UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.  20549








Form 10-K/A








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


SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31, 2008





 ̈  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.)




2375 E. Tropicana Ave., Suite 8-259Las Vegas, Nevada
89119(Address of principal executive offices)
(Zip Code)




Issuer's Telephone Number(702) 516-9684




Securities registered under Section 12(b) of the Exchange Act:  None





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


Common Stock, $0.001 par value


(Title if Class)




Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes r No x




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




Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant as required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes x No r




Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. r




Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one):




Large accelerated filer           r
Accelerated filer                      rNon-accelerated filer             r
Smaller reporting company  x




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




The aggregate market value of the voting and non-voting common equity held by non-affiliates (5,772,656 shares) computed by reference to the average bid and ask price as of March 31, 2009, was approximately $346,359, based on an averaged share value of $0.06.




The number of shares of Common Stock, $0.001 par value, outstanding on March 31, 2009, was 11,812,844.





Table of Contents





GLOBALENTERTAINMENT HOLDINGS, INC.


For the Fiscal Year Ended


December 31, 2008





Index to Report


on Form 10-K








PART I

PageItem 1.
Description of Business
4Item 1A.
Risk Factors
10Item 2.
Properties
12Item 3.
Legal Proceedings
12Item 4.
Submission of Matters to a Vote of Security Holders
12PART IIItem 5.
Market for Common Equity and Related Stockholder Matters
13Item 6.
Selected Financial Data
14Item 7.
Management’s Discussion and Analysis of Financial Condition andResults of Operations
14Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
18Item 8.
Financial Statements and Supplementary Data
18Item 9.
Changes in and Disagreements With Accountants on Accounting andFinancial Disclosure
19Item 9A.
Controls and Procedures
19Item 9B.
Other Information
19PART IIIItem 10.
Directors, Executive Officers and Corporate Governance
20Item 11.
Executive Compensation
23Item 12.
Security Ownership of Certain Beneficial Owners andManagement and Related Stockholder Matters
26Item 13.
Certain Relationships and Related Transactions, and Director Independence
27Item 14.
Principal Accounting Fees and Services
27Item 15
Exhibits, Financial Statements and Schedules
28








Table of Contents




Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
   On August 18, 2009, the Company was notified by the Securities and Exchange Commission that the Public Company Accounting Oversight Board (“PCAOB”) had revoked the registration of Lawrence Scharfman & Co., CPA, P.C. (“Scharfman”), its former independent accountants.
  As Scharfman was no longer registered with the PCAOB, the Company could not include its audit reports or consents in future filings with the SEC. The Company dismissed Scharfman as its independent accountant on August 18, 2009, the date it received notice from the SEC and PCAOB.  Scharfman’s reports on the Company’s financial statements for the fiscal year ending December 31, 2007 and 2008 were qualified noting the Company’s ability to continue as a going concern. The reports contained no other adverse opinion, disclaimer of opinion or qualification or modification as to uncertainty, audit scope or accounting principles.  There were no disagreements with the former accountants on any matter of accounting principles or practices, financial statement disclosure or activity scope or proceeding during the Company’s two most recent fiscal years and any subsequent interim period though the date of dismissal.
  The Company engaged the accounting firm of Larry O’Donnell, CPA. P.C. to review its Form 10-Q for the quarter ended June 30, 2009 and to reaudit the Company’s financial statements for the 2008 fiscal year and to audit its financial statements for the 2009 fiscal year.  The audit report and consent of Larry O’Donnell, CPA. P.C. is included in this filing.




FORWARD-LOOKING STATEMENTS








This Annual Report on Form 10-K includes certain forward-looking statements as defined within Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, relating to revenue, revenue composition, earnings, projected plans, performance, contract procurement, procurement of capital, demand trends, future expense levels, gross margins and the level of expected capital expenditures.  Such forward-looking statements are based on the beliefs of, estimates made by, and information currently available to the management of the Company, as well as the management of its subsidiaries, and are subject to certain risks, uncertainties and assumptions.  Any statements contained herein (including without limitation statements to the effect that the Company or management "estimates," "expects," "anticipates," "plans," "believes," "projects," "continues," "may," "will," "could," or "would" or statements concerning "potential" or "opportunity" or variations thereof or comparable terminology or the negative thereof) that are not statements of historical fact should be construed as forward-looking statements.  The actual results that may be achieved by the Company may vary materially from those expected or anticipated in these forward-looking statements.  The realization of any results described by such forward-looking statements may be significantly affected by certain unanticipated factors, including those discussed in "Risk Factors," under Item 1A, and in "Management's Discussion and Analysis of Financial Condition and Results of Operations," under Item 7.  Because of these factors and other uncertainties that may affect the Company’s operating results, past performance should not be considered as an indicator of future performance, and investors should not use historical results to anticipate results or trends in future periods.  The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of any unanticipated events.  Readers should carefully review the risk factors described in this and other documents that the Company files from time to time with the Securities and Exchange Commission ("SEC"), including subsequent Current Reports on Form 8-K, Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.





HOW TO OBTAIN COMPANY REPORTS FILED WITH THE SEC




All reports filed with the SEC by Global Entertainment Holdings, Inc. are available free of charge via EDGAR through the SEC website at www.sec.gov.  In addition, the public may read and copy materials filed with the SEC by the Company at the SEC's public reference room located at 450 Fifth Street, N.W., Washington, D.C.  20549.  Upon written request, the Company will provide investors with copies of its Forms 8-K, 10-Q and 10-K.  Additionally, the Company plans to make all such reports available through its website at: www.globaluniversal.com, as soon as reasonably practicable.





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







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PART I








Item1.    Description of Business





(a)           General





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. (the “Company”), to better reflect the new direction and focus of the Company.  The Company is presently conducting its business through its affiliate, Global Universal Pictures, for films produced in Canada, and its wholly-owned subsidiaries, Global Universal Entertainment, Inc., for film production in the U.S., and Global Universal Film Group, Inc., for its distribution and sales activities.  Global Universal Entertainment was formally an inactive subsidiary called Easy Money Express, which had no activity or operations prior to the change of name. Hereinafter, the Company, together with its subsidiaries and Canadian affiliate are sometimes, collectively referred to as “Global Universal.”




The Company was originally incorporated under the name of RP Entertainment, Inc. in the State of Nevada on July 11, 1996, and changed its name to LitFunding Corp. in February of 2003, as the result of a reverse merger with California LitFunding, Inc., a private, California corporation.  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 of 2007, the Company was in the business of investing in litigation recoveries and pursuing other 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.  This business was sold by the Company in March of 2008.





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, consumer loan company, and Global Universal Film Group, Inc. (“GUFG”), an early stage developer, producer and distributor of “niche” films, related books, and music rights. Easy Money Express was renamed Global Universal Entertainment, Inc. and plans to commence film production activities during the second quarter of 2009. The former management of LitFunding Corp. had planned to develop Easy Money Express as its core business, and to spin-off GUFG as a separately traded, public corporation.  However, these plans did not come to fruition, and GUFG remains a wholly-owned subsidiary.





In March 2007, the Company entered into a stock purchase agreement with Rochester Capital Partners, LP. (RCP), a limited partnership controlled by our present Chief Executive Officer (Gary Rasmussen) as its General Partner, whereby the Company issued four million (4,000,000) shares of treasury stock to RCP 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.  However, in November, 2008, the Company’s Board of Directors authorized the issuance of an additional ten million shares of common stock to RCP to compensate RCP for a diminution in value of the receivable amounts represented by LitFunding’s prior management, as an adjustment, post closing, to the stock purchase transaction between LitFunding and RCP.  Further information on this transaction is available in the Company report on Form 8-K, filed with the SEC on March 7, 2007.




On August 31, 2007, Morton Reed, CEO, President and Chairman of the Board resigned for health reasons. He was replaced in September of 2007 by Gary Rasmussen, who, upon taking an active role, commenced in restructuring the Company and developing its new core business of film production, conducted primarily through its subsidiary companies.




(b)           Our Primary Business





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








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OVERVIEW





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





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





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





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





We believe that we should be able to secure recognizable talent based on the attractiveness of the screenplay, but we may also offer, as an added incentive, grants of our stock or options to acquire our stock.  We will then endeavor to secure the financing to produce the movie and make it available for distribution. The financing may come from federal and provincial governments in the form of tax incentives, financial institutions for production loans, lenders with profit participation, advances or pre-sales from distribution companies, accredited investors or a combination of these outside sources.





Motion picture revenue is derived from the worldwide licensing of a film to several distinct markets, each having its own distribution network and potential for profit.  The selection of the distributor for each of our feature films will depend upon a number of factors.  Our most basic criterion is whether the distributor has the ability to achieve a high level of sales on satisfactory terms, as well as when and in what amount the distributor will make advances to us.  We will also consider the amount and manner of computing distribution fees and the extent to which the distributor will guarantee certain print, advertising and promotional expenditures.  We will not attempt to obtain financing for the production of a particular film unless we believe that adequate distribution arrangements for the film can be made.





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





Feature Film Production





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





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





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





We also plan to enter into co-productions with experienced and qualified production companies in order to become a consistent supplier of motion pictures to distributors in the world markets.  With dependable and consistent delivery of product to these markets, we believe that distribution arrangements can be structured that will be equivalent to the arrangements made by major studios. Our first co-production film was Blue Seduction, co-produced with Image In Media, a Canadian film production company.





Primary responsibility for the overall planning, financing and production of each motion picture will rest with our management.  For each motion picture we will employ an independent film director who will be responsible for, or involved with, many of the creative elements, such as direction, photography, and editing.  All decisions will be subject to budgetary restrictions and our business control, although we will permit an independent director to retain reasonable artistic control of the project, consistent with its completion within strict budget guidelines and the commercial requirements of the picture.





