##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 ANNUAL
REPORT  Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Fiscal Year Ended January 4, 2009
 Commission File Number 000-51737
 GLOBAL EMPLOYMENT HOLDINGS, INC.
  Delaware
(State or other jurisdiction 
of incorporation)
    
    43-2069359
(IRS Employer
Identification Number)10375 Park Meadows Drive, Suite 375Lone Tree, Colorado
    
    80124(Address of Principal Executive Offices)
    
    (Zip Code)
 (303) 216-9500   Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class 
None
    
    Name of Each Exchange on Which Registered
N/A
  o þ
 Yes o No þ
 þ o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o(Do not check if a smaller reporting company)
    
    Smaller Reporting Company þ
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



PART IITEM 1. BUSINESS
    
    
    1ITEM 1A. RISK FACTORS
    
    
    9ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    19ITEM 2. PROPERTIES
    
    
    19ITEM 3. LEGAL PROCEEDINGS
    
    
    19ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    19PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    19ITEM 6. SELECTED FINANCIAL DATA
    
    
    21ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    21ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    31ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    32ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    32ITEM 9A(T). CONTROLS AND PROCEDURES
    
    
    32ITEM 9B. OTHER INFORMATION
    
    
    33PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    34ITEM 11. EXECUTIVE COMPENSATION
    
    
    34ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    34ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
    
    
    34ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    34PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    35SIGNATURESExhibit 31.1Exhibit 31.2Exhibit 32.1




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PART I.
 Cautionary
Note Regarding Forward Looking Statements
  
 ITEM 1. BUSINESS
 Overview
of our Business
  Recent Developments
   Industry Overview
 Staffing Services Segment Overview
   1




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PEO Segment Overview
   
    
    Relief from the burden of employment administration.
    
    A wide range of personnel management solutions through a team of experienced professionals.
    
    Improved employment practices, compliance and risk management to reduce potential liabilities.
    
    Access to a comprehensive employee benefits package, allowing customers to be competitive in
the labor market.
    
    Improved profitability resulting from safety engineering, control and management of workers
compensation losses and costs, and one-stop shopping for employee benefits, workers
compensation insurance, 401(k) plans, payroll services, risk management services and guidance
for compliance with most federal and state employment laws.
    
    Safety training and education.
   2




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Company overview
 Our History
      3




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Subsidiaries
   
    
    Temporary Placement Service, Inc. (business sold in March 2009)
 
    
    Main Line Personnel Services, Inc. (Main Line)
 
    
    Friendly Advanced Software Technology, Inc. (FAST)
 
    
    Excell Personnel Services Corporation (Excell)
  Current Name
    
    Formerly    Global Employment Solutions PEO Inc.
    
        Southeastern Staffing, Inc.    Global Employment Solutions PEO II Inc.
    
        Southeastern Staffing II, Inc.    Global Employment Solutions PEO III Inc.
    
        Bay HR, Inc.    Global Employment Solutions PEO IV Inc.
    
        Southeastern Georgia HR, Inc.    Global Employment Solutions PEO V Inc.
    
        Southeastern Personnel Management, Inc.    Global Employment Solutions PEO VI Inc.
    
        Southeastern Staffing III, Inc.    Global Employment Solutions PEO VII Inc.
    
        Southeastern Staffing IV, Inc.    Global Employment Solutions PEO VIII Inc.
    
        Southeastern Staffing V, Inc.    Global Employment Solutions PEO IX Inc.
    
        Southeastern Staffing VI, Inc.    Keystone Alliance, Inc.
 Services
  Staffing services
   4




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PEO services
  Operations
  Recruiting
  Marketing
  Marketing in the Staffing Services Segment
  Marketing in the PEO Services Segment
   5




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Customers
    Our Strategy and Competitive Strengths
 Support, Strengthen and Expand Branch Office Operations
  Increase Customer Utilization of our Services
  Enhance Management Information Systems
  Penetrate Other Selected Markets
  Pursue Strategic Acquisitions
  Financial Information about Segments
  Financial Information about Geographic Areas
   6




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New Market Segments
  Competition
   Research and Development
  Seasonality
  Our Technology and Management Information Systems
    7




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Risk Management Programs
    Employees
  
    
    Co-employ workers at customer locations, and thereby assume responsibility as
an employer for specified purposes of the workers assigned to the client
locations.
    
    Reserve a right of direction and control of the employees.
    
    Share or allocate with customer employers responsibilities in a manner
consistent with maintaining the customers responsibility for their products or
services.
    
    Pay wages and employment taxes of the employees out of our own accounts.
    
    Report, collect and deposit employment taxes with state and federal authorities.
    
    Establish and maintain an employment relationship with our employees that is
intended to be long-term and not temporary.
    
    Retain a right to hire, reassign and fire the employees.
  Service Marks
   8




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Regulatory and Legislative Issues
  Business Operations
  Employee Benefit Plans
  Working Capital Practices
  Available information
  
 ITEM 1A. RISK FACTORS
   9




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Any significant economic downturn could result in our clients using fewer temporary and contract
workers or becoming unable to pay us for our services on a timely basis, which would materially
adversely affect our business.
       We derive a significant amount of our revenues from one customer and if we are unable to retain
the customer, our results of operations will suffer.
   We face price competition which could result in a decrease in our gross margins or, if we are
unable to compete effectively, loss of revenues.
   
    
    Develop and expand their infrastructure and service offerings more quickly and achieve greater cost
savings.
    
    Invest in new technologies.
  10




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
    
    Expand operations into new markets more rapidly.
    
    Devote greater resources to marketing.
    
    Compete for acquisitions more effectively and complete acquisitions more easily.
    
    Aggressively price products and services and increase benefits in ways that we may not be able to match.
   Our business is subject to risks associated with geographic market concentration.
  2008
    
    
    2007Georgia  primarily TPS
    
    
    35
    %
    
    
    37
    %Florida
    
    
    17
    %
    
    
    19
    %New York/New Jersey
    
    
    30
    %
    
    
    27
    %
  Our service agreements may be terminated on short notice, leaving us vulnerable to loss of a
significant amount of customers in a short period of time.
  If we are unable to retain existing customers or attract new customers, our results of
operations could suffer.
    We have significant working capital needs and if we are unable to satisfy those needs from cash
generated from our operations or borrowings under our revolving line of credit, we may not be
able to meet payroll or statutory tax payment requirements.
   11




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Failure to comply with restrictive covenants under our debt instruments could trigger prepayment
obligations or additional costs.
  We may not have sufficient liquidity and capital resources necessary to meet our future
financial obligations.
  We could be required to write-off goodwill in future periods if our future operating results
suffer.
   12




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The amount of collateral that we are required to maintain to support our workers compensation
obligations could increase, reducing the amount of capital we have available to support and grow
our field operations.
  We depend on our senior management and key personnel recruitment and retention, both of which
may be difficult and expensive.
     We depend on attracting and retaining qualified employees; during periods of economic growth our
costs to do so increase and it becomes more difficult to attract and retain people.
  We face risks associated with maintaining our professional reputation and establishing and
maintaining our brand name.
  Because we assume the obligation to make wage, tax and regulatory payments in respect of some
employees, we are exposed to customer credit risks.
   13




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If we are found not to be an employer under certain laws and regulations, our customers may
stop using our services, and we may be subject to additional liabilities.
   We may be exposed to employment-related claims, legal liability and costs from and related to
customers and employers that could increase our cost of doing business, thereby decreasing our
profits, and our insurance coverage may not cover all of our potential liability.
  
    
    Claims of misconduct or negligence on the part of our employees.
    
    Claims against our employees of discrimination or harassment.
    
