requires the cash purchase of the Company’s common stock. The share price was $0.10. These shares were issued pursuant to our registration statement on form SB-2, effective on June 5 2007.

On May 27, 2008 100,000 shares of unrestricted common stock, par value $0.001, were issued to Imperial Capital Holdings pursuant to the terms of the Equity Investment Agreement that requires the cash purchase of the Company’s common stock. The share price was $0.08. These shares were issued pursuant to our registration statement on form SB-2, effective on June 5 2007.

On May 30, 2008, we issued 200,000 shares of restricted common stock, par value $0.001, as directed by Stanley Weiner, in consideration for the cancellation of an outstanding loan, at a per share price of $0.10. Stanley Weiner is the Company’s Vice President of Finance and a member of the Board of Directors.

On May 30, 2008, we issued 104,760 shares of restricted common stock, par value $0.001, as directed by Stanley Weiner, to the Marital Trust created under the will of Blanche Weiner, in consideration for the cancellation of an outstanding loan, at a per share price of $0.10. Stanley Weiner is the Company’s Vice President of Finance and a member of the Board of Directors.

On May 30, 2008, we issued 95,240 shares of restricted common stock, par value $0.001, as directed by Stanley Weiner, to the Disclaimed Residential Trust created under the Will of Blanche Weiner, in consideration for the cancellation of an outstanding loan, at a per share price of $0.10.  Stanley Weiner is the Company’s Vice President of Finance and a member of the Board of Directors.

On June 5, 2008 100,000 shares of restricted common stock, par value $0.001, were issued to Imperial Capital Holdings pursuant to the terms of the Equity Investment Agreement that requires the cash purchase of the Company’s common stock. The share price was $0.08. These shares were issued pursuant to our registration statement on form SB-2, effective on June 5 2007.

Additionally, in November, 2008, the Company’s Board of Directors authorized the issuance of an additional 500,000 shares of Series C Preferred stock to Mr. Rasmussen in partial consideration for his agreement to: (i) reduce his salary to $10,000 per month, (ii) to defer the receipt of his salary and other compensation until such time as the Company has sufficient funds, and (iii) for his agreement to forego receipt of all accrued salary due him from inception of his employment through September 30, 2008. These shares were not issued until March, 2009.
 
 
Common Stock Issued in 2009
 
The following common stock was issued during the twelve months ending December 31, 2009.
 
On March 16, 2009 the Company issued 10,000,000 restricted shares of its $0.001 par value common stock to Rochester Capital Partners, LP at $0.02 per share as a continuation in connection with a modification of the original stock purchase agreement by which Rochester Capital Partners, LP agreed to purchase stock in the company in March of 2007. The total shares issued by the company under the stock purchase agreement are 14,000,000 at an average share price of $0.018 per share.

On April 8, 2009 the Company issued 100,000 restricted shares of its $0.001 par value common stock to an individual investor at a price of $0.10, per share, as documented by a Subscription agreement dated April 7, 2009.

On April 13, 2009 the Company authorized 100,000 restricted shares of its $0.001 par value common stock to an individual investor at a price of $0.10, per share, as documented by a Subscription agreement dated April 13, 2009. These shares are pending and have not been issued at this time.

On July 24, 2009 the Company issued 20,000 restricted shares of its $0.001 par value common stock at $0.05 to three individuals as compensation for services performed.

On July 24, 2009 the Company issued 10,000 restricted shares of its $0.001 par value common stock at $0.05 to a management company as consideration for services to be performed under a contractual agreement.

On November 20, 2009 the Company issued 625,000 restricted shares of its $0.001 par value common stock to an individual investor at a price of $0.04, per share, as documented by a Subscription agreement dated October 6, 2009.

Series “A” Preferred Stock

On July 20 2005, the Board of Directors authorized the company to amend its Article of Incorporation to allow the issuance of up to 10,000,000 shares of preferred stock, par value $0.001 per share.  Further, the Board authorized the initial issuance of up to 2,000,000 shares of Series A 12% Convertible Preferred Stock (Series A Preferred).  The Series A Preferred provides for a conversion rate 2 shares of common for each share of Series A Preferred, and such conversion rights shall commence six months from the date of purchase.  During 2005, the Company issued 800,000 shares of Series A Preferred at $0.25 per share to two individual investors for cash totaling $200,000. During 2007, all 800,000 shares were converted into common stock. As of December 31, 2009, the Company has not issued any outstanding shares of its Series A Preferred Stock.