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Distribution Arrangements





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





Presently, our management is negotiating with several film distribution companies to assist us in financing and marketing a slate of 6 or more, feature-length films that we plan to produce.  The distribution companies will typically charge a us fee of 15% to 25% for foreign distribution, and 20% to 30% for U.S. distribution.  The Company will negotiate for the distribution company to provide some financing participation in each film’s budget, which, when combined with tax incentives and debt financing and/or equity participation from an investor, will provide 100% of the cost to produce each film.





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





Current Film Operations





Blue Seduction





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





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





Subject to financing of the Film, GUP agreed to pay the Company an all inclusive one-time fee of (i) U.S. $150,000 and (ii) revenue representing 50% of its “Net Receipts” from the sale of the Film rights.





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





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





On October 2, 2008, National Bank of Canada agreed to fund approximately $1.1M Canadian for the production of Blue Seduction. The bank financing was contingent upon the bank's receipt of a Completion Bond that will guarantee that the film is actually produced and delivered -- so the bank can collect on certain available tax credits and advances pending.




The Completion Bond Company, Film Finances of Canada, Ltd., requested that the Company provide a guarantee for any amounts that they may lose in connection with the transaction. The contingent liability of the Company is difficult to determine at this time because, in essence, the completion bond company is backing up the bank loan, and the bank loan is structured as a credit facility that provides B & J Pictures with periodic draws in both U.S and Canadian currencies.  The bank agreed to advance up to $613,000 in Canadian dollars (including an interest reserve and costs), and up to $425,000 in U.S. currency.





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





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American Sunset





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





“American Sunset” is a story about love and sacrifice.  It’s an edge-of-your-seat, shocking thriller about how one ordinary man traveled to hell and back to save his wife.  A thriller, with a Usual Suspects–style twist, that is expected to have both moviegoers and crime solvers alike anxiously waiting for clues to this mystery’s riddle; each time wondering if it will not be too late.





On a trip back to  Canada to celebrate their fifth wedding anniversary, Tom Marlow wakes to find his beloved wife missing.  Their vacation home – now a crime scene – is now littered with clues to his wife’s whereabouts.  In order to ensure her safe return, Tom, now a stranger in the land of his birth is forced to cooperate with the practices of local authorities, the political rhetoric of the American Embassy and the unorthodox methods of a Private Investigator he hired to help him.





Amidst the chaos of the investigation, the silence is broken when the phone rings and an evil voice on the other end asks: “You wanna play a game?  Here’s your first riddle.”  Tom and the P.I. are now part of a treasure hunt set in motion by his wife’s captors.   The game is simple and the prize is his wife’s freedom.  Each correctly answered riddle brings them one-step closer; but one wrong answer...one missed deadline...and the consequences will be fatal.  As the hunt brings them deeper and deeper into a corrupt world, spawned by greed, deception and immoral motives, one thing is clear; this is not a random kidnapping for money – this is personal.





“American Sunset” will test the audience’s attention-to-detail skills and even give them time to decode the riddles before time runs out.  It’s a thriller with an original twist that the Company hopes will have audiences revisiting the movie again and again, wondering how they missed so many clues the first time.  In “American Sunset”, everything is a clue and everybody has something to say, even if it is from the grave.





Other Films Planned





Also, in the planning stages, are several films that GUE intends to produce as “Co-Production Treaty” films, either in combination with a distribution company, or in partnership with an investor or another production company.  These films will be produced with government incentives from Canada and one or more additional 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, the Company would have the option of discounting the contract at the bank and utilizing each sale for production funds, or hold onto the contract to be paid 100% of the 50% of the budget at the completion of each film.  With 50% plus of the budget expenses underwritten by such incentives, the producer and investor are more likely to realize a profit.




GUP’s per film budget is expected to range between roughly $2 million (if no advertising and delivery items are included) and up to $5 million (U.S.), with approximately 35% to 50% of each budget underwritten by the respective country’s investment (e.g., Canada, U.K, France, Germany, Ireland, etc.).  All financing fees, marketing and advertising costs, completion bond fees and a contingency reserve will be included in the average film budget.





On a “straight to video” release, 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 types of government incentives include CABIN FEVER, HOSTEL, SAW, OPEN WATER, WRONG TURN, and SWIMFAN. (Lions Gate released the first 4 films; Twentieth Century Fox released the last 2 films).





EASY MONEY EXPRESS, INC. / GLOBAL UNIVERSAL ENTERTAINMENT, 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 continued as a wholly-owned subsidiary of the Company until January of 2008, when the name was changed to Global Universal Entertainment, Inc.  To date, there had been no activity or operations since its acquisition in 2006.  The Company plans to develop this subsidiary as its U.S. presence in producing films and has hired Peter Liapis to manage the business of this subsidiary as its President.








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FINANCING STRATEGY





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





LOW BUDGET GENRE PRODUCTION & DISTRIBUTION




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





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





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





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





The first four films the Company will produce will eventually become part of the Company’s film library. A film library, over time, is expected to build asset value for Global Entertainment Holdings.  Following the license term of each picture (7 years for direct-to-video releases and 20 years for theatrical releases), the film distribution rights and eventual ownership will become part of the Company’s assets.  Therefore, the Company can build a significant film library that may be re-licensed on either an “ad-hoc” or “packaged” basis, or sold to a 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.




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Motion Picture Distribution




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





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





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





The initial theatrical, home video, pay-per-view, pay television, and free television, including network, syndication and basic cable, comprise what is typically referred to as the first distribution “cycle”.  While a substantial portion of a motion picture’s total revenues are generated during the first “cycle”, significant revenues can be generating in succeeding “cycles.” For example, re-pricing and re-packaging of video releases and re-licensing of television exhibitions.  Some motion pictures may generate revenues from the creation of derivative works such as remakes, sequels, and spin-offs.





Theatrical Exhibition Market




The theatrical exhibition of motion pictures entails the promotion and release of the film in theatres. The theatrical distribution of a motion picture, both in the U.S. and internationally, involves the licensing and booking of the film to theatrical exhibitors (movie theatres), the advertising and publicity campaigns to support the release and the manufacture of release prints from the film negative. The distributor and the exhibitor typically enter into an agreement to determine the payment arrangements from the box-office to the distributor, generally as a percentage of gross box office receipts. This percentage is referred to as the “rental” rate, which is typically within the range of 35% to 60%. These “rental” rates vary among countries.





Releasing costs include advertising campaigns, trailers, publicity campaigns, print advertising, and other forms of promotional media, including the Internet.




Home Video Distribution




The film’s distributor sells, in most cases, DVDs and cassettes to local, regional and national video wholesalers and retailers, which then sell and/or rent these DVDs and cassettes to consumers. There remain some revenue sharing agreements, though this business has been declining, whereby the wholesaler or retailer purchases the DVDs and cassettes at reduced prices in return for which the distributor shares in the rental income. Certain mass merchants, including Wal-Mart and Target, occupy a significant and important retail position in the DVD and cassette sale market.




Television Distribution




Television rights to motion pictures are generally licensed first to pay-per-view television following initial video release, then to pay television, and thereafter to free television such as network, syndication and basic cable for an exhibition period, and then, in many cases, back to pay television again. In addition, many films are licensed for subsequent “cycles” of pay and free television exhibitions.





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





Basic cable networks and local broadcast stations may purchase exhibition rights for a specified number of telecasts over a specific license period.




Non-Theatrical And Ancillary Rights Distribution




Motion pictures may be licensed for “non-theatrical” use by outlets such as airlines, ships, oilrigs, schools, public libraries and government groups such as the armed forces.





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





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 Table of Contents




(c)           Discontinued Business




LitFunding USA, Inc.




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





During the fiscal year ending December 31, 2007, as well as the first quarter of 2008, 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 divested the Company of its then 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.




Item1A.  Risk Factors





Risk Factors That May Affect Our Results of Operation





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





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





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





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





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





We have historically had losses from operations and losses may continue in the future, which may cause us to curtail operations.





Since our inception we have not been profitable and have lost money on both a cash and non-cash basis.  For the year ended December 31, 2008, we incurred net losses before extraordinary gain of $207,627. Our accumulated deficit at the end of December 31, 2008, was $12,040,077.  Future losses, before extraordinary gain, are likely to occur, as we are dependent on spending money to pay for our operations. No assurances can be given that we will be successful in reaching or maintaining profitable operations.  Accordingly, we may experience liquidity and cash flow problems.  If our losses continue, our ability to operate may be severely impacted or alternatively we may be forced to terminate our operations.





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





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





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





Thus, these stockholders, acting together, will have the absolute ability to control substantially all matters submitted to our stockholders for approval, including:




·
election of our board of directors;


·
removal of any of our directors;·
amendment of our certificate of incorporation or bylaws; and


·
adoption of measures that could delay or prevent a change in control or impede a merger, takeover or any other business combination involving the Company and its subsidiaries.





Risk Factors Associated with the Film Production Industry





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





The industry in which we 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.





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 Table of Contents




Item1B.   Unresolved Staff Comments




None.





Item2.      Properties





The Company utilizes the private office of its CFO, Terry Gabby, to support his services for the Company, and retains a mailing address in Las Vegas, Nevada, at a cost of about $200, annually, with an address of 2375 E. Tropicana Avenue, Suite 8-259, Las Vegas, Nevada 89119.





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





Item3.      Legal Proceedings





In connection with our former business of LitFunding, we were named a defendant in several matters in litigation, many of which are in the normal course of business, including litigation for refunds of funds invested. These claims will be answered by Iscom in connection the sale of this business entity in March of 2008.





Item4.      Submission of Matters To a Vote of Security Holders.





None.