    Claims by our employees of discrimination or harassment directed at them, including claims
relating to actions of our customers.
    
    Immigration-related claims, such as claims related to the employment of illegal aliens or
unlicensed personnel.
    
    Payment of workers compensation claims and other similar claims.
    
    Violations of wage, hour and other workplace regulations.
    
    Claims relating to employee benefits, entitlements to employee benefits, or errors in the
calculation or administration of such benefits.
    
    Retroactive entitlement to employee benefits.
    
    Errors and omissions of our temporary employees, particularly in the case of professionals.
    
    Claims by our customers relating to our employees misuse of customer proprietary
information, misappropriation of funds, other criminal activity or torts, or other similar
claims.
  Adverse developments in the market for excess workers compensation insurance could lead to an
increase in our costs.
   14




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The cost of unemployment insurance for temporary employees may rise and reduce our margins.
  We operate in a complex regulatory environment, and failure to comply with applicable laws and
regulations could result in fines or other penalties.
  Changes in government regulations may result in restrictions or prohibitions applicable to the
provision of employment services or the imposition of additional licensing, regulatory or tax
requirements.
  
    
    Impose additional regulations that prohibit or restrict employment-related businesses like ours.
    
    Require additional licensing or add restrictions on existing licenses to provide
employment-related services.
    
    Increase taxes or make changes in the way in which taxes are calculated for providers of
employment related services.
    
    Make changes in the way in which employee benefits are required for providers of employment
related services.
  We may find it difficult to expand our business into additional states due to varying state
regulatory requirements.
  Changes in state unemployment tax laws and regulations could restrict our ability to market our
services and make our services less attractive to current or potential customers thereby
resulting in a flattening or decrease of our revenues.
   15




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We are dependent upon technology services, and if we experience damage, service interruptions or
failures in our computer and telecommunications systems, or if our security measures are
breached, our customer relationships and our ability to attract new customers may be adversely
affected.
  Acquisitions subject us to various risks, including risks relating to selection and pricing of
acquisition targets, integration of acquired companies into our business and assumption of
unanticipated liabilities.
  From time to time, we are a defendant in a variety of litigation and other actions, which may
have a material adverse effect on our business, financial condition and results of operations if
we are unable to recover any monetary liability resulting from a successful claim.
  Our common stock has been thinly traded and prospective investors may not be able to resell
their shares at or above the purchase price paid by such investor, or at all.
  
    
    The lack of readily available price quotations.
    
    The absence of consistent administrative supervision of bid and ask quotations.
    
    Lower trading volume.
    
    Market conditions.
  16




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
    
    Actual or anticipated variations in our operating results.
    
    Changes in the market valuations of other human capital solutions companies.
    
    Announcements by us or our competitors of significant acquisitions,
strategic partnerships, joint ventures or capital commitments.
    
    Adoption of new accounting standards affecting our industry.
    
    Additions or departures of key personnel.
    
    Introduction of new services by our competitors or us.
    
    Sales of our common stock or other securities in the open market.
    
    Changes in financial estimates by securities analysts.
    
    Conditions or trends in the market in which we operate.
    
    Changes in earnings estimates and recommendations by financial analysts.
    
    Our failure to meet financial analysts performance expectations.
    
    Other events or factors, many of which are beyond our control.
  Our common stock is currently considered a penny stock and may be difficult to sell.
  A significant amount of common stock is subject to issuance upon the conversion of our
convertible notes and mandatorily redeemable convertible preferred stock. The conversion,
exercise and sale of these financial instruments could depress the market price of our common
stock.
   17




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We cannot assure that we will list our common stock on NASDAQ or any other national securities
system or exchange.
  Securities analysts have not initiated coverage and may not initiate coverage of our common
stock and this may have a negative impact on our common stocks market price.
  Our certificate of incorporation contains an anti-takeover provision which could discourage or
prevent a takeover even if an acquisition would be beneficial to our stockholders.
  If we fail to comply with the requirements of Section 404 of the Sarbanes-Oxley Act regarding
internal control over financial reporting or to remedy any material weaknesses in our internal
controls that we may identify, such failure could result in material misstatements in our
financial statements, cause investors to lose confidence in our reported financial information
and have a negative effect on the trading price of our common stock.
  Accounting for Contingencies,
     18




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ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  
 ITEM 3. LEGAL PROCEEDINGS
 Legal Proceedings
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
 Market Information
  2008:
    
    High
    
    
    LowFirst quarter ended March 30, 2008
    
    $
    2.50
    
    
    $
    1.50Second quarter ended June 29, 2008
    
    $
    2.45
    
    
    $
    1.05Third quarter ended September 28, 2008
    
    $
    1.90
    
    
    $
    0.75Fourth quarter ended January 4, 2009
    
    $
    1.10
    
    
    $
    0.13
 2007:
    
    High
    
    
    LowFirst quarter ended April 1, 2007
    
    $
    5.25
    
    
    $
    5.00Second quarter ended July 1, 2007
    
    $
    5.25
    
    
    $
    3.75Third quarter ended September 30, 2007
    
    $
    3.75
    
    
    $
    1.50Fourth quarter ended December 30, 2007
    
    $
    2.50
    
    
    $
    1.50
   19




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Sales of unregistered securities and use of proceeds.
  Issuer purchases of securities for cash.
  Dividends
  Stockholders
  Securities Authorized for Issuance under Equity Compensation Plans
  Number of securitiesremaining available forfuture issuance underNumber of securities to
    
    
    Weighted-average
    
    
    equity compensationbe issued upon exercise
    
    
    exercise price of
    
    
    plans (excludingof outstanding options,
    
    
    outstanding options,
    
    
    securities reflected inwarrants and rights
    
    
    warrants and rights
    
    
    column (a))Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
    
    
    3,026,951
    
    
    $
    1.88
    
    
    
    1,780,049Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    3,026,951
    
    
    $
    1.88
    
    
    
    1,780,049
   20




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ITEM 6. SELECTED FINANCIAL DATA
  Years Ended(All amounts in thousands, except per share data)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Revenues, net
    
    $
    168,476
    
    
    $
    173,893
    
    
    $
    128,790
    
    
    $
    111,563
    
    
    $
    97,126Gross profit
    
    $
    42,775
    
    
    $
    45,329
    
    
    $
    36,719
    
    
    $
    34,370
    
    
    $
    30,200SG&A expenses
    
    $
    35,604
    
    
    $
    37,432
    
    
    $
    28,311
    (a)
    
    $
    45,478
    (b)
    
    $
    23,936Depreciation and amortization
    
    $
    2,689
    
    
    $
    2,563
    
    
    $
    573
    
    
    $
    729
    
    
    $
    734Operating income (loss)
    
    $
    4,482
    
    
    $
    5,334
    
    
    $
    7,835
    
    
    $
    (11,837
    )
    
    $
    5,530Other income (expense)
    
    $
    (3,802
    )
    
    $
    5,543
    
    
    $
    (7,959
    )(c)
    
    $
    (256
    )
    
    $
    (703
    )Net income (loss)
    
    $
    (7,328
    )
    
    $
    10,966
    
    
    $
    1,309
    
    
    $
    (15,725
    )
    
    $
    2,793Dividend paid to Series C preferred shareholders
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (6,300
    )
    
    $
    Valuation of redeemable preferred stock
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (36,693
    )
    
    $
    Income (loss) available to common stockholders
    
    $
    (7,328
    )
    
    $
    10,966
    
    
    $
    1,309
    
    
    $
    (58,718
    )
    
    $
    2,793Income (loss) per share:Basic earnings (loss) per shareIncome (loss) available to common stockholders
    
    $
    (0.69
    )
    
    $
    1.67
    
    
    $
    0.23
    
    
    $
    (10.95
    )
    