Series “B” Convertible Preferred Stock

Pursuant to the reverse tri-party merger with Global Universal Film Group, Inc., we issued a total of 1,500,000 shares of Series B Convertible Preferred Stock to the stockholder’s of Global Universal. Mr. Rasmussen owned 50% of the shares of Global Universal and also received 750,000 Series B Shares in the merger. Ms. Jacqueline Giroux, President of Global Universal, received 750,000 shares.  In December 2007, we issued an additional 2,490,134 shares of Series B Preferred stock in exchange for the cancellation of $273,915 in debt of Global Universal.  Mr. Rasmussen received 343,227 shares directly in his name, and Rochester Capital Partners received 641,225 shares. Ms. Giroux received 1,505,682 shares directly in her name. The total 3,990,314 shares of our Series B Preferred stock outstanding are convertible into 3,990,134 shares of common stock at anytime.
 
The rights and preferences of the Series B shares are as follows:

Dividend Provisions The holders of the Series B Convertible Preferred Stock will not be entitled to any dividends on the Preferred Stock.
 
 
Liquidation Preference   In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, subject to the rights of series of preferred stock that may from time to time come into existence, the holders of Series B Convertible Preferred Stock shall be entitled to receive, prior to and in preference to any distribution of any of the assets of the Company to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the sum of (i) $0.001 for each outstanding share of Series B Preferred Stock (“Original Series B Issue Price”) and (ii) an amount equal to the Original Series B Issue Price for each twelve (12) months that has passed since the date of issuance of any Series B Preferred Stock.

Spin-off Rights   At the election of a majority in interest of the Series B Preferred Stock, Global Universal Film Group shall be spun off to the holders of the Series B Preferred Stock, with 90% of such shares in Global Universal Film Group being issued, pro rata to the holders of the Series B Preferred Stock, and 10% being issued and distributed to the shareholders of the Company Common Stock on a pro-rata basis. This provision was eliminated entirely with the filing of an amendment to the designation of rights and preferences of our Series B Preferred with the State of Nevada on December 6, 2007.

Conversion   Each share of Series B Convertible Preferred Stock is convertible, at the election of the holder, into one (1) share of the Company’s common stock on such date as the majority shareholders of all Series B have elected to effect the Spin-Off transaction; however, the Series B Convertible Preferred Stock shall automatically convert into shares of Common Stock of the Company after twelve (12) months from the date of LitFunding’s acquisition of Global Universal Film Group, regardless of whether or not an election has been made to spin-off Global Universal Film Group. This provision was amended with the filing of an amendment to the designation of rights and preferences of our Series B Preferred with the State of Nevada on December 6, 2007. The conversion into common stock may be made at anytime, without conditions, by the holders of the Series B Preferred stock.

Voting Rights   The shares of the Series B Preferred Stock do not have any voting rights.

Series “C” Convertible Preferred Stock

In January, 2008, in keeping with the restructuring efforts of the new management team, the Board authorized the issuance of 6,000,000 shares of a non-dilutive, convertible preferred stock entitled, Series C Convertible Preferred Stock (“Series C Stock”). The Series C Stock is non-dilutive and, the initial 6,000,000 shares authorized, will convert into 60% of the Company’s outstanding common stock as calculated immediately after such conversion. On April 4, 2008, the Company filed a Certificate of Designation relating to its Series C Convertible Preferred Stock with the Nevada Secretary of State. On November 8, 2008, the Board approved an amendment to the Certificate of Designation of the Series C, which provided for 6,500,000 shares authorized, converting into 65% of the outstanding common stock at the time of conversion, to correct an error in the original filing.  A full description of the terms and conditions of the Series C Preferred Stock is provided in Exhibit 3.3, filed with our quarterly report on Form 10-QSB on August 14, 2008.

Note 8 – Commitments and Contingencies

Contingencies & Litigation
 
The Company's former subsidiary, LitFunding USA, Inc., is a defendant in several matters in litigation, which were related to its former business and which were incurred in the normal course of business, including litigation for refunds of funds invested and collection matters. The Company believes these suits are without merit, and the responsibility for which has been assumed by the Purchaser of the former business unit of LitFunding USA.

