UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549


Form
10-KSBA





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


SECURITIES
EXCHANGE ACT OF 1934


For the
fiscal year ended December 31,
2007





 ̈ TRANSITION REPORT UNDER
SECTION 13 OR 15(d) OF THE


SECURITIES
EXCHANGE ACT OF 1934


Commission
File number 000-49679





GLOBAL
ENTERTAINMENT HOLDINGS, INC. (f/k/a LitFunding Corp.)


(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.)





1516
      E. Tropicana Ave., Suite 245Las
      Vegas, Nevada
            
            89119(Address
      of principal executive offices)
            
            (Zip
      Code)





Issuer's
      Telephone Number(702)
      333-0440








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)





Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act.  





Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.  Yes
   No 





Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB.  





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


Yes
 No 





The
issuer’s revenues for its most recent fiscal year ended December 31, 2007-
$216,089.





The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the average bid and ask price as of
March 31, 2008, was approximately $325,750 based on a share value of
$0.09.





Check
whether the issuer has filed all documents and reports required to be filed by
Section 12, 13 or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.  Yes
   No 





The
number of shares of Common Stock, $0.001 par value, outstanding on March 31,
2008, was 9,429,511.





Transitional
Small Business Disclosure Format (check one):  Yes  No 




1




GLOBAL
ENTERTAINMENT HOLDINGS, INC.


For
the Fiscal Year Ended


December
31, 2007





Index
to Report


on
Form 10-KSBA





PART
      I
            
            PageItem
      1.
            Description
      of Business
            3Item
      2.
            Description
      of Property
            7Item
      3.
            Legal
      Proceedings
            7Item
      4.
            Submission
      of Matters to a Vote of Security Holders
            7PART
      IIItem
      5.
            Market
      for Common Equity and Related Stockholder Matters
            7Item
      6.
            Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
            8Item
      7.
            Financial
      Statements
            11Item
      8.
            Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure
            11Item
      8A.
            Controls
      and Procedures
            11Item
      8B.
            Other
      Information
            12PART
      IIIItem
      9.
            Directors
      and Executive Officers, Promoters, and Control Persons; Compliance with
      Section 16(a) of the Exchange Act.
            12Item
      10.
            Executive
      Compensation
            14Item
      11.
            Security
      Ownership of Certain Beneficial Owners and Management
            16Item
      12.
            Certain
      Relationships and Related Transactions
            17Item
      13.
            Exhibits
            17Item
      14
            Principal
      Accountant Fees and Services
            18




FORWARD-LOOKING
STATEMENTS








This
document contains “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995.  All statements other than
statements of historical fact are “forward-looking statements” for purposes of
federal and state securities laws, including, but not limited to, any
projections of earnings, revenue or other financial items; any statements of the
plans, strategies and objections of management for future operations; any
statements concerning proposed new services or developments; any statements
regarding future economic conditions or performance; any statements or belief;
and any statements of assumptions underlying any of the foregoing.





Forward-looking
statements may include the words “may,” “could,” “estimate,” “intend,”
“continue,” “believe,” “expect” or “anticipate” or other similar
words.  These forward-looking statements present our estimates and
assumptions only as of the date of this report.  Except for our
ongoing securities laws, we do not intend, and undertake no obligation, to
update any forward-looking statement.





Although
we believe that the expectations reflected in any of our forward-looking
statements are reasonable, actual results could differ materially from those
projected or assumed in any or our forward-looking statements.  Our
future financial condition and results of operations, as well as any
forward-looking statements, are subject to change and inherent risks and
uncertainties.  The factors impacting these risks and uncertainties
include, but are not limited to:





o
            increased
      competitive pressures from existing competitors and new
      entrants;




o
            increases
      in interest rates or our cost of borrowing or a default under any material
      debt agreements;




o
            deterioration
      in general or regional economic
conditions;




o
            adverse
      state or federal legislation or regulation that increases the costs of
      compliance, or adverse findings by a regulator with respect to existing
      operations;




o
            loss
      of customers or sales weakness;




o
            inability
      to achieve future sales levels or other operating
  results;




o
            the
      unavailability of funds for capital expenditures and/or general working
      capital; and




o
            operational
      inefficiencies in distribution or other
systems.







For a
detailed description of these and other factors that could cause actual results
to differ materially from those expressed in any forward-looking statement,
please see “Factors That May Affect Our Plan of Operation” in this
document.





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














2








PART
I





ITEM
1.                      DESCRIPTION
OF BUSINESS





(a)           General Business
Development





In
December of 2007, the Company effected a one-for-ten reverse split of the
outstanding common stock and changed the Company name to Global Entertainment
Holdings, Inc. (GBHL), to better reflect the new direction of the Company from
LitFunding Corp. The Company intends to conduct business through Global
Universal Film Group, Inc., a wholly-owned subsidiary. Another subsidiary, Easy
Money Express, is currently not active and has no operations.





LitFunding
Corp. was incorporated in the State of Nevada on July 11, 1996 as RP
Entertainment, Inc. and changed its name to LitFunding Corp. in February 2003,
as the result of a reverse merger with California LitFunding, a private company.
On March 22, 2004, LitFunding USA was formed to serve as the operating entity
and carry on the business previously conducted through California
LitFunding.





Prior to
December, 2007, the Company was in the business of investing in litigation
recoveries and pursuing other profitable financial business models. The Company
raised and advanced capital to various law firms pursuant to “Settlement
Agreements”.  These Settlement Agreements provide that the funds
advanced were to be repaid to the Company, plus a fee, when the lawsuits
referenced in the agreement ultimately settle. The amount of the fee payable on
the funds advanced depended upon the length of time the funds were outstanding
up to a fixed limit.  Pursuant to the terms of the Settlement
Agreements, the contractual right to payment was limited to the funds ultimately
paid to the law firm from the specified lawsuit, or lawsuits, in which the funds
were invested.  This business was conducted through the wholly-owned
subsidiary, LitFunding USA and its six, wholly-owned limited liability
companies. LitFunding USA resumed the business of California LitFunding (our
subsidiary which the Company acquired by reverse merger in February 2003 that
had operated the business since 2000) subsequent to June 17, 2004, after the
United States Bankruptcy Court entered an order confirming the Company and
California LitFunding’s joint plans of reorganization.





In the
first quarter of 2006, the Company acquired two wholly-owned subsidiaries, Easy
Money Express, a recently formed entity that planned to develop an
internet-based, loan company, and Global Universal Film Group, Inc. (“Global
Universal”), an early stage developer, producer and distributor of “niche”
films, related books, and music rights. Both of these entities are at a nascent
stage in their development and have not yet produced revenues.





The
former management of the Company had planned to develop Easy Money Express as
its core business, and to spin-off Global Universal as a separately traded,
public corporation, for which the Company would have earned a $200,000
management fee and retained 10% of the shares of Global Universal upon
completing the spin-off transaction. However, none of these plans came to
fruition.





In
March 2007, the Company entered into an agreement with Rochester Capital
Partners, LP. (RCP), a limited partnership controlled by Gary Rasmussen (our
current CEO) as its General Partner, whereby the Company issued four million
(4,000,000) shares
of treasury stock for consideration of $250,000. In addition, RCP
purchased one million, one hundred thousand (1,100,000) shares
directly from Morton Reed, our former Chief Executive Officer, at a price of
$65,000. This Transaction was unanimously approved by the Board of Directors at
a meeting held on February 22, 2007.  Further information on this
transaction is available in the Company report on Form 8-K, filed with the SEC
on March 7, 2008.




On
August 31, 2007, Morton Reed, CEO, President and Chairman of the Board resigned
for health reasons. He was replaced by Gary Rasmussen, who is taking an active
role in restructuring the Company and developing the core business conducted
through Global Universal.




For
the years ended December 31, 2007 and December 31, 2006, the Company incurred
net losses before extraordinary gain, of $302,423 and $1,027,947,
respectively.  The Company accumulated deficit at the end of December
31, 2007 was $11,487,537.





(b)           Our Primary
Business





Global
Entertainment Holdings, through its wholly owned subsidiary Global Universal,
plans to develop the business of producing low-budget genre pictures with
recognizable, name talent.  Global Universal management believes
investment risk can be significantly reduced by utilizing Canadian and other
major countries Government tax incentives to cover up to 50% of each film’s
budget. Additional coverage of 20% to 25% of a film’s budget can be derived from
pre-selling either foreign or U.S. rights to the film.  The remaining
balance (25% to 30%) will be obtained from private investment of debt, equity or
combination of both.  Management intends to retain revenues generated
from one or more territories of each film to provide cash flow for operating
expenses to assure long-term profitability for the Company and its
shareholders.







OVERVIEW




Global
Universal is in negotiations with an international film distribution company to
produce and distribute a proprietary slate of 6 to 8 feature-length films. Under
the proposed agreement with the distribution company, the Company will provide
100% of the budget required to produce each film. The distribution company will
charge a fee of 7.5% for foreign distribution, and 10% for U.S.
distribution.  The distribution company will try to utilize a
pre-arranged “output deal” with a major studio to affect a U.S. theatrical
release, if the film warrants such investment.





Because
of the financing incentives noted previously, profitability can be realized even
for a direct-to-video release, followed by pay, cable, satellite, free and
syndicated television exhibition.  The Company is confident that at
least two of the 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, although
the distribution company will use “best efforts” to obtain U.S. theatrical
release through an “out put” and “first look” arrangement with a major film
studio.





Should a
major studio distribute one or more of the Global Universal films in the U.S.,
the distribution company will allocate their 10% fee out of the major studio
distribution fee.




In
addition, Global Universal has been offered a development project from the
Canadian distribution company, and its Executive Producers, Image In Media, to
produce a film tentatively  entitled “Blue Seduction”, starring Billy
Zane and Estella Warren.  Image In Media has a production agreement,
or an “output deal”, with Starz Media, and Regent Releasing.  Image In
Media has offered Global Universal a possible opportunity to participate in the
production of additional films, contingent upon the outcome of our first film,
Blue Seduction.





Starz
Media, LLC., is owned by Liberty Media, which also owns Starz Entertainment,
LLC. Starz is a premium movie service provider that offers 16 movie channels,
including the Starz® and Encore® brands, with approximately 16.3 million and
30.7 million subscribers, respectively.





The first
several films planned for production, either through the distribution company or
Image In Media’s “output deal”, will be co-production films, meaning the film is
produced with government incentives from Canada and one or more additional
countries such as France or the U.K.  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, Global Universal 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.





The genre
of the initial film will likely be a thriller. However, Global Universal will
subsequently produce “specialty” pictures if “estimated sales” or pre-sales are
high enough to prove that the “specialty” piece can obtain its entire budget
back via the Foreign Distribution Market.





A
“specialty” picture currently in joint pre-production with Global Universal and
Image In Media, is titled “FRAIL.” A British international distribution company
has provided estimated foreign sales for FRAIL, sufficient to recover it’s
entire budget.  Using these estimated sales, combined with the
Canadian and U.K. Government Tax incentives, it is likely that FRAIL will be “in
profit” before all of the rights to the film are sold.




Global
Universal’s per film budget will typically range between $2 million (if no
advertising and delivery items are included) and $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, Global Universal estimates that the net bottom-line
from worldwide television will range from an estimated low of $500,000 to as
much as $2 million, or more. The Company’s investment in each film will be
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 such pictures utilizing these 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).




3





FINANCING
STRATEGY





In the
opportunity Global Universal is currently negotiating with the foreign
distribution company, Global Universal will endeavor to form a strategic
alliance with a financial partner that will provide a credit facility of up to
$20 million. These funds will be released “as needed” to produce up to four
films, with sales and distribution of each film agreed to in advance by the
foreign distribution company.





Our
Agreement with Image In Media:





In the
distribution/production partnership recently negotiated between Image In Media
and Global Universal, the Company has structured a bankable finance strategy to
fund the production of films with budgets of $3 million and under using a long
term Letter of Credit. The financing mechanism incorporates the foreign
government tax incentive certificates, foreign sales estimates while using a
letter of credit as collateral to handle any “shortfalls” that occur during
production.





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.





Since
consumers of this genre are a well-defined and accessible group (specifically,
men and women under 25 years old), marketing costs are reduced by concentrating
advertising and publicity efforts on a definable demographic.





These
film productions will utilize completion bonds. The 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 our investors against over-budget costs.





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
product also requires less studio management oversight during production. The
worldwide home video market, plus cable television continues to show strong
performance, particularly in Global Universal’s targeted genres, which include
“edgy” thrillers and “specialty” pictures.





Global
Universal already owns the rights “in house” to all four of the screenplays that
it intends to produce as films. The Company is able to by-pass the script
optioning process. 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 first
four films Global Universal will produce will eventually become part of the
Global Universal film library. A film library, over time, will build asset value
for our publicly traded 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 Global Universal’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 3rd 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.




4




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.




(c)           Other
Business




LitFunding
USA, Inc.




LitFunding
USA is a wholly-owned subsidiary of Global Entertainment Holdings, and is
engaged in the business of investing in litigation recoveries.





Through
LitFunding USA, we provide funding to qualifying plaintiffs and plaintiffs’
attorneys for the payment of costs and expenses of litigation, principally in
the areas of personal injury, medical malpractice, product liability, toxic
torts and employment. These costs generally include costs such as court filing
fees, expert witnesses, private investigators (i.e. if the litigant is injured
or otherwise incapacitated and unable to work) and other expenses of a law
office in filing and maintaining a civil lawsuit. We generated revenues by
raising capital and advancing this capital to various law firms pursuant to
“Settlement Agreements.” These Settlement Agreements provide that the funds
advanced were to be repaid to us, plus a fee, when the lawsuits referenced in
the agreement ultimately settle. The amount of the fee payable on the funds
advanced depended upon the length of the time the funds were outstanding, up to
a fixed limit.  Pursuant to the terms of the Settlement Agreements,
our contractual right to payment was limited to the funds ultimately paid to the
law firm from the specified lawsuit, or lawsuits, in which the funds were
invested.





Throughout
our fiscal year 2007, we had contracts with attorney clients located in
California (with an emphasis in Los Angeles, Orange, Ventura and San Diego
counties), Georgia, Illinois, Minnesota, Mississippi, New York and South
Carolina. Our internal guidelines limit non-recourse investment in any given
case can be no more than 7% of what our retained legal experts estimate to be
the value of the case to us.  In exchange for our financial support,
we receive a contingent contractual interest secured by a security interest in
the monetary settlement or judgment in the lawsuit.  If a case is lost
or abandoned, we receive nothing in exchange for our investment.  We
are not a law firm and take no role in the filing or handling of the
litigation.  However, if the case is settled or a judgment is obtained
against the defendant, we are paid according to the formula in the
contract.  Generally, we receive a return of our investment, plus a
45% fixed fee, due upon return on the funds we provided, for each 90-day period
that the principal is outstanding.  This return is sometimes “capped”,
depending upon the circumstances involved in the underlying
litigation.  Excluding cases that are lost and do not pay any return,
our statistics show that we receive a return of our investments and fees on
cases we invest within an average of 12 to 36 months from the date of our
investment.  Most of our current, remaining portfolio consists of
cases that are more than 36 months from the date of advance.





During
the fiscal year ending December 31, 2007, we had no new cases or lending
activity associated with this business entity, and had an aggregate investment
of $354,000 in cash advances on approximately 22 cases. During 2007, we
collected $74,500 in principle and fees, lost $30,000 of principle, and have an
ongoing interest in open and unresolved cases whose advances and fees total
approximately $1,545,433.





In March
of 2008, our Board of Directors elected to sell its interest in LitFunding USA.
This decision to sell LitFunding USA was primarily a result of the Company’s
change in focus to the motion picture production industry, as well as our
efforts to reorganize the Company and reduce liabilities. On March 31, 2008, the
Company sold its interest in LitFunding USA to a private company, Iscom, Inc.,
in a transaction that will divest the Company of its former core operating
business assets and associated liabilities. Further information on this
transaction is available in our report on Form 8-K, filed with the SEC on April
8, 2008.




Easy
Money Express, Inc.





In March,
2006, we acquired 100% of the issued and outstanding shares of the common stock
of Easy Money Express, Inc., a Nevada Corporation from its two stockholders.
Easy Money continues as a wholly-owned subsidiary of the
Company.  There has been no activity nor have operations taken place
since its acquisition.





(d)           Risk
Factors





Risk
Factors That May Affect Our Results of Operation





We
have a limited operating history and lack of profitability.





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 new focus on Motion Picture production will change the way
which we will reach profitability.





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.





5




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 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.





Our
business of funding plaintiffs and plaintiff attorneys may be in potential
conflict with Champerty Laws.





Champerty,
as defined by Black’s Law Dictionary, “is a bargain to divide the proceeds of
litigation between the owner of the liquidated claim and a party supporting or
enforcing the litigation.”  Different states impose rules on the champerty
process.  We research state champerty laws prior to advancing capital to
plaintiffs and plaintiff attorneys, however, if we were to be found in violation
of states Champerty laws it could have a material adverse effect on us and our
results of operations.





Our
cash flow from the financing of litigation depends on a lengthy collection cycle
and factors beyond our control that may require us to obtain interim
financing.





Our
procedures and underwriting process have been changed in past years to try and
lessen our risk and to shorten our collection cycle with respect to our business
of financing litigation recoveries. Nevertheless, our collection cycle on
advances made will remain lengthy compared to other similar
industries.  We believe that cases we advance funds to attorneys on
may take between 18 months and 36 months to reach resolution.  Larger
cases may take longer to reach resolution.  Once we advance the money,
the collection cycle is out of our control and this may force us to seek other
sources of capital to fund our overhead expenses.  There can be no
assurance that in such an event we could find such financing or that, if we
could, the financing would be available on satisfactory terms. Additionally, our
film production business is not likely to produce any significant cash flow
until completion of our first film.  Although there can be no
guarantee that we will ever complete any of our intended films, we anticipate
completion of our first film in the fourth quarter of 2008.





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, 2007, we incurred net
losses before extraordinary gain of $934,629 Our accumulated
deficit at the end of December 31, 2007 was $11,858,701. 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, Global Universal Film Group.  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.





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.  That they will be structured or financed in a way that will
enhance our credit worthiness.  That they will meet our objectives or
be successful.  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 over 51% of our outstanding shares of common stock, plus an
additional, estimated 6% that may be acquired by conversion of our Series B
preferred stock. Gary Rasmussen, our CEO, is the General Partner of RCP and
exercises sole voting control over its shares. In addition, Mr. Rasmussen and
Ms. Giroux, as holders of our Series B preferred stock, have the right to
acquire an estimated 30% of our common stock upon conversion of their Series B
preferred stock  Thus, these 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.




6




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 intend to 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 includes 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.