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PART II








Item5.    Market For Common Equity and Related Stockholder Matters





(a)           Market Information





Our common stock was quoted under the symbol “GBHL.OB” on the OTC Bulletin Board until June of 2008.  Thereafter, our shares commenced trading on the “pinksheets”, due to a late filing that was caused by an error made by an independent third party vendor, whom we hired to file our reports with the SEC. We expect to return to trading our shares on the OTC Bulletin Board in the second quarter of 2009.





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.





2008


2007High


Low


High


Low1st Quarter


0.75



0.08



1.50



0.602nd Quarter


0.30



0.09



1.90



0.703rd Quarter


0.09



0.02



1.20



0.504th Quarter


0.04



0.02



1.00



0.11





(b)           Holders of Common Stock





As of December 31, 2008, we had approximately 219 stockholders of record of the 11,812,844 shares issued and outstanding.





(c)           Dividends





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





(d)           Securities Authorized for Issuance under Equity Compensation Plans





2002 Employee Stock Compensation Plan





Effective August 15, 2002, we adopted a 2002 Employee Stock Compensation Plan, as amended, with a maximum number of 150,000 shares that may be issued.  As of December 31, 2008, 53,750 options and 96,000 warrants had been issued under this plan.





2004 Stock Option Plan





Effective March 9, 2004, we adopted a 2004 Stock Option Plan.  The total number of shares of our common stock which may be purchased pursuant to the exercise of options shall not exceed, in the aggregate, 30% of the issued and outstanding shares of the Company’s common stock.  As of December 31, 2008, 149,000 options are outstanding under this plan.





Stock





Exercise






AmountOwner name

Type

Option Plan

Grant Date

Vested

Through

Grant Price


Amount

ExercisedCohen, David

Option

YES

21-Dec-04

Immediate

21-Dec-14

$
3.00



35,000

noneGuerrero, Jonnathan

Option

YES

21-Dec-04

Immediate

21-Dec-14

$
3.00



1,000

noneReed, Morton

Option

YES

21-Dec-04

Immediate

21-Dec-14

$
3.00



25,000

noneWeiner, Stanley

Option

YES

21-Dec-04

Immediate

21-Dec-14

$
3.00



35,000

noneReed, Morton

Option

YES

20-Jan-05

Immediate

20-Jan-15

$
5.30



50,000

noneAmira, Bob

Option

YES

11-Mar-05

Immediate

11-Mar-15

$
8.950



1,000

noneRyan, Dermot

Option

YES

11-Mar-05

Immediate

11-Mar-15

$
8.950



1,000

noneStein, Vera

Option

YES

20-Jan-05

Immediate

20-Jan-15

$
4.80



1,000

none149,000Weighted average of exercise price $3.86







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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, 2008, a total of 600,000 shares had been issued under this plan.





Effective September 29, 2006, we adopted the “2006-B Non-Qualified Stock Compensation Plan.” The maximum number of shares that may be issued pursuant to the plan is 600,000 shares.  As of December 31, 2008, a total of 600,000 shares had been issued under this plan.





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





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





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





The table below sets forth information as of December 31, 2008 regarding outstanding options granted under the plans, warrants issued to consultants and options reserved for future grant under the plan.





Number

of shares to be issued upon exercise of outstanding options, warrants and rights

(a)



Weighted-average exercise price of outstanding options, warrants and rights

(b)



Number of shares remaining available for future issuance under equity compensation plans (excluding shares reflected in column (a))

(c)Equity compensation plans approved by stockholders


-


$
-



-Equity compensation plans not approved  by stockholders


472,750


$
2.84



250
(1)Total


472,750


$
2.84



250
(1)





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





As of December 31, 2008, there were 250 shares that remained available for issuance under the 2002 employee stock compensation plan.  As of December 31, 2008, no shares remained available under the 2006 Non-Qualified Stock Compensation Plan, the Attorney’s and Accountant Stock Plan Non-Qualified Stock Compensation Plan 2006 and the 2006-B Non-Qualified Stock Compensation Plan.




Item6.    Selected Financial Data





For the years ended December 31, 2008 and December 31, 2007, the Company incurred net losses before extraordinary gain, of $207,627 and $934,629, respectively.  The Company accumulated deficit at the end of December 31, 2008, was $12,040,077.





See Index to Financial Statements and Schedules appearing under Item 8 of this Form 10-K.




Item7.    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.




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OVERVIEW AND OUTLOOK





During 2008, we were in the business developing and producing motion pictures and we discontinued the business of investing in litigation recoveries..





Results of Operations





The following overview provides a summary of key information concerning our financial results for the years ended December 31, 2008 and 2007.





Revenues




Year Ended

December 31st


Increase (Decrease)2008


2007


Amount

PercentNet Revenue

$
25,000


$
216,089


$
(427,951
)
(88.4) %





Revenue: Total revenue was $25,000 and $216,089 for the fiscal years ended December 31, 2008, and 2007, respectively.  Our decrease in revenue of $427,951 is due to the discontinuance 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 31st


Increase (Decrease)2008


2007


Amount


PercentageGeneral and administrative expenses


154,683



1,014,565


$
(859,882
)


(84.7
) %Financing expense


60,721



70,000



(9,279
)


(13.2
) %Depreciation and amortization


6,463



26,001



(19,538
)


(75.1
) %-Total operating expenses


211,573


$
1,110,566


$
(898,993
)


(80.9
) %





Total operating expenses for the year ended December 31, 2008 decreased by $898,993 from the year ended December 31, 2007, because of the cost cutting procedures that management has implemented.





Other income (expense)




Year Ended

December 31st


Increase (Decrease)2008


2007


Amount


PercentageOther income

$
3,699


$
53,947


$
(50,248
)


(93.1
) %Interest (expense)


(14,459
)


(94,099
)


(79,640
)


(84.6
) %-











--Total other income (expense)


(10,760
)


(40,152
)


(29,392
)


(73.2
) %






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Our interest expense was $79,640 lower in 2008, than in 2007, because we used the issuance of stock to reduce the debt and to finance operating costs.





Net (loss)


Year Ended

December 31st


Increase (Decrease)2008


2007Net (loss) before extraordinary gain

$
(207,627)



(934,629)


$
(727,007)


$
(77.7)
%





Our net loss before extraordinary gain was approximately 77.7% lower in the year ended December 31, 2008, as compared to the year ended December 31, 2007, because we reduced our G & A expenses by over $800,000, restructured a substantial portion of our debt, and reclassified certain expenses to a movie rights, asset account.





Operation Plan





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





Liquidity and Capital Resources





We had cash on hand of $2,253, as of December 31, 2008.  In the opinion of management, our available funds will not satisfy our working capital requirements for the next twelve months.  We will need to raise funds to continue to implement our business plan. We plan to raise these funds through private and institutional debt or equity offerings, including interest bearing convertible debentures.  There can be no assurance that the Company will be able to obtain such financing.





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 Jacqueline 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. Jacqueline 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.





In May and June of 2008, the Company exercised its rights pursuant to the terms of the Equity Investment Agreement with Imperial Capital Holdings, dated July 28, 2006, to require Imperial Capital Holdings to purchase shares of the Company’s common stock.  The aggregate number of shares subject to the Puts was 400,000 shares, or the aggregate minimum Put amount was $40,000, less fees.





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





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





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





On May 19, 2008, we issued 40,000 shares of restricted common stock, par value $0.001, to Jerry E. Polis as an enticement for a $20,000 loan, the share price was $0.08.





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





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





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





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





Additionally, in November, 2008, the Company’s Board of Directors authorized the issuance of an additional 500,000 shares of Series C Preferred stock to Mr. Rasmussen in partial consideration for his agreement to: (i) reduce his salary to $10,000 per month, (ii) to defer the receipt of his salary and other compensation until such time as the Company has sufficient funds, and (iii) for his agreement to forego receipt of all accrued salary due him from inception of his employment through September 30, 2008. These shares were not issued until April, 2009.





In November, 2008, the Company’s Board of Directors authorized the issuance of an additional ten million shares of common stock to Rochester Capital Partners (RCP) to compensate RCP for a diminution in value of the receivable amounts represented by LitFunding’s prior management, as adjusted post closing to the stock purchase transaction between LitFunding and RCP.  These shares were not issued until late March, 2009.





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.





On June 5, 2007, our registration statement was declared effective by the SEC.  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, 2008 and 2007, 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, 2008, 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, 2008, which means that our current liabilities exceeded our current assets on December 31, 2008, by $481,382.  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, 2008, were not sufficient to satisfy all of our current liabilities on December 31, 2008.  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.





17
 Table of Contents




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





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





Expected Purchase or Sale of Plant and Significant Equipment.





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





Significant Changes in the Number of Employees.





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





Off-Balance Sheet Arrangements





We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.




Critical Accounting Policies and Estimates




Our Management's Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources, primarily allowance for doubtful accounts receivables, accruals for other costs, and the classification of net operating loss and tax credit carry forwards between current and long-term assets. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the financial statements included in this report.




Item7A.    Quantitative and Qualitative Disclosures About Market Risk




Not Applicable to smaller reporting companies.