    $
    0.51Weighted average number of shares outstanding
    
    
    10,548
    
    
    
    6,550
    
    
    
    5,745
    
    
    
    5,363
    
    
    
    5,471Diluted earnings (loss) per shareIncome (loss) available to common stockholders
    
    $
    (0.69
    )
    
    $
    1.04
    
    
    $
    0.23
    
    
    $
    (10.95
    )
    
    $
    0.51Weighted average number of shares outstanding
    
    
    10,548
    
    
    
    15,587
    
    
    
    5,745
    
    
    
    5,363
    
    
    
    5,471Total assets
    
    $
    55,112
    
    
    $
    69,486
    
    
    $
    57,202
    
    
    $
    52,920
    
    
    $
    51,014Long-term debt, net
    
    $
    17,087
    
    
    $
    16,114
    
    
    $
    15,138
    
    
    $
    
    
    
    $
    17,800Long-term mandatorily redeemable preferred stock, net
    
    $
    7,215
    
    
    $
    4,588
    
    
    $
    2,013
    
    
    $
    
    
    
    $
    5,856Stockholders equity (deficit)
    
    $
    (4,982
    )
    
    $
    983
    
    
    $
    (19,641
    )
    
    $
    (24,921
    )
    
    $
    11,234
 (a)
    
    Includes $1,048 of non-recurring compensation expense in connection with the March 31, 2006 recapitalization.(b)
    
    Includes $21,152 of restricted stock compensation recorded in connection with the March 31, 2006 recapitalization.(c)
    
    Includes $3,359 of expenses recorded in connection with the March 31, 2006 recapitalization. 
 ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
  Cautionary Statement
  Overview
 Reporting Revenues Gross as a Principal
Versus Net as an Agent
  21




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Critical Accounting Policies
   Revenue Recognition
 Reporting Revenue Gross as a Principal versus Net as an Agent,
  22




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Allowance for Doubtful Accounts
  st
 Intangible Assets and Goodwill
 Business Combinations Goodwill and Other Intangible Assets.
 Income Taxes
 Accounting
for Income Taxes
 Share-Based Compensation
 Share-Based Payments
 Warrant and Conversion Feature Valuation
 Accounting for Derivative Instruments and Hedging
Activities Accounting for Derivative Financial Instruments Indexed to, and
Potentially Settled in, a Companys Own Stock
  23




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Recent Accounting Pronouncements
  Executive Overview
    Acquisitions,
 rd
 Fluctuations in Quarterly Operating Results
   24




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Results of Continuing Operations
  2008
    
    
    2007REVENUES:Staffing
    
    
    81.5
    %
    
    
    80.4
    %PEO
    
    
    18.5
    %
    
    
    19.6
    %TOTAL REVENUES, net
    
    
    100.0
    %
    
    
    100.0
    %COST OF SERVICES
    
    
    74.6
    %
    
    
    73.9
    %GROSS PROFIT
    
    
    25.4
    %
    
    
    26.1
    %OPERATING EXPENSESSelling, general and administrative
    
    
    21.1
    %
    
    
    21.5
    %Depreciation and amortization
    
    
    1.6
    %
    
    
    1.5
    %Total operating expenses
    
    
    22.7
    %
    
    
    23.0
    %OPERATING (LOSS) INCOME
    
    
    2.7
    %
    
    
    3.1
    %OTHER INCOME (EXPENSE)Interest expense:Other interest expense, net of interest income
    
    
    -5.1
    %
    
    
    -5.3
    %Fair market valuation of warrant liability
    
    
    3.2
    %
    
    
    8.7
    %Other income (expense)
    
    
    -0.4
    %
    
    
    -0.2
    %Total other income (expense), net
    
    
    -2.3
    %
    
    
    3.2
    %INCOME (LOSS) BEFORE INCOME TAXES
    
    
    0.4
    %
    
    
    6.3
    %INCOME TAX EXPENSE (BENEFIT)
    
    
    4.8
    %
    
    
    0.0
    %NET INCOME (LOSS)
    
    
    -4.4
    %
    
    
    6.3
    %
  2008
    
    
    2007PEO
    
    
    18.5
    %
    
    
    19.6
    %Staffing:Commercial
    
    
    35.0
    %
    
    
    36.6
    %Professional
    
    
    17.8
    %
    
    
    18.6
    %Contingency
    
    
    23.9
    %
    
    
    19.8
    %Permanent Placement
    
    
    4.8
    %
    
    
    5.4
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
  25




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Gross reporting
    
    
    
    
    
    
    Net reportingYears
    
    method
    
    
    Reclassification
    
    
    method2008Revenues, net
    
    $
    552,729,000
    
    
    $
    (384,253,000
    )
    
    $
    168,476,000Cost of services
    
    
    (509,954,000
    )
    
    
    384,253,000
    
    
    
    (125,701,000
    )Gross profit
    
    $
    42,775,000
    
    
    $
    
    
    
    $
    42,775,0002007Revenues, net
    
    $
    577,927,000
    
    
    $
    (404,034,000
    )
    
    $
    173,893,000Cost of services
    
    
    (532,598,000
    )
    
    
    404,034,000
    
    
    
    (128,564,000
    )Gross profit
    
    $
    45,329,000
    
    
    $
    
    
    
    $
    45,329,000
 CHANGES IN RESULTS OF OPERATIONS FOR THE YEAR ENDED JANUARY 4, 2009 AND DECEMBER 30, 2007
  Revenues
    
    
    Incremental revenues from a full year of Career Blazers of $6.6 million;
 
    
    Additional revenue from the Georgia acquisition of $3.0 million;
 
    
    2.3% increase in the average bill rate in the professional division; offset by;
 
    
    3.9% decrease in the number of billed hours in the commercial division;
 
    
    7.9% decrease in the number of billed hours in the professional division, and;
 
    
    14.9% decrease in permanent placement fee revenues.
     26




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##### Table of Contents



Gross profit and gross margin percentage
        Selling, general and administrative expenses
    Depreciation and amortization
   27




---



##### Table of Contents



Other Expense
  Interest Expense
  
    
    lower average outstanding balances on our senior credit facilities and lower principal
amount of outstanding convertible notes in 2008 compared to 2007;
 
    
    lower interest rates on our senior credit facilities;
 
    
    lower interest rates on our mandatorily redeemable preferred stock and convertible
notes, which had been temporarily increased in 2007; offset by;
 
    
    $521,000 of unamortized debt issuance costs and termination fees recorded related to the
refinancing of our senior credit facility in 2008 and;
 
    
    $395,000 of unamortized debt issuance costs and termination fees recorded related to the
refinancing of our senior credit facility in 2007.
   Income taxes
   LIQUIDITY AND CAPITAL RESOURCES
    28




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##### Table of Contents



Operating Activities
     Investing Activities
  Financing Activities
      
    
    Beginning on April 30, 2009, the maximum amount of borrowings under the revolving
line of credit available under the WF facility will be reduced from $20 million to $15
million.
 
    
    The calculation of the interest rate on the outstanding balances was changed.
Interest is now calculated with reference to the WFBC Base Rate. The WFBC Base Rate
is, for any day, a fluctuating rate equal to the higher of (a) the Wells Fargo prime
rate in effect on such day or (b) a rate determined by Wells Fargo to be 1.50% above the
daily three month LIBOR rate (the rate of interest equal to LIBOR then in effect for
delivery for a three-month period).
  29




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##### Table of Contents




    
    The interest rate on our revolving loan is now calculated with reference to the
WFBC Base Rate plus 0.5%. The interest rate on our term note is now calculated with
reference to the WFBC Base Rate plus 2.75%.
 