ITEM
2.                      PROPERTY





Our
corporate headquarters are located at 1516 E. Tropicana Avenue, Suite 245, Las
Vegas, Nevada 89119. We occupy approximately 600 square feet of office space at
a rental rate of $750 per month.





Additionally,
our wholly-owned subsidiary, Global Universal Film Group, maintains offices at
the Raleigh Studios lot, consisting of approximately 500 square feet in size and
leased on a monthly basis at a rate of $900.00, per month. The offices are
located at 650 N. Bronson Avenue, Suite B-116, Los Angeles,
California  90004.





ITEM
3.                      LEGAL
PROCEEDINGS





We are a
defendant in several matters in litigation, many of which are in the normal
course of business, including litigation for refunds of funds invested. We
believe these suits are without merit and intend to defend these litigations in
courts of law.  In connection with the business of
LItFunding,





On or
about October 31, 2006, the Company obtained a judgment against Joel Gatlin,
Esq., in the principal amount of $52,856.32, with interest to continue to accrue
at 5% per month, pursuant to the terms of an earlier lending agreement entered
into between the parties.





On or
about November 20, 2006, the Company obtained a judgment against Alan Schuchman,
Esq., in the principal amount of $40,000, with interest to continue to accrue at
10% per year on the unpaid balance. Mr. Schuchman has abandoned his rights to a
$10,000 debenture of LitFunding in favor of LitFunding Corp.





On or
about January 26, 2007, the Company obtained a judgment against Anthony
Casamassimi, Esq., in the principal amount of $88,500, with interest to continue
to accrue at 10% per month pursuant to the terms of an earlier lending agreement
entered into between the parties.





These
judgments totaling $181,356 are deemed to be non-collectable at December 31,
2007.  We reserved the discounted amount, $159,838, to adequately
reflect the status of the receivables.





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





On August
30, 2007, our largest stockholder, Rochester Capital Partners, acted by majority
written consent to vote and approve the following matters: (1) to change our
corporate name from “LitFunding Corp.” to “Global Entertainment Holdings, Inc.,
and (2) to authorize our board of directors to effect a reverse split of our
outstanding shares of common stock on a basis ranging from not greater than
“one-for-ten” and not less than “one-for-three.” Rochester Capital Partners cast
its vote on 4,960,030 shares, or
58.7% of our outstanding common stock, in favor of the foregoing
matters.  On November 21, 2007, our board of directors voted
unanimously to affect a reverse split of our outstanding shares of common stock
on a basis of “one-for-ten.”





On
December 7, 2007, the holders of our Series B Convertible Preferred stock voted
unanimously to: (1) delete section 5(c), thereby removing the automatic
conversion feature (whereby the Series B Preferred stock would automatically
convert to common stock one year after issuance), and (2) amend section 8 and
delete section 9 in order to clarify the effect of any stock split, including
that approved on November 21, 2007. Votes for: 1,500,000, or 100% of the
class.











PART
II





ITEM
      5.
            MARKET
      FOR COMMON EQUITY & RELATED STOCKHOLDER
  MATTERS





(a)           Market
Information





Our
common stock is quoted under the symbol “GBHL.OB” on the OTC Bulletin Board,
which is sponsored by the Financial Industry Regulatory Authority
(FINRA).  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 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.  These quotations
reflect inter-dealer prices, without retail mark-up, markdown or commission, and
may not necessarily represent actual transactions. The table has been adjusted
to reflect a “one-for-ten” reverse split of our common stock on December 17,
2007.





2007
            2006High
            Low
            High
            Low1st
      Quarter
            1.50
            0.60
            3.80
            1.202nd
      Quarter
            1.90
            0.70
            2.75
            0.603rd
      Quarter
            1.20
            0.50
            1.40
            0.404th
      Quarter
            1.00
            0.11
            0.70
            0.30








(b)           Holders of Common
Stock





As of
December 31, 2007, we had approximately 215 stockholders of record of the
9,258,511 shares issued and outstanding.





7




(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 150,000shares that
may be issued.  As of December 31, 2006, 53,750options and
96,000 warrants have
been issued under this plan, which leaves 250 sharesavailable for issuance.  No Plan shares may be issued after
July 14, 2008.





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, 2006, 232,000options
have been granted under this plan.





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, 2007, a total of 400,000 shares have 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 600,000shares.  As of December 31, 2007, a total of 454,541shares have
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, 2007 regarding outstanding
options granted under the plans, warrants issued to consultants and options
reserved for future grant under the plan.







Plan
      Category
            
            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)





(1) 250 shares are
available for issuance under our 2002 Employee Stock Compensation
Plan.  Under the 2004 Stock Option Plan, we are allowed to issue a
total number of shares of our common stock that may be purchased pursuant to the
exercise of options and shall not exceed, in the aggregate, 30% of the issued
and outstanding shares of the Company’s common stock.





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 its 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, 2007,
250shares
remained available for issuance under the 2002 employee stock compensation
plan.  As of December 31, 2007 145,458 shares
remained available under the 2006 non-qualified stock compensation
plan.








ITEM
      6.
            MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS





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
2007, we were in the business of investing in litigation recoveries. This
business was conducted through our subsidiary, LitFunding USA, and its six,
wholly-owned limited liability companies.  LitFunding USA resumed the
business of California LitFunding (our subsidiary which had been in the business
since 2000) subsequent to June 17, 2004, after the United States Bankruptcy
Court entered an order confirming us and California LitFunding joint plans of
reorganization.  In June, 2006, we announced the receipt of an order
of final decree closing our bankruptcy proceedings on the grounds that the
bankruptcy case has been fully administered.  We raised and advanced
capital to various law firms pursuant to “Settlement
Agreements”.




8




These
Settlement Agreements generally provided that the funds advanced would be repaid
to us, plus a fee, when the lawsuits referenced in the agreements ultimately
settled.  The amount of the fees payable on the funds advanced depend
upon the length of the time the funds are outstanding, up to a fixed
limit.  Pursuant to the terms of the Settlement Agreements, the
Company’s contractual right to payment is limited to the funds ultimately paid
to the law firm from the specified lawsuit, or lawsuits, in which the funds are
invested or expended.





During
fiscal year 2007, we had no new cases or lending activity associated with this
business.  For the year ended December 31, 2007, we had $354,000 in
funds invested in approximately 22 cases. We collected $74,500 in principal and
fees, lost $30,000 of principal, and currently have open and unresolved cases
totaling claims of approximately $1,545,433. We estimate that the principal and
fees expected on the open and unresolved cases is approximately
$1,545,433.





However,
most of these open cases are well over 36 months old and there has been very
little or no contact or follow up with most of the attorneys representing these
remaining cases.  Current management surveyed most of the attorneys
and is of the opinion that our chances of recovering all or a significant
portion of our advances and fees is highly doubtful without costly litigation.
Therefore, in late 2007, our management decided to sell our interest in
LitFunding USA.  The sale included the assumption of all liabilities
of this subsidiary by the Buyer. This sale was completed on March 31,
2008.  Accordingly, we are no longer in this business and will
henceforth focus our efforts and resources on the film production
business.





Results of
Operations





The
following overview provides a summary of key information concerning our
financial results for the years ended December 31, 2007 and 2006.





Revenues


Year Ended December 31,
            
            
            Increase (Decrease)2007
            
            
            2006
            
            
            
            
            
            $
            
            %Net Revenue
            
            
            216,089
            
            
            $
            644,040
            
            
            $
            (427,951
            )
            
            
            66
            %)





Revenue:
Total revenue was $216,089 and $644,040 for the fiscal years ended December 31,
2007 and 2006, respectively. Our decrease in revenue of $427,951 is due to the
declining condition of our litigation funding business and our shifting of
business operations into the entertainment industry. We cannot guarantee with
certainty when we will generate revenue sufficient to fund ongoing operations.
Our future revenues will be reliant on the ability to produce and market film
and entertainment products.


Operating
expenses


Year Ended December 31,
            
            
            Increase (Decrease)2007
            
            
            2006
            
            
            
            
            
            $
            
            %Reserve for unsuccessful resolution of
      lawsuits
            
            
            
            
            
            
            
            $
            35,200General and administrative
      expenses
            
            
            706,288
            
            
            
            1,659,845
            
            
            
            (953,557
            )
            
            
            (57
            %)Consulting fees – related
    party
            
            
            
            
            
            
            
            
            
            
            8,301
            
            
            
            -Financing expense
            
            
            70,000
            
            
            
            45,906
            
            
            
            24,094
            
            
            
            52
            %-Depreciation and
    amortization
            
            
            26,001
            
            
            
            23,558
            
            
            
            2,443
            
            
            
            10
            %Preferred stock dividend
            
            
            
            
            
            
            19,993
            
            
            
            
            
            
            
            -Total operating expenses
            
            
            802,289
            
            
            $
            1,749,302
            
            
            $
            (947,013
            )
            
            
            (54
            %)





Total
operating expenses for the year ended December 31, 2007 decreased by $947,013 from the
year ended December 31, 2006 because of the cost cutting procedures that have
been implemented.





Other
income (expense)


Year Ended December 31,
            
            
            Increase (Decrease)2007
            
            
            2006
            
            
            
            
            
            $
            
            %Other income
            
            $
            53,947
            
            
            $
            10,000
            
            
            $
            43,947
            
            
            
            439
            %Interest (expense)
            
            
            (94,099
            )
            
            
            (62,685
            )
            
            
            31,414
            
            
            
            50
            %Rental income
            
            
            -
            
            
            
            0
            
            
            
            
            
            
            
            -Amortization of debtdiscount
            
            
            
            
            
            
            130,000
            
            
            
            
            
            
            
            -Total other income(expense)
            
            
            (40,099
            )
            
            
            77,315
            
            
            
            37,216
            
            
            
            3,552
            %





Our
interest expense was $37,216 higher in 2007 than in 2006 because we used short
term financing to cover operating costs.





Net
(loss)


Year Ended December
    31,
            
            
            Increase (Decrease)2007
            
            
            2006
            
            
            
            
            
            $
            
            %Net (loss) beforeextraordinary gain
            
            $
            (934,629
            )
            
            
            (1,027,947
            )
            
            $
            93,318
            
            
            
            9.0
            %





Our net
loss before extraordinary gain was approximately9.0%lower in the
year ended December 31, 2007 as compared to the year ended December 31, 2006
because we realized gains on debt conversion restructuring and negotiations on
expense liabilities.




Operation
Plan





Global
Entertainment Holdings, through its wholly owned subsidiary Global Universal, is
a development stage company engaged in the development of low-budget genre
pictures with recognizable, named talent.  Global Universal management
believes investment risk in such films can be significantly reduced by utilizing
Canadian and other major countries Government tax incentives to cover up to 50%
of each film’s budget. Additional coverage of 20% to 25% of a film’s budget can
be derived from pre-selling either foreign or U.S. rights to the
film.  The remaining balance (25% to 30%) will be obtained from
private investment of debt, equity or combination of both.  Management
intends to retain revenues generated from one or more territories of each film
to provide cash flow for operating expenses to assure long-term growth for the
Company and its shareholders.





Liquidity
and Capital Resources





We had
cash of $2,558 as of December 31, 2007. 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.  We may also rely
on our Investment Agreement with Imperial Capital by exercising a “put” to have
them purchase up to $3 million of our common stock at a price equal to 93% of
market value at the time we elect to issue such put.  We may attempt
to secure other loans from lending institutions or other sources. We will also
consider establishing relationships with selected business partners whose
contributions include cash. There is no guarantee that we will be able to raise
additional funds through offerings or other sources. If we are unable to raise
funds, our ability to continue with operations will be materially
hindered.




9





Pursuant
to our outstanding indebtedness to the law firm of Callahan & Blaine for
legal services in connection with our Bankruptcy proceedings, our subsidiary
California LitFunding and Michael A. Marcelli entered into a Promissory Note
with Daniel J. Callahan for the principal amount of $36,881 on March 1,
2006.  Pursuant to the note California LitFunding and Michael A.
Marcelli, jointly promised to pay to the order of Daniel J. Callahan the sum of
$36,881 with interest thereon at the rate of 8% per annum.  Monthly
installments commenced on April 1, 2006, in the amount of $7,524 and will
continue thereafter on the first day of each month until August 1, 2006, at
which time all unpaid principal and accrued interest shall be due and
payable.  Each monthly payment shall be credited first on the interest
then due, and the remainder, if any, on the principal sum; interest shall
thereupon cease to accrue on the amount so credited on the principal
sum.  Should default be made in the payment of any installment due
under the note, Mr. Callahan will be entitled to payment of all amounts due plus
$8,305 previously waived in consideration for the note and the whole sum of
principal and interest shall become immediately due and payable at the option of
Mr. Callahan. On November 7, 2007 54,541 shares of
common stock was issued to Callahan & Blaine as conversion of the accrued
interest and remaining balance of the note.





On May
10, 2006, Easy Money, our wholly owned subsidiary, entered into a Promissory
Note with Davric Corp. for the principal amount of $100,000.  Pursuant
to the note Easy Money promised to pay to the order of Davric Corp. the sum of
$100,000 together with accrued interest thereon at 24% per annum.  The
principal amount of the note or any part thereof, along with all interest
accrued and unpaid thereon, shall be payable to Davric Corp. on or before one
year from the date of May 10, 2006. On October 24, 2007, we issued 100,000 shares of our
common stock to Daveric Corp. in exchange for their conversion of the principle
of the note and forgiveness of the accrued interest.





On March
5, 2007, a promissory note in the principal amount of $250,000 was issued by
Rochester capital Partners as consideration for the purchase of 4,000,000 shares from
the Company. The note was fully paid off on August  9,
2007.





On July
10, 2007 the Company issued a promissory note in the amount of $5,000 to Stanley
Weiner, a director of the Company, with interest accruing at 6% per annum. Mr.
Weiner has elected to convert this note into common stock.





On
September 28, 2007, the Company issued 500,000 shares of
common stock for the conversion of its promissory note dated December 9, 2004,
in the principle amount of $500,000. The note had been assumed by Stanley
Weiner, our Vice President of Finance and a director. The accrued interest was
forgiven by the note holder.





On
September 28, 2007 the Company issued 125,000 shares of
common stock to J-Bear Investment, LLC., for the conversion of three stock
subscription notes issued in 2007 by our subsidiary, Global Universal, with
varying dates totaling a principle amount of $100,000. Any accrued interest was
waived.





On
September 28, 2007, the Company issued 24,375 shares of
common stock to Peter Liapis for the conversion of a stock subscription note
dated May, 23, 2007, the principle amount of $15,000, accrued interest was
waived.





On
December 28, 2007, several promissory notes held by Rochester Capital Partners,
LP, totaling $64,940, with accrued interest of $5,595, were converted into
641,225 shares of the Company’s Series B, Convertible Preferred Stock. Mr.
Rasmussen, our CEO, is the General Partner of this partnership.





On
December 28, 2007, several promissory notes held by Gary Rasmussen totaling
$32,000, with  accrued interest of $5,735, were converted into 343,227
shares of the Company’s Series B, Convertible Preferred Stock. Mr. Rasmussen is
the CEO of Global Entertainment Holdings, Inc. and a board member.





On
December 28, 2007, several promissory notes held by Jackelyn Giroux, totaling
$148,000, with  accrued interest of $17,625, were converted into
1,505,682 shares of the Company’s Series B, Convertible Preferred Stock.
Jackelyn  Giroux is the President and CEO of our subsidiary Global
Universal Film Group Inc.  Mr. Rasmussen is the Chairman of Global
Universal and a board member.





Agreements
with Imperial Capital Holdings





On
January 16, 2006, we entered into an Equity Investment Agreement (“Investment
Agreement”), which is an equity line of credit ("ELoC"), with Imperial Capital
Holdings ("Imperial"). On that same date, we also entered into a Registration
Rights Agreement (“Registration Agreement”) with Imperial, which called for us
to file a registration statement relating to the ELoC within sixty
days.  Further, we were in default of our promise to register the
common stock underlying the shares of our Series A convertible preferred stock,
which Imperial acquired in August, 2005, and, in July, 2006, we were also in
default on the payment of a $30,000 promissory note due Imperial on July 12,
2006. On July 28, 2006, we reached an understanding with Imperial to cure our
defaults in exchange for the issuance of 80,000 shares of
common stock. Concurrently, we entered into a new Investment Agreement and a new
Registration Rights Agreement with Imperial with substantially similar terms as
the original agreements dated January 16, 2006.  In October, 2006, we
agreed to issue 20,000 shares to
Imperial to cover interest on the $30,000 note. In January, 2007, we agreed to
issue an additional 30,000 shares to
cover dividends due on the Series A 12% preferred stock and to grant an
additional 60-day extension on the $30,000 note.  On November 12,
2007, we borrowed an additional sum of $12,500 from Imperial and renewed our
previous $30,000 note, combine in a new note in the principal amount of $45,000,
with interest at 12%, and a maturity date of April 15, 2008. This note is
secured by advances against our ELoC. On December 14, 2007, we borrowed an
additional $6,000 from Imperial with interest at 12%, due April 15, 2008. This
note is convertible into common stock at $.05 per share.





The ELoC
terminates 24 months after the registration statement has been declared
effective. On June 5, 2007, our registration statement was declared effective by
the SEC. The maximum amount of money that the ELoC may provide to us over the
24-month period of time is $3,000,000. During these 24 months, commencing June
5, 2007, we may periodically deliver newly issued, registered shares of our
common stock to Imperial who will then deliver to us the purchase price, in
cash, in amounts based on a fluctuating price per share of our common stock. We
are not obligated to request any portion of the $3,000,000. The actual aggregate
number of shares that we may issue pursuant to the Investment Agreement is not
determinable as it is based on the market price of our common stock from time to
time and how much funding we desire from time to time. We have reserved 900,000 shares for
issuance under the ELoC. However, Imperial is not obligated to purchase such
amount of shares that would cause it to own more than 9.9% of our total number
of outstanding shares at any given time.  From time to time, we may,
in our sole discretion, deliver a put notice to Imperial which states the dollar
amount which we intend to sell to Imperial which will be, at our choice, either:
(A) 200% of the average daily volume (as quoted on the U.S. markets only) of our
common stock for the 10 trading days prior to the applicable put notice date,
multiplied by the average of the 3 lowest daily closing bid prices immediately
preceding the put date, or, (B) a minimum put amount of $10,000. The maximum
amount of any put notice cannot exceed $250,000. The purchase price for the
common stock identified in the put notice will be equal to 93% of the lowest
closing bid price of the common stock during the pricing period. The pricing
period is the period beginning on a put notice date and ending on and including
the date that is five (5) trading days after the put notice date. Imperial is
required to purchase from us during the related pricing period that number of
shares having an aggregate purchase price equal to the Put Amount set forth in
the Put Notice. Imperial is deemed to be an “underwriter” within the meaning of
the Securities Act of 1933, as amended, in connection with the resale of our
common stock under the Investment Agreement.