In connection with the business unit of LitFunding USA, which was sold by the Company on March 28, 2008, the Company obtained various judgments in Courts situated in the State of Nevada for the return of deposits made to attorneys practicing in various other states.  In turn, a judgment was entered against the Company in Clark County, Nevada District Court for attorneys’ fees, in the amount of $30,000, incurred in connection with the obtaining of these judgments.  The Company believes that these judgments are uncollectible and that all such judgments and other receivables, as well as related liabilities, were assumed by the Purchaser in March, 2008.
 

Note 9- Net Income (Loss) Per Share

Net income per share is calculated using the weighted average number of shares of common stock outstanding during the year. Options/Warrants to purchase 445,459 and 25,000 common shares were not considered in the calculation for diluted earnings per share for the years ended December 31, 2009 and December 31, 2008 respectively. In accordance with SFAS No. 128, the control number used in determining the dilutive effect of warrants and options is based on operating income. Therefore, because the Company experienced a net operating loss as of December 31, 2009, the effect of their inclusion based would be anti-dilutive and hence, were not included.

   
2009
   
2008
 
   
Income (Loss)
   
Shares
   
Per Share
   
Income (Loss)
   
Shares
   
Per Share
 
Net  income (loss) before extraordinary item
 
$
(183,076
)
             
$
(207,627
)
           
Extraordinary item
                       
26,250
             
Total
 
$
(183,076
               
(181,377
)
           
                                         
Preferred dividends
   
0
                 
0
             
Income (loss) available to common shares holders
 
$
(183,076
)
             
$
(181,377
)
           
                                         
Basic earnings (loss) Per Share:
                                       
Before extraordinary item
 
$
(183,076
)
   
19,916,351
   
$
(0.008
)
 
$
(207,627
)
   
10,954,988
   
$
(0.2
)
Extraordinary item
           
19,916,351
   
$
0.00
     
26,250 
     
10,954,988
   
$
0.00
 
                                                 
Total
 
$
(183,076
)
   
19,916,351
   
$
(0.008
)
 
$
(181,377
)
   
10,954,988
   
$
(0.02
)

Note 10– Related Party

Gary Rasmussen, our CEO and Chairman, also serves as the Chairman and Secretary of our subsidiary, Global Universal Film Group.  As a result, Mr. Rasmussen received shares of our Series B Preferred stock, both directly and indirectly through Rochester Capital Partners (RCP), in connection with our acquisition of Global Universal Film Group, and in consideration of the cancellation of notes payable from Global Universal Film Group. Additionally, Mr. Rasmussen is the General Partner of Rochester Capital Partners, our controlling and largest shareholder.
 

 Options and Warrants Exercised
 
During the year ended December 31, 2009, no options were exercised, and no warrants were exercised. The warrants and options were issued to both non-employees for services and to Directors of the Company and creditors. The warrants and options issued to Directors of the Company were part of the compensation package promised to Directors in August 2004 and are priced accordingly. The summary of activity for the Company's stock options and warrants is presented below and takes into effect the reverse split of our common stock on a 1-for-10 basis in December 2007:

   
Year ended
December, 2009
   
Weighted Average
Exercise Price
   
Year ended
December, 2008
   
Weighted Average
Exercise Price
 
                         
Options/Warrants  outstanding at beginning of Period
   
481,675
   
$
4.20
     
481,675
   
$
4.20
 
Granted
   
50,000
   
$
0.02
     
445,459
   
$
0.36
 
Exercised
         
 .001
     
  100,000
   
$
  .001
 
Amended
   
300,000
   
$
0.38
     
  300,000
     
  0.32
 
Terminated/Expired
   
1,000
   
$
4.00
     
(444,250
)
   
  2.63
 
Options /warrants outstanding at end of period
   
530,675
   
$
1.65
     
481,675
   
$
1.65
 
Options/warrants exercisable at end of period
   
530,675
   
$
1.65
     
481,675
   
$
1.65
 
                                 
Price per share of options outstanding
 
$
0.10-$70.00
           
$
0.10-70.00
         
                                 
Weighted average remaining contractual lives
 
1.54 years
           
1.69 years
         
                                 
Weighted average fair value of options granted during the period
 
$
0.02
           
$
0.8
         
 
Note 11 - Subsequent Events

None.
 