    
    The quarterly principal amortization payments of $20,000 under the $250,000
promissory note received from Select Staffing pursuant to the TPS Agreement will be used
to partially pay down the term note.
 
    
    We agreed not to incur or contract to incur capital expenditures of more than (a)
$500,000 in the aggregate during the 2009 fiscal year and (b) $200,000 thereafter until
new financial covenants are set.
 
    
    Our ability to make new loans and advances to, and investments in, TPS may not
exceed certain thresholds.
         Convertible Notes
 Off-Balance Sheet Arrangements
   30




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##### Table of Contents



Contractual Obligations and Commitments
  Payments due by periodLess than
    
    
    1-3
    
    
    3-5
    
    
    More thanTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsLong-term debt
    
    $
    25,238,000
    
    
    $
    3,185,000
    
    
    $
    22,053,000
    
    
    $
    
    
    
    $
    Mandatorily redeemable convertible
preferred stock (a)
    
    
    20,012,000
    
    
    
    
    
    
    
    
    
    
    
    20,012,000
    
    
    
    Operating leases
    
    
    12,157,000
    
    
    
    2,241,000
    
    
    
    3,043,000
    
    
    
    2,138,000
    
    
    
    4,735,000Total contractual cash obligations
    
    $
    57,407,000
    
    
    $
    5,426,000
    
    
    $
    25,096,000
    
    
    $
    22,150,000
    
    
    $
    4,735,000
    Payments due by periodLess than
    
    
    1-3
    
    
    3-5
    
    
    More thanTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsLong-term debt
    
    $
    25,238,000
    
    
    $
    3,185,000
    
    
    $
    22,053,000
    
    
    $
    
    
    
    $
    Mandatorily redeemable convertible
preferred stock (a)
    
    
    20,012,000
    
    
    
    
    
    
    
    
    
    
    
    20,012,000
    
    
    
    Operating leases
    
    
    11,548,000
    
    
    
    1,943,000
    
    
    
    2,755,000
    
    
    
    2,115,000
    
    
    
    4,735,000Total contractual cash obligations
    
    $
    56,798,000
    
    
    $
    5,128,000
    
    
    $
    24,808,000
    
    
    $
    22,127,000
    
    
    $
    4,735,000
  Inflation
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     31




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
  
 ITEM 9.
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
  
 ITEM 9A(T). CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures
  Managements Report on Internal Control over Financial Reporting
       Reporting Activities
    32




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##### Table of Contents



Managements Plan for Remediation
    Changes in Internal Control over Financial Reporting
  Inherent Limitations
  CEO and CFO Certifications
  
 ITEM 9B. OTHER INFORMATION.
   33




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
 www.gesnetwork.com
 
 ITEM 11. EXECUTIVE COMPENSATION.
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS.
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
   
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
   34




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
   Report of Independent Registered Public Accounting Firm
    
    
    F-1Consolidated Balance Sheets as of January 4, 2009 and December 30, 2007
    
    
    F-2Consolidated Statements of Operations for the Years ended January 4, 2009 and December 30, 2007
    
    
    F-3Consolidated Statements of Stockholders Equity (Deficit) For the Years ended January 4, 2009 and December 30, 2007
    
    
    F-4Consolidated Statements of Cash Flows for the Years ended January 4, 2009 and December 30, 2007
    
    
    F-5Notes to Consolidated Financial Statements
    
    
    F-6
     Exhibit #
    
    Description
    
    Reference3.1
    
    
    Amendment No. 1 to
Certificate of Designations,
Preferences and Rights of
Series A Convertible
Preferred Stock of Global
Employment Holdings, Inc.
    
    Incorporated by reference to
Exhibit 3.1 to the
Registrants Current Report
on Form 8-K filed with the
Securities and Exchange
Commission on March 6, 2007
(File No. 000-51737), as
amended.3.2
    
    
    Amended Articles of
Incorporation of Global
Employment Holdings, Inc.
    
    Incorporated by reference to
Exhibit 3.2 to the
Registrants Annual Report
on Form 10-K filed with the
Securities and Exchange
Commission on April 15, 2008
(File No. 000-51737).4.1
    
    
    Form of Warrant issued under
Subscription Agreement,
dated as of October 3, 2007
    
    Incorporated by reference to
Exhibit 4.1 to the
Registrants Current Report
on Form 8-K filed with the
Securities and Exchange
Commission on October 9,
2007 (File No. 000-51737).10.1
    *
    
    Employment Agreement, dated
as of March 14, 2007, among
Global Employment Holdings,
Inc., Global Employment
Solutions, Inc. and Steven
List
    
    Incorporated by reference to
Exhibit 10.1 to the
Registrants Current Report
on Form 8-K filed with the
Securities and Exchange
Commission on March 20, 2007
(File No. 000-51737).10.2
    
    
    Asset Purchase Agreement,
dated as of December 29,
2006, by and among Global
Employment Holdings, Inc.,
Career Blazers Personnel
Services, Inc., Career
Blazers Contingency
Professionals, Inc., Career
Blazers Personnel Services
of Washington, D.C., Inc.
and CapeSuccess LLC
    
    Incorporated by reference to
Exhibit 10.1 to the
Registrants Current Report
on Form 8-K filed with the
Securities and Exchange
Commission on January 5,
2007 (File No. 000-51737).
  35




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##### Table of Contents



Exhibit #
    
    Description
    
    Reference10.3
    
    
    Amendment to Asset Purchase
Agreement, dated as of
February 28, 2007, by and
among Global Employment
Holdings, Inc., Career
Blazers Personnel Services,
Inc., Career Blazers
Contingency Professionals,
Inc., Career Blazers
Personnel Services of
Washington, D.C., Inc., and
CapeSuccess LLC
    
    Incorporated by reference to
Exhibit 10.2 to the
Registrants Current Report
on Form 8-K filed with the
Securities and Exchange
Commission on March 6, 2007
(File No. 000-51737), as
amended.10.4
    
    
    Credit Agreement, dated as
of February 28, 2007, by and
among Global Employment
Solutions, Inc., Global
Employment Holdings, Inc.,
Temporary Placement Service,
Inc., Southeastern Personnel
Management, Inc., Main Line
Personnel Services, Inc.,
Friendly Advanced Software
Technology, Inc., Excell
Personnel Services
Corporation, Southeastern
Staffing, Inc., Bay HR,
Inc., Southeastern Georgia
HR, Inc., Southeastern
Staffing II, Inc.,
Southeastern Staffing III,
Inc., Southeastern Staffing
IV, Inc., Southeastern
Staffing V, Inc.,
Southeastern Staffing VI,
Inc., Keystone Alliance,
Inc., and CapitalSource
Finance LLC, as
administrative agent for the
lenders, and the lenders
from time to time parties
hereto
    
    Incorporated by reference to
Exhibit 10.3 to the
Registrants Current Report
on Form 8-K filed with the
Securities and Exchange
Commission on March 6, 2007
(File No. 000-51737), as
amended.10.5
    
    
    Subordination Agreement,
dated as of February 28,
2007, by and among Whitebox
Convertible Arbitrage
Partners, L.P., for itself
and in its capacity as
collateral agent for the
subordinated creditors,
Radcliffe SPC, Ltd., for and
on behalf of the Class A
Convertible Crossover
Segregated Portfolio,
Magnetar Capital Master
Fund, Ltd., Guggenheim
Portfolio XXXI, LLC, Pandora
Select Partners, LP,
Whitebox Intermarket
Partners, LP, Context
Advantage Master Fund, L.P.,
on behalf of itself, Context
Advantage Fund, LP, f/k/a
Context Convertible
Arbitrage Fund, L.P., and
Context Offshore Advantage
Fund, Ltd., f/k/a Context
Convertible Arbitrage
Offshore, Ltd., Context
Opportunistic Master Fund,
L.P., Gwirtsman Family
Partners, LLC, Luci Altman,
Gregory Bacharach, Howard
Brill, Richard Goldman,
Daniel Hollenbach, Terry
Koch, Michael Lazrus, Steven
List, Kenneth Michaels,
Steven Pennington, Fred
Viarrial, and Jay Wells, for
the benefit of CapitalSource
Finance LLC, for itself and
as agent for the lenders now
or hereafter existing under
the Credit Agreement
    