As we
draw down on the ELoC, more shares will be sold into the market by Imperial.
This new supply of shares may cause our stock price to drop. In turn, as the
stock price drops and as we make more draw downs on the ELoC, even more stock
will come into the market which may cause yet a further drop in stock price. You
should be aware that there is an inverse relationship between our stock price
and the number of shares to be issued pursuant to the ELoC. If our stock price
declines, we will be required to issue a greater number of shares under the
ELoC. We are not required to draw down or use the full amount available of the
ELoC.





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, 2007 and
2006, 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, 2007, 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, 2007 which means that
our current liabilities exceeded our current assets on December 31, 2007 by
$1,137,885.  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, 2007, were not sufficient to satisfy all of our
current liabilities on December 31, 2007.  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.





10




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.  Because of the legal
proceedings previously discussed in our prior reports, we experienced a
deleterious and damaging loss of both financial resources and key personnel
associated with our former business model of investing in litigation
recoveries.  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.





ITEM
7.                      
FINANCIAL STATEMENTS





See Index
to Financial Statements and Financial Statement Schedules appearing on
page 20 through 35 of this Form 10-KSB.






ITEM
8.                      
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE





We have
appointed Lawrence Scharfman & Co., CPA, P.C., as the Company's independent
accountants for the years ended December 31, 2007, and 2006. This is a change in
accountants recommended by the Company's Executive Management and approved by
the Company's Board of Directors.  We dismissed Epstein Weber &
Conover, PLC and engaged Lawrence Scharfman & Co., CPA, P.C. on April 28,
2006.  During the most recent two fiscal years and during the portion
of 2006 preceding the Board’s decision, neither the Company, nor anyone engaged
on its behalf, has consulted with Lawrence Scharfman & Co., CPA, P.C.,
regarding: (i) either the application of accounting principles to a specified
transaction, either completed or proposed; or the type of audit opinion that
might be rendered on the Company’s financial statements; or (ii) any matter that
was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of
Regulation S-K) or a reportable event (as described in Item 304(a)(1)(v) of
Regulation S-K).





The
report of Epstein Weber & Conover, PLC on the Company’s consolidated
financial statements for the fiscal years ended December 31, 2004 and 2003 did
not contain an adverse opinion or disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope or accounting principles, except for
Epstein Weber & Conover, PLC issuance of going concern opinions on the
financial statements for the fiscal years ended December 31, 2004 and 2003. From
March 26, 2004, the date when Epstein Weber & Conover, PLC was appointed as
the Company’s independent accountant, and for the most recent fiscal year and
the subsequent interim period ending on April 27, 2006, when Epstein Weber &
Conover, PLC was dismissed as the Company’s independent accountant, there were
no disagreements between the Company and Epstein Weber & Conover, PLC on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Epstein Weber & Conover, PLC would have caused it to make a
reference to the subject matter of the disagreement in connection with its audit
reports.





The
change in accountants does not result from any dissatisfaction with the quality
of professional services rendered by Epstein Weber & Conover, PLC, as the
independent accountants of the Company.





Epstein
Weber & Conover, PLC, in their letter filed as Exhibit 16 to Form 8-K filed
on May 15, 2006, states in part that “during the past two fiscal years, we have
informed management of LitFunding Corp. of significant deficiencies in internal
controls which we believe is a reportable event under 304(a)(1)(iv)(B)(1) of
Regulation SB.”





The
Company does not disagree with Epstein Weber & Conover’s statement, in that
in the first quarter of 2005 the Company’s audit committee was informed of
Epstein Weber & Conover’s inability to rely on the competency of the
Company’s prior Chief Financial Officer which resulted in a lack of internal
controls necessary to develop reliable financial statements.  The
communication from Epstein Weber & Conover to the Company’s audit committee
resulted in the termination of the services of its prior CFO in June of
2005.  In an attempt to prevent future significant deficiencies, the
Company has retained the services of an outside consulting firm, Opus Pointe, to
assist in curing deficiencies in its internal controls.





ITEM
8A.                                CONTROLS
AND PROCEDURES





We
conducted an evaluation, with the participation of Morton Reed, our President
& Chief Executive Officer (through August 31, 2007), Gary Rasmussen, our
current Chief Executive Officer, and Terry Gabby, 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, 2007, 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 Gabby have concluded that as of December
31, 2007, our disclosure controls and procedures were not effective at the
reasonable assurance level, primarily due to our inability to timely file this
report on Form 10-KSB within the time frame prescribed by the Securities and
Exchange Commission.





In light
of our inability to timely file this report, we performed additional analysis
and other post-closing procedures to ensure our consolidated financial
statements were prepared in accordance with generally accepted accounting
principles. Accordingly, we believe that the consolidated financial statements
included in this report fairly present, in all material respects, our financial
condition, results of operations and cash flows for the periods
presented.





Other
than the deficiency and weakness described above, Mr. Rasmussen, our Chief
Executive Officer and Mr. Gabby, our Chief Financial Officer concluded that our
disclosure controls and procedures are generally effective.





The Company had engaged the
securities law firm of Trombly Business Law Center in Boston, MA, to assist us
in preparing corporate documents, filing the required corporate documents with
the appropriate regulatory agencies, both state and federal and reviewing the
September 30, 2007 10-QSB during the third and fourth quarter of
2007.   Due to the lack of sufficient funding, the law firm was
unwilling to continue providing services, and we were unable to maintain the
engagement to utilize their assistance needed in preparing our Form 10KSB for
the period ended December 31, 2007. We are pursuing various avenues of financing
to sustain an accounting staff and the necessary outside support services to
enhance timely filings of our reports. On June 27,2008 the Company


engaged an outside law firm to
assist it in complying with applicable regulations.


11




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, 2007 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, 2007, our internal control over financial
reporting is not 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.




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 31,2007  that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.






ITEM
8B.                                OTHER
INFORMATION




None.







PART
III





ITEM
      9.
            DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION
      16(A) OF THE EXCHANGE ACT





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





Effective
February 22, 2007, our Board of Directors appointed Dennis H. Johnston as a
director.  However, effective June 27, 2007, the Board of Directors
dismissed Mr. Johnston for cause.





Effective
August 31, 2007, Morton Reed resigned as our President, CEO and Chairman of the
Board of Directors.  Mr. Reed’s resignation was for health reasons and
was not a result of any disagreements with the Company.





Effective
September 1, 2007, the board of directors appointed Gary Rasmussen as interim
CEO and a Director of the Company.





Effective
September 26, 2007, the board of directors appointed Virginia Perfili as a
Director of the Company.





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





Name
            Age
            TitleGary
      Rasmussen
            55
            CEO
      and DirectorTerry
      Gabby
            63
            CFO
      and TreasurerStanley
      Weiner
            64
            Director
      and VP of FinanceVirginia
      Perfili
            48
            Director











Duties,
Responsibilities and Experience of Director & Officers





Gary
Rasmussen.  Mr. Rasmussen
will serve as our Chairman and will guide the Company through its transition to
a public-traded entity, as well as oversee 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 raising debt and equity
capital for both public and private enterprises, implementing short and long
term business planning and strategic concepts, acquisitions and divestitures,
and has played a leading role in spearheading several publicly held corporations
from their inception through the capital raising stages. Mr. Rasmussen is a
graduate of Western Michigan University.





Terry
Gabby.  Mr. Gabby has served as Chief Financial Officer and
Treasurer of the Company since July 1, 2005.  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 other


12




reporting
company.





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.  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.





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 Litfunding), who was instrumental in
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 Ruffallo, 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.





Dennis H.
Johnston.  Mr. Johnston served as a director from February 22,
2007, until his dismissal on June 27, 2007.  He was formerly a
practicing attorney in the State of California with over twenty-eight years
experience in representing financial institutions, public and privately traded
corporations and has successfully completed in excess of three billion dollars
worth of acquisitions during his practice.





For the
past 12 years, Mr. Johnston has maintained his own law practice specializing in
public companies and related securities transactions. He has negotiated and
implemented many public company mergers, acquisitions and changes in control for
companies ranging from financial institutions, to manufacturing companies to the
highly publicized Internet related entities. In addition to advising clients on
corporate restructuring and securities matters, his particular expertise is in
representing clients before governmental regulatory agencies including the
Securities and Exchange Commission, the Department of Corporations, the National
Association of Securities Dealers and other administrative and governmental
agencies.





Mr.
Johnston graduated with honors from UCLA in 1975, with a Bachelor of
Administration in business and economics and received his Juris Doctor degree
with Dean's List Honors from Loyola University of Los Angeles where he was a
Note and Comment Editor of The Loyola Law Review, a Founding Member of the
Loyola International and Comparative Law Journal and the author of a published
article entitled "Vicarious Liability Of Controlling Persons Under The
Securities Act Of 1934", (1977) 11 Loyola L.A. L. Review 131.





Morton
Reed, Ph.D.,  served
as our President, CEO and a Director of the Company from December 2000 through
August 2007.  Dr. Reed served in the United States Marine Corps during
the Korean War.  After returning from overseas he attended UCLA for
his undergraduate studies in English and Philosophy.  From 1960
through 1980 he served as an executive in several business
ventures:  CEO of Cathay Studios, from 1960 to 1968; CEO of Orient
Limited of Nevada from 1968 to 1972; President and Chairman of AAlpha Mortgage
Company from 1970 to 1982.  During this time he continued with his
education earning a Masters Degree in Psychology form Antioch University in 1973
and a Doctorate in philosophy in Clinical Psychology from California Graduate
Institute in 1975.  In 1996 Dr. Reed joined Magnolia Studios a post
production facility in Burbank, CA and helped effect a rate of that company to
Millennium Studios which appointed him interim CEO.  He left
Millennium in 1999 and joined Case Financial, a litigation funding company where
he served as VP of Sales.  In November 2000, Dr. Reed left Case
Financial to for LitFunding Corp. where he remains as President.  Dr.
Reed is not an officer or director of any other reporting company.





Management
Biographies for Global Universal Film Group, Inc.





Jackelyn
Giroux.Jackelyn
Giroux is the CEO and President of Global Universal Film Group, a film
production and distribution company that she founded in 1997. In March, 2006,
Global Universal became a wholly-owned subsidiary of Global Entertainment
Holdings (OTCBB: GBHL), in a merger transaction whereby 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 FoneFriend, Inc.
(OTCBB: FFRD), also a publicly-traded company engaged in Internet Telephony
(VoIP communications). Ms. Giroux is expected to join Global Entertainment in a
similar capacity upon completion of restructuring and initial financing
(anticipated to occur in the second quarter of 2008), due to her prior
experience with public companies and her expertise in film financing and
worldwide business relationships. Ms. Giroux is also a writer, producer and
director of feature films, and has been awarded “keys” to numerous Cities for
her lecturing and fund raising for charity organizations in the United
States.





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 “Head Heart & Balls” a television
pilot starring Adam Corolla.





Ms.
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, which
prominently featured the “FoneFriend” product being used by the main
characters.  “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.





Recently,
Ms. Giroux acquired $20 million worth of Pre-Certification Tax Credits from the
State of Louisiana, which Global Universal intends to utilize as part of its
financing structure on future films that are produced in that state. These
credits may be pledged in connection with a film production loan from a bank in
Louisiana.





Ms.
Giroux was instrumental in securing the spokeswoman services of bi-lingual
actress/artist Barbara Carrera, to the FoneFriend product and produced the
television commercials entitled, “Nobody Takes My
FoneFriend”.  Recently, she wrote and directed the television reality
pilot “You’ve Got the Part!” which Global Universal Film Group Inc. has created
an online casting website, which will be utilized to find and cast talent
worldwide: www.youvegotthepart.com.





Ms.
Giroux is a bondable producer with the well-known Completion Bond Company, Film
Finances.  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”.





Peter
Liapis.Mr. Liapis serves as Global Universal’s Senior Vice
President of Development.  Peter received his Bachelor of Arts degree
from California State University at Fullerton in 1973, and attended law school
the following year.  Shortly thereafter he moved to Los Angeles where he
began his acting career starring opposite the legendary Mae West in her last,
but very controversial, motion picture, “Sextette.”  Over the next
several years Mr. Liapis starred in numerous feature films including “Ghoulies”,
“Ghoulies IV”, and Ghost Warrior. By the early 1990's Mr. Liapis moved behind
the camera to co write and executive produce "Sins of Desire" starring Tanya
Roberts and Nick Cassavetes for Cinetel Films.  He continue to write and
direct such pictures as “Alone With A Stranger”, “The Step Daughter” and
“Captured” for The Image Organization and WIN International
Pictures.




13





Mr.
Liapis was a founding member of Gotham Metro Studios, a production /
distribution company based in Santa Monica.  In mid 2006 he joined Global
Universal Film Group Inc. to assist and assemble a screenplay library and to
build Global Universal into a publicly traded company.  Mr. Liapis was
instrumental in Global Universal's acquisition of $21 MUSD in Pre Certified Tax
Credits issued by the State of Louisiana and in the post- production joint
venture agreement between Global Universal and Third Coast Digital, a
post-production facility in Baton Rouge, Louisiana. Mr. Liapis has developed a
close working relationship with many successful independent film and
distribution companies in Hollywood.  Those relationships, along with his
prolific writing ability, have provided Global Universal Film Group Inc. a
tremendous advantage in creating and developing future in-house
projects.





Virginia Perfili – Vice President of
Production. (See biography above)





Gary Rasmussen –
Chairman.  (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 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 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. Gabby, our CFO, we have no additional financial experts. We believe the
cost related to retaining a financial expert at this time is prohibitive.
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.








ITEM
10.                                EXECUTIVE
COMPENSATION





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.





Morton
Reed voluntarily stopped taking salary in mid-2003 to assist the company in the
financing of on going litigation.  He received $175,845 out of his
salary of $252,000, and accrued the remaining $76,155 in 2003. He resumed taking
salary in 2004, but took only $150,000 of the $252,000 and accrued the remaining
$102,000. In 2005, he received $118,750 out of his salary of $252,000 and
accrued the remaining $133,250. In 2006, he received $64,927 out of the $252,000
and accrued the remaining $187,073. In 2007, Mr. Reed did not receive a
salary.





In 2004,
Mr. Reed received 70,000 options of common
stock, these options vested at date of grant.  The options were issued
for services.  During 2005 Mr. Reed was issued 100,000 options forcommon stock, these options vested at the date of grant.





Mr. Reed
received $16,716 as reimbursement for his rent, telephone, utilities and
automobile expenses in 2004.  In 2005 he received $26,019 as
reimbursement for these expenses. In 2006 he received $24,880 as reimbursement
for these expenses.





In 2005
Mr. Reed received $80,750 as a board member, $24,500 in fees and $56,250 in
warrants.  The warrants 11,250 issued for common stock were granted on
January 20, 2005 with immediate vesting.  The warrants authorized the
purchase of common stock at $2.00 per share and
expire on dates beginning on August 6, 2009 through May 6, 2010. In 2006 Mr.
Reed accrued $31,500 as a board member.





In 2007,
Mr. Reed received common stock valued at $525,000 in lieu of his accrued salary.
Mr. Reed also received $24,000 in common stock for prior board member
fees.




14




Mr. Gabby
entered in to an employment agreement effective June 29, 2005 to serve as the
companies Chief Financial Officer with an annual salary of
$55,000.  Mr. Gabby received 1,000 options at
$4.10 per share
expiring on July 1, 2007.  These options were vested at the date of
grant.  Mr. Gabby received 5,000 options in
November 2006 exercisable at $0.40 per share and
will expire on November 21, 2009. In November 2006 Mr. Gabby received 5,000 warrants
exercisable at $0.40 per share and
will expire on November 27, 2009. The fair value of these options and warrants
is calculated to be $4,425.  In August 2007 Mr. Gabby received 25,000 options
exercisable at $0.80 per share and
will expire on August 30, 2009. The fair value of these options is calculated to
be $19,500.








Summary
Compensation Table


For
Fiscal Year- Ended 2007and 2006


Name
      and Principal Position
              Year
              Salary
                ($)
              Bonus
                ($)
              Stock
      Awards
                ($)
              Options
      Awards
                ($)
              Non-Equity Incentive Plan Compensation
      ($)
              Change
      in Pension Value & Nonqualified Deferred Compensation
      Earnings
                ($)
              All
      Other Compensation
                ($)
              Total
                ($)(a)
              (b)
              (c)
              (d)
              (e)
              (f)
              (g)
              (h)
              (i)
              (j)Morton
      Reed President,
      CEO
      & Director
              2007
              252,000
              NONE
              NONE
              NONE
              NONE
              NONE
              0
              $252,0002006
              252,000
              NONE
              NONE
              NONE
              NONE
              NONE
              $56,380
              $308,380Gary
      Rasmussen
                CEO
      &Director
              2007
              252,000
              NONE
              NONE
              NONE
              NONE
              NONE
              0
              $252,000Terry
      Gabby,CFO
              2007
              55,000
              NONE
              16,500
              $19,500
              NONE
              NONE
              NONE
              $75,0002006
              55,000
              NONE
              NONE
              $4,425
              NONE
              NONE
              NONE
              $59,425










OUTSTANDING
EQUITY AWARDS


AT FISCAL YEAR- END
AS OF 12/31/2007


Name
                (a)
              Number
      of Securities Underlying Unexercised Options (#) Exercisable
                (b)
              Number
      of Securities Underlying Unexercised Options (#) Unexercisable

                  
                  
                  (c)
              Equity
      Incentive Plan Awards: Number of Securities Underlying Unexercised
      Unearned Options(#)
                (d)
              Option
      Exercise Price($)

                  
                  
                  
                  (e)
              Options
      Expiration Date

                  
                  
                  
                  (f)
              Number
      of Shares or Units of Stock That Have Not Vested (#)
                
                
                (g)
              Market
      Value of Shares or Units of Stock That Have Not Vested($)
                (h)
              Equity
      Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
      That Have Not Vested(#)
                (i)
              Equity
      Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
      Other Rights That Have Not Vested($)
                
                (j)Morton
      Reed, Ph.D. President, CEO & Director
              32,550
                25,000
                50,000
                50,000
                3,750
                1,875
                1,875
                1,875
                1,875
              NONE
              NONE
              $10.00
                $3.00
                $5.30
                $9.90
                $2.00
                $2.00
                $2.00
                $2.00
                $2.00
              2/3/07
                12/21/14
                1/20/15
                9/6/08
                1/20/10
                8/6/09
                11/6/09
                2/6/10
                5/6/10
              NONE
              NONE
              NONE
              NONEGary
      Rasmussen CEO & Director
              NONE
              NONE
              NONE
              NONE
              NONE
              NONE
              NONE
              NONE
              NONETerry
                Gabby,
      CFO
              25,000
                5,000
                5,000
              NONE
              NONE
              $0.80
                $0.40
                $0.40
              8/30/09
                11/21/09
                11/27/09
              NONE
              NONE
              NONE
              NONEStanley
                Weiner,
      Board Member
              3,750
                1,875
                1,875
                1,875
                1,875
              NONE
              NONE
              $2.00
                $2.00
                $2.00
                $2.00
                $2.00
              1/20/10
                8/6/09
                11/6/09
                2/6/10
                5/6/10
              NONE
              NONE
              NONE
              NONEDavid
      Wallace, Board Member
              3,750
                1,875
                1,875
                500
                250
                250
              NONE
              NONE
              $2.00
                $2.00
                $2.00
                $2.00
                $2.00
                $2.00
              1/20/10
                1/20/10
                1/20/10
                1/20/10
                1/20/10
                1/20/10
              NONE
              NONE
              NONE
              NONEHoward
      Appel,
                Board
      Member
              3,750
                1,875
                1,875
                500
                250
                250
              NONE
              NONE
              $2.00
                $2.00
                $2.00
                $2.00
                $2.00
                $2.00
              1/20/10
                1/20/10
                1/20/10
                1/20/10
                1/20/10
                1/20/10
              NONE
              NONE
              NONE
              NONEAndrew
      Scherr, Board Member
              3,750
                1,875
                1,875
                500
                250
                250
              NONE
              NONE
              $2.00
                $2.00
                $2.00
                $2.00
                $2.00
                $2.00
              1/20/10
                1/20/10
                1/20/10
                1/20/10
                1/20/10
                1/20/10
              NONE
              NONE
              NONE
              NONE







All
options and warrants have been authorized by the Board of
Directors.  All options and warrants issued were for services
rendered.