 

On August 18, 2009, the Company was notified by the Securities and Exchange Commission that the Public Company Accounting Oversight Board (“PCAOB”) had revoked the registration of Lawrence Scharfman & Co., CPA, P.C. (“Scharfman”), its former independent accountants.

As Scharfman was no longer registered with the PCAOB, the Company could not include its audit reports or consents in future filings with the SEC. The Company dismissed Scharfman as its independent accountant on August 18, 2009, the date it received notice from the SEC and PCAOB.  Scharfman’s reports on the Company’s financial statements for the fiscal year ending December 31, 2007 and 2008 were qualified noting the Company’s ability to continue as a going concern. The reports contained no other adverse opinion, disclaimer of opinion or qualification or modification as to uncertainty, audit scope or accounting principles.  There were no disagreements with the former accountants on any matter of accounting principles or practices, financial statement disclosure or activity scope or proceeding during the Company’s two most recent fiscal years and any subsequent interim period though the date of dismissal.

The Company engaged the accounting firm of Larry O’Donnell, CPA. P.C. to review its Form 10-Q for the quarter ended June 30, 2009 and to reaudit the Company’s financial statements for the 2008 fiscal year and to audit its financial statements for the 2009 fiscal year.  The audit report and consent of Larry O’Donnell, CPA. P.C. is included in this filing.


We conducted an evaluation, with the participation of Gary Rasmussen, our current Chief Executive Officer, and Stanley Weiner, our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of December 31, 2008, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, Messrs. Rasmussen and Weiner have concluded that as of December 31, 2009, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Report on Internal Control over Financial Reporting
 
Management is responsible for establishing and maintaining adequate internal control over financial reporting of the Company.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, 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 and procedures may deteriorate.

Management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on this evaluation, because of the Company’s limited resources and limited number of employees, management concluded that, as of December 31, 2009, our internal control over financial reporting is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the U.S. generally accepted accounting principles.

 
Management has abandoned its former business model in March of 2008, and does not therefore believe that its current business, after taking into consideration its current controls and procedures could result in a reoccurrence of the material weaknesses which occurred with respect to the 2007 financial statements.
 
This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
 
Limitations on Effectiveness of Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.  The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goal under all potential future conditions.  Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in internal controls

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15d-15 under the Exchange Act that occurred during the year ended December 31, 2009, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 
None.
 

PART III


The members of the board of directors serve for one year terms and are elected at the next annual meeting of stockholders, or until their successors have been elected.  The officers serve at the pleasure of the board of directors.

Resignations and Appointments of Officers and Directors

Information as to our current directors and executive officers of the Company is as follows:

Name
 
Age
 
Title
Gary Rasmussen
 
57
 
CEO & Director
Stanley Weiner
 
67
 
CFO & Director
Virginia Perfili
 
52
 
Corp. Secretary & Director
Terry Gabby
 
65
 
Controller & Treasurer

Duties, Responsibilities and Experience of Directors & Officers of Global Entertainment Holdings.

Gary Rasmussen.   Mr. Rasmussen has served as our Chief Executive Officer and Chairman of the Board of Directors since September of 2007.  In such capacity, he oversees our ongoing business development, acquisitions and financing. Mr. Rasmussen has an extensive background spanning over 30 years as an entrepreneur with vast experience in all phases of business development, having been a founder, chief executive officer or director of numerous private and publicly-held corporations engaged in the areas of cable television, investment banking, mortgage banking and motion pictures.  He has extensive experience in structuring debt and negotiating equity capital for both public and private enterprises, implementing short and long term business planning, acquisitions and divestitures, and has played a leading role in spearheading several publicly held corporations from their inception. From November of 2004 through September of 2007, Mr. Rasmussen was self-employed as a business consultant, working primarily with small publicly traded companies.  Prior to November, 2004, Mr. Rasmussen was a founder, consultant and non-executive Chairman of a public company engaged in developing a VoIP (Voice over Internet Protocol) technology to provide residential phone services to consumers with an Internet connection.  Mr. Rasmussen holds a Bachelor degree in Business Administration from Western Michigan University.
 