    Incorporated by reference to
Exhibit 10.4 to the
Registrants Current Report
on Form 8-K filed with the
Securities and Exchange
Commission on March 6, 2007
(File No. 000-51737), as
amended.10.6
    
    
    Security Agreement, dated as
of February 28, 2007, by and
among Global Employment
Solutions, Global Employment
Holdings, Inc., Temporary
Placement Service, Inc.,
Southeastern Personnel
Management, Inc., Main Line
Personnel Services, Inc.,
Friendly Advanced Software
Technology, Inc., Excell
Personnel Services
Corporation, Southeastern
Staffing, Inc., Bay HR,
Inc., Southeastern Georgia
HR, Inc., Southeastern
Staffing II, Inc.,
Southeastern Staffing III,
Inc., Southeastern Staffing
IV, Inc., Southeastern
Staffing V, Inc.,
Southeastern Staffing VI,
Inc., Keystone Alliance,
Inc., and CapitalSource
Finance LLC, in its capacity
as agent for the lender
parties
    
    Incorporated by reference to
Exhibit 10.5 to the
Registrants Current Report
on Form 8-K filed with the
Securities and Exchange
Commission on March 6, 2007
(File No. 000-51737), as
amended.10.7
    
    
    Securities Pledge Agreement,
dated as of February 28,
2007, between CapitalSource
Finance LLC, as
administrative agent for the
lenders under the Credit
Agreement, and Global
Employment Holdings, Inc.
    
    Incorporated by reference to
Exhibit 10.6 to the
Registrants Current Report
on Form 8-K filed with the
Securities and Exchange
Commission on March 6, 2007
(File No. 000-51737), as
amended.
  36




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##### Table of Contents



Exhibit #
    
    Description
    
    Reference10.8
    
    
    Securities Pledge Agreement,
dated as of February 28,
2007, between CapitalSource
Finance LLC, as
administrative agent for the
lenders under the Credit
Agreement, and Global
Employment Solutions
    
    Incorporated by reference to
Exhibit 10.7 to the
Registrants Current Report
on Form 8-K filed with the
Securities and Exchange
Commission on March 6, 2007
(File No. 000-51737), as
amended.10.9
    
    
    Securities Pledge Agreement,
dated as of February 28,
2007, between CapitalSource
Finance LLC, as
administrative agent for the
lenders under the Credit
Agreement, and Southeastern
Staffing, Inc.
    
    Incorporated by reference to
Exhibit 10.8 to the
Registrants Current Report
on Form 8-K filed with the
Securities and Exchange
Commission on March 6, 2007
(File No. 000-51737), as
amended.10.10
    
    
    Securities Pledge Agreement,
dated as of February 28,
2007, between CapitalSource
Finance LLC, as
administrative agent for the
lenders under the Credit
Agreement, and Excell
Personnel Services
Corporation
    
    Incorporated by reference to
Exhibit 10.9 to the
Registrants Current Report
on Form 8-K filed with the
Securities and Exchange
Commission on March 6, 2007
(File No. 000-51737), as
amended.10.11
    
    
    First Amendment to Senior
Secured Convertible Notes,
dated as of February 28,
2007, by and among Global
Employment Holdings, Inc.
and the holders of Global
Employment Holdings, Inc.
senior secured convertible
notes
    
    Incorporated by reference to
Exhibit 10.10 to the
Registrants Current Report
on Form 8-K filed with the
Securities and Exchange
Commission on March 6, 2007
(File No. 000-51737), as
amended.10.12
    
    
    Letter from Global Employment
Holdings, Inc., dated
February 28, 2007, to holders
of the senior convertible
notes and the Series A
convertible preferred stock
regarding commitment to issue
equity
    
    Incorporated by reference to
Exhibit 10.11 to the
Registrants Current Report
on Form 8-K filed with the
Securities and Exchange
Commission on March 6, 2007
(File No. 000-51737), as
amended.10.13
    *
    
    Amended and Restated
Employment Agreement, dated
as of January 2, 2007,
between Global Employment
Solutions, Inc. and Terry
Koch
    
    Incorporated by reference to
Exhibit 10.2 to the
Registrants Current Report
on Form 8-K filed with the
Securities and Exchange
Commission on January 5, 2007
(File No. 000-51737).10.14
    
    
    Financial Statements of Career Blazers Personnel
Services, Inc. and subsidiaries as of December 31, 2006
and 2005 and the related consolidated statements of
operations, changes in stockholders equity (deficit)
and cash flows for the years ended December 31, 2006,
2005 and 2004
    
    Incorporated by
reference to Item
9.01 of Amendment
No. 1 to the
Registrants
Current Report on
Form 8-K filed on
May 21, 2007 (File
No. 000-51737).10.15
    
    
    Subscription Agreement, dated as of October 3, 2007, by
and among Global Employment Holdings, Inc. and the
purchasers signatory thereto
    
    Incorporated by
reference to
Exhibit 10.1 to the
Registrants
Current Report on
Form 8-K filed on
October 9, 2007
(File No.
000-51737).10.16
    
    
    Warrant Exercise and Cancellation Agreement dated as of
December 26, 2007.
    
    Incorporated by
reference to
Exhibit 10.1 to the
Registrants
Current Report on
Form 8-K filed on
January 3, 2008
(File No.
000-51737).10.17
    
    
    Credit and Security Agreement dated as of April 29, 2009
    
    Incorporated by
reference to
Exhibit 10.1 to the
Registrants
Current Report on
Form 8-K filed on
May 5, 2008 (File
No. 000-51737).
  37




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##### Table of Contents



Exhibit #
    
    Description
    
    Reference10.18
    
    
    $20,000,000 Revolving Promissory Note dated as of April
29, 2009
    
    Incorporated by
reference to
Exhibit 10.2 to the
Registrants
Current Report on
Form 8-K filed on
May 5, 2008 (File
No. 000-51737).10.19
    
    
    $6,000,000 Term Note dated as of April 29, 2009
    
    Incorporated by
reference to
Exhibit 10.3 to the
Registrants
Current Report on
Form 8-K filed on
May 5, 2008 (File
No. 000-51737).10.20
    
    
    Pledge Agreement dated as of April 29, 2009
    
    Incorporated by
reference to
Exhibit 10.4 to the
Registrants
Current Report on
Form 8-K filed on
May 5, 2008 (File
No. 000-51737).10.21
    
    
    Patent and Trademark Security Agreement dated as of
April 29, 2009
    
    Incorporated by
reference to
Exhibit 10.5 to the
Registrants
Current Report on
Form 8-K filed on
May 5, 2008 (File
No. 000-51737).10.22
    
    
    Copyright Security Agreement dated as of April 29, 2009
    
    Incorporated by
reference to
Exhibit 10.6 to the
Registrants
Current Report on
Form 8-K filed on
May 5, 2008 (File
No. 000-51737).10.23
    
    
    Guarantee by Corporation dated as of April 29, 2009
    
    Incorporated by
reference to
Exhibit 10.7 to the
Registrants
Current Report on
Form 8-K filed on
May 5, 2008 (File
No. 000-51737).10.24
    