15





DIRECTOR
COMPENSATION


For
Fiscal Year- Ending 12/31/2007


Name
              
              (a)
            Fees
      Earned or Paid in Cash
              ($)
              (b)
            
            Stock
      Awards
              ($)
              
              (c)
            
            Option
      Awards
              ($)
              
              (d)
            Non-Equity
      Incentive Plan Compensation ($)
              
              (e)
            Change
      in Pension Value and Nonqualified Deferred Compensation
      Earnings
              (f)
            All
      Other Compensation
              ($)
              
              (g)
            
            Total
              ($)
              
              (h)Morton
      Reed, President, CEO & Director
            NONE
            
            $
            24,000
            
            NONE
            NONE
            NONE
            NONE
            
            $
            24,000Stanley
      Weiner
            NONE
            
            $
            21,500
            
            NONE
            NONE
            NONE
            NONE
            
            $
            21,500Gary
      Rasmussen
            NONE
            
            NONE
            
            NONE
            NONE
            NONE
            NONEDennis
      H. Johnston
            NONE
            
            NONE
            
            NONE
            NONE
            NONE
            NONEVirginia
      Perfili
            NONE
            
            NONE
            
            NONE
            NONE
            NONE
            NONEDonald
      Hejmanowski
            NONE
            
            $
            16,500
            
            NONE
            NONE
            NONE
            NONE
            
            $
            31,500


The
amounts in all Other Compensation columns for the Board members are the fair
value of warrants that were issued to the Board members for their past
services.  All of the warrants were vested on the grant
date.  None have been exercised.





EMPLOYMENT
AGREEMENTS





Morton
Reed





Effective
September 5, 2002, the Company entered into an employment agreement with Morton
Reed wherein Mr. Reed agreed to serve as the Company’s Chief Executive Officer
and President.  The term of employment was for four (4)
years.  The Company agreed to pay Mr. Reed annual compensation of
$252,000. In addition to the cash compensation, Mr. Reed is entitled to the use
of a Company vehicle.  Mr. Reed voluntarily stopped taking his full
salary in mid-2003 to assist the Company in the financing of ongoing
litigation.  Mr. Reed resumed taking a salary in 2004, but took only
$150,000. Mr. Reed has agreed to accrue such portions of his salary ($355,915 as
of December 31, 2005, and $543,000 as of December 31, 2006) as deemed relevant
by the board of directors until such time as the Company is adequately
capitalized and able to pay such salary. In 2007, Mr. Reed was issued stock
valued at $525,000 for his accrued salary and  his agreement was
cancelled.




Gary
Rasmussen





Mr.
Rasmussen has not yet entered into a written employment agreement with the
Company. However, the Board of Directors authorized compensation and benefits
for him that are commensurate with those provided to his predecessor, Morton
Reed. Therefore, the Company has accrued a salary base of $252,000 per annum.
Mr. Rasmussen elected to waive any salary, or accrual therof, for the fiscal
year ending December 31, 2007.





Terry
Gabby





Mr. Gabby
entered in to an employment agreement effective June 29, 2005 to serve as the
Company’s Chief Financial Officer with an annual salary of
$55,000.  Mr. Gabby received 1,000 options at
$4.10 per share
expiring on July 1, 2007.  These options were vested at the date of
grant.  Mr. Gabby received 5,000 options in
November 2006 exercisable at $0.40 per share and
will expire on November 21, 2009. In November 2006 Mr. Gabby received 5,000 warrants
exercisable at $0.40 per share and
will expire on November 27, 2009. The fair value of these options and warrants
is calculated to be $4,425.  In August 2007 Mr. Gabby received 25,000 options
exercisable at $0.80 per share and
will expire on August 30, 2009. The fair value of these options is calculated to
be $19,500.





Director
Compensation and Other Arrangements





All
directors will be reimbursed for expenses incurred in attending Board or
committee meetings.  From time to time, certain directors, who are not
employees, may receive shares of common stock.





Compensation
Committee





The
Company does not have a compensation committee of the Board of
Directors.  Until a formal committee is established, the Board of
Directors will review all forms of compensation provided to our executive
officers, directors, consultants and employees, including stock
compensation.





Option
Grants in Last Fiscal Year





On August
30, 2007, the Board awarded Terry Gabby, the Company’s Chief Financial Officer,
an unregistered stock option to acquire a total of 25,000 shares of the
Company’s common stock at an exercise price of $0.80 per share.
 The option expires two years from the date of grant. We believe that the
grant of the option was exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933 by virtue of Section
4(2).








ITEM
11.                                SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





The
following table presents information, to the best of our knowledge, about the
beneficial ownership of our common stock on December 31, 2007, held by those
persons known to beneficially own more than 5% of our capital stock and by our
directors and executive officers.





The
percentage of beneficial ownership for the following table is based on 9,258,511
shares of common stock outstanding as of December 31, 2007, and 3,990,134 shares
of Series B Preferred. Each share of Series B Preferred stock is convertible
into one share of common stock. The far rights column of the Percentage of
Beneficial Ownership table assumes the conversion of the Series B Preferred
shares into 3,990,134 shares of common stock with a total of 13,248,645 shares
of common stock then outstanding.





Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and does not necessarily indicate beneficial ownership for
any other purpose. Under these rules, beneficial ownership includes those shares
of common stock over which the stockholder has sole or shared voting or
investment power. It also includes (unless footnoted) shares of common stock
that the stockholder has a right to acquire within 60 days after December 31,
2007, pursuant to options, warrants, conversions privileges or other
rights.  The percentage ownership of the outstanding common stock,
however, is based on the assumption, expressly required by the rules of the
Securities and Exchange Commission, that only the person or entity whose
ownership is being reported has converted options or warrants into shares of our
common stock.





Beneficial Ownership of
Securities


Name
      of Beneficial Owner
              And
      Position  (1)
            
            Number
              of
      Shares of Common Beneficially Owned
            
            
            Percent
      of
              Class
      Beneficially Owned (2)
            
            
            Number
              of
      shares of Series B Beneficially Owned (3)
            
            
            Percent
      of
              Class
      Assuming Conversion of Series B Pfd (2)Gary
      Rasmussen (4)
              Chairman
      & CEO
            
            
            4,938,500
            
            
            
            53.2
            %
            
            
            1,734,452
            
            
            
            42.0
            %Terry
      Gabby (5)
              CFO
      & Treasurer
            
            
            15,000
            
            
            
            0.26
            %
            
            
            -
            
            
            
            0.1
            %Stanley
      Weiner
              VP
      of Finance and a Director
            
            
            612,383
            
            
            
            6.6
            %
            
            
            -
            
            
            
            4.6
            %Virginia
      Perfili
              Director
            
            
            14,450
            
            
            
            0.2
            %
            
            
            -
            
            
            
            0.1
            %Jackelyn
      Giroux, President (6)
              Global
      Universal Film Group, Inc.
            
            
            59,855
            
            
            
            0.6
            %
            
            
            2,255,682
            
            
            
            17.5
            %Morton
      Reed, Ph.D.
              Former
      President, CEO, Chairman
            
            
            169,895
            
            
            
            1.8
            %
            
            
            -
            
            
            
            1.3
            %James
      Paul Gietz
              3603
      Aberdeen Way
              Houston,
      TX 77025
            
            
            500,000
            
            
            
            5.4
            %
            
            
            -
            
            
            
            3.8
            %Directors
      and Officers as a Group (6 persons)
            
            
            5,810,083
            
            
            
            62.7
            %
            
            
            3,990,134
            
            
            
            74.0
            %




16




Footnotes:





1.
            As
      used in this table, “beneficial ownership” means the sole or shared power
      to vote, or to direct the voting of, a security, or the sole or shared
      investment power with respect to a security (i.e., thepower to dispose
      of, or to direct the disposition of, a security).  It also
      includes shares of common stock that the stockholder has the right to
      acquire within 60 days of December 31, 2007, which are treated as
      outstanding for the purpose of determining the percent of class by such
      stockholder. Unless otherwise indicated, the address for each of these
      stockholders is c/o Global Entertainment Holdings, 1516 E. Tropicana
      Avenue, Suite 245, Las Vegas, Nevada
89119.




2.
            Figures
      are rounded to the nearest tenth of a
percent.




3.
            Each
      share of Series B Preferred stock is convertible into one share of common
      stock by the holder at anytime.




4.
            Mr.
      Rasmussen holds 13,500 shares of common stock and 1,093,227 shares of
      Series B Preferred stock directly in his name. The amount of shares
      indicated includes 4,925,000 shares of common stock and 641,225 shares of
      Series B Preferred stock owned by Rochester Capital Partners, LP. (RCP), a
      Nevada limited partnership. Gary Rasmussen, CEO of the Company, is the
      General Partner of RCP and owns a majority equity interest therein. As
      General Partner, Mr. Rasmussen has voting, investment and dispositive
      power over the shares of stock owned by the
  partnership..




5.
            Mr.
      Gabby holds an option to purchase 5,000 and 25,000 shares
      of our common stock at a price of $0.40 and
      $ 0.80
      per share respectively.




6.
            Jackelyn
      Giroux holds 59,855 shares of common stock and 2,255,682 shares of Series
      B Preferred stock directly in her name. Ms. Giroux is the President and
      CEO of Global Universal Film Group, our wholly-owned subsidiary, and is
      not an officer or director of Global Entertainment
    Holdings.










ITEM
12.                                CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS





Gary
Rasmussen, our CEO and Chairman, also serves as the Chairman of our subsidiary,
Global Universal. 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, and in
consideration of the cancellation of notes payable from Global Universal.
Additionally, Mr. Rasmussen is the General Partner of Rochester Capital
Partners, our controlling and largest shareholder.








ITEM
13.                                EXHIBITS
AND REPORTS ON FORM 8-K





(a)           Exhibits





The
following exhibits are filed herewith or are incorporated by reference to
exhibits previously filed with the Commission.





Exhibit
      Number
            Description2.1
            Plan
      and agreement of merger between RP Entertainment Inc., RP Acquisition
      Corp. and LitFunding Corp. dated February 21, 2003 (Incorporated by reference to
      the exhibits to Form 8-K filed on March 11,
2003)2.2
            U.S.
      Bankruptcy Court Stipulation between LitFunding Corporation and
      Petitioning Creditors dated November 14, 2003 (Incorporated by reference to
      the exhibits to Form 8-K filed on December 4,
  2003)2.3
            U.
      S. Bankruptcy Court Notice of Entry of Judgment (Incorporated by reference to
      the exhibits to Form 8-K filed on December 4,
  2003)2.4
            U.S.
      Bankruptcy Court Chapter 11 Plan of Reorganization dated April 7, 2004
      (Incorporated by
      reference to the exhibits to Form 8-K filed on July 6,
      2004)2.5
            Agreement
      and Plan of Merger between LitFunding Inc., LFDG Subsidiary Corp. and Easy
      Money Express Inc. dated February 7th,
      2006 (Incorporated by
      reference to the exhibits to Form 8-K filed on February 13,
      2006)3(i).1
            Articles
      of Incorporation dated July 2, 1996 (Incorporated by reference to
      the exhibits to Form SB-2 filed on June 19,
2001)3(i).2
            Certificate
      of Amendment to Articles of Incorporation dated September 4, 1996 (Incorporated by reference to
      the exhibits to Form SB-2 filed on June 19,
2001)3(ii).1
            By-Laws
      dated September 2, 1996 (Incorporated by reference to
      the exhibits to Form SB-2 filed on June 19,
2001)3(ii).2
            Amendment
      of By-laws dated March 5, 1997 (Incorporated by reference to
      the exhibits to Form SB-2 filed on June 19,
2001)3.3
            Certificate
      of Amendment to Designation of Series B Convertible Preferred Stock, dated
      December 6, 2007 (10)4.1
            Common
      Stock Certificate Form (Incorporated by reference to
      the exhibits to Form SB-2 filed on June 19,
2001)10.1
            Agreement
      between RP Entertainment Inc. and Brutus Productions dated May 1, 1999
      (Incorporated by
      reference to the exhibits to Form SB-2A filed on August 3,
      2001)10.2
            Amended
      2002 Employee Stock Compensation Plan Prospectus dated September 2, 2003
      (Incorporated by
      reference to the exhibits to Form S-8 filed on September 10,
      2003)10.3
            Amended
      2002 Employee Stock Compensation Plan Certification of Plan Adoption dated
      September 2, 2003 (Incorporated by reference to
      the exhibits to Form S-8 filed on September 10,
    2003)10.4
            2004
      Stock Option Plan dated March 9, 2004 (Incorporated by reference to
      the exhibits to Form DEF 14A filed on July 13,
  2004)10.5
            Employment
      Agreement between LitFunding USA and Stephen D. King dated October 2004
      (Incorporated by
      reference to the exhibits to Form S-8 filed on October 28,
      2004)10.6
            Investment
      Agreement between LitFunding Corp. and Dutchess Private Equities Fund,
      L.P. dated January 14, 2005 (Incorporated by reference to
      the exhibits to Form 8-K filed on January 21,
  2005)10.7
            Registration
      Rights Agreement between LitFunding Corp. and Dutchess Private Equities
      Fund, L.P. dated January 14, 2005 (Incorporated by reference to
      the exhibits to Form 8-K filed on January 21,
  2005)10.8
            Option
      Agreement between Silver Dollar Productions Inc. and Morton Reed dated
      January 31, 2005 (Incorporated by reference to
      the exhibits to Form PRE 14C filed on March 21,
    2005)10.9
            Certificate
      of Designation dated July 25, 2005 (Incorporated by reference to
      the exhibits to Form S-8 filed on July 28, 2005)10.10
            Binding
      letter of intent of merger between LitFunding Corp. and Cashwize Inc.
      dated September 15, 2005 (Incorporated by reference to
      the exhibits to Form 8-K filed on September 19,
    2005)10.11
            Letter
      of intent of merger between LitFunding Corp. and Easy Money Express Inc.
      dated December 14, 2005 (Incorporated by reference to
      the exhibits to Form 8-K filed on January 3,
  2006)10.12
            Binding
      Letter of Intent between Silver Dollar Productions, Inc. and Global
      Universal Film, Group Ent. Inc. dated December 21, 2005 (Incorporated by reference to
      the exhibits to Form 8-K filed on January 12,
  2006)10.13
            Investment
      Agreement with Imperial Capital Holdings, dated January 16, 2006 (Incorporated by reference to
      the exhibits to Form 8-K filed on February 1,
  2006)10.14
            Registration
      Rights Agreement with Imperial Capital Holdings, dated January 19, 2006
      (Incorporated by
      reference to the exhibits to Form 8-K filed on February 1,
      2006)10.15
            Placement
      Agent Agreement with Brewer Financial Services, LLC., dated January 16,
      2006 (Incorporated by
      reference to the exhibits to Form 8-K filed on February 1,
      2006)10.16
            2006
      Non-QualifiedStock Compensation
      Plan (Incorporated by
      reference to the exhibits to Form S-8 filed on February 28,
      2006)10.19
            Share
      Exchange Agreement with Easy Money Express, Inc., dated March 31,
      200610.20
            Service
      Agreement between Easy Money Express and M2 Internet, dated June 16, 2006
      (1)10.21
            Restated
      Investment Agreement between the Registrant and Imperial Capital Holdings,
      dated July 28, 2006 (2)10.22
            Restated
      Registration Rights Agreement between the Registrant and Imperial Capital
      Holdings, dated July 28, 2006 (2)10.23
            Restated
      Placement Agent Agreement between the Registrant and Brewer Financial
      Services, dated July 28, 2006 (2)10.24
            Letter
      of Intent between the Registrant and CardMart Plus, dated November 17,
      2006 (3)10.25
            Termination
      of Letter of Intent with CardMart Plus, dated February 20, 2007
      (4)10.26
            Letter
      Agreement to Acquire Shares between the Registrant and Rochester Capital
      Partners, dated March 5, 2007 (6)20
            Letter
      to Shareholders dated March 11, 2003 (Incorporated by reference to
      the exhibits to Form 8-K filed on March 11,
2003)21
            List
      of Subsidiaries : California LitFunding, E.Evolution Expeditions and
      LitFunding USA (Incorporated by reference to
      the exhibits to Form 10-KSB filed on March 21,
  2005)23.1*
            Consent
      of Independent Registered Public Accounting Firm31.1*
            Certification
      of Gary Rasmussen pursuant to Section 302 of the Sarbanes-Oxley
      Act31.2*
            Certification
      of Terry Gabby pursuant to Section 302 of the Sarbanes-Oxley
      Act32.1*
            Certification
      of Gary Rasmussen pursuant to Section 906 of the Sarbanes-Oxley
      Act32.2*
            Certification
      of Terry Gabby pursuant to Section 906 of the Sarbanes-Oxley
      Act


______


*              Filed
herewith.


17




(b)           Reports on Form
8-K





The
following reports on Form 8-K were filed by the Company in 2007, and are
incorporated herein by this reference:





(1)  Form
8-K, filed 2-23-2007, regarding the termination of a merger agreement between
the Registrant and CardMart Plus.





(2)  Form
8-K, filed 02-26-2007, appointment of Dennis H. Johnston as
director.