Item8.       Financial Statements and Supplementary Data














18
 Table of Contents





Item 8.  Financial Statements and Supplementary Data
 
 
  TABLE OF CONTENTS
  
 PAGESREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
F-2CONSOLIDATED BALANCE SHEET
F-3CONSOLIDATED STATEMENT OF OPERATIONS
F-4CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
F-4CONSOLIDATED STATEMENT OF CASH FLOWS
F-6NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-7
 
 
 
 Table of Contents
 
  Larry O'Donnell, CPA, P.C.
 Telephone (303) 745-4545
2228 South Fraser StreetFax (303) 369-9384
Unit IEmail larryodonnellcpa@msn.com
Aurora, Colorado    80014www.larryodonnellcpa.com
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 Board of Directors
 Global Entertainment Holdings, Inc.
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 I have audited the accompanying balance sheet of Global Entertainment Holdings, Inc., and subsidiaries as of December 31, 2008, and the related consolidated statements of operations, stockholders equity and cash flows for each of the two years in the period ended December 31, 2008. These financial statements are the responsibility of management. My responsibility is to express an opinion on these financial statements based on my audits.
 I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  I believe that my audit provides a reasonable basis for my opinion.
 In my 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, 2008, and the results of operations and its cash flows for each of the two years in the period ended December 31, 2008, in conformity with accounting principles generally accepted in the United States.
 The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As disclosed in the consolidated financial statements and notes to the consolidated financial statements, the Company will need additional working capital for its planned activity and to service its debt. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are described in the notes to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 /s/ Larry O’Donnell, CPA, PC
 April 14, 2010
 
 F-2
 Table of Contents
 
 
 GlobalEntertainment Holdings Inc.Consolidated Balance SheetDecember 31,2008AssetsCurrent assets:Cash and cash equivalents

$
2,553Note receivable


160,000Accrued Interest Income


3,699Total current assets


165,952Fixed assets, net


16,714Total fixed assets


16,714Other assetsBook Rights


1,864TV Game/Reality Show


5,966Film Rights


189,175Movies


26,850Website Software: Less Amortization


4,000Other Assets


17,195Producer Investment


150,000Total other assets


395,050Total assets

$
577,716Liabilities and Stockholders' EquityLiabilities not subject to compromiseAccounts payable

$
69,824Accrued expenses


183,906Deferred Revenue


150,000Notes payable


243,604Total current liabilities not subject to compromise


647,334Liabilities subject to compromiseDebentures


40,000Total liabilities subject to compromise


40,000Total liabilities


687,334Stockholders' 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,11,812,844, and 9,258,511shares issued andoutstanding at December 31, 2008 and 2007, respectively


94,282Shares authorized & unissued


(200,000
)Subscription PayableAdditional paid-in capital


11,339,565Additional paid-in capital Preferred B


271,425Additional paid-in capital Preferred C


500Accumulated (deficit)


(12,040,077)(109,618)$
577,716
 
 F-3
 Table of Contents
  GlobalEntertainment Holdings, Inc.

Consolidated Statement of Operations
  2008


2007Net Revenue

$
25,000


$
216,089Expenses:General and administrative expenses


154,683



1,014,565Financing expense


60,721



70,000Depreciation & Amortization


6,463



26,001Total operating expenses


211,573



1,110,566Net operating (loss)


(196,867
)


(894,477
)Other income (expenses):Other income


3,699



53,947Interest expense


(14,459
)


(94,099
)Rental IncomeTotal other income (expenses)


(10,760
)


(40,152
)Loss before reorganization items


(207,627
)


(934,629
)Extraordinary gain and income taxesBad Debt in connection with share issuanceGain on debt restructure


26,250



323,929Loss  before extraordinary  gain and income taxesIncome (Loss) before Income taxes


(181,377
)


(610,700
)Net Income (loss)

$
(181,377
)

$
(610,700
)Basic Earnings (loss) per share:


(0.02
)


(0.23
)Before Extraordinary item


(0.02
)


(0.23
)Extraordinary item


0.00



0.08Total


(0.02
)


(0.15
)Weighted average number of common shares outstanding:Basic


10,954,988



04,005,251
  F-4
 Table of Contents
  Statementsof Changes in Stockholders' Equity
  Common Stock


Preferred Stock


Preferred StockShares


Amount


Shares


Amount


Shares


Amount

Shares

Amount

Amount

Paid in

Capital


Paid in

Capital


Subscription

Payable


Shares Authorized

Unissued

Accumulated

(Deficit)


Total Stockholders

EquityBalance, December 31, 2004


1,122,006



11,221



-



-
















4,611,310






-







-6,225,276



-1,602,745shares 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



-3,972,043Balance, 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
)


(2,479,324Shares 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



















(826,147
)Shares 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

500,000


500


3,990


10,745,821



271,425



-171,000



17,500

(11,858,700)


(898,381
)Shares issued in settlement of debt


1,534,333



1,534


























328,966







171,000



17,500








693,139Shares issued for services


400,000



400


























31,600




















32,000Shares issued for financing


220,000



220


























9,480




















9,700Shares authorized & unissued


10,000,000






























200,000




















200,000Shares issued for cash


400,000



400


























34,900




















35,300Shares IssuedNet Loss for the of the year


















































(181,377
)


(181,377
)Balance, December 31, 2008


11,812,844



94,282











3,990,314



3990

500,000


500





11,339,215



271,425



0



200,000




(12,040,077
)


(109,618
)
  
 F-5
 Table of Contents
   GlobalEntertainment Holdings Inc.Consolidated Statements of Cash Flow
  For the years ending

December 31,2008


2007Cash flows from operating activitiesNet income (loss)

$
(181,377
)

$
(610,700
)Adjustments 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


6,463



26,001Reserve for unsuccessful resolution of lawsuits


226,663Reserve for Doubtful Receivables


159,838Loss on disposal of assetShare-based compensation


765,616Common stock issued in settlements


360,966



(1,389,878
)Share-based interest paymentsShares cancelled


4,176Gain on participation obligation


940Debt discount amortizationChanges in assets and liabilities:Trade and other accounts receivable


222,279Other assets


(139,030
)


163,095Contingent advancesAccounts payable and accrued expenses


9,581



(25,000
)Trade and other claims subject to compromiseNote receivable


(160,000
)


173,100Deferred revenue


(150,000
)Net cash (used in) operating activities


(272,559
)


(283,870
)Cash flows from investing activities:Purchases of property and equipmentNet cash (used in) investing activitiesCash flows from financing activities:Cash from issuance of common stock


35,300



242,500Cash from exercise of options & warrants


100Cash from issuance of preferred stockProceeds from notes payable


76,600Subscription PayableProceeds from investor participation borrowingsProceeds from investor obligations


22,210Principal repayments on capital lease obligationsValue of Warrants issued


160,554



(150,900
)Net cash provided by financing activities


272,554



284,810Increase (decrease) in cash


(5
)


940Cash - beginning of period


2,258



1,618Cash - ending of period

$
2,253


$
2,258Supplemental disclosures:Interest paidIncome taxes paid

$
-


$
-Shares issued for services

$
32,000



593,000Number of shares issued for services


400,000



*112,568Shares issued for debt

$
360,966



1,111,865Number of shares issued for debt


1,534,333



*840,660Imputed value of warrants issued with debt


-All share after 10 to 1 reverse split
 F-6
 Table of Contents
 GlobalEntertainment Holdings Inc.
 Notes To Consolidated Financial Statements
  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 $109,618 at December 31, 2008. The Company's net loss for the year ended December 31, 2008 is $181,377. 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.
  F-7
 Table of Contents
  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, 2008 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, 2008 and 2007 was $6,463 and $26,001respectively.
  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, 2008 and December 31, 2007 respectively is $223,855 and $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.
  F-8
 Table of Contents
  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. T he amortized amount for the year 2008 was $2,000.
 
 Revenue recognition
  Film revenue from licensing agreements is recognized when the license period begins and the licensee and the Company become contractually obligated under a non-cancellable agreement. All revenue recognition for license agreements is in compliance with the AICPA's Statement of Position 00-2, Accounting by Producers or Distributors of Films.  To date, Global Universal has not realized any film revenue.
 
 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.
 
 Pursuant to SFAS 15 paragraphs 25 and 26 at June 30, 2008 we report debt-restructuring reduction for accounts payable totaling $26,250 for a note payable discounted with the issue of 500,000 shares of restricted common stock at $0.10 per share..  The per share gain is $0.002.
 
 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 became a 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.
  F-9
 Table of Contents
  On September 22, 2008, the Company entered into an Exclusive License Agreement with its Canadian affiliate, Global Universal Pictures, Inc. (“GUP”), whereby the Company granted a worldwide, exclusive license to GUP to use the work entitled "Blue Seduction" (the "Film"). The license includes: (1) the right to promote the Film throughout the world in all languages and in all distribution markets, including TV, home video, DVD and non-theatrical and theatrical markets, and (2) merchandise rights relating to all goods and services appearing in the Film. The Company owns a thirty percent (30%) equity interest in GUP.
 
 As a condition to the license, GUP agreed to credit the Company as the source of the original concept for the Film and Mr. Gary Rasmussen, the Company's President, as Executive Producer.
 
 Subject to financing of the Film, GUP agreed to pay the Company an all inclusive one-time fee of (i) U.S. $150,000, evidenced by a Promissory Note due March 31, 2009 (the "Fee"), and (ii) revenue representing 50% of GUP's "Net Receipts" from the sale of the Film rights in the worldwide marketplace.
 
 The $150,000 fee has been recorded as deferred revenue and will be amortized as a percentage of the net receipts from the sale of the film rights.
 
 Income taxes
  The Company provides for income taxes based on the provisions of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, which, among other things, requires that recognition of deferred income taxes be measured by the provisions of enacted tax laws in effect at the date of financial statements. The company is a cash basis taxpayer.
 
 Tax Credits
  The grant for $20 million 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 $32,000 and $783,018 for the years ended December 31, 2008 and 2007, 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.
  F-10
 Table of Contents
  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.
 
 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:
 
 2008


2007Net (loss), as reported

$
(181,377
)

$
(610,700
)Add:   Employee stock-based compensation

Expense, as reported






19,500Deduct:  Total stock-based employee compensation

expense determined under fair value method






(19,500
)Pro forma net (loss)

$
(181,377
)

$
(610,700
)Net (loss) per common shareBasic (loss) per share, as reported

$
(0.02
)

$
(0.23
)Basic per share, pro forma

$
(0.02
)

$
(0.23
)
 
 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.
  F-11
 Table of Contents
  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.
  F-12
 Table of Contents
  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, 2008 is $40,000. The Company has not made the semi annual interest payments in the year 2008 and 2007 with respect to the $40,000 remaining amount of debentures. The accrued interest is $9,900, as of December 31, 2008.
 