Stanley B. Weiner Mr. Weiner has served as a Director of the Company since October 2003 and Vice President of Finance of the Company since December 2000.  On September 19, 2009, he was named CFO of the Company.  Mr. Weiner has more than 35 years experience creating and running businesses.  Mr. Weiner was the founding officer of Gemini Financial Corporation, a NASD Broker/Dealer from 1970 through 1975, President of APA, Real Estate Syndication Company from 1975 through 1978, Managing Partner of Agri-World Partnership from 1978 through 1983, an agricultural project syndication company with offices throughout Europe and the Middle East.  Mr. Weiner was a Founding Officer/President of Regent Properties from 1985 through 1990, and Chief Executive Officer of Wise Industries from 1990 through 1993, a company specializing in pollution control devices.  In 1978, Mr. Weiner founded Western Pacific Investment Corporation, centers and agricultural properties in addition to packaging many tax-sheltered investments.  As a result of the foregoing activities, Mr. Weiner has extensive experience in marketing, acquiring, financing and developing commercial and agricultural property, negotiating agreements and packaging transactions.  Mr. Weiner received his Bachelor of Arts degrees in both Psychology and Economics from California State University at Long Beach in 1966.  He also did graduate work in both fields at UCLA.  Mr. Weiner has in the past held a National Association of Securities Dealers Principals license and is a licensed Real Estate Broker.  Mr. Weiner is not an officer or director of any other reporting company.

Terry Gabby Mr. Gabby has served as Chief Financial Officer and Treasurer of the Company from July 1, 2005 to September 18, 2009, and as Controller from November 1, 2009 to date.  Mr. Gabby has over 30 years’ experience in executive management, auditing and finance. As the senior auditor for a regional audit firm, Seidman & Seidman CPA's, he was the senior in charge of audits for several publicly held companies in the casino and manufacturing industries. From 1981 to 1991, Mr. Gabby was the corporate director of internal audit for Sahara Resorts, Inc., a publicly traded company with several gaming subsidiaries and time-share properties. As a consultant for various clients, Mr. Gabby has developed and implemented financial accounting systems, internal control systems and participated in establishing review procedures for compliance testing as required under the Sarbanes-Oxley Act. The past seven years, Mr. Gabby has held the executive positions of Chief Financial Officer and Controller for several large tribal gaming enterprises located in several state jurisdictions. These enterprises were business start-ups requiring loan acquisitions, funding distributions, construction cost control and the development of financial reporting systems. Mr. Gabby earned his Bachelor of Science degree in accounting from the University of Nevada, Las Vegas College of Business Administration in 1973. Mr. Gabby will receive a salary of $55,000 annually, and will receive a signing bonus of 10,000 options to purchase shares of the Registrant's common stock at $0.41 per share. Mr. Gabby is not an officer or director of any reporting company.

Virginia Perfili.  Ms. Perfili has been involved in the entertainment industry for the past 25 years, having served as the President of a public company, Orphan, Inc., and as a writer, director, producer and executive producer of several feature-length films, many music videos, and a TV show pilot.

In 1984, Ms. Perfili was a co-founder and served as President of Orphan, Inc., a publicly held, entertainment company that started as a small Detroit-based, independent record label. Under her leadership, Orphan acquired marketed five recording artists, all of which began charting on the Billboard charts, negotiated several distribution deals, obtained an artist contract with Atlantic, as well as contracts to produce videos for Atlantic and Sony.

In 1990, Orphan ventured into producing feature films.  Orphan joined forces with Gary Rasmussen (currently CEO of LitFundi), who was instrumental in restructuring the company as a publicly-traded entity, as well as raising capital for several films that were produced by Orphan.  Ms. Perfili was both producer and executive producer for the feature films, “Mirror Mirror” and “Mirror Mirror 2: Raven Dance”, and spearheaded their marketing and distribution.  Both of these independent feature films enjoyed theatrical, cable, Pay-Per-View, TV broadcast, VHS, DVD, and Laser Disc releases, domestically.  In 1995, she directed another sequel, Mirror, Mirror III: The Voyeur.  Ms Perfili has always had a keen eye for recognizing fresh, new talent as demonstrated by the fact that she cast a then unknown young actor, Mark Ruffalo, as the male lead in both Mirror, Mirror 2 and Mirror, Mirror III, his very first leading roles in a feature film.
 