(3)  Form
8-K, filed 03-07-2007, regarding the issuance of 40 million shares pursuant to a
Letter Agreement between the Registrant and Rochester Capital
Partners.





(4)  Form
8-K, filed 07-02-2007, dismissal of Dennis H. Johnston as director for
cause.





(5)  Form
8-K, filed 09-19-2007, regarding a change in control of Registrant by Rochester
Capital Partners.





(6)  Form
8-K, filed 11-05, 2007, appointment of Virginia Perfili as
director.





(7) Form
8-K, filed 12-12-2007, regarding amendment to the designation of rights and
preferences of the Series B, Convertible Preferred Stock.








ITEM
14.                            PRINCIPAL
ACCOUNTANT FEES AND SERVICES





(1)           AUDIT
FEES





The
aggregate fees billed for professional services rendered by Lawrence Scharfman
& Co., CPA, P.C., for the audit of our annual financial statements and
review of the financial statements included in our Form 10-QSB or services that
are normally provided by the accountant in connection with statutory and
regulatory filings or engagements for fiscal year 2006 was $32,500.





The
aggregate fee billed for professional services rendered by Lawrence Scharfman
& Co., CPA, P.C., for the audit of our annual financial statements for
fiscal year 2007 was $35,000.








(2)           AUDIT-RELATED
FEES





Not applicable.





(3)           TAX FEES





Not applicable.





(4)           ALL OTHER
FEES





Not applicable.





(5)           AUDIT COMMITTEE POLICIES AND
PROCEDURES





We
do not have an audit committee.





(6)           If
greater than 50 percent, disclose the percentage of hours expended on the
principal accountant's engagement to audit the registrant's financial statements
for the most recent fiscal year that were attributed to work performed by
persons other than the principal accountant's full-time, permanent
employees.





Not
applicable.


SIGNATURES





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










GLOBAL ENTERTAINMENT HOLDINGS,
      INC.Date
      October 31, 2008
              By:
              /s/ Gary
      RasmussenName Gary
      RasmussenTitle CEO







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








Company NameDate
      October 31, 2008
              By:
              /s/ Gary
      RasmussenName Gary
      RasmussenTitle CEO
      & Chairman







Company NameDate
      October 31, 2008
              By:
              /s/ Terry
      GabbyName Terry
      GabbyTitle Chief
      Financial Officer





18


Company NameDate
      October 31, 2008
              By:
              /s/ Stanley
      WeinerName Stanley
      WeinerTitle VP
      Finance, Director





Company NameDate
      October 31, 2008
              By:
              /s/ Virginia
      PerfiliName Virginia
      PerfiliTitle Director




19








TABLE OF
CONTENTS


PAGES





REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
            21CONSOLIDATED
      BALANCE SHEET
            22CONSOLIDATED
      STATEMENT OF OPERATIONS
            23CONSOLIDATED
      STATEMENT OF STOCKHOLDERS' EQUITY
            24CONSOLIDATED
      STATEMENT OF CASH FLOWS
            25NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
            26-35














20





Lawrence
Scharfman & Co., CPA, P.C.


Certified
Public Accountants




18 E SUNRISE HIGHWAY,#201
              9608
      HONEY BELL CIRCLEFREEPORT, NY11520
              BOYNTON
      BEACH FL,33437TELEPHONE:(516) 771-5900
              TELEPHONE:(561) 733-0296FACSIMILE:   (516 771-2598
              FACSIMILE: (561)
470-0613




Board of
Directors


Global
Entertainment Holdings, Inc.


1516 East
Tropicana Ave. Ste 245


Las Vegas
Nevada 89119








REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





We have
audited the accompanying balance sheet of Global Entertainment Holdings, Inc.,
and subsidiaries as of December 31, 2007 and the related consolidated statements
of operations, stockholders equity and cash flows for the years then ended.
These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on
our audits.  The statements for 2004 and prior years were audited by
another auditor.





We
conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. 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 presentation. We believe that our audit
provided a reasonable basis for our opinion.





In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Global Entertainment
Holdings as of December 31, 2006 and December 31, 2007 and the results of
operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States.





The
Company has had difficulty in generating sufficient cash flow to meet its
obligations and is dependent on management’s  ability to develop
profitable operations.  These factors, among others, may raise
substantial doubt as to their ability to continue as agoing
concern.





Boynton
Beach
FL                                                                Yours
Truly,


September
20, 2008


/s/ Lawrence Scharfman
CPA





- LICENSED IN FLORIDA & NEW YORK
-





21




Global
      Entertainment Holdings
      Inc.Consolidated
      Balance SheetDecember
      31,2007AssetsCurrent
      assets:Cash
      and cash equivalents
              
              
              
              $
              2,558Accounts receivable,
    net
              
              
              
              
              
              
              
              0Contingent advances less reserves for
      unsuccessfulresolution of lawsuits
              
              
              
              
              
              
              
              0Employee
      Advances
              
              
              
              
              
              
              
              25,315Note
      receivable
              
              
              
              
              
              
              
              900Total current assets
              
              
              
              
              
              
              
              28,773Fixed
      assets, net
              
              
              
              
              
              
              
              23,479Total
      fixed assets
              
              
              
              
              
              
              
              23,479Other
      assetsBook Rights
              
              
              
              
              
              
              
              1,864TV Game/Reality Show
              
              
              
              
              
              
              8,966Film Rights
              
              
              
              
              
              
              
              189,175Website Software
              
              
              
              
              
              
              
              6,000Movies
              
              
              
              
              
              
              
              26,850Other Assets
              
              
              
              
              
              
              
              23,170Total other assets
              
              
              
              
              
              
              
              256,025Total assets
              
              $
              308,277Liabilities and Stockholders'
      EquityLiabilities
      not subject to compromiseAccounts
      payable
              
              
              
              
              
              
              $
              178,312Accrued
      expenses
              
              
              
              
              
              
              
              121,842Notes
      payable
              
              
              
              
              
              
              
              167,004Investor
      participation obligations
              
              
              
              
              
              
              
              699,500Interest
      payableTotal
      current liabilities not subject to compromise
              
              
              
              1,166,658Liabilities
      subject to compromiseDebentures
              
              
              
              
              
              
              
              40,000Total liabilities
      subject to compromise
              
              
              
              40,000Total
      liabilities
              
              
              
              
              
              
              
              1,206,658Stockholders' Equity:Series
      A Convertible preferred Stock, par value $0.001, 2,000,000 shares
      authorized, 800,000 shares issued and2,000,000
      shares authorized, 800,000 shares issued and shares issued and
      outstandingSeries
      B Convertible preferred Stock, par value $0.001, 4.000,000 shares
      authorized, 3,990,314 shares issued
      and outstanding
              
              
              
              3,990Common
      stock, $0.001 par value, 230,000,000 shares authorized,9,258,459 and 2,898,890 shares issued
andoutstanding
      at December 31, 2007 and 2006, respectively
              
              
              
              92,584Shares
      authorized & unissued
              
              
              
              
              
              
              
              17,500Subscription
      Payable
              
              
              
              
              
              
              
              (171,000
              )Additional
      paid-in capital
              
              
              
              
              
              
              
              10,745,821Additional
      paid-in capital Preferred AAdditional
      paid-in capital Preferred
              
              
              
              271,425Accumulated
      (deficit)
              
              
              
              
              
              
              
              (11,858,701
              )(898,381
              )$
              308,277






22





Global
      Entertainment Holdings, Inc.Statements
      of OperationsFor
      the years endingDecember
      31,2007
            
            2006
            
            2005Net
      Revenue
            
            $
            216,089
            
            $
            644,040
            
            $
            355,264Expenses:76,950General and administrative
      expenses
            
            
            1,014,565
            
            
            1,659,845
            
            
            1,659,845Consulting
      Fees – related party
            
            
            
            
            
            
            
            
            8,301Financing
      expense
            
            
            70,000
            
            
            45,906
            
            
            67,288Depreciation
      & Amortization
            
            
            26,001
            
            
            23,558
            
            
            28,467Preferred
      stock dividend
            
            
            
            
            
            19,993
            
            
            1,245Total operating expenses
            
            
            1,110,566
            
            
            1,749,302
            
            
            3,168,738Net operating (loss)
            
            
            (894,477
            )
            
            (1,105,262
            )
            
            (2,813,474
            )Other
      income (expenses):Other
      income
            
            
            53,947
            
            
            10,000
            
            
            73,953Interest
      expense
            
            
            (94,099
            )
            
            (62,685
            )
            
            (57,039
            )Rental
      IncomeAmortization
      of debt discount
            
            
            
            
            
            130,000
            
            
            (677,484
            )Total
      other income (expenses)
            
            
            (40,152
            )
            
            77,315
            
            
            (660,570
            )Loss
            before
            reorganization items
            
            
            (934,629
            )
            
            
            
            
            (3,474,043
            )Extraordinary
            gain
            and
      income taxesBad
      Debt in
            connection
            with
      share issuance
            
            
            
            
            
            
            
            
            (498,000
            )Gain
      on debt restructure
            
            
            323,929Loss  before
      extraordinary  gain and income taxes
            
            
            
            
            
            
            
            
            (3,972,043
            )Income (Loss) before Income
      taxes
            
            
            (610,700
            )
            
            1,027,947
            
            
            (3,972,043
            )Net Income (loss)
            
            $
            (610,700
            )
            $
            1,027,947
            
            $
            (3,972,043
            )Basic Earnings (loss) per
      share:
            
            
            (0. 23
            )
            
            (0.54
            )
            
            (0.28
            )Before Extraordinary item
            
            
            (0.23
            )
            
            (0.54
            )
            
            (2.40
            )Extroardinary
            item
            
            
            
            0.08
            
            
            
            
            
            (0.35
            )Total
            
            
            
            
            (0.15
            )
            
            (0.54
            )
            
            (2.40
            )Weighted
      average number of common shares outstanding:Basic
            
            
            4,005,251
            
            
            1,909,965
            
            
            1,441,949




23


Statements
      of Changes in Stockholders' EquityCommon
      Stock
              Preferred
      Stock
              Preferred
      StockA
              
              
              B
              
              Paid
      in
              Paid
      in
              Subscription
              Shares
      Authorized
              Accumulated
              Total
      StockholdersShares
              Amount
              Shares
              
              Amount
              Shares
              
              Amount
              Capital
              Capital
              Payable
              Unissued
              (Deficit)
              EquityBalance,
      December 31, 2004
              1,122,006
              
              11,221
              -
              
              -
              
              
              
              4,611,310
              
              -
              
              (6,225,276)
              (1,602,745)shares
      issued for cash
              227,195
              
              2,292
              800,000
              
              800
              
              
              
              1,136,608
              
              -
              
              -
              1,136,
      608Shares
      authorized & unissued
              
              
              
              
              
              
              
              
              
              327,139
              
              -
              
              -
              327,139Shares
      issued for services
              75,750
              
              757
              -
              
              -
              
              
              
              415,705
              
              -
              
              -
              415,705Shares
      issued in settlement
              15,788
              
              157
              -
              
              -
              
              
              
              67,236
              
              -
              
              -
              67,236Shares
      issued in settlement of notes
              60,000
              
              600
              -
              
              -
              
              
              
              647,891
              
              -
              
              -
              647,891Shares
      issued in lieu of interest
              7,500
              
              75
              -
              
              -
              
              
              
              38,675
              
              -
              
              -
              38,675Warrants
      and Options issued
              -
              
              -
              -
              
              -
              
              
              
              739,979
              
              -
              
              -
              739,979Warrants
      and Options exercised
              66,500
              
              665
              -
              
              -
              
              
              
              32,335
              
              -
              
              -
              32,335Options
      exercised  - related party
              45,000
              
              450
              -
              
              -
              
              
              
              44,550
              
              -
              
              -
              44,550Subscription
      payable
              -
              
              -
              -
              
              -
              
              
              
              -
              
              327,139
              
              -
              327,139Net
      (loss) for the year ended
              
              
              
              
              
              
              
              
              
              
              
              
              
              (3,972,043)
              (3,972,043)Balance,
      December 31, 2005
              1,621,740
              $
              16,217
              800,000
              $
              800
              
              
              $
              8,061,428
              
              327,139
              $
              (10,197,319)
              ($1,791,735)Shares
      issued for cash
              126,533
              
              1,265
              
              
              
              
              
              
              145,268
              
              
              
              
              145,268Shares
      issued for investment
              1,500
              
              15
              
              
              
              
              
              
              3,580
              
              
              
              
              3,580Shares
      authorized & unissued
              
              
              
              
              
              
              
              
              
              327,139
              
              
              
              
              327,139Shares
      issued for services
              734,989
              
              7,350
              
              
              
              
              
              
              378,826
              
              
              
              
              378,826Shares
      issued in settlement of debt
              140,660
              
              1,407
              
              
              
              
              
              
              256,997
              
              
              
              
              256,997Shares
      issued for preferred dividend
              9,600
              
              96
              
              
              
              
              
              
              9,024
              
              
              
              
              9,024Shares
      issued in settlement of notes
              200,000
              
              2,000
              
              
              
              
              
              
              198,000
              
              
              
              
              198,000Shares
      issued for financing
              70,400
              
              704
              
              
              
              
              
              
              65,176
              
              
              
              
              65,176Shares
      issued in lieu of interest
              1,466
              
              15
              
              
              
              
              
              
              1,452
              
              
              
              
              1,452Share
      issued in exchange of preferred
              80,000
              
              800
              (400,000)
              
              
              
              
              
              99,200
              
              
              
              
              99,200Warrants
      and options issued
              32,000
              
              320
              
              
              
              
              
              
              35,207
              
              
              
              
              35,207Warrants
      and Options exercised
              65,000
              
              650
              
              
              
              
              
              
              3,600
              
              
              
              
              3,600Shares
      Cancelled
              (185,000)
              
              (1,850)
              400,000
              
              (4000)
              
              
              
              (933,918)
              
              
              
              
              (933,918)Options
      exercised – related party
              
              
              
              
              
              
              
              
              
              4,425
              
              
              
              
              4,425Subscription
      payable
              
              
              
              
              
              
              
              
              
              
              
              -322,139Net
      (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,027,947)For
      the year endedDecember
      31,2006Balance,
      December 31,2006
              2,898,890
              
              28,988
              
              
              
              
              
              
              8,655,403
              
              
              
              (11,248,000)
              (2,479,324)Shares
      authorized & unissued
              
              
              
              
              
              
              
              
              
              
              
              (171,000)
              
              
              (171,000)Shares
      authorized & unissued
              
              
              
              
              
              
              
              
              
              17,500
              
              
              17,500
              
              17,500Shares
      issued for services
              1,125,657
              
              11,257
              
              
              
              
              
              
              826,147
              
              
              
              
              826,147Shares
      issued in settlement of debt
              1,103,416
              
              11,039
              
              
              
              3,990,314
              
              3,990
              883,071
              271,425
              
              
              
              1,154,496Shares
      issued for Note Receivable
              4,000,000
              
              40,000
              
              
              
              
              
              
              210,000
              
              
              
              
              210,000Shares
      issued for financing
              500,000
              
              500
              
              
              
              
              
              
              54,500
              
              
              
              
              54,500Share
      issued in exchange of preferred
              80,000
              
              800
              
              
              
              
              
              
              99,200
              
              
              
              
              100,000Net
      (Loss)
              
              
              
              
              
              
              
              
              
              
              
              
              
              (610,700)
              (610,700)For
      the year endedDecember
      31,2007
              47Balance,
      December 31,2007
              9,258,511
              
              92,584
              
              
              
              3,990,314
              
              3,990
              10,745,821
              271,425
              (171,000)
              17,500
              (11,858,700)
              (898,381)







24




Global
      Entertainment Holdings Inc.Consolidated
      Statements of Cash FlowFor
      the years endingDecember
      31,2007
              
              
              2006
              
              
              2005Cash
      flows from operating activitiesNet
      income (loss)
              
              $
              -610,700
              
              
              $
              -1,027,947
              
              
              
              $-3,474,048Adjustments
      to reconcile net income to net cashprovided
      by (used in operating activities)Extraordinary
      gain on settlement with IEP creditorsGain
      on forgiveness of capital lease obligationGain
      on Discount of pre-petition debtDepreciation
      and amortization
              
              
              26,001
              
              
              
              23,558
              
              
              
              28,467Reserve
      for unsuccessful resolution of lawsuits
              
              
              226,663
              
              
              
              
              
              
              
              76,950Reserve
      for Doubtful Receivables
              
              
              159,838Loss
      on disposal of assetShare-based
      compensation
              
              
              765,616
              
              
              
              414,353
              
              
              
              825,124Common
      stock issued in settlements
              
              
              -1,389,878
              
              
              
              493,885
              
              
              
              67,394Share-based
      interest payments
              
              
              1,467Shares
      cancelled
              
              
              4176
              
              
              
              -935,768Gain
      on participation obligation
              
              
              94038,750Debt
      discount amortization
              
              
              -1,300,000
              
              
              
              -15,000Changes
      in assets and liabilities:
              
              
              
              
              
              
              603,558Trade
      and other accounts receivable
              
              
              222,279
              
              
              
              -2,790
              
              
              
              84,530Other
      assets
              
              
              163,095
              
              
              
              -138,982
              
              
              
              -20,881Contingent
      advances
              
              
              -572,825
              
              
              
              -769,500Accounts
      payable and accrued expenses
              
              
              -25,000
              
              
              
              123,945315,705Trade
      and other claims subject to compromise
              
              
              
              -241,193Note
      receivable
              
              
              173,100
              
              
              
              -73,819
              
              
              
              -100,000Deferred
      revenue
              
              
              
              75,004
              
              
              
              141,668Net
      cash (used in) operating activities
              
              
              -283,870
              
              
              
              -1,749,919
              
              
              
              -2,438,471Cash
      flows from investing activities:Purchases
      of property and equipment
              
              
              
              
              
              
              -3,733Net
      cash (used in) investing activities
              
              
              
              -3,733Cash
      flows from financing activities:Cash
      from issuance of common stock
              
              
              242,500
              
              
              
              75,004
              
              
              
              441,700Cash
      from exercise of options & warrants
              
              
              4,250
              
              
              
              77,550Cash
      from issuance of preferred stock200,000Proceeds
      from notes payable
              
              
              
              1,106,806
              
              
              
              222,500Subscription
      Payable
              
              
              
              
              
              
              
              76,533Proceeds
      from investor participation borrowings
              
              
              
              702,500Proceeds
      from investor obligations
              
              
              22,210
              
              
              
              450,500Principal
      repayments on capital lease obligationsValue
      of Warrants issued
              
              
              -150,900
              
              
              
              35,527
              
              
              
              387,021Net
      cash provided by financing activities
              
              
              284,810
              
              
              
              1,744,416
              
              
              
              2,107,804Increase  (decrease)
      in cash
              
              
              940
              
              
              
              -5,503
              
              
              
              -334,401Cash
      - beginning of period
              
              
              1618
              
              
              
              7,121
              
              
              
              341,522Cash
      - ending of period
              
              $
              2258
              
              
              $
              1,618
              
              
              
              7,121Supplemental
      disclosures:Interest
      paid
              
              
              
              
              
              
              62,685
              
              
              
              57,039Income taxes
      paid
              
              $
              -
              
              
              $
              -Shares issued for
      services
              
              $
              593,000
              
              
              
              378,826
              
              
              _416,462Number of shares
      issued for services
              
              
              *112,568
              
              
              
              734,989
              
              
              
              75,750Shares issued for
      debt
              
              $
              1,111,865
              
              
              
              458,404
              
              
              
              754,634Number of shares
      issued for debt
              
              
              *840,660
              
              
              
              340,660
              
              
              
              83,288Imputed value of
      warrants issued with debt
              
              
              -
              
              
              $
              
              
              
              __________All share after 10 to 1 reverse
      split




25


Note
1 - Summary of Accounting Policies





LitFunding
Corp. ("The Company") was incorporated in the state of Nevada. The Company
serves as a holding company for its wholly owned subsidiaries, California
LitFunding and LitFunding USA ("The Companies"), both incorporated in the State
of Nevada. California LitFunding was the entity that conducted substantially all
operations during 2004, and owned substantially all of the operating assets,
employed all the personnel, and paid the obligations of all the corporations.
LitFunding USA began assuming some operations in the last quarter of 2004 and in
2005 assumed responsibility for substantially all the operations of all the
corporations.