 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, 2008 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.
 
 On September 22, 2008, the Company entered into an Exclusive License Agreement with its Canadian affiliate, Global Universal Pictures, Inc. (“GUP”), whereby the Company granted a worldwide, exclusive license to GUP to use the work entitled "Blue Seduction" (the "Film"). The license includes: (1) the right to promote the Film throughout the world in all languages and in all distribution markets, including TV, home video, DVD and non-theatrical and theatrical markets, and (2) merchandise rights relating to all goods and services appearing in the Film. The Company owns a thirty percent (30%) equity interest in GUP.
 
 As a condition to the license, GUP agreed to credit the Company as the source of the original concept for the Film and Mr. Gary Rasmussen, the Company's President, as Executive Producer.
 
 Subject to financing of the Film, GUP agreed to pay the Company an all inclusive one-time fee of (i) U.S. $150,000, evidenced by a Promissory Note due March 31, 2009 (the "Fee"), and (ii) revenue representing 50% of GUP's "Net Receipts" from the sale of the Film rights in the worldwide marketplace.
  F-13
 Table of Contents
  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 31,2008


2007Current 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, 2008:
 
 December 31,2008

2007Federal statutory rates

$
(181,377)
(34%)

$
(610,700)
34%State income taxes


0



0Valuation allowance for operating loss carry forwards


(181,377)
34%


(610,700)
34%Permanent difference for discharge of debt


0
0%


0
0%Other


0
0%


0
0%Effective rate

$
0
0%

$
-0-
0%
  F-14
 Table of Contents
  Note 5 - Contingent Advances
 
 Contingent advances occurred when the Company, operating as LitFunding Corp., entered into agreements with lawyers and law firms whereby the Company advanced funds for litigation costs on selected cases. Generally, the Company would be repaid those amounts, plus negotiated fees, when and if a case was settled. These agreements were non-recourse, but were secured by a lien against any awards in the case.  Fees were generally based on the length of time the advances were outstanding.  If the fee was less than the award or settlement, the fees would be reduced to the amount of the recovery.
 
 Most of those advances were for cases well over 36 months old and past management undertook very little or no contact or follow up with most of the attorneys involved with the 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.
 
 The Company has no contingent advances as of December 31, 2008. In March of 2008, the Company divested itself of this former business with the sale of LitFunding USA, Inc.
  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 its common stock, par value $0.001, priced at market to one of the law firms. In 2007 the Company issued 125,000 shares of its 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.
  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.
 
 Pursuant to SFAS 15 paragraphs 25 and 26 at June 30, 2008 we report debt-restructuring reduction for accounts payable totaling $26,250 for a note payable discounted with the issue of 500,000 shares of restricted common stock at $0.10 per share..  The per share gain is $0.002.
 
 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.
 
 On March 5, 2008, the Company authorized the issuance of 283,333 shares of its $0.001, par value, restricted common stock for the conversion of a note in the amount of $42,500 held by Davric Corporation relating to LFC 104. The conversion share price was $0.15. These shares were issued April 22, 2008. On March 5, 2008, the Company authorized 180,000 shares of its $0.001 par value restricted common stock for the conversion of a note in the amount of $27,000 held by Davric Corporation relating to LFC 105. The conversion share price was $0.15. These shares were issued April 22, 2008.
  F-15
 Table of Contents
  On March 31, 2008, the Company authorized 500,000 shares of its $0.001 par value restricted common stock for the conversion of a note in the amount of $50,000 held by Green Realty Corp. relating to LFC 101. The conversion share price was $0.10. These shares were issued April 25,2008.  As of December 31, 2008, the Company has no participation obligations.
  The participation obligations were notes held in individual Limited Liability Companies, of which LitFunding USA served as the managing member.  In March 2008, the Company divested itself of LitFunding USA.  The funds from the notes were advanced to law firms to fund litigation cases with a monthly fee charged until the case is won or settled. The investor could 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 was lost, the investment of the investor would be lost and the note balance would be 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, 2008, the Company had accrued interest totaling $9,900.
 
 The registered holders of the debentures have the right, after one year prior to maturity, to convert the principal at the original conversion price of $10 for one Common share or at the adjusted conversion price. If and whenever on or after the date of this debenture, the Company issues or sells any share of common stock for a consideration per share less than the initial conversion rate, then upon such issue or sale, the initial conversion rate shall be reduced to the lowest net price per share at which such share of common stock have been issued. The debentures are subordinated to all the senior indebtedness, including debts under equity participation agreements.
 
 Note 9 - 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, 2008 is comprised of the following:
 
 Note payable to entity, original balance of $19,181.   Principal and interest due June 15, 2006. The Note is unsecured.

$
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.

$
10,081Advances to be converted into notes.

$
29,000Notes payable face amounts totaling $42,500, with various interest rates and due dates. The notes have been verbally extended.

$
42,500Note payable face amount $40,000 , dated May 1, 2008, interest rate 12% due date April 30, 2009.

$
40,000Note payable face amount $20,000, dated May 1,2008, interest rate 12% due date April 30, 2009.

$
20,000Note payable face amount $8,000, dated July 7, 2008, interest rate 12% due date March 31,2009

$
8,000Note payable face amount $4,500, dated July 8, 2008, interest rate 12% due date March 31, 2009

$
4,500Note payable face amount $4,500 date August 19, 2008, interest rate 12% due date March 31, 2009

$
4,500Global Notes with no specified due dates and varying interest rates.

$
59,383Total

$
243,604
  F-16
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  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.
 
 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.
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  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.
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  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 this option to cause the Company to redeem any shares of stock.
 
 At December 31, 2008 the contingent liability of the Security Agreement was 200,000 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.
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  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, as amended, 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 were outstanding prior to the Effective Date and that are not outstanding after the Effective Date 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.
 
 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.
  F-20
 Table of Contents
  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 on July 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.
 
 Common Stock Issued in 2008
 
 During the quarter ended March 31, 2008, we issued a total of 171,000 shares to 2 individuals for conversion of $150,000 in debentures they held, with accrued interest of $21,000, or an aggregate of $171,000. The shares were issued at a value of $1.00 per share.  We believe that the issuance of these shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933, as amended, by virtue of Section 4(2).
 
 On March 5, 2008, the Company authorized the issuance of 283,333 shares of its $0.001, par value, restricted common stock for the conversion of a note in the amount of $42,500 held by Davric Corporation relating to LFC 104. The conversion share price was $0.15. These shares were issued April 22, 2008. On March 5, 2008, the Company authorized 180,000 shares of its $0.001 par value restricted common stock for the conversion of a note in the amount of $27,000 held by Davric Corporation relating to LFC 105. The conversion share price was $0.15. These shares were issued April 22, 2008.
 
 On March 27, 2008, the Company authorized 400,000 shares of its $0.001 par value restricted common stock to Virginia Perfili, a Board Member, for services performed as a Board Member and for past services performed for Global Universal Film Group during 2007.  The shares were valued at $0.08 per share totaling $32,000. These shares were issued April 22, 2008.
 
 On March 31, 2008, the Company authorized 500,000 shares of its $0.001 par value restricted common stock for the conversion of a note in the amount of $50,000 held by Green Realty Corp. relating to LFC 101. The conversion share price was $0.10. These shares were issued April 25,2008.
 
 On April 30, 2008, 100,000 shares of restricted common stock was issued to Worldwide financial Solutions Inc., in connection with the exercise of warrants issued at $0.001 par value.
 
 On May 9, 2008 100,000 shares of unrestricted common stock, par value $0.001, were issued to Imperial Capital Holdings pursuant to the terms of the Equity Investment Agreement that requires the cash purchase of the Company’s common stock. The share price was $0.09.  These shares were issued pursuant to our registration statement on form SB-2, effective on June 5 2007.
  F-21
 Table of Contents
  On May 19, 2008, we issued 40,000 shares of restricted common stock, par value $0.001, to Jerry E. Polis as an enticement for a $20,000 loan, the share price was $0.08.
 
 On May 19, 2008, we issued 80,000 shares of restricted common stock, par value $0.001, to Davric Corp. as an enticement for a $40,000 loan, the share price was $0.08.
 
 On May 21, 2008 100,000 shares of unrestricted common stock, par value $0.001, were issued to Imperial Capital Holdings pursuant to the terms of the Equity Investment Agreement that requires the cash purchase of the Company’s common stock. The share price was $0.10. These shares were issued pursuant to our registration statement on form SB-2, effective on June 5 2007.
 
 On May 27, 2008 100,000 shares of unrestricted common stock, par value $0.001, were issued to Imperial Capital Holdings pursuant to the terms of the Equity Investment Agreement that requires the cash purchase of the Company’s common stock. The share price was $0.08. These shares were issued pursuant to our registration statement on form SB-2, effective on June 5 2007.
 
 On May 30, 2008, we issued 200,000 shares of restricted common stock, par value $0.001, as directed by Stanley Weiner, in consideration for the cancellation of an outstanding loan, at a per share price of $0.10. Stanley Weiner is the Company’s Vice President of Finance and a member of the Board of Directors.
 
 On May 30, 2008, we issued 104,760 shares of restricted common stock, par value $0.001, as directed by Stanley Weiner, to the Marital Trust created under the will of Blanche Weiner, in consideration for the cancellation of an outstanding loan, at a per share price of $0.10. Stanley Weiner is the Company’s Vice President of Finance and a member of the Board of Directors.
 