    
    Security Agreement dated as of April 29, 2009
    
    Incorporated by
reference to
Exhibit 10.8 to the
Registrants
Current Report on
Form 8-K filed on
May 5, 2008 (File
No. 000-51737).10.25
    
    
    Subordination Agreement dated as of April 29, 2009
    
    Incorporated by
reference to
Exhibit 10.9 to the
Registrants
Current Report on
Form 8-K filed on
May 5, 2008 (File
No. 000-51737).10.26
    
    
    Agreement to Enter in New Subordination Agreement dated
as of April 29, 2009
    
    Incorporated by
reference to
Exhibit 10.10 to
the Registrants
Current Report on
Form 8-K filed on
May 5, 2008 (File
No. 000-51737).10.27
    
    
    First Amendment to Credit and Security Agreement and
Waiver of Default, dated as of March 11, 2009
    
    Incorporated by
reference to
Exhibit 10.1 to the
Registrants
Current Report on
Form 8-K filed on
March 17, 2009
(File No.
000-51737).10.28
    
    
    Consent and Second Amendment to Senior Secured
Convertible Notes, dated as of March 11, 2009
    
    Incorporated by
reference to
Exhibit 10.2 to the
Registrants
Current Report on
Form 8-K filed on
March 17, 2009
(File No.
000-51737).10.29
    
    
    Consent and First Amendment to Preferred Stock
Securities Purchase Agreement, dated as of March 11,
2009
    
    Incorporated by
reference to
Exhibit 10.3 to the
Registrants
Current Report on
Form 8-K filed on
March 17, 2009
(File No.
000-51737).
  38




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##### Table of Contents



Exhibit #
    
    Description
    
    Reference10.30
    
    
    Asset Purchase and Sale Agreement dated as of March 9,
2009, By and Between Global Employment Holdings, Inc.,
Temporary Placement Service, Inc., And Eastern Staffing,
LLC, d.b.a. Select Staffing
    
    Incorporated by
reference to
Exhibit 10.1 to the
Registrants
Current Report on
Form 8-K filed on
March 18, 2009
(File No.
000-51737).10.31
    
    
    $250,000 Promissory Note
    
    Incorporated by
reference to
Exhibit 10.2 to the
Registrants
Current Report on
Form 8-K filed on
March 18, 2009
(File No.
000-51737).10.32
    
    
    $700,000 Promissory Note
    
    Incorporated by
reference to
Exhibit 10.3 to the
Registrants
Current Report on
Form 8-K filed on
March 18, 2009
(File No.
000-51737).10.33
    
    
    Non-Competition Agreement
    
    Incorporated by
reference to
Exhibit 10.4 to the
Registrants
Current Report on
Form 8-K filed on
March 18, 2009
(File No.
000-51737).10.34
    
    
    Guaranty
    
    Incorporated by
reference to
Exhibit 10.5 to the
Registrants
Current Report on
Form 8-K filed on
March 18, 2009
(File No.
000-51737).21.1
    
    
    List of subsidiaries of Global Employment Holdings, Inc.
    
    Incorporated by
reference to
Exhibit No. 21.1 to
the Post Effective
Amendment No. 3 to
the Registrants
Registration
Statement on
Form S-1 filed on
August 29, 2008
(File
No. 333-133666), as
amended.31.1
    
    
    Certification of Howard Brill, Chief Executive Officer
and President pursuant to Rule 13a-14(a) and the
Exchange Act of 1934
    
    Filed herewith.31.2
    
    
    Certification of Dan Hollenbach, Chief Financial Officer
and Principal Accounting Officer pursuant to
Rule 13a-14(a) and the Exchange Act of 1934
    
    Filed herewith.32.1
    
    
    Certification of Howard Brill, Chief Executive Officer
and President, and Dan Hollenbach, Chief Financial
Officer pursuant to 18 U.S.C. Section 1350
    
    Furnished herewith.
 *
    
    - Indicates management contract or compensatory plan or arrangement.  39




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
  F-1




---



##### Table of Contents



GLOBAL EMPLOYMENT HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 December
    
    
    December2008
    
    
    2007ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    5,000
    
    
    $
    330,000Restricted cash
    
    
    202,000
    
    
    
    Accounts receivable, less allowance for doubtful accounts of $376,000 and $476,000
for 2008 and 2007, respectively
    
    
    21,617,000
    
    
    
    27,784,000Deferred income taxes
    
    
    89,000
    
    
    
    1,809,000Prepaid expenses and other current assets
    
    
    2,116,000
    
    
    
    2,344,000Total current assets
    
    
    24,029,000
    
    
    
    32,267,000Property and equipment, net
    
    
    2,623,000
    
    
    
    2,040,000Deferred income taxes
    
    
    2,277,000
    
    
    
    8,406,000Other assets, net
    
    
    1,407,000
    
    
    
    1,823,000Intangibles, net of accumulated amortization of $3,786,000 and $1,955,000
for 2008 and 2007, respectively
    
    
    4,039,000
    
    
    
    5,463,000Goodwill
    
    
    20,737,000
    
    
    
    19,487,000Total assets
    
    $
    55,112,000
    
    
    $
    69,486,000LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)CURRENT LIABILITIESBank overdrafts
    
    $
    1,742,000
    
    
    $
    1,220,000Accounts payable
    
    
    598,000
    
    
    
    343,000Accrued liabilities
    
    
    18,535,000
    
    
    
    23,737,000Current portion of long-term debt  credit facility
    
    
    3,185,000
    
    
    
    9,375,000Line of credit
    
    
    10,102,000
    
    
    
    6,735,000Total current liabilities
    
    
    34,162,000
    
    
    
    41,410,000Other long-term liabilities
    
    
    1,489,000
    
    
    
    601,000Warrant and conversion liability
    
    
    135,000
    
    
    
    5,568,000Warrant and conversion liability due to related parties
    
    
    6,000
    
    
    
    222,000Long-term debt  credit facility
    
    
    1,062,000
    
    
    
    Senior subordinated secured convertible notes, net of unamortized
discount of $4,719,000 and $7,222,000 for 2008 and 2007, respectively
    
    
    15,228,000
    
    
    
    14,731,000Senior subordinated secured convertible notes due to related parties, net of
unamortized
discount of $247,000 and $677,000 for 2008 and 2007, respectively
    
    
    797,000
    
    
    
    1,383,000Mandatorily redeemable preferred stock, net of unamortized
discount of $8,108,000 and $10,069,000 for 2008 and 2007, respectively
    
    
    6,914,000
    
    
    
    4,588,000Mandatorily redeemable preferred stock due to related parties, net of unamortized
discount of $353,000 and $-0- for 2008 and 2007, respectively
    
    
    301,000
    
    
    
    Total liabilities
    
    
    60,094,000
    
    
    
    68,503,000COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY (DEFICIT)Series A preferred stock, $.001 par value, 10,000,000 authorized shares designated,
12,750 issued and outstanding in 2008 and 2007. Included above under
mandatorily
redeemable preferred stock, net
    
    
    
    
    
    
    Common stock, $.001 par value, 40,000,000 shares authorized; 10,555,010 issued,
10,548,330 outstanding in 2008 and 2007
    
    
    1,000
    
    
    
    1,000Treasury stock, at cost, 6,680 shares in 2008 and 2007
    
    
    
    
    
    
    Additional paid in capital
    
    
    34,781,000
    
    
    
    33,418,000Accumulated deficit
    
    
    (39,764,000
    )
    
    
    (32,436,000
    )Total stockholders (deficit) equity
    
    
    (4,982,000
    )
    