 
From 2000 through present, Ms. Perfili has been actively involved as a producer and consultant in the entertainment industry, and was also a director and consultant for a publicly-held, Voice Over Internet company.  In 2006, Virginia Perfili organized Freelance Filmworks, LLC, and served as the Executive Producer of its current feature film, tentatively entitled “ROUNDS”, which is presently in post production.

Ms. Perfili graduated from Wayne State University in Detroit, Michigan, with a B.A. degree in Humanities with a pre-law curriculum.
 
Management Biographies for Global Universal Film Group, Inc.

Jacqueline Giroux.   Jacqueline Giroux serves as the President of our wholly-owned subsidiary, Global Universal Film Group, a film production and distribution company that she founded in 1997. Additionally, she is the founder and President of Global Universal Pictures, Inc., a federally chartered Canadian corporation, which is 30% owned by the Company.  In March of  2006, Global Universal Film Group entered into an agreement whereby it became a wholly-owned subsidiary of Global Entertainment Holdings (OTCBB: GBHL), in a merger transaction wherein the original stock holders of Global Universal received 1,500,000 shares of GBHL Series B, convertible preferred stock.  Prior to Global Universal’s merger with GBHL, Ms. Giroux was a co-founder, director and President of a publicly-traded company engaged in Internet Telephony (VoIP communications). Ms. Giroux is also the founder and President of Global Universal Pictures, Inc., a Canadian corporation, which is 30% owned by Global Entertainment Holdings.

Ms. Giroux has experience in managing publicly-held companies and considerable expertise in film financing and developing worldwide business relationships for co-producing and financing motion pictures. Jackie is also an accomplished writer, producer and director of feature films, and has been awarded “keys” to numerous U.S. Cities for her lecturing and fund raising for charity organizations in the United States. In addition, Ms. Giroux created an online casting website for Global Universal, which will be utilized to find and cast talent worldwide: www.youvegotthepart.com .

Ms. Giroux won a scholarship to the New York American Academy of Dramatic Arts, and has appeared in many off Broadway and Broadway plays.  Her career in films was launched with a lead role in “The Cross and the Switch Blade”, starring Pat Boone and Eric Estrada.  She has appeared in fifteen feature films and several TV series; her last film as an actress was in “To Live and Die in LA”, directed by Billy Friedkin for MGM in 1985.  Since then, she has written and produced ten feature films, two “Movies of the Week”, two reality series, and most recently she has written and produced: “Blue Seduction”, a TV movie starring Billy Zane and Estella Warren; “American Sunset”, scheduled to show at the 2010 Cannes Film Festival, starring Corey Haim (his last completed film) and Frank Molina; “Plaster Rock”, scheduled for theatrical release in Canada on May 6, 2010, starring Christine Johnson, Lalesha Railsback, Eric A. Leffler, Frank Molina; and “The Night”, a supernatural thriller, starring Lalesha Railsback and __ Hamrick.
 

Jacqueline Giroux has extensive experience in structuring financing and co-production deals, having successfully arranged for co-productions between Canada, France and Germany, as well as Canada, France and Australia.  In 2000, she wrote and directed “Coo Coo Café”, a satire on the media networks.  “Coo Coo Café” the first film produced in New Brunswick Canada, was invited to the Sundance Film Festival, as well as received an invitation by the American Film Institute to be considered as one of the Best Screenplays of the year 2000.  She is a past nominee of The New York Film and Video Festival, and The Cannes Film Festival’s “Out of Competition” series. She has been profiled in several books, and appeared on The Tonight Show, The Merv Griffin Show, and The Geraldo Rivera Show, “Now It Can Be Told”.

Eric A. Leffler.  Eric Leffler serves as the Manager of Business Development for this wholly-owned subsidiary. His responsibilities will entail development of film projects, assistance in production and obtaining financing.  Mr. Leffler has a wealth of divergent experiences that he brings with him to Global Universal along with his talents as both a producer and actor.

Prior to shifting his interest to the entertainment Industry, Eric was the CEO and founder of Directional Sign Services, an advertising company he formed when he was 17 years old.  Mr. Leffler grew Directional Sign Services to become one of the largest sign companies on the East Coast, at one point operating in Eight States.  He subsequently founded a construction company in 2008 operating in New Jersey and Colorado. Additionally, in 2009, he oversaw the development, construction and management of one of North America’s largest swine raising facilities for Cargill and is also currently seated as President of The Daniel D. Tompkins Foundation, a charitable, non-profit entity benefiting the arts and education.