 On May 30, 2008, we issued 95,240 shares of restricted common stock, par value $0.001, as directed by Stanley Weiner, to the Disclaimed Residential Trust created under the Will of Blanche Weiner, in consideration for the cancellation of an outstanding loan, at a per share price of $0.10.  Stanley Weiner is the Company’s Vice President of Finance and a member of the Board of Directors.
 
 On June 5, 2008 100,000 shares of restricted common stock, par value $0.001, were issued to Imperial Capital Holdings pursuant to the terms of the Equity Investment Agreement that requires the cash purchase of the Company’s common stock. The share price was $0.08. These shares were issued pursuant to our registration statement on form SB-2, effective on June 5 2007.
 
 Additionally, in November, 2008, the Company’s Board of Directors authorized the issuance of an additional 500,000 shares of Series C Preferred stock to Mr. Rasmussen in partial consideration for his agreement to: (i) reduce his salary to $10,000 per month, (ii) to defer the receipt of his salary and other compensation until such time as the Company has sufficient funds, and (iii) for his agreement to forego receipt of all accrued salary due him from inception of his employment through September 30, 2008. These shares were not issued until March, 2009.
 
 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. Jacqueline Giroux, President of Global Universal, received 750,000 shares.  In December 2007, we issued an additional 2,490,134 shares of Series B Preferred stock in exchange for the cancellation of $273,915 in debt of Global Universal.  Mr. Rasmussen received 343,227 shares directly in his name, and Rochester Capital Partners received 641,225 shares. Ms. Giroux received 1,505,682 shares directly in her name. The total 3,990,314 shares of our Series B Preferred stock outstanding are convertible into 3,990,134 shares of common stock at anytime.
  F-22
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 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.
 
 Series “C” Convertible Preferred Stock
 
 In January, 2008, in keeping with the restructuring efforts of the new management team, the Board authorized the issuance of 6,000,000 shares of a non-dilutive, convertible preferred stock entitled, Series C Convertible Preferred Stock (“Series C Stock”). The Series C Stock is non-dilutive and, the initial 6,000,000 shares authorized, will convert into 60% of the Company’s outstanding common stock as calculated immediately after such conversion. On April 4, 2008, the Company filed a Certificate of Designation relating to its Series C Convertible Preferred Stock with the Nevada Secretary of State. On November 8, 2008, the Board approved an amendment to the Certificate of Designation of the Series C, which provided for 6,500,000 shares authorized, converting into 65% of the outstanding common stock at the time of conversion, to correct an error in the original filing.  A full description of the terms and conditions of the Series C Preferred Stock is provided in Exhibit 3.3, filed with our quarterly report on Form 10-QSB on August 14, 2008.
 
 Note 11 – 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, 2008, 2007 and 2006 was $9,800,  $44,046, and $48,908, respectively.
 
 The Company utilizes the private office of its CFO, Terry Gabby, to support his services for the Company, and retains a mailing address in Las Vegas, Nevada, at a cost of about $200, annually, with an address of 2375 E. Tropicana Avenue, Suite 8-259, Las Vegas, Nevada 89119.
 
 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.
  F-23
 Table of Contents
  We incurred 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 445,459 and 25,000 common shares were not considered in the calculation for diluted earnings per share for the years ended December 31, 2008 and December 31, 2007 respectively. In accordance with SFAS No. 128, the control number used in determining the dilutive effect of warrants and options is based on operating income. Therefore, because the Company experienced a net operating loss as of December 31, 2008, the effect of their inclusion based would be anti-dilutive and hence, were not included.
 
 2008


2007Income (Loss)


Shares


Per Share


Income (Loss)


Shares


Per ShareNet  income (loss) before extraordinary item

$
(207,627
)







$
(934,629
)Extraordinary item


26,250









323,929Total

$
(181,377)









(610,700
)Preferred dividends


0









0Income (loss) available to common shares holders

$
(181,377
)







$
(610,700
)Basic earnings (loss) Per Share:Before extraordinary item

$
(207,627
)


10,954,988


$
(0.02
)

$
(934,629
)


4,005,251


$
(0.23
)Extraordinary item


26,250



10,954,988


$
0.00



323,929



4,005,251


$
0.08Total

$
(181,377
)


10,954,988


$
(0.02
)

$
(610,700
)


4,005,251


$
(0.15
)
  F-24
 Table of Contents
  Note 13– Related Party
 
 Gary Rasmussen, our CEO and Chairman, also serves as the Chairman and Secretary of our subsidiary, Global Universal Film Group.  As a result, Mr. Rasmussen received shares of our Series B Preferred stock, both directly and indirectly through Rochester Capital Partners (RCP), in connection with our acquisition of Global Universal Film Group, and in consideration of the cancellation of notes payable from Global Universal Film Group. Additionally, Mr. Rasmussen is the General Partner of Rochester Capital Partners, our controlling and largest shareholder.
 
 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, 2008, no options were exercised, and 100,000 warrants were exercised. The warrants and options were issued to both non-employees for services and to Directors of the Company and creditors. The warrants and options issued to Directors of the Company were part of the compensation package promised to Directors in August 2004 and are priced accordingly.
 
 The summary of activity for the Company's stock options and warrants is presented below and takes into effect the reverse split of our common stock on a 1-for-10 basis in December 2007:
 
 Year ended

December, 2008


Weighted Average

Exercise Price


Year ended

December, 2007


Weighted Average

Exercise PriceOptions/Warrants  outstanding at beginning of Period


481,675


$
4.20



601,075


$
4.20Granted


445,459


$
0.36



25,000


$
0.80Exercised


100,000


$
.001






$Amended


300,000


$
0.32Terminated/Expired


(444,250
)

$
2.63



(144,400
)Options /warrants outstanding at end of period


481,675


$
1.65



481,675


$
3.20Options/warrants exercisable at end of period


481,675


$
1.65



481,675


$
3.20Price per share of options outstanding

$
0.10-$70.00






$
0.10-70.00Weighted average remaining contractual lives

1.69 years






1.75 yearsWeighted average fair value of options granted during the period

$
0.08






$
0.79
  F-25
 Table of Contents
 
 Note 15 - Subsequent Events
 
 Divestiture of LitFunding USA
 
 On March 28, 2008, the Company entered into Stock Purchase Agreement with Iscom, 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.
 
 
 F-26
 Table of Contents
 Item9.        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, 2008, and 2007.
  Item 9A.    Controls and Procedures
 
 We conducted an evaluation, with the participation of Gary Rasmussen, our current Chief Executive Officer, and Stanley Weiner, our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of December 31, 2008, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, Messrs. Rasmussen and Weinerhave concluded that as of December 31, 2008, our disclosure controls and procedures were effective at the reasonable assurance level.
 Management’s Report on Internal Control over Financial Reporting
  Management is responsible for establishing and maintaining adequate internal control over financial reporting of the Company.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
 
 Management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on this evaluation, because of the Company’s limited resources and limited number of employees, management concluded that, as of December 31, 2008, our internal control over financial reporting is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the U.S. generally accepted accounting principles.
 
 Management has abandoned its former business model in March of 2008, and does not therefore believe that its current business, after taking into consideration its current controls and procedures could result in a reoccurrence of the material weaknesses which occurred with respect to the 2007 financial statements.
  This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
  Limitations on Effectiveness of Controls and Procedures
 
 Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and  procedures or our internal controls will prevent all errors and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.  The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goal under all potential future conditions.  Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
 
 Changes in internal controls
 
 There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15d-15 under the Exchange Act that occurred during the year ended December 31, 2008, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
 Item 9B.    Other Information
  None.
 
 19
 Table of Contents
 
 PART III
 
 
 Item 10.     Directors, Executive Officers and Corporate Governance
 
 The members of the board of directors serve for one year terms and are elected at the next annual meeting of stockholders, or until their successors have been elected.  The officers serve at the pleasure of the board of directors.
 
 Resignations and Appointments of Officers and Directors
 
 Information as to our current directors and executive officers of the Company is as follows:
 
 Name

Age

TitleGary Rasmussen

56

CEO and DirectorTerry Gabby

64

CFO and TreasurerStanley Weiner

65

Director and VP of FinanceVirginia Perfili

50

Director
 
 
 Duties, Responsibilities and Experience of Director & Officers of Global Entertainment Holdings.
 
 Gary Rasmussen.  Mr. Rasmussen has served as our Chief Executive Officer and Chairman of the Board of Directors since September of 2007.  In such capacity, he oversees our ongoing business development, acquisitions and financing. Mr. Rasmussen has an extensive background spanning over 30 years as an entrepreneur with vast experience in all phases of business development, having been a founder, chief executive officer or director of numerous private and publicly-held corporations engaged in the areas of cable television, investment banking, mortgage banking and motion pictures.  He has extensive experience in structuring debt and negotiating equity capital for both public and private enterprises, implementing short and long term business planning, acquisitions and divestitures, and has played a leading role in spearheading several publicly held corporations from their inception. From November of 2004 through September of 2007, Mr. Rasmussen was self-employed as a business consultant, working primarily with small publicly traded companies.  Prior to November, 2004, Mr. Rasmussen was a founder, consultant and non-executive Chairman of Infinicall, a public company engaged in developing a VoIP (Voice over Internet Protocol) technology to provide residential phone services to consumers with an Internet connection.  Mr. Rasmussen holds a Bachelor degree in Business Administration from Western Michigan University.
 