    
    983,000Total liabilities and stockholders equity (deficit)
    
    $
    55,112,000
    
    
    $
    69,486,000
   F-2




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##### Table of Contents



GLOBAL EMPLOYMENT HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Years EndedDecember
    
    
    December2008
    
    
    2007REVENUES, net
    
    $
    168,476,000
    
    
    $
    173,893,000COST OF SERVICES
    
    
    125,701,000
    
    
    
    128,564,000GROSS PROFIT
    
    
    42,775,000
    
    
    
    45,329,000OPERATING EXPENSESSelling, general and administrative
    
    
    35,604,000
    
    
    
    37,432,000Depreciation and amortization
    
    
    2,689,000
    
    
    
    2,563,000Total operating expenses
    
    
    38,293,000
    
    
    
    39,995,000OPERATING INCOME
    
    
    4,482,000
    
    
    
    5,334,000OTHER INCOME (EXPENSE)Interest expense:Other interest expense, net of interest income
    
    
    (8,615,000
    )
    
    
    (9,191,000
    )Fair market valuation of warrant and conversion liability
    
    
    5,449,000
    
    
    
    15,156,000Other expense
    
    
    (636,000
    )
    
    
    (422,000
    )Total other income (expense), net
    
    
    (3,802,000
    )
    
    
    5,543,000INCOME BEFORE INCOME TAXES
    
    
    680,000
    
    
    
    10,877,000INCOME TAX EXPENSE (BENEFIT)
    
    
    8,008,000
    
    
    
    (89,000
    )NET INCOME (LOSS)
    
    $
    (7,328,000
    )
    
    $
    10,966,000Basic earnings (loss) per share of common stock
    
    $
    (0.69
    )
    
    $
    1.67Weighted average number of basic common shares outstanding
    
    
    10,548,330
    
    
    
    6,550,054Diluted earnings (loss) per share of common stock
    
    $
    (0.69
    )
    
    $
    1.04Weighted average number of diluted common shares outstanding
    
    
    10,548,330
    
    
    
    15,586,644
   F-3




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##### Table of Contents



GLOBAL EMPLOYMENT HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT)
 Years ended December 2008 and December 2007Preferred stock
    
    
    Common stock
    
    
    Treasury stock
    
    
    Additional
    
    
    AccumulatedAmount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    paid in capital
    
    
    deficit
    
    
    TotalBalances at December 2006
    
    $
    
    
    
    
    
    
    
    $
    1,000
    
    
    
    6,030,122
    
    
    $
    
    
    
    
    (6,680
    )
    
    $
    23,760,000
    
    
    $
    (43,402,000
    )
    
    $
    (19,641,000
    )Fractional shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    310
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,802,000
    
    
    
    
    
    
    
    1,802,000Warrant conversion compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    553,000
    
    
    
    
    
    
    
    553,000Sale of common stock at $1.50 per share, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,000,000
    
    
    
    
    
    
    
    
    
    
    
    2,970,000
    
    
    
    
    
    
    
    2,970,000Warrant liability related to common stock
warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,723,000
    )
    
    
    
    
    
    
    (1,723,000
    )Conversion of warrants, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,524,578
    
    
    
    
    
    
    
    
    
    
    
    6,150,000
    
    
    
    
    
    
    
    6,150,000Conversion of related party debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (94,000
    )
    
    
    
    
    
    
    (94,000
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,966,000
    
    
    
    10,966,000Balances at December 2007
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    10,555,010
    
    
    
    
    
    
    
    (6,680
    )
    
    
    33,418,000
    
    
    
    (32,436,000
    )
    
    
    983,000Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,363,000
    
    
    
    
    
    
    
    1,363,000Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,328,000
    )
    
    
    (7,328,000
    )Balances at December 2008
    
    $
    
    
    
    
    
    
    
    $
    1,000
    
    
    
    10,555,010
    
    
    $
    
    
    
    
    (6,680
    )
    
    $
    34,781,000
    
    
    $
    (39,764,000
    )
    
    $
    (4,982,000
    )
   F-4




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##### Table of Contents



GLOBAL
EMPLOYMENT HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years endedDecember
    
    
    December2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    (7,328,000
    )
    
    $
    10,966,000Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation
    
    
    858,000
    
    
    
    608,000Amortization of intangibles
    
    
    1,831,000
    
    
    
    1,955,000Amortization of debt discount and issuance costs
    
    
    2,908,000
    
    
    
    2,458,000Accretion of preferred stock
    
    
    1,020,000
    
    
    
    1,134,000Amortization of warrant discount on preferred stock
    
    
    1,608,000
    
    
    
    1,441,000Bad debt expense
    
    
    206,000
    
    
    
    124,000Deferred taxes
    
    
    7,849,000
    
    
    
    (324,000
    )Share-based and warrant conversion compensation expense
    
    
    1,363,000
    
    
    
    2,355,000Fair market valuation of warrant liability
    
    
    (5,449,000
    )
    
    
    (15,156,000
    )Loss on debt repurchase
    
    
    636,000
    
    
    
    395,000Gain on workers compensation insurance settlement
    
    
    (1,110,000
    )
    
    
    Changes in operating assets and liabilities, net of effects of acquisition:Accounts receivable
    
    
    5,961,000
    
    
    
    (1,528,000
    )Prepaid expenses and other
    
    
    35,000
    
    
    
    60,000Accounts payable
    
    
    255,000
    
    
    
    (332,000
    )Accrued expenses and other liabilities
    
    
    (5,549,000
    )
    
    
    2,240,000Net cash flows provided by operating activities
    
    
    5,094,000
    
    
    
    6,396,000CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    (507,000
    )
    
    
    (745,000
    )Acquisitions, net of cash and cash equivalents acquired
    
    
    (320,000
    )
    
    
    (9,689,000
    )Net cash used in investing activities
    
    
    (827,000
    )
    
    
    (10,434,000
    )CASH FLOWS FROM FINANCING ACTIVITIES:Bank overdrafts
    
    
    522,000
    
    
    
    (956,000
    )Restricted cash
    
    
    (202,000
    )
    
    
    Net (repayments) borrowings on revolving line of credit
    
    
    3,367,000
    
    
    
    (2,314,000
    )Borrowings on term note
    
    
    6,000,000
    
    
    
    12,000,000Repayments of term notes
    
    
    (11,127,000
    )
    
    
    (6,375,000
    )Debt issuance costs
    
    
    (282,000
    )
    
    
    (802,000
    )Repurchase of convertible notes
    
    
    (2,870,000
    )
    
    
    Issuance of common stock
    
    
    
    
    
    
    2,757,000Net cash flows (used in) provided by financing activities
    
    
    (4,592,000
    )
    
    
    4,310,000Net (decrease) increase in cash and cash equivalents
    
    
    (325,000
    )
    
    
    272,000Cash and cash equivalents, beginning of year
    
    
    330,000
    
    
    
    58,000Cash and cash equivalents, end of year
    
    $
    5,000
    
    
    $
    330,000Supplemental Disclosure of Cash Flow InformationCash paid during the period for income taxes
    
    $
    202,000
    
    
    $
    278,000Cash paid during the period for interest
    
    $
    3,076,000
    
    
    $
    4,158,000Supplemental Disclosure of Non-Cash InformationContingent payment accrued for Career Blazers acquisition
    
    $
    1,250,000
    
    
    $
    Landlord leasehold incentives recorded as leasehold improvements
    
    $
    631,000
    
    
    $
    363,000Conversion of senior subordinated secured convertible notes for common stock
    
    $
    
    
    
    $
    243,000
   F-5




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##### Table of Contents



NOTE A  SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
 Organization
      Subsidiaries
   
    
    Temporary Placement Service, Inc.
 