California
LitFunding is the successor-in-interest by merger to the "original" company in
the three primary entity corporate structure that now exists. It has been in the
business of investing in litigation recoveries since 2000. In summary,
California LitFunding raised capital and advanced this capital to various law
firms pursuant to "Settlement Agreements". LitFunding USA resumed the business
of litigation funding subsequent to June 17th, 2004, after the United States
Bankruptcy Court entered an order confirming the LitFunding Corp. and California
LitFunding joint plans of reorganization. LitFunding USA pursues this business
by itself and through several wholly owned limited liability companies
("LLC's"). Settlement Agreements provide that the funds advanced shall be repaid
to the Companies, plus a fee, when the lawsuits referenced in the agreement
ultimately settle. The exact amount of the fee payable on the funds advanced
depends upon the length of time the funds are outstanding, up to a fixed limit.
Pursuant to the terms of the Settlement Agreements, the Companies' contractual
right to payment is limited to the funds ultimately paid to the law firm from
the specified lawsuit, or lawsuits, in which the funds are invested or
expended.





On
January 23, 2003, the Company completed a merger with RP Entertainment, Inc., a
publicly held Nevada corporation, through a newly formed entity, RP Acquisition
Corp., a Nevada corporation, as a wholly owned subsidiary of RP Entertainment.
On February 25, 2003, the Company entered into an Agreement of Merger with
California LitFunding, formerly LitFunding Corp. (LFC) a California corporation.
LFC became a subsidiary when the Articles of Merger between RP Acquisition
Corp., the Registrant's wholly owned subsidiary that was formed to facilitate
the merger and LFC were filed with the Nevada Secretary of State. The charter
documents of the Company are the charter documents of the surviving corporation.
Pursuant to the Merger Agreement, 759,225 shares of common stock were to be
issued to the LFC shareholders in exchange for all the issued and outstanding
shares of LFC common stock. LitFunding Corp, a California corporation changed
its name to California LitFunding on May 30, 2003. RP Entertainment had no
material operations, assets or liabilities prior to the merger.





As a
result of the merger transaction with RP Entertainment, the former California
LitFunding stockholders obtained control of the Company's voting stock. For
financial accounting purposes, 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. The financial
statements have been prepared to give retroactive effect to January 1, 2002, of
the reverse acquisition completed on January 23, 2003, and represent the
operations of California LitFunding. Consistent with reverse acquisition
accounting: (i) all of California LitFunding's assets, liabilities, and
accumulated deficit, are reflected at their combined historical cost (as the
accounting acquirer) and (ii) the preexisting outstanding shares of the Company
(the accounting acquiree) are reflected at their net asset value as if issued on
January 23, 2003.





On April
2, 2003 certain individuals and entities filed an involuntary bankruptcy
petition against the Company in the United States Bankruptcy Court, Central
District of California. After numerous legal proceedings, in November 2003, the
Company filed its voluntary Chapter 11 bankruptcy petition. In January 2004, the
Company's wholly owned operating subsidiary, California LitFunding, filed a
voluntary Chapter 11 bankruptcy petition. The Company received confirmation of
its plan of reorganization from the United States Bankruptcy Court on June 17th,
2004 (see Note 3).





As
discussed in Note 2, the Company has entered into a Chapter 11 Plan of
Reorganization under the United States Bankruptcy Code. In June, 2006 the
Company received it’s discharge from the Bankruptcy Court. Liabilities exceed
assets by $898,381 at December 31, 2007. The Company's net loss for the year
ended December 31, 2007 is $610,700. The ability
of the Company to continue as a going concern remains dependent upon successful
operation as it comes out from the bankruptcy plan, obtaining additional capital
and financing, and generating positive cash flow from operations. The Company
intends to seek additional capital either through debt or equity offerings and
believes that increased volume and reduction in its lead time to finance and
collect on funded cases will ultimately lead to profitability and positive cash
flows. The financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern.





Rescission of
HandsFree Entertainment





On December 31, 2007, we entered
into an agreement to acquire 100 percent of the issued and outstanding shares of
common stock of Hands Free Entertainment,Inc., a Texas corporation. In
consideration for the acquisition, we agreed to issue an aggregate of 250,000
shares of our restricted common stock to the shareholders of Hands Free
Entertainment.




Under the terms of the Share
Exchange Agreement, Hands Free was to provide certain financial information to
our auditors, as well as copies of material agreements. No information other
than a preliminary financial statement was received from Hands Free. No shares
were issued or exchanged and the transaction was voided ab
initio.




We entered into a
Rescission Agreement with Hands Free Entertainment in March to mutually rescind
the Share Exchange Agreement,ab
initio, and to
release all parties from any potential claims.




The foregoing description of the
terms and conditions of the Share Exchange Agreement, as well as the Rescission
Agreement, are qualified in their entirety by, and made subject to, the more
complete information set forth in our reports on Form 8-K, filed with the SEC
and dated January 4, 2008, and April 10, 2008,respectively.




We incurred no material expenses
with the acquisition or rescission of the Share Exchange Agreement with HFE, as
both agreements were prepared by management and, since we could not obtain
proper information from HFE, no material effort or expense was incurred in
evaluating their information.








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,
2007 there were no cash deposits that exceeded those insured
limits.





Accounts
Receivable





On or about October 31, 2006, the
Company obtained a judgment against Joel Gatlin, Esq., in the principal amount
of $52,856.32, with interest to continue to accrue at 5% per month, pursuant to
the terms of an earlier lending agreement entered into between the
parties.




On or about November 20, 2006,
the Company obtained a judgment against Alan Schuchman, Esq., in the principal
amount of $40,000, with interest to continue to accrue at 10% per year on the
unpaid balance. Mr. Schuchman has abandoned his rights to a $10,000 debenture of
LitFunding in favor of LitFunding Corp.




On or about January 26, 2007, the
Company obtained a judgment against Anthony Casamassimi, Esq., in the principal
amount of $88,500, with interest to continue to accrue at 10% per month pursuant
to the terms of an earlier lending agreement entered into between the
parties.




These judgments totaling $181,356
are deemed to be non-collectable at December 31, 2007.  We reserved
the discounted amount, $159,838, to adequately reflect the status of the
receivables.


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, 2007 and 2006
was $26,001 and $23,558 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, 2007 is
$200,005.  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 has been
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.





26




Revenue
recognition




Film revenue
from licensing agreements is recognized when the license period begins and
the licensee andthe
Companybecome
contractually obligated under a noncancellable
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.




The
Company recognizes revenues earned for the fees charged on the contingent
advances upon successful resolution of the funded lawsuit. In accordance with
the guidelines of Staff Accounting Bulletin (SAB) 104 and Statement of Financial
Accounting Concepts (SFAC) No. 5, upon successful resolution of the lawsuit,
including appeals, the fees become realizable and earned. At this time the fee
is determinable and the collection ensured. Fees are determined as set forth in
the individual contracts. Fees are generally progressive the longer the time
period for which the advances are outstanding. Fees are not earned until there
is successful resolution to the related legal matter. The Company has begun to
make contingent advances on so called post settlement lawsuit matters. In these
instances all appeals have been exhausted and the fee is both determinable and
collection ensured at the time the advances are made.





Gain on Debt
Restructuring





Pursuant to SFAS 15 paragraphs 25
and 26 at December 31,2007 we report debt-restructuring as
follows:




The Company had two law firms
with monthly invoices amounting to $395,619 billed and outstanding for
approximately 2 years. In the year 2006 the company issued 150,000 shares of its
common stock, par value $0.001, priced at market to one legal firm. In 2007 the
Company issued 125,000 shares of its common stock, par value $0.001, priced at
market to the other firm. The law firms agreed to forgive the remaining balance
of $268,119.




The Company also negotiated in
2007 the reduction of accrued interest accumulated on a $500,000 promissory note
dated December 9, 2004. The lender agreed to convert the note into the Company’s
common stock and to forgive the $55,810 accrued interest. On November 12,
2007,the Company issued 500,000 shares of common stock, par value $0.001, valued
at market were issued to Stanley Weiner a board member.




The total Gain on debt
restructure is $323,929. The per share aggregate gain is
$0.08.





Deferred
Revenue





On March 7, 2006, we entered into
an agreement to effect a reverse tri-party merger by and among the Company,
Silver Dollar Productions, a Nevada corporation and wholly owned subsidiary of
the Company, and Global Universal Film Group, Inc. (“Global Universal”), a
Nevada corporation.  In connection with the merger, we issued
1,500,000 shares of our Series B Convertible Preferred Stock to Global Universal
in exchange for 100% of the issued and outstanding securities of Global
Universal.  Pursuant to the terms of the merger agreement, Global
Universal merged with and into Silver Dollar, Silver Dollar ceased to exist, and
Global Universal becamea wholly-owned subsidiary of the
Company.




Our merger agreement with Global
Universal gave its former shareholders, as holders of our Series B convertible
preferred stock, the right to “spin-off” from LitFunding and become a separately
traded corporation. The merger agreement referenced a registration statement
that was to be filed within sixty (60) days to register the shares that would be
received by LitFunding shareholders in the spin-off transaction. After electing
to spin-off, the Series B preferred stock would automatically convert into an
equal amount of shares of our common stock at the closing of the spin-off
transaction.  On October 16, 2006, Global Universal shareholders gave
notice to the Company of their election to spin-off from us. Upon completing the
spin-off transaction, we would earn a management fee of $200,000, of which
$26,000 has already been paid by Global Universal, and we would retain 10% of
Global Universal’s shares that were issued and outstanding immediately after the
spin-off transaction.  In the event that the spin-off transaction was
not completed by June 30, 2007, the balance of the management fee (i.e.,
$174,000) would be waived and we would be entitled to receive only 5% of their
shares at spin-off, rather than 10%. Because the spin-off did not occur by June
30, 2007, in July, the $26,000 in notes due Global Universal were acquired by
Rochester Capital Partners, LP, in exchange for cancellation of $26,000 in notes
of Global Universal held by Rochester, and were applied towards its $250,000
note due to the Company in connection with its acquisition of a controlling
interest of our common stock.




The $200,000 management fee which
was previously recorded as Deferred Revenue in our Consolidated Balance Sheet
for the year ended December 31, 2006, was eliminated to reflect waiver of the
management fee after June 30, 2007.


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 tax
credits from the Louisiana Department of Economic Development can be applied
towards 25% of the total production costs, plus an additional 10% of any
Louisiana labor expense, of the budgets of the seven films that Global Universal
intended to produce with the financing from PGH.  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 a final tax credit equal to 25% of the amount spent on production and an
additional 10% on Louisiana laborers.




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 $783,018 and $414,353  for the years ended December 31, 2007
and 2006, 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 repricing 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 repriced options, be expensed as non-cash stock-based compensation
expense until such time as the repriced options are exercised, expire or are
otherwise forfeited. Any increase in the intrinsic value of the repriced 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.





27




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:





2007
            
            2006Net
      (loss), as reported
            
            $
            (610,700
            )
            $
            (1,027,947
            )Add:   Employee
      stock-based compensation
              Expense,
      as reported
            
            
            19,500
            
            
            4,425Deduct:  Total
      stock-based employee compensation
              expense
      determined under fair value method
            
            
            (19,500
            )
            
            (4,425
            )Pro
      forma net (loss)
            
            $
            (610,700
            )
            $
            (1,027,9470Net
      (loss) per common shareBasic
      (loss) per share, as reported
            
            $
            (0.23
            )
            $
            (0.54
            )Basic
      per share, pro forma
            
            $
            (0.
      23
            )
            $
            (0.54
            )





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.




Note
2 - Bankruptcy Petition and Reorganization





On April
2, 2003, certain creditors filed an involuntary bankruptcy petition under
Chapter 7 of the United States Bankruptcy Code against LitFunding Corp, a Nevada
corporation. In the Petition, the Petitioning Creditors alleged that LitFunding
Corp was generally not paying its debts as they became due. The debtors disputed
this allegation. For approximately eleven months the debtors and the petitioning
creditors engaged in litigation regarding the merits of the involuntary
petition, and the Petitioning Creditors rights under disputed
contracts.





As a
result of the foregoing litigation, LitFunding Corp was placed into a protective
Chapter 11 proceeding effective November 19, 2003. The costs of litigating the
merits of the involuntary petition, and the financial impact of the pending
involuntary, so materially damaged both the LitFunding Corp and California
LitFunding that it ultimately became necessary for both companies to enter into
Chapter 11. Accordingly, California LitFunding entered into a Chapter 11
proceeding on January 26, 2004.





In
February of 2004, this litigation was settled. The settlement reached by and
among the Company and the petitioning creditors has been incorporated into a
reorganization plan confirmed by the United States Bankruptcy Courts on June
17th, 2004.





During
2004 and 2003, California LitFunding, as the operating entity, held title to
substantially all of the assets of The Company. The core assets within
California LitFunding, and those with most of the value, were the Settlement
Agreements, which were the primary subject of the litigation indicated with the
filing of the involuntary bankruptcy petition on April 2, 2003. A total of
approximately $18.6 million dollars was invested through those Settlement
Agreements.





Pursuant
to the plan of reorganization, LitFunding Corp and California LitFunding had the
option to voluntarily transfer the control and the collection of the settlement
agreements ("the Contract Pool") to an IEP distribution agent (the `Contract
Agent') for the benefit of the IEP claimants who comprise class 6 under the
terms of the reorganization plan.





LitFunding
Corp, California LitFunding and the IEP claimants stipulated and agreed to do
this in December 2004. In that stipulation, the Contract Agent would assume full
control and administration over the `Contract Pool' and have full authority over
the enforcement of the obligations set forth in the settlement agreements that
comprise the Contract Pool.





Per the
agreement signed on November 30th, 2004, LitFunding Corp and California
LitFunding transferred all of the original records and files to the Contract
Agent on December 16th, 2004, and sent written notice to all parties subject to
the settlement agreement notifying them of the transfer of control of the
Contract Pool and settlement agreements to the Contract Agent including the
assignment of LitFunding Corp and California LitFunding's legal rights and that
all payments are now payable to the Contract Agent.





As a
result of the transfer, the Company was effectively relieved of the obligation
due to the IEP claimants of IEP Note of approximately $26,662,000 including
related accrued interest. The carrying value of receivables and advances at the
time of the transfer was approximately $12,331,000 resulting in a gain on the
transfer of $14,131,000 for the year ended December 31, 2004. The original value
of the IEP Note was determined based on the stipulations within the bankruptcy
plan. In the transfer, the Company transferred all of its rights to the
contingent advances and any potential earnings thereon. Because payments on the
IEP Note were only to come from collections and earnings on the contingent
advances, the Company is no longer responsible for that obligation.





In
consideration for the cooperation and support provided by LitFunding Corp. and
California LitFunding making the transition seamless and effective, the IEP
claimants waived and released LitFunding Corp and California LitFunding from all
liability arising under the "Contingent Recourse Note" of approximately
$1,560,000, which would have become effective in 2005.





Moreover,
by effecting this transfer of the Contract Pool, the two other classes of
creditors (Class 4 and 5) affected by this transition will continue to receive
the benefit of the unsecured creditors' allocation as defined in the plan of
reorganization. The contingency administrative charge allowed by the plan of
reorganization to be paid to LitFunding Corp and California LitFunding has
ceased as a result of this transfer.





As a
result of the transfer of the contract pool to the IEP claimants effective in
December 2004, the Company recorded an extraordinary gain for the removal the
associated obligation and assets.





The
Company's primary liabilities are summarized in the following
paragraphs:





A.
Administrative and Priority Claims. The claims within this class total
approximately $287,000 through December 31, 2005. Most of this amount represents
the fees and costs payable to the Debtors general insolvency counsel, Winthrop
Couchot, P.C. who accepted 20,000 shares of
common stock from the company in April 2005 and an additional 10,000 shares in 2005
in part or full payment for the amount. The balance represents sums owed of
approximately $9,300 in priority wages owed to two officers of the Debtors.
These amounts are not subject to compromise and are included in accounts payable
and accrued expenses in the accompanying balance sheet at December 31,
2006.





B. Gap
Claims. During the period between the filing of the involuntary petition and the
date on which LitFunding Nevada's stipulated to the entry of an order for
relief, certain claims accrued. Substantially all of these claims accrued in
favor of two law firms that were defending LitFunding Nevada against the
involuntary filing. The Debtors reached an agreement with these claimants to pay
$314,000 over twelve months.  The remaining balance owed at December
31, 2005 is approximately 40,557.  These amounts are subject to
compromise and are included in trade and miscellaneous claims in the
accompanying balance sheet at December 31, 2005; During the three months ending
March 31, 2006 the debtor elected to covert $3,676 to 2,625 shares of the
Companies $0.001 par value common stock and  $36,881 to a promissory
note bearing interest at 8 % per annum with a maturity date of August 1, 2006.
The Company is in default on this note and owes $29,357 and accrued
interest.