A few of Eric’s notable producing credits include 250 Episodes for “Fairfax Magazine”, a Virginia based, Television Cable show.  Mr. Leffler has also produced numerous marketing videos and industrials.   Eric produced “The Glenn Miller Gala”, a live musical event in NYC, along with other gala charity events. He has also produced a number of “Off Broadway” productions, including “SOHO BOXES”, “CHAIRMAN OF THE BOARD” and “LINE”.  He has unaccredited production work on several feature films such as; “THE VICIOUS CIRCLE”, “RED PASSPORT”, and “UNSAVORY CHARACTERS”. He recently served as Executive Producer for “AMERICAN SUNSET”, starring Frank Molina and Corey Haim in his last leading role.

His film credits as an actor include over 25 feature films, a few notables are “AMERICAN SUNSET”, “DEATH WITHOUT CONSENT”, “ALL THE WRONG PLACES”, “THE VICIOUS CIRCLE”, “LBS” “STONE COLD KILLERS”, “UNSAVORY CHARACTERS”, “RUM AND COKE”, “CLOSE UP”, “THUMB”,  “PERFECT LIES” and “THE INVISIBLE”. Fluent in German, Eric has done voice-overs for German companies along with national product spots and endorsements.  Trained at Lee Strasberg and The Actor’s Studio along with Uta Hagen, he has subsequently performed on stage in many off Broadway productions, The Lincoln Center and at The Kennedy Center.

Eric is a 1985 graduate of George Mason University’s business school, and holds a Bachelor of Science degree in Marketing.

Terry Gabby – Controller & Treasurer (See biography above)
Virginia Perfili – Vice President of Production. (See biography above)
Gary Rasmussen – CEO & Secretary.   (See biography above)

 
Management Biographies for Global Universal Entertainment, Inc.

Daniel A. Sherkow.  Daniel Sherkow was recently hired in February of 2010, to serve as the Chief Operating Officer of Global Universal Entertainment, Inc. (“GUE”), a wholly-owned subsidiary of the Company.  GUE will handle the development and production of film projects intended to be produced in the U.S., and will be the primary liaison for the Company’s joint venture entity, Global Renaissance Funding, LLC.  GUE was formerly known as Easy Money Express, a subsidiary which former management of the Company intended to conduct short-term, small financial loan transactions using the Internet.

Mr. Sherkow straddles the worlds of media/entertainment and finance as a successful motion picture and television producer and former Series 7 licensed Registered Representative.  He has advised numerous leading media entities such as the Korean animation company, Seoul Movie, and the China Film Group Corp., the official governmental agency of the People’s Republic of China, in their negotiations with a major U.S. motion picture studio concerning an overall financing, production, and distribution arrangement for live action motion pictures.

Following stints at NBC Television and Time-Life Films, and then Vice President, Production at Paramount Pictures and Tri-Star Pictures, Mr. Sherkow produced the feature motion picture "SUSPECT," written by Eric Roth ("FORREST GUMP") and starring Cher, Dennis Quaid, and Liam Neeson.  Mr. Sherkow then raised funding for and produced "AMERICAN BUILT"/"RACE FOR GLORY"; and "IMPROMPTU", which opened to universal acclaim and won the prestigious Houston WorldFest Award as “Audience Favorite”.  "IMPROMPTU", starring Judy Davis, Hugh Grant, Emma Thompson, Mandy Patinkin, Bernadette Peters and Julian Sands, marked the film directorial debut of noted Broadway stage director, Pulitzer Prize and Tony Award winner, James Lapine ("SUNDAY IN THE PARK WITH GEORGE").  Following its theatrical release and extraordinarily successful video/DVD distribution, “IMPROMPTU” was telecast on the prestigious Public Broadcasting System (PBS) show “Masterpiece Theatre”.

Mr. Sherkow recently financed and produced the feature motion picture “BEING MICHAEL MADSEN”, shot on location in Los Angeles, Connecticut and New York City, and starring Michael Madsen, Daryl Hannah, Harry Dean Stanton, Virginia Madsen, and David Carradine.  “BEING MICHAEL MADSEN” was a featured official submission at the largest independent film festival in Europe, the Raindance Film Festival in London, and at the Starz Denver International Film Festival and San Francisco International Film Festival.   “BEING MICHAEL MADSEN” was also selected to screen in the prestigious “Outside the Box (Office)” series at the USC School of Cinema in Los Angeles.