 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 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 restructuring the company as a publicly-traded entity, as well as raising capital for several films that were produced by Orphan.  Ms. Perfili was both producer and executive producer for the feature films, “Mirror Mirror” and “Mirror Mirror 2: Raven Dance”, and spearheaded their marketing and distribution.  Both of these independent feature films enjoyed theatrical, cable,  Pay-Per-View, TV broadcast, VHS, DVD, and Laser Disc releases, domestically.  In 1995, she directed another sequel, Mirror, Mirror III: The Voyeur.  Ms Perfili has always had a keen eye for recognizing fresh, new talent as demonstrated by the fact that she cast a then unknown young actor, Mark Ruffallo, as the male lead in both Mirror, Mirror 2 and Mirror, Mirror III, his very first leading roles in a feature film.
 
 20
 Table of Contents
  From 2000 through present, Ms. Perfili has been actively involved as a producer and consultant in the entertainment industry, and was also a director and consultant for a publicly-held, Voice Over Internet company.  In 2006, Virginia Perfili organized Freelance Filmworks, LLC, and served as the Executive Producer of its current feature film, tentatively entitled “ROUNDS”, which is presently in post production.
 
 Ms. Perfili graduated from Wayne State University in Detroit, Michigan, with a B.A. degree in Humanities with a pre-law curriculum.
 
 Management Biographies for Global Universal Film Group, Inc. and Global Universal Pictures, Inc.
 
 Jacqueline Giroux.Jacqueline Giroux is the CEO, President and Treasurer of our wholly-owned subsidiary, Global Universal Film Group, a film production and distribution company that she founded in 1997. Additionally, she is the founder and President of Global Universal Pictures, Inc., a federally chartered Canadian corporation, which is 30% owned by the Company.  In March, 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 a publicly-traded company engaged in Internet Telephony (VoIP communications). Ms. Giroux is also the founder and President of Global Universal Pictures, Inc., a Canadian corporation, which is 30% owned by Global Entertainment Holdings.
 
 Ms. Giroux has experience in managing publicly-held companies and considerable expertise in film financing and developing worldwide business relationships for co-producing and financing motion pictures. Jackie is also a writer, producer and director of feature films, and has been awarded “keys” to numerous U.S. Cities for her lecturing and fund raising for charity organizations in the United States. In addition, Ms. Giroux created an online casting website for Global Universal, which will be utilized to find and cast talent worldwide: www.youvegotthepart.com.
 
 Ms. Giroux won a scholarship to the New York American Academy of Dramatic Arts, and has appeared in many off Broadway and Broadway plays.  Her career in films was launched with a lead role in “The Cross and the Switch Blade”, starring Pat Boone and Eric Estrada.  She has appeared in fifteen feature films and several TV series; her last film as an actress was in “To Live and Die in LA”, directed by Billy Friedkin for MGM in 1985.  Since then, she has written and produced ten feature films, two “Movies of the Week”, two reality series, and most recently “Head Heart & Balls” a television pilot starring Adam Corolla.
 
 Jacqueline Giroux has extensive experience in structuring financing and co-production deals, having successfully arranged for co-productions between Canada, France and Germany, as well as Canada, France and Australia.  In 2000, she wrote and directed “Coo Coo Café”, a satire on the media networks.  “Coo Coo Café” the first film produced in New Brunswick Canada, was invited to the Sundance Film Festival, as well as received an invitation by the American Film Institute to be considered as one of the Best Screenplays of the year 2000.  She is a past nominee of The New York Film and Video Festival, and The Cannes Film Festival’s “Out of Competition” series. She has been profiled in several books, and appeared on The Tonight Show, The Merv Griffin Show, and The Geraldo Rivera Show, “Now It Can Be Told”.
 
 Terry Gabby – CFO(See biography above)
 Virginia Perfili – Vice President of Production. (See biography above)
 Gary Rasmussen – Chairman & Secretary.  (See biography above)
  Management Biographies for Global Universal Entertainment, Inc.
 
 Peter Liapis.Mr. Liapis was recently hired to serve as the President of Global Universal Entertainment, Inc., a wholly-owned subsidiary.  Global Universal Entertainment was formerly known as Easy Money Express, a subsidiary intended by former management of the Company to conduct financial transactions.
 
 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.
  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.
 
 David Richter.David Richter will serve as Production Executive for Global Universal Entertainment, a wholly-owned subsidiary of the Company (“GUE”).  Mr. Richter will be applying a decade of production related experience and entrepreneurial skill to the challenging task of assisting GUE in rolling out its slate of  planned films.  David Richter is also working with Global Entertainment Holdings, assisting management with the preparation of corporate materials and packaging financial presentations designed to facilitate overall financing for the Company.
 
 David graduated from Colorado State University 1991 with a B.A. degree in Communication and a minor in English. While attending CSU, he was awarded a scholarship from their prestigious creative writing program.  After college, David began his career in broadcast video production, working as a producer for the CBS affiliated KKTV television station in Colorado Springs, Colorado.  He produced and directed some 80 local and regional commercials and won the Colorado Broadcasters Award for Best Low Budget Commercial in that market in 1993.  He moved to Los Angeles in 1994, and has worked in all categories of film and video production.  He has produced and directed promos and commercials, line produced and post production supervised film projects, operated beta-cam, worked as an editor at a post house, hired cast & crew, scheduled & budgeted, location scouted, and supervised film processing &  telecine transfers.  He honed his artistic skill by studying acting and directing for 3 years at the well-known Beverly Hills Playhouse.  From 1998 to 2004 he founded his own production company which focused on marketing and advertising for the automotive industry.  For the last 5 years he has been an entrepreneur in the construction industry and holds a State of California General Contractor’s License.
 
 21
 Table of Contents
  Terry Gabby – CFO & Treasurer.  (See biography above)
 Gary Rasmussen – Chairman & Secretary.  (See biography above)
  Election of Directors and Officers.
 
 Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the Board of Directors following the next annual meeting of stockholders and until their successors have been elected and qualified.
 
 No Executive Officer or Director of the Company within the last 5 years has been the subject of any Order, Judgment, or Decree of any Court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring suspending or otherwise limiting him from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.
 
 No Executive Officer or Director of the Company within the last 5 years has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending.  No Executive Officer or Director of the Company is the subject of any pending legal proceedings.
 
 Section 16(a) Beneficial Ownership Reporting Compliance
 
 Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our executive officers and directors, and persons who beneficially own more than ten percent of our common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers, directors and greater than ten percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based upon a review of the copies of such forms furnished to us and representations from our executive officers and directors, we have found that, as of the date of this filing, some of the required filings have not been timely filed. We are processing the appropriate documents to bring this reporting requirement current.
  Audit Committee and Financial Expert
 
 We do not have an Audit Committee.  Our directors perform some of the same functions of an Audit Committee such as: recommending a firm of independent certified public accountants to audit the annual financial statements; reviewing the independent auditors, the financial statements and their audit report; and reviewing management's administration of the system of internal accounting controls. The Company does not currently have a written audit committee charter or similar document.
 
 Other than Mr. Gabby, our CFO, we have no additional financial experts. We believe the cost related to retaining a financial expert at this time would be prohibitive and an unnecessary strain on our limited financial resources. Further, because of our start-up operations, we believe the services of a financial expert are not warranted.
 
 Code of Ethics
 
 A code of ethics relates to written standards that are reasonably designed to deter wrongdoing and to promote:
 
 (1)
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;(2)
Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the Commission and in other public communications made by an issuer;
 (3)
Compliance with applicable governmental laws, rules and regulations;(4)
The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
 (5)
Accountability for adherence to the code.
 
 We have not adopted a corporate code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
 
 The decision to refrain from adopting a code of ethics resulted from having only three officers and three directors operating the Company.  Possible ethics code violations would be reported directly to the party generating the violation.
  22
 Table of Contents
  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.
 
 Item11.  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.
  
 
 
 Summary Compensation Table
 For Fiscal Year- Ended 2008 and 2007
 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 (1)
2008
NONE
NONE
NONE
NONE
NONE
NONE
0
02007
252,000
NONE
NONE
NONE
NONE
NONE
$56,380
$308,380Gary Rasmussen

CEO & Director (2)
2008

2007
120,000

252,000
NONE

NONE
NONE

NONE
NONE

NONE
NONE

NONE
NONE

NONE
0

0
120,000

$252,000Terry Gabby,CFO
2008
55,000
NONE
NONE
NONE
NONE
NONE
NONE
$55,0002007
55,000
NONE
16,500
$19,500
NONE
NONE
NONE
$75,000
 
 (1) Mr. Reed resigned all positions with the Company on August 31, 2007, for health reasons.
  (2) Mr. Rasmussen waived his right to any salary from the Company on November 8, 2008, for the period commencing with his appointment as our CEO, through September 30, 2008. Additionally, he voluntarily reduced his salary to $10,000 per month, which shall be accrued until such time as the Company has attained sufficient capital to pay salaries.
 
 23
 Table of Contents
 
 OUTSTANDING EQUITY AWARDS
 AT FISCAL YEAR- END AS OF 12/31/2008
  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)Gary 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
NONE
 
 All options and warrants have been authorized by the Board of Directors.  All options and warrants issued were for services rendered.
 
  DIRECTOR COMPENSATION
 For Fiscal Year- Ending 12/31/2008
  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)Stanley Weiner
NONE


NONE

NONE
NONE
NONE
NONE

$
0Gary Rasmussen
NONE

NONE

NONE
NONE
NONE
NONE


0Virginia Perfili
NONE

32,000

NONE
NONE
NONE
NONE

$
32,000
 
 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.
 
 
 24
 Table of Contents
  EMPLOYMENT AGREEMENTS
  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 had accrued a salary base of $252,000 per annum. No portion of this salary was paid and Mr. Rasmussen elected to waive all accrued salary for the fiscal year ending December 31, 2007. At a meeting of the Board on November 8, 2008, Mr. Rasmussen officially reduced his salary to $10,000, per month, with the provision that his salary be accrued until such time as the Company has attained sufficient capital. Further, Mr. Rasmussen has waived all of his salary previously accrued through September 30, 2008.  Mr. Rasmussen has not received any salary for his services to the Company from inception of his employment as CEO through March 31, 2009.
 