28





C.
Debenture Claims. In calendar years 2002 and 2003 California LitFunding issued
debentures to seven individuals, creating approximately two hundred thousand
dollars ($200,000) in debt obligations. Included is a $10,000 debenture payable
to a related party. These claims are unsecured and they are undisputed. In
November 2006 the Company won a Judgment against Alan Schuchman for fees owed, a
stipulation in the Judgment was that Mr. Schuchman forfeits the $ 10,000
debenture he was holding. On December 28, 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. The balance of debentures at December 31, 2007 is $40,000. The
Company has not made the December 15, 2006 or the semi annual interest payments
in the year 2007 with respect to the $40,000 remaining amount of debentures. The
accrued interest is $5,363, as of December 31, 2007.





D.
Unsecured Claims Other Than Debenture Claims and IEP Claims. The Debtors have
approximately $339,653 in allowed unsecured claims. These amounts are subject to
compromise and are included in trade and miscellaneous claims in the
accompanying balance sheet at December 31, 2005. During the months ended March
31, 2006 , the debtors elected to convert $244,169 to 145,410 shares of the
Companies $0.001 par value common stock and $ 157,258 to notes payable with a
maturity date of June 15, 2006. The remaining balance due as of December 31,
2007 is $47,265.00.





E. IEP
Claims. Pursuant to the Settlement Agreement entered into by and between The
Company and the IEP petitioning creditors, each and every claim held by the IEP
petitioning creditors has been fixed in them Plan. The totality of all claims
held by the IEP petitioning creditors has been incorporated into the
non-recourse Plan Note. The Plan Note had an opening balance of $26,111,763.
This obligation was relieved in connection with the transfer of the Contract
Pool to the IEP Creditors in December 31, 2004;





F. The
Plan presented for confirmation incorporates both a business plan, and a legal
framework for the payment of claims. The business plan sets forth how The
Company intends to generate the funds necessary to meet the monetary obligations
fixed in the Plan. The legal framework details what each class of creditors will
receive under the terms of the Plan





G. The
business plan incorporated into the Plan is designed to accomplish two core
objectives. The first core objective is to maximize the funds collected to be
collected. The second core objective is to essentially restart The Company's
business model by raising and investing additional capital in new
lawsuits;





H.
Interest Holders. Interest holders are the parties who hold ownership interest
(i.e., equity interest) in The Company. The Plan creates two classes of
interests. Class 7, which is comprised of LitFunding Nevada, as the holder of
all of the common stock of California LitFunding, and Class 8, which is
comprised of all of the holders of common stock interests in LitFunding Nevada.
These classes are not impaired under the terms of the Plan.





Note
3 – 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.





Note
4 – 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, 2005 and 2004 consisted of the following:





As
      of December 31,2007
            
            
            2006Current
      tax benefit (provision)
            
            $
            0
            
            
            $
            0Deferred
      (benefit) provision
            
            
            0
            
            
            
            0Total
      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, 2007:


December
      31,2007
            
            2006Federal
      statutory rates
            
            $
            (610,700)
            (34%)
            
            $
            (1,027,947)
            34%State
      income taxes
            
            
            0
            
            
            
            0Valuation
      allowance for operating loss carry forwards
            
            
            (610,700)
            34%
            
            
            (1,027,947)
            34%Permanent
      difference for discharge of debt
            
            
            0
            0%
            
            
            0
            0%Other
            
            
            0
            0%
            
            
            0
            0%Effective
      rate
            
            $
            0
            0%
            
            $
            -0-
            0%





Note
5 - Contingent Advances





Contingent
advances occur when the Company enters into agreements with lawyers and law
firms whereby the Company advances funds for litigation costs on selected cases.
Generally, the Company will be repaid those amounts plus negotiated fees when
and if a case is settled. These agreements are non-recourse but are secured by a
lien against any awards in the case. Fees are generally based on the length of
time the advances are outstanding. If the fee is less than the award or
settlement, the fees are reduced to the amount of the recovery.





Most of these advances are for
cases well over 36 months old and there has been very little or no contact or
follow up with most of the attorneys involved with these remaining
cases.  Current management surveyed most of the attorneys and is of
the opinion that our chances of recovering all or a significant portion of our
advances and fees is highly doubtful.




Therefore, at December 31, 2007
we have increased the impairment allowance by $226,663, bringing the allowance
to 100% of the contingent advances outstanding of $416,750 and a corresponding
impairment allowance of $416,750.




Note 6 – Debt
Restructure





Pursuant to SFAS 15 paragraphs 25
and 26 at December 31, 2007 we report debt-restructuring as
follows:




The Company had two law firms
with monthly invoices amounting to $395,619, billed and outstanding for
approximately 2 years. In 2006 the company issued 1,500,000 shares of it’s
common stock, par value $0.001, priced at market to one of the law firms. In
2007 the Company issued 125,000 shares of it’s common stock, par value $0.001,
priced at market to the other law firm. Both law firms agreed in 2007 to forgive
the remaining balance of $268,119.


29




The Company also negotiated the
reduction of accrued interest accumulated on a $500,000 promissory note dated
December 9, 2004.The note was acquired from the original
lender by Stanley Weiner, an officer and director of the Company, who agreed to
convert the note into shares of the Company’s common stock and to forgive the
$55,810 in accrued interest. On November 12, 2007, the Company issued 500,000
shares of common stock, par value $0.001, valued at market, to Stanley Weiner
and the Note was cancelled.




The total gain on debt
restructure is $323,929.




The per share aggregate gain is
$0.08.




Note
7- Participation
Agreements





Prior to
the filing of the involuntary petition on April 2, 2003, the Company raised
capital to enable it to engage in the practice of funding the contingent
advances by entering into so called IEP agreements. These are considered to be
investment/equity participation agreements the nature of which has been
redefined and fixed as part of plan of reorganization and the totality of all
claims held by the IEP petitioning creditors has been incorporated into the
non-recourse Plan Note. The non-recourse Plan Note had an opening balance of
$26,111,763 as of May 1, 2004 and as of May 1, 2004 included an approximate
$2,000,000 from the cancelled sale of stock and a predetermined retroactive
return. As discussed in note 3 above, the Contract Pool was transferred on
December 16, 2004, to the Contract Manager designated by the IEP Claimants.
Accordingly, this non-recourse plan note was removed from the balance sheet at
December 31, 2004, to reflect the economic reality of that
transaction.  As of December 31, 2007, the Company had participation
obligations of $699,500.




The participation obligations are
notes held in individual Limited Liability Companies that LitFunding USA serves
as the managing member. The funds from the notes are advanced to law firms to
fund litigation cases with a monthly fee charged until the case is won or
settled. The investor can then decide to take their portion of the fees and
reinvest the principal amount back in to another case or withdraw the principal
thus reducing the note balance. If the case is lost, the investment of the
investor is lost and the note balance is reduced by the amount of the
loss.





There were no obligations
retained by the Company after the reorganization, the obligations that are
currently on the balance sheet were established after the
reorganization.


Note
8 -
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, 2007, the Company had accrued interest
totaling $5,362.





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.


Note9-
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, 2007, are comprised of the
    following:Note
      payable to entity, original balance of $19,181

              Principal
      and interest due June 15, 2006. The Note is unsecured.
            $9,591Note
      payable to entity, original balance $32,187. This note is
      unsecured
            $6,094Note
      payable to entity, original balance of $15,000 due in three monthly
      installments of $5,000 beginning April 15, 2006. The Note is
      unsecured
            10,000Note
      payable to entity, original balance of $30,502 due in two monthly
      installments of $15,251 beginning April 15, 2006. The Note is
      unsecured
            10,820Notes
      payable with no specified due dates.  Face amount of $19,500 and
      $15,000, interest at 10% per annum, the note is unsecured.
            34,500Note
      payable Face amount $6,000, interest at 12% due April 15,
      2008.
              
              Note
      payable face amount $42,500, interest at 18%
            6,000
              
              42,500Global
      Notes with no specified due dates and varying interest
    rates.
            47,500Total
            $167,004







Note
10– 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.





30




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.





Agreements
with Imperial Capital Holdings




In August of
2005, we sold 400,000 shares of our Series A, 12% Convertible Preferred Stock at
$.25 per share to Imperial Capital, and concurrently entered into a Registration
Agreement with Imperial whereby we promised to file a registration statement
within ninety (90) days covering 80,000 shares of common stock underlying shares
of our Series A Preferred Stock.  In December, 2005, we received a
notice of default from Imperial, which required us to cure such default by
filing a registration statement within ten (10) days. We failed to do so. The
Company didn’t file such registration statement until December 11, 2006, about
one full year later. The price of our common stock had dropped by more than 75%,
causing Imperial a substantial loss on their investment in our Series A
Preferred Stock.





On January 16, 2006, we entered
into an Equity Investment Agreement (“Investment Agreement”), which is an equity
line of credit ("ELoC"), with Imperial Capital Holdings ("Imperial"). On that
same date, we entered into a Registration Rights Agreement (“Registration
Agreement”) with Imperial, which called for us to file a registration statement
relating to the ELoC within sixty (60) days, and a Placement Agent Agreement
with Brewer Financial Services, a registered broker-dealer, which provided
Brewer with a placement fee of one percent (1%) of the proceeds of the gross
proceeds we receive under the ELoC. This registration statement was to include
the 80,000 shares of common stock underlying the Series A Preferred Stock, in
addition to shares of common stock that would be purchased by Imperial under the
terms of the ELoC.  Again, for unexplained reasons, our former
management failed to file the registration statement, and was so notified by
Imperial.




On April 12, 2006, we borrowed
$30,000 from Imperial Capital, which we stated would be used to pay critical
corporate expenses and allow us to file the registration statement by July 12,
2006. The note accrued interest at 12% and was convertible into shares of our
common stock at 93% of market value.




As of July 28, 2006, for unknown
reasons, the management of LitFunding failed to file any registration statement
and was in default of the $30,000 promissory note that was due July 12,
2006.  Therefore, on July 28, 2006, we reached an understanding with
Imperial to cure our defaults in exchange for the issuance of 80,000 shares of
common stock that were finally registered in June of 2007. Concurrently, we
entered into a new Equity Investment Agreement and a new Registration Rights
Agreement with Imperial, and a new Placement Agent Agreement with Brewer
Financial Services, all with substantially similar terms as the original
agreements dated January 16, 2006.




The Investment
Agreement.  The Investment Agreement grants us an Equity Line of
Credit (ELoC) whereby Imperial agrees to purchase up to $3,000,000 of our
registered common stock within 24 months of the effective date of our
registration statement. Our registration on Form SB-2 was declared effective on June 5,
2007.  During the 24 month period following such effective date, we
may, in our sole discretion, periodically deliver newly issued, registered
shares of our common stock to Imperial who will then deliver to us the purchase
price, in cash, in amounts based on a fluctuating price per share of our common
stock, less a 7% discount from the lowest bid price of our stock. We are not
obligated to request any portion of, or the entire $3,000,000. Although we
initially registered 900,000 shares, the actual aggregate number of shares that
we may issue pursuant to the ELoC is not determinable as it is based on the
market price of our common stock from time to time and how much funding we
desire from time to time.


For an equal amount of dollars of
funding from time to time pursuant to the ELoC, the number of shares we would
issue to Imperial would be greater during times of our stock price being low, as
it currently is, and conversely so during times when our stock price is high.
Pursuant to the ELoC, we are subject to penalties if we fail to deliver stock to
Imperial after we request a draw down from the ELoC. Specifically, the
Investment Agreement subjects us to pay late payments to Imperial for late
issuance of Securities (delivery of Securities after the applicable Closing
Date) in accordance with the following schedule (where "No. of Days Late" is
defined as the number of trading days beyond the Closing Date.  The
following amounts are cumulative:








LATE  PAYMENT  FOR  EACHNO.  OF  DAYS  LATE
            $10,000  OF  COMMON  STOCK1
            $1002
            $2003
            $3004
            $4005
            $5006
            $6007
            $7008
            $8009
            $90010
            $1,000Over
    10
            $1,000,
      plus $200 for each business







Pursuant to the terms of the
ELoC, we may issue and sell to Imperial, and Imperial will purchase from us, up
to that number of shares of common stock having an aggregate value not exceeding
$3,000,000.  However, Imperial is not obligated to purchase such
amount of shares that would cause it to own more than 9.9% of our total number
of outstanding shares at any given time.  From time to time, we may,
in our sole discretion, deliver a put notice to Imperial which states the dollar
amount which we intend to sell to Imperial which will be, at our choice, either:
(A) 200% of the average daily volume (as quoted on the U.S. markets only) of our
common stock for the 10 trading days prior to the applicable put notice date,
multiplied by the average of the 3 lowest daily closing bid prices immediately
preceding the put date, or, (B) a minimum put amount of $10,000. The maximum
amount of any put notice cannot exceed $250,000. The purchase price for the
common stock identified in the put notice will be equal to 93% of the lowest
closing bid price of the common stock during the pricing period. The pricing
period is the period beginning on a put notice date and ending on and including
the date that is five (5) trading days after the put notice date. Imperial is
required to purchase from us during the related pricing period that number of
shares having an aggregate purchase price equal to the Put Amount set forth in
the Put Notice. Imperial is deemed to be an “underwriter” within the meaning of
the Securities Act of 1933, as amended, in connection with the resale of our
common stock under the Investment Agreement.




Registration Rights
Agreement.In connection with the
Investment Agreement with Imperial, on July 28, 2006 we entered into a
Registration Rights Agreement with Imperial to provide for the registration of
the shares of common stock that may be issued by us pursuant to the ELoC, and to
register shares 80,000 shares of common stock underlying the Series A 12%
Convertible Preferred Stock held by Imperial.  The agreement required
us to file a registration statement within sixty (60) days and to use our best
efforts to cause its effectiveness within 180 days thereafter. Additionally, we
were allowed to register an additional 500,000 shares under our registration
statement for other investors. Additionally, we were required to permit Imperial
and its legal counsel to review and comment upon the registration statement, and
all amendments and supplements thereto, at least three (3) business days prior
to our filing same.




Placement Agent
Agreement.In connection with the
Investment Agreement with Imperial, on July 28, 2006 we entered into a Placement
Agent Agreement with Brewer Financial Services, LLC, a NASD registered
broker-dealer.  The Placement Agent will render services to us with respect
to the Investment Agreement and will be available for consultation in connection
with the advances to be requested by us pursuant to the Investment Agreement.
 We agreed to pay to the Placement Agent a fee of one percent (1%) of the
gross proceeds we receive from each draw,  under the Investment
Agreement, for all services in connection with the Placement Agent
Agreement.





The foregoing description of the
terms of our Investment Agreement, the Registration Rights Agreement and
Placement Agent Agreement, relating to our ELoC with Imperial Capital, is
qualified in its entirety by reference to the actual agreements filed by us on
Form 8-K on August 4, 2006.




Note: The 1.3 million shares, and
references to all share amounts below have been reduced by a factor of 10 to
account for the reverse split of our common shares in December,
2007.




As noted above, 80,000 shares
were issued in settlement of our defaults under agreements with Imperial,
including losses they sustained due to LitFunding’s failure to register the
80,000 shares of common stock underlying their Series A 12% Preferred
Stock.  An additional 50,000 shares was issued on June 2007, to cover
interest on the $30,000 note, and the 12% dividend on the Series A Preferred
Stock through April 15, 2007, our target date for our registration to become
effective.


31


The $30,000 note was convertible
at 93% of market price. No conversion ever took place. The note was renewed in
November, 2007, and combined with an additional advance of
$12,500.  The new note is for $45,000, due on April 15, 2008, and
carries interest at 12%, simple. The new note is not convertible, but is secured
by a lien against 50% of any advances we elect to make under the ELoC. Also, in
December, 2007, we borrowed an additional $6,000, with interest at 12%, due
April 15, 2008. This note was convertible into common stock at a fixed price of
$.05 per share, but no conversion took place.  On April 15, 2008, we
were granted a verbal extension of thirty (30) days. On May 15, 2008, this note
was paid.





On July 24, 2007, a Security
Agreement was signed between LitFunding Corp. and James Paul Gietz (“Secured
Party”). The agreement establishes a security interest in certain property as
collateral for amounts that may be invested in common stock of LitFunding Corp.
by the Secured Party. The collateral all now existing and hereafter arising
accounts receivable, contract rights, license rights and all other forms of
obligations owing to LitFunding arising out of the advance of monies to
attorneys. Periodic redemption and pro-rata release of collateral commenced on
October 1,2007 and recurring every ninety days until January 1, 2010, the
Secured Party shall have the option to redeem 50,000 shares of its LitFunding
common stock directly from LitFunding at a fixed price of $25,000. The
collateral will be reduced proportionately. To date, the Secured Party has not
exercised his option to cause the Company to redeem any shares of
stock.




At July 1, 2008 the contingent
liability of the Security Agreement was 300,000 shares of common stock at $.50
per share.




Recent Sales
of Unregistered Securities





On March
21, 2006 the Company issued 25,000 shares of its $.001
par value common stock to two accredited investors at $2.00 per share for cash
totaling $50,000.




During
the three months ended March 31, 2006, certain consultants and debtors exercised
their warrant rights to purchase 65,000 shares of the
Company’s par value common stock for cash totaling $4,250.




In
March 2006, the Company issued 273,731 shares of its
$.001 par value common stock for services valued at $271,426 the fair value of
the underlying shares.




During
the months ended March 31, 2006, certain unsecured creditors elected to convert
$244,169 to 145,410 shares of the Company’s $.001 par value common
stock.  At March 31, 2006 the Company had issued 28,113 and the
remaining 17,297
shares were issued on April 18, 2006 the Company recorded a subscription payable
of $ 190,687 at March 31, 2006




On
April 18, 2006, the company issued 83,148 shares of its
common stock to Morton Reed, CEO of the Company, in exchange for accrued debt
valued at $130,000.  The shares were unrestricted pursuant to the S-8
Registration filed on February 28, 2006.




On
April 18, 2006, the Company issued 5,000 shares of its
restricted common stock to Anthony Longo as a sign-on bonus.




On
April 18, 2006, the Company issued 1,500 shares of its
restricted common stock to Rochester Capital Partners, LP and 500 shares of our common
stock to Joseph Weaver in exchange for all of the issued and outstanding shares
of Easy Money Express, Inc. (200,000 shares).




On
April 20, 2006, the Company issued 2,500 shares of its
restricted common stock to Baldev Singh Grewal of Navin Enterprises, Inc.
pursuant to its consulting agreement dated March 1, 2006.




On
May 23, 2006, the Company issued 100,000 shares of its
restricted common stock to Stoecklein Law Group for services rendered to the
Company.




On
May 23, 2006, the Company issued 50,000 shares of its
restricted common stock to Opus Pointe for services rendered to the
Company.




Apex
Investment Fund Ltd. converted 40,000 shares of Series A 12% Convertible
Preferred Stock into 80,000 shares of our
restricted common stock.  The 80,000 shares of common
stock were issued on June 2, 2006.




On
June 23, 2006, the Company issued 100,000 shares of its
restricted common stock to CLX & Associates, Inc. pursuant to its consulting
agreement dated March 1, 2006.