In television, Mr. Sherkow has produced the Made-For-TV-Movies "DONOR", starring Melissa Gilbert and Jack Scalia, as Executive Producer for CBS Entertainment;  "ELVIS AND THE COLONEL: THE UNTOLD STORY", starring Beau Bridges for dick clark productions and NBC; and also served as Executive Producer for “ALL LIES END IN MURDER”, starring Kim Delaney and Jamey Sheridan (“LAW AND ORDER: CRIMINAL INTENT”), for ABC-TV.

Broadway stage projects have included "AGNES OF GOD", starring Elizabeth Ashley and Amanda Plummer, “MY ONE AND ONLY", starring Twiggy and Tommy Tune, as well as “THE SLAB BOYS” with Sean Penn, Kevin Bacon, Val Kilmer, and Jackie Earle Haley, Jr., which Mr. Sherkow produced on behalf on Paramount Pictures.
 

After graduating from the University of Wisconsin/Milwaukee with a Bachelor’s degree in Fine Arts (BFA), with Honors, Mr. Sherkow entered the Graduate School of Business Administration at Harvard University in Boston, Mass., where he earned an MBA.

Terry Gabby – Controller & Treasurer (See biography above)
Eric Leffler – Manager of Business Development (See biography above)
Gary Rasmussen – CEO & Secretary.   (See biography above)
 
Election of Directors and Officers

Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the Board of Directors following the next annual meeting of stockholders and until their successors have been elected and qualified.

No Executive Officer or Director of the Company within the last 5 years has been the subject of any Order, Judgment, or Decree of any Court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring suspending or otherwise limiting him from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.

No Executive Officer or Director of the Company within the last 5 years has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending.  No Executive Officer or Director of the Company is the subject of any pending legal proceedings.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our executive officers and directors, and persons who beneficially own more than ten percent of our common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers, directors and greater than ten percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based upon a review of the copies of such forms furnished to us and representations from our executive officers and directors, we have found that, as of the date of this filing, some of the required filings have not been timely filed. We are processing the appropriate documents to bring this reporting requirement current.
 
Audit Committee and Financial Expert

We do not have an Audit Committee.  Our directors perform some of the same functions of an Audit Committee such as: recommending a firm of independent certified public accountants to audit the annual financial statements; reviewing the independent auditors, the financial statements and their audit report; and reviewing management's administration of the system of internal accounting controls. The Company does not currently have a written audit committee charter or similar document.
 
 
Other than Mr. Weiner, our CFO, and Mr. Gabby, our Controller, we have no additional financial experts. We believe the cost related to retaining a financial expert at this time would be prohibitive and an unnecessary strain on our limited financial resources. Further, because of our start-up operations, we believe the services of a financial expert are not warranted.

Code of Ethics

A code of ethics relates to written standards that are reasonably designed to deter wrongdoing and to promote:

 
(1)
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
 
(2)
Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the Commission and in other public communications made by an issuer;
 
(3)
Compliance with applicable governmental laws, rules and regulations;
 
(4)
The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
 
(5)
Accountability for adherence to the code.

We have not adopted a corporate code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.

The decision to refrain from adopting a code of ethics resulted from having only three officers and three directors operating the Company.  Possible ethics code violations would be reported directly to the party generating the violation.

Nominating Committee

We do not have a Nominating Committee or Nominating Committee Charter. Our board of directors performs the functions associated with a Nominating Committee. We have elected not to have a Nominating Committee in that we are a development stage company with limited operations and resources.


The following table sets forth the compensation of the Company’s executive officers during the last three fiscal years of the Company.  The remuneration described in the table does not include the cost of the Company of benefits furnished to the named executive officers, including premiums for health insurance and other benefits provided to such individuals that are extended in connection with the conduct of the Company’s business.
 

Summary Compensation Table
For Fiscal Year- Ended 2009 and 2008
 
 
Name and Principal Position
   
Year
     
Salary
($)
   
Bonus
($)
 
Stock Awards
($)
 
Options Awards
($)
 
Non-Equity Incentive Plan Compensation ($)
Change in Pension Value & Nonqualified Deferred Compensation Earnings