 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. Additionally, directors are eligible to participate in any stock option plans.
 
 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
 
 The following Warrants were issued to Worldwide Financial Solutions (“WFS”) during the year ending December 31, 2008.
 
 On April 3, 2008, we issued WFS a warrant to purchase 100,000 shares of our common stock at a price equal to its par value. This warrant was exercised.
 
 May 15, 2008, we issued WFS warrants to purchase an aggregate of 345,359 shares of our common stock upon the terms set forth in the table below.
 
 EXERCISE




Fair





EXERCISE


EXERCISE


CLOSINGGRANT DATE
THROUGH

WARRANTS


Value


AMOUNT


PRICE


Amount


PRICE

Issued For5/15/2008
6/30/2008


100,000


$
0.07


$
6,700


$
0.20


$
20,000.00


$
0.14

Financial Consulting5/15/2008
8/15/2008


100,000


$
0.08


$
7,900


$
0.40


$
40,000.00


$
0.145/15/2008
11/30/2008


100,000


$
0.10


$
10,000


$
0.70


$
70,000.00


$
0.145/15/2008
2/15/2009


45,459


$
0.12


$
5,501


$
1.00


$
45,459.00


$
0.144/3/2008



100,000


$
0.07


$
7,000


$
0.001


$
100.000


$
0.08445,459


$
0.44


$
37,101


$
2.30


$
175,559.00Weighted Average


$
0.08










$
0.39
 
 On November 8, 2008, the original term of the warrants issued to WFS, entitling themto purchase 300,000 shares of our common stock, were extended to an exercise date of not later than March 31, 2009. The exercise price was also amended as set forth in the table below.
 
 EXERCISE




Fair





EXERCISE


EXERCISE


CLOSINGGRANT DATE
THROUGH

WARRANTS


Value


AMOUNT


PRICE


Amount


PRICE

Issued For11/8/2008
3/31/2009


100,000


$
0.02


$
2,000


$
0.20


$
20,000.00


$
0.02

Financial Consulting11/8/2008
3/31/2009


100,000


$
0.02


$
2,000


$
0.25


$
25,000.00


$
0.0211/8/2008
3/31/2008


100,000


$
0.02


$
2,000


$
0.70


$
70,000.00


$
0.02300,000


$
0.06


$
6,000


$
1.15


$
115,000.00Weighted Average


$
0.02










$
0.38
  25
 Table of Contents
 
 
 Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 
 The following table presents information, to the best of our knowledge, about the beneficial ownership of our common stock on December 31, 2008, held by those persons known to beneficially own more than 5% of our capital stock and by our directors and executive officers.
 
 On December 31, 2008, we had a total of 11,812,844 shares of common stock 3,990,134 shares of our Series B, Convertible Preferred Stock (“Series B”), and 6,500,000 shares of our Series C, Convertible Preferred Stock (“Series C”) issued and outstanding.
 
 Each share of Series B stock is convertible into one share of common stock. The Percentage of Beneficial Ownership table below, assumes the conversion of the Series B shares into 3,990,134 shares of common stock with a total of 15,802,978 shares of common stock then outstanding.
 
 The 6,500,000 shares of Series C stock outstanding are, in the aggregate, convertible into 65% of the issued and outstanding shares of common stock, calculated immediately following such conversion.  Each share of Series C stock is convertible, at will, into a pro-rata percentage (of 65%) of the total common stock outstanding upon conversion. In addition, each share of Series C stock carries voting rights equal to that number of shares of common stock that would result from the conversion of each share of Series C stock.  The two far right columns of the Percentage of Beneficial Ownership table does not assume the conversion of the Series C shares into common stock, but states only the amount of shares held, by whom and the percentage held of that Class.  Assuming  that all Series B stock was converted into 3,990,134 shares of common stock, the Company would have a total of 15,802,978 shares of common stock then outstanding.  Assuming that all Series C stock was then converted subsequent to the conversion of all Series B stock, the Series C stock would convert into 29,348,388 shares of common stock, resulting in a total of 45,151,366 shares of common stock issued and 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, 2008, 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
 Number of


PercentShares of


of ClassNumber of





Number of


Common


Owned


Number ofShares of


Percent


Shares of


Assuming


Assuming


Shares ofCommon


of Class


Series B preferred


Conversion


Conversion


Series C preferred


PercentBeneficially


Beneficially


Beneficially


of


of


Beneficially


of ClassAffiliates

Owned


Owned


Owned


Series B


Series B


Owned


OwnedRochester Capital Partners


4,925,000



41.69
%


641,225



5,566,225



35.22
%Gary Rasmussen - Director (4)


13,500



0.11
%


1,093,227



1,106,727



7.00
%


3,500,000



53.85
%Terry Gabby - CFO (5)


15,000



0.13
%






15,000



0.09
%Virginia Perfili - Director


414,450



3.51
%






414,450



2.62
%Stan Weiner - Director


612,383



5.18
%






612,383



3.88
%Jacqueline Giroux  (6)


59,855



0.51
%


2,255,682



2,315,537



14.65
%


3,000,000



46.15
%Shares held by Insiders


6,040,188



51.13
%


3,990,134



10,030,322



63.47
%


6,500,000



100.00
%5% ShareholdersDavric Corp.


921,334



7.80
%






921,334



5.83
%Green, Andrew


597,500



5.06
%






597,500



3.78
%Other Shareholders


4,253,822



36.01
%






4,253,822



26.92
%Total Amounts


11,812,844



100.00
%


3,990,134



15,802,978



100.00
%


6,500,000



200.00
%
  
 26
 Table of Contents
 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, 2008, 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, 2375 E. Tropicana Avenue, #8-259, 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. Additionally, Mr. Rasmussen owns 3,500,000 shares of our Series C stock directly in his name.
  5.
Mr. Gabby holds 15,000 shares of common stock, options to purchase 5,000 and 25,000 shares of our common stock at a price of $0.40 and $ 0.80 per share respectively and warrants to purchase 5,000 shares of our common stock at a price of $0.40 per share.
  6.
Jacqueline Giroux owns 59,855 shares of common stock, 2,255,682 shares of Series B Preferred and 3,000,000 shares of Series C Preferred stock directly in her name. Ms. Giroux is the President and CEO of Global Universal Film Group, our wholly-owned subsidiary, as well as the President of Global Universal Pictures, which is 30% owned by the Company.  She is neither an officer nor director of Global Entertainment Holdings.
  Item 13.  Certain Relationships and Related Transactions, and Director Independence
 
 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 14.  Principal Accounting 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 2008, was $35,000.
 
 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 2008 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.
 
 27
 Table of Contents
  Item15.  Exhibits, Financial Statements and Schedules
 
 (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)3.4
Certificate of Designation of Series C Convertible Preferred Stock, dated January 9, 2008 (Incorporated by reference to exhibit 3.3 to Form10-QSB filed on August 14, 2008)3.5*
Amendment of Certificate of Designation of Series C Convertible Preferred Stock, dated November 8, 20084.1
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)10.27
Acquisition of Hands Free Entertainment (Incorporated by reference to exhibits to Form 8-K, filed on January 4, 2008)10.28
Disposition of LitFundingUSA (Incorporated by reference to exhibits to Form 8-K, filed onApril 8, 2008)10.29
Recession Agreement With Hands Free Entertainment (Incorporated by reference to exhibits to Form 8-K, filed on April 10, 2008)10.30
Exclusive License Agreement with Global Universal Pictures(Incorporated by reference to exhibits to Form 8-K, filed on December 11, 2008)10.31
Music Rights Agreement with B & J Pictures (Incorporated by reference to exhibits to Form 8-K, filed on December 11, 2008)10.32
Guarantee and Amended Exclusive License Agreement with Global Universal Pictures (Incorporated by reference to exhibits to Form 8-K, filed on December 11, 2008)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)21.1*
List of Subsidiaries: Global Universal Film Group, Global Universal Entertainment (formerly Easy Money Express) and Global Universal Pictures, a Canadian Corporation (30% owned)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 Stanley Weiner 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 Stanley Weiner pursuant to Section 906 of the Sarbanes-Oxley Act
 ___
 *              Filed herewith.
  28
 Table of Contents
  (b)           Reports on Form 8-K
 
 The following reports on Form 8-K were filed by the Company in 2008, and are incorporated herein by this reference:
 
 (1)  Form 8-K, filed January 4, 2008, regarding the acquisition of Hands Free Entertainment, Inc.
  (2)  Form 8-K, filed April 8, 2008, regarding the disposition of the Company’s subsidiary, LitFunding USA, Inc.
  (3)  Form 8-K, filed April 10, 2008, regarding the Rescission Agreement between the Company and Hands Free Entertainment, Inc.
  (4)  Form 8-K, filed December 11, 2008, regarding the Company’s material agreements with its Canadian affiliate, Global Universal Pictures, Inc.
 
 
 29
 Table of Contents
 
 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: April 14, 2010
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.
 
 Global Entertainment Holdings, Inc.Date: April 14, 2010
By:
/s/ Gary RasmussenName Gary RasmussenTitle CEO & Chairman
 
 Global Entertainment Holdings, Inc.Date: April 14, 2010
By:
/s/ Stanley WeinerName Stanley WeinerTitle Chief Financial Officer
 
 Global Entertainment Holdings, Inc.Date: April 14, 2010
By:
/s/ Stanley WeinerName Stanley WeinerTitle VP Finance, Director
 
 Global Entertainment Holdings, Inc.Date: April 14, 2010
By:
/s/ Virginia PerfiliName Virginia PerfiliTitle Director
  
 
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 Table of Contents