On
August 7, 2006, the Company issued 12,500 shares of
restricted common stock to Howard Joffe for $10,000 cash.




On
August 7, 2006, the Company issued 12,500 shares of
restricted common stock to Robert Heitner for $10,000 cash.




On
August 7, 2006 the Company issued 125,000 shares of
restricted common stock to Morton Reed, CEO of the Company, in exchange for
accrued debt valued at $250,000.




On
August 14, 2006 the Company voided the 100,000 shares of its
restricted common stock issued on June 23, 2006 to CLX & Associates, Inc
pursuant to the cancellation agreement dated March 1, 2006.




On
August 28, 2006, the Company issued 100,000 shares of its
restricted common stock to CLX & Associates, Inc. pursuant to its consulting
agreement dated March 1, 2006 that was reinstated.




On
August 28, 2006, the Company issued 160,000 shares of
restricted common stocks to Imperial Capital Holdings LLC as follows; 9,600 shares for preferred
shares dividend, 20,000 shares for the
extension of the $30,000 note executed April 12, 2006 and 50,400 shares for
inducement to execute an equity line of $3,000,000.




Imperial
Capital Holdings LLC converted 40,000 shares of Series A 12% Convertible
Preferred Stock into 80,000 shares of our restricted common
stock.  The 80,000 shares of common
stock were issued on August 28, 2006.




On
August 28, 2006, the Company issued 278,000 shares of
restricted common stock to Davric Corporation as follows; 1,466 shares for interest
accrued on $200,000 note, 76,533 shares for cash and
200,000 in
settlement of $200,000 note.




On
October 4, 2006, the Company issued 90,000 shares of common
stock to Hans George Huetter for consulting services rendered to the Company.
The shares issued were unrestricted pursuant to the S-8 Registration filed with
SEC on September 29, 2006.




On
October 4, 2006, the Company issued 27,500 shares of common
stock to Dennis H. Johnston for legal services rendered to the
Company.  The shares issued were unrestricted pursuant to the S-8
Registration filed with SEC on September 29, 2006.




On
November 17, 2006 the Company voided the 100,000 shares of its
restricted common stock issued on August 28, 2006 to CLX & Associates, Inc
pursuant to the cancellation agreement dated March 1, 2006.




On
December 11, 2006 the Company rescinded the issuance of 125,000 shares of
restricted common stock to Morton Reed, CEO of the Company, in exchange for
accrued debt valued at $125,000.





Common Stock
Issued In 2007





On November 26,
2007, the Company’s Board approved an Amendment to the  Company’s
Amended Articles of Incorporation, asamended, affecting a 10 x 1
reverse stock split. No fractional shares shall be issued in connection with the
foregoing stock split; all shares of Common Stock so split that are held by a
stockholder will be aggregated subsequent to the foregoing split and each
fractional share resulting from such aggregation of each series held by a
stockholder will be rounded up to the nearest whole share.
 Shares of Common
Stock that wereoutstanding prior to the
Effective Date and that are not outstanding after the EffectiveDate shall resume the status of
authorized but unissued shares of Common Stock. The filing date  of
the Amendment was November 26, 2007 and the Effective Date was December 10,
2007.
 32


The common stock issuances
described in the Company’s  annual report on Form 10KSB for the year
ended December 31, 2007  have been retroactively
adjusted  to give effect to the 10 x 1 stock split for all periods
presented.


The fair market value for the
common stock shares issued was determined as the closing price of the common
stock on the day the Board authorized the
issuance.


On
March 7, 2007, the Company issued 1,900,000 shares of its $0.001 par value
common stock to Rochester Capital Partners LP and 2,100,000 shares of its $0.001
par value common stock to Lehars Handels Ges MBH at $0.0625 per share for a note
receivable totaling $250,000.The share price was
negotiated  between  the Board and Rochester Capital
Partners LP.





On May 3, 2007 an Administrative
Stop was placed on certificate 992 representing 2,100,000 shares of common stock
issued to Lehars Handlels Ges M.b.H. on March 7, 2007. The Administrative Stop
is issued for breach of the agreement for payment by virtue of the failure to
pay for the shares. In July 2007, the shares were returned by Lehars and
subsequently issued to Rochester Capital.




On March 30, 2007, the Company
issued 800,000 shares of its restricted commons stock to Morton Reed for accrued
salary of $350,000. Mr. Reed subsequently sold the shares to Rochester Capital
Partners, LP.




On May 17, 2007, the Company
issued 125,000 shares of its restricted commons stock to Morton Reed for accrued
salary of $175,000. Mr. Reed transferred these shares to Rochester Capital
Partners, LP.




On May 21, 2007, the Company
authorized the issuance of 50,000 restricted shares of common stock to Imperial
Capital Holdings for the extension of a $30,000 note. The shares were registered
pursuant to the SB-2 Registration Statement filed on May 24, 2007 and issued on
June 27, 2007.


On June 15, 2007, the Company
issued 15,000 restricted shares of its common stock to Terry Gabby our Chief
Financial Officer as a bonus for past service contributions.




On
July 5, 2007, the board of directors authorized the issuance of 125,000 shares
of restricted common stock to Winthrop Couchot pursuant to their agreement to
eliminate the fee claim of $313,732. The shares were issued onJuly 24,
2007.


On July
24, 2007 Imperial Capital Holdings LLC converted their 40,000 shares of Series A
Convertible Preferred stock into 80,000 shares of the Company’s common
stock.





On October 24, 2007, the Company
issued 100,000 restricted shares of its common stock to Davric Corporation for
conversion of a $100,000 Note.




On October 24, 2007, the Company
issued 7,894 restricted shares of its common stock to Morton Reed for services
rendered to the company as a Board Member.




On October 24, 2007, the Company
issued 5,263 restricted shares of its common stock to Stanley Weiner for
services rendered to the company as a Board Member.




On November 7, 2007, the Company
issued 54,541 shares of its common stock to Callahan & Blaine pursuant to an
agreement to eliminate the fee claim of $43,633.




On November 7, 2007, the Company
issued 24,375 restricted shares of its common stock to Peter Liapis pursuant for
conversion of a $19,500 Note.




On November 12, 2007, the
Company issued 500,000 restricted shares of its common stock to Stanley Weiner
for conversion of a $500,000 Note. Stanley Weiner is the Company’s Vice
President of Finance and a Board member.




On November 19, 2007, the Company
issued 125,000 restricted shares of its common stock to J-Bear Investments LLC
for conversion of a $100,000 Note.







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, 2007, the Company has no issued and 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.
Jackelyn 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 does not have any voting
rights.


The business activities of Global
Universal did not materialize as planned due to the default of PGH under the PGH
Agreements.  Global Universal did acquire the pre-certification tax
credit certificates from Louisiana, and did endeavor to develop the slate of
films


33




with other potential financing
partners.  However, no arrangements have been secured.  The
statement that “... since its formation in 1997 [Global Universal] has produced
eleven films...” is in error and conflicts with the Company’s disclosures made in
its financial filings.  Management’s review of Global Universal’s
website (prior to recent changes) did not reveal the presence of such a
statement. The website does have a tabbed heading that is titled “PRODUCED”, and
invites the viewer to click on a film title for more information. The tabbed
heading “PRODUCED” may lead one to believe that Global Universal produced all of
the titles. However, if one clicks on any of the eleven films, the information
stated is correct; the films were produced and/or directed by officers of Global
Universal. Also, Global Universal acquired certain rights to ten of the films
directly from Jackelyn Giroux, as she had personally directed and/or produced
the films while attached to previous companies, prior to the formation of Global
Universal (formed in June of 2004).  The website was recently correct
so as not to be misleading. The films are now referenced as “Projects by
Management.”





Because we merged into Silver
Dollar Productions, not LitFunding. The Transaction and related merger agreement
was prepared by the Company’s legal counsel at the time, Donald Stoecklein, Esq.
Further, Global Universal had no revenue and it’s assets were less than 10% of
the Company’s assets.




The third entity was Silver
Dollar Productions, Inc.  Therefore, this was not a reverse
acquisition by LitFunding.  Also, the original intent at merger was to
spin-off Global Universal from LitFunding Corp, not to become the core
business.  The shares received by Global Universal shareholders in the
merger were convertible into less than 10% of LitFunding’s outstanding common
stock. It was not until late September of 2007,
after the former management failed to effect the spin-off, that a change in
control took place and new management elected to retain Global Universal as the
primary operating business.







Note11 – Commitments and Contingencies





Commitments





In
October 2004, the Company rescinded its long-term property lease as allowed in
Chapter 11 bankruptcy proceedings of the Federal Bankruptcy code and moved its
offices to Las Vegas, Nevada where it occupied space on a month-to-month lease
until March 1, 2005.  On March 1, 2005 the company entered into
three-year lease agreement expiring February 29, 2008 at $5,000 per month in
2005, $6,000 per month in 2006 and $6,180 for the remaining lease year. Rent
expense for the years ended December 31, 2005 and 2004 was $78,837 and $127,310,
respectively.





Rent expense for the years ended
December 31, 2007, 2006 and 2005 was $44,046, $48,908 and $78,837,
respectively.




We currently maintain an
executive office at 1516 E. Tropicana, Suite 245, Las Vegas, Nevada
89119.  The space consists of approximately 600 square
feet.  The monthly rental for the space is $750 per month.
Additionally, our wholly-owned subsidiary, Global Universal Film Group,
maintains offices at Raleigh Studios, which are approximately 500 square feet in
size and are leased on a monthly basis at a rate of $900.00, per month. The
offices are located at 650 N. Bronson Avenue, Suite B-116, Los Angeles,
California  90004.




In December of 2006, Global
Universal entered into a Deal Memo with Third Coast Digital (“TCD”), a post
production company located in Baton Rouge, Louisiana, whereby TCD would provide
Global Universal with an office presence in Louisiana and perform services
related to post production services on the slate of films to be
produced.  TCD also assisted Global Universal in obtaining the
pre-certified tax credits and formed three production LLC’s on Global
Universal’s behalf in the State of Louisiana.  As consideration for
TCD’s services and the provision of office space, the Deal Memo provided that
TCD was to receive a post production contract in the amount of $100,000 for each
film produced by Global Universal in Louisiana, provided the film’s budget was
$3 Million, or greater. If any particular film’s budget was lower than $3
Million, TCD’s fee would be reduced on a pro-rata basis. Additionally, TCD was
to receive a profit participation of 1% of the net profits from each film, and
would receive appropriate screen credit for their
services.





We incured no costs to Global
Universal in procuring verbal indications of interest from the agents of Kevin
Spacey and Billy Crystal. A formal offer was made to Billy Crystal’s agent and
no response has yet been received.  The script for “Mavericks in
Toyland” was originally developed by a third party and optioned by Kevin Spacey.
Also, there are no ongoing costs, other than the costs we will incur for
renewing the three LLC’s formed in Louisiana; Global Universal Film Finance,
LLC., and Global Universal Film Productions, LLC. and Global Universal Mavericks
in Toyland, LLC.





A Consulting Agreement was
entered into on October 26, 2007 with an investor relations firm.  The
term of the contract was for three months to be automatically renewed for each
successive three-month period, unless either party notified the other in writing
to terminate the agreement.  The fee per month was $5,000. On January
24, 2008, the contract was terminated by the Company due to budget
constraints.  The total consideration paid was $1,000 and 20,000
shares of common stock, par value $0.001 paid by Rochester Capital Partners
valued at $.04 per share.





Contingencies
& Litigation


The
Company is a defendant in several matters in litigation, many of which are in
the normal course of business, including litigation for refunds of funds
invested and collection matters. The company believes these suits are without
merit, not of a significant amount or nature, and intends to vigorously defend
these actions in courts of law.





In
connection with the business of LitFunding USA, which was sold by the Company on
March 28, 2008 (See Note 14 – Subsequent Events) the Company obtained various
judgments for the return of deposits made to attorneys practicing principally in
the State of Nevada.  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 liabilities were assured by the
Purchaser.








Note
12 -
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 25,000. common shares
were not considered in the calculation for diluted earnings per share for the
years ended December 31, 2007. 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, 2007 the effect of their inclusion based would be
anti-dilutive and hence, were not included.





2007
            
            
            2006Income
      (Loss)
            
            
            Shares
            
            
            Per
      Share
            
            
            Income
      (Loss)
            
            
            Shares
            
            
            Per
      ShareNet  income
      (loss) before extraordinary item
            
            $
            (934,629
            )
            
            
            
            
            
            
            
            $
            (1,027,947
            )Extraordinary
      item
            
            
            323,929Total
            
            $
            (610,700
            )
            
            
            
            
            
            
            
            
            (1,027,947
            )Preferred
      dividends
            
            
            0
            
            
            
            
            
            
            
            
            
            19,993Income
      (loss) available to common shares holders
            
            $
            (
      610,700
            )
            
            
            
            
            
            
            
            $
            (1,047,940
            )Basic
      earnings (loss) Per Share:Before
      extraordinary item
            
            $
            (934,629
            )
            
            
            4,005,251
            
            
            $
            (0.23
            )
            
            $
            (1,047,940
            )
            
            
            1,909,965
            
            
            $
            (0.54
            )Extraordinary
      item
            
            
            323,929
            
            
            
            4,005,251
            
            
            $
            0.08
            
            
            
            
            
            
            
            1,909,965
            
            
            $
            (0.54
            )Total
            
            $
            (610,700
            )
            
            
            4,005,251
            
            
            $
            (0.15
            )
            
            $
            (1,047,940
            )
            
            
            1,909,965
            
            
            $
            (0.54
            )






Note 13 – Related Party





Gary
Rasmussen, our CEO and Chairman, also serves as the Chairman of our subsidiary,
Global Universal. 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, and in
consideration of the cancellation of notes payable from Global Universal.
Additionally, Mr. Rasmussen is the General Partner of Rochester Capital
Partners, our controlling and largest shareholder.





34





Note
14 –
Warrants and Options





On
January 5, 2006, we granted 30,000 options to
purchase shares of our common stock at $1.50 per share to
Baldev Singh Grewal for services rendered to the Company.  The options
are exercisable for one year.





On March
15, 2006, we issued a two (2) year warrant to purchase 1,000 shares of our
common stock at $2.50 per share to
David Ciolino for services rendered to the Company.





We
granted the CFO of the Company Terry Gabby 500 options in
November 2006, exercisable at $4.00 per share and
expiring on November 21, 2009. We granted Terry Gabby 500 warrants in
November 2006, exercisable at $4.00 per share and
expiring on November 27, 2009.





We
believe that the issuance and grant of the warrants and options was exempt from
the registration and prospectus delivery requirements of the Securities Act of
1933 by virtue of Section 4(2) and Regulation D Rule 506.  The shares
issued were directly from us and did not involve a public offering or general
solicitation.  The recipients of the shares were afforded an
opportunity for effective access to files and records of the Company that
contained the relevant information needed to make their investment decision,
including the financial statements and 34 Act reports.  We reasonably
believed that the recipients, immediately prior to issuing the shares, had such
knowledge and experience in our financial and business matters that they were
capable of evaluating the merits and risks of their investment.  The
recipients had the opportunity to speak with our management on several occasions
prior to their investment decision.








Options and
Warrants Exercised




During
the year ended December 31, 2007, no options or warrants were exercised. The
warrants and options were issued to both non-employees for services and to
Directors of the Company and creditors. The 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 1-for-10:





Year
      ended
              December,
      2007
            
            
            Weighted
      Average
              Exercise
      Price
            
            
            Year
      ended
              December,
      2006
            
            
            Weighted
      Average
              Exercise
      PriceOptions/Warrants  outstanding
      at beginning of Period
            
            
            601,075
            
            
            $
            4.20
            
            
            
            625,075
            
            
            $
            3.00Granted
            
            
            25,000
            
            
            $
            0.80
            
            
            
            16,000
            
            
            $
            0.90Exercised
            
            
            
            
            
            
            
            
            
            
            (40,000
            )
            
            $
            0.10Terminated/Expired
            
            
            (144,400
            )
            
            
            
            
            
            
            -Options
      /warrants outstanding at end of period
            
            
            481,675
            
            
            $
            3.20
            
            
            
            601,075
            
            
            $
            4.20Options/warrants
      exercisable at end of period
            
            
            481,675
            
            
            $
            3.20
            
            
            
            601,075
            
            
            $
            4.20Price
      per share of options outstanding
            
            $
            0.10-$70.00
            
            
            
            
            
            
            $
            0.01-$7.00Weighted
      average remaining contractual lives
            
            1.75
      years
            
            
            
            
            
            
            2.08
      yearsWeighted
      average fair value of options granted during the period
            
            $
            0.79
            
            
            
            
            
            
            $
            4.90





Note
15 - Subsequent Events





Divestiture of LitFunding
USA


On March
28, 2008, the Company entered into Stock Purchase Agreement with Iscorn, Inc.,
whereby, effective on March 31, 2008, we divested ourselves of LitFunding USA,
Inc., a Nevada corporation, and all of its assets and liabilities. LitFunding
USA was a wholly-owned subsidiary of the Registrant and, through its six,
wholly-owned subsidiary LLC companies, was engaged in the business of advancing
funds to Plaintiffs attorneys on various legal actions, for which it anticipated
earning a fee along with the return of such advances upon a favorable outcome of
the litigation. The business operations of LitFunding USA, and corresponding
liabilities, represented the bulk of the Registrant's former core business
operations. As a wholly-owned subsidiary of the Company, LitFunding USA's
substantial liabilities were required to be reported on the Company's balance
sheet, while the assets, consisting primarily of advances and fees due,
contingent upon the successful outcome of litigation, could not be booked due to
their uncertainty of collection.


Under the
terms of the Stock Purchase Agreement, we received consideration of $500 plus a
fifty percent (50%) interest in the net revenues collected from advances and
fees conditionally due from various Plaintiffs attorneys, less any and all
expenses associated with the collection of such advances, less the amount of the
liabilities of LitFunding USA, and less a deduction of fifteen percent (15%) of
any gross revenues collected as a reasonable fee for the services of the
purchaser, or its agents, for managing the business of LitFunding
USA.


Under the
terms of the Stock Purchase Agreement, the Company will have no involvement
with, or obligations to, the spun-off entity.  In addition, the
Company will have no managerial, or other, control over the operations of the
disposed entity.  As such, the net revenue sharing arrangement is
strictly passive and based upon the historical difficulties in collecting any of
these fees no revenues to the Company are expected or
projected.


The
foregoing description of the terms and conditions of the Stock Purchase
Agreement is qualified in its entirety by, and made subject to, the more
complete information set forth in the entire Stock Purchase Agreement, a copy of
which was filed as an exhibit to our Form 8-K, dated March 28, 2008, and filed
on April 8, 2008.


35