    
    Main Line Personnel Services, Inc. (Main Line)
 
    
    Friendly Advanced Software Technology, Inc. (FAST)
 
    
    Excell Personnel Services Corporation (Excell)
  Current Name
    
    Formerly    Global Employment Solutions PEO Inc.
    
        Southeastern Staffing, Inc.    Global Employment Solutions PEO II Inc.
    
        Southeastern Staffing II, Inc.    Global Employment Solutions PEO III Inc.
    
        Bay HR, Inc.    Global Employment Solutions PEO IV Inc.
    
        Southeastern Georgia HR, Inc.    Global Employment Solutions PEO V Inc.
    
        Southeastern Personnel Management, Inc.    Global Employment Solutions PEO VI Inc.
    
        Southeastern Staffing III, Inc.    Global Employment Solutions PEO VII Inc.
    
        Southeastern Staffing IV, Inc.    Global Employment Solutions PEO VIII Inc.
    
        Southeastern Staffing V, Inc.    Global Employment Solutions PEO IX Inc.
    
        Southeastern Staffing VI, Inc.    Keystone Alliance, Inc.
 
  F-6




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##### Table of Contents



Basis of Presentation
  Fiscal Periods
  Use of Estimates
  Revenue Recognition
 Reporting Revenue Gross as a Principal versus
Net as an Agent
    Cash and Cash Equivalents
   F-7




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##### Table of Contents



Restricted cash
  Financial Instruments
   2008
    
    
    2007Georgia  primarily TPS
    
    
    35
    %
    
    
    37
    %Florida
    
    
    17
    %
    
    
    19
    %New York/ New Jersey
    
    
    30
    %
    
    
    27
    %
   Fair Value Measurements
  
    
    Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets
or liabilities.
 
    
    Level 2 inputs are quoted prices for similar assets and liabilities in active
markets or inputs that are observable for the asset or liability, either directly or
indirectly through market corroboration for substantially the full term of the
financial instrument.
 
    
    Level 3 inputs are unobservable inputs based on our own assumptions used to measure
assets and liabilities at fair value.
  F-8




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##### Table of Contents



Accounts Receivable and Allowance for Doubtful Accounts
   st
   Property and Equipment
  
   F-9




---



##### Table of Contents



Long-Lived Assets
 , Accounting for the
Impairment or Disposal of Long-Lived Assets
 Goodwill and Identifiable Intangible Assets
 Goodwill and Other Intangible Assets
     Reporting Unit
    
    December 2008
    
    
    December 2007GES PEO
    
    $
    12,090,000
    
    
    $
    12,090,000FAST
    
    
    1,989,000
    
    
    
    739,000Main Line
    
    
    5,519,000
    
    
    
    5,519,000Excell
    
    
    1,139,000
    
    
    
    1,139,000Total
    
    $
    20,737,000
    
    
    $
    19,487,000
  F-10




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##### Table of Contents



Workers Compensation Insurance
  rd
 Advertising Expense
  Income Taxes
  Treasury Stock
  Share-Based Compensation
 Share-Based Payments
 Warrant and conversion feature valuation
 Accounting for Derivative Instruments and
Hedging Activities Accounting for Derivative Financial Instruments Indexed to,
and Potentially Settled in, a Companys Own Stock
  F-11




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##### Table of Contents



Net Earnings (Loss) per Share of Common Stock
  December 2008
    
    
    December 2007Stock options
    
    
    3,026,951
    
    
    
    1,469,540Warrants
    
    
    112,440
    
    
    
    112,440Convertible debt
    
    
    4,770,568
    
    
    
    Preferred stock
    
    
    3,851,889
    
    
    
    Total
    
    
    11,761,848
    
    
    
    1,581,980
   December 2008
    
    
    December 2007Basic net income (loss)
    
    $
    (7,328,000
    )
    
    $
    10,966,000Convertible debt interest and amortization, net of tax
    
    
    
    
    
    
    2,704,000Make whole conversion interest, net of tax (a)
    
    
    
    
    
    
    (1,454,000
    )Fair market valuation of backstop warrants
    
    
    
    
    
    
    1,388,000Preferred stock accretion and amortization
    
    
    
    
    
    
    2,575,000Diluted net income (loss)
    
    $
    (7,328,000
    )
    
    $
    16,179,000Weighted average number of basic common shares outstanding
    
    
    10,548,330
    
    
    
    6,550,054Impact of the assumed conversion or exercise of:Stock options
    
    
    
    
    
    
    1,684Warrants
    
    
    
    
    
    
    37,626Convertible notes
    
    
    
    
    
    
    5,498,797Convertible debt make whole (a)
    
    
    
    
    
    
    Preferred stock
    
    
    
    
    
    
    3,498,483Weighted average number of diluted common shares outstanding
    
    
    10,548,330
    
    
    
    15,586,644
 (a)
    
    As more fully explained in Note I, the Company assumed payment of the
present value of interest under a redemptive event in cash.  F-12




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##### Table of Contents



Taxes Collected from Customers and Remitted to Governmental Authorities
 How Taxes Collected from
Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement
(That is, Gross Versus Net Presentation),
 Quantifying Materiality of Financial Statement Misstatements
 Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements
 Recent Accounting Pronouncements
  Accounting
for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial
Cash Settlement)
 Determination of the Useful Life of Intangible Assets Goodwill and Other Intangible Assets
 Disclosures about Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133. Accounting for Derivative Instruments and Hedging Activities,
  F-13




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##### Table of Contents



Accounting for Leases,
 Business Combinations.
 Noncontrolling Interests in Consolidated Financial
Statements-an amendment of ARB No. 51.
 The Fair Value Option for Financial Assets and
Financial Liabilities  Including an amendment of FASB Statement No. 115. Fair Value Measurements .
 NOTE B  ACCOUNTS RECEIVABLE
  December 2008
    
    
    December 2007Accounts receivable billed
    
    $
    10,673,000
    
    
    $
    14,588,000Accounts receivable unbilled
    
    
    10,544,000
    
    
    
    11,955,000Accounts receivable other
    
    
    776,000
    
    
    
    1,717,000Allowance for doubtful accounts
    
    
    (376,000
    )
    
    
    (476,000
    )Total
    
    $
    21,617,000
    
    
    $
    27,784,000
  F-14




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##### Table of Contents



2008
    
    
    2007Balance, beginning of year
    
    $
    476,000
    
    
    $
    431,000Additions charged to cost and expense
    
    
    206,000
    
    
    
    124,000Acquisition of Career Blazers
    
    
    
    
    
    
    319,000Accounts receivable written-off, net of recoveries
    
    
    (306,000
    )
    
    
    (398,000
    )Balance, end of year
    
    $
    376,000
    
    
    $
    476,000
 NOTE C  PROPERTY AND EQUIPMENT
  December
    
    
    December2008
    
    
    2007Office equipment
    
    $
    2,113,000
    
    
    $
    1,938,000Furniture and fixtures
    
    
    885,000
    
    
    
    759,000Computer software
    
    
    1,104,000
    
    
    
    1,017,000Leasehold improvements
    
    
    1,691,000
    
    
    
    955,0005,793,000
    
    
    
    4,669,000Less accumulated depreciation and amortization
    
    
    (3,170,000
    )
    
    
    (2,629,000
    )Total
    
    $
    2,623,000
    
    
    $
    2,040,000
  NOTE D  OTHER ASSETS
  December
    
    
    December2008
    
    
    2007Debt issuance costs, net of accumulated amortization of
$364,000 and $857,000 for 2008 and 2007, respectively
    
    $
    755,000
    
    
    $
    1,391,000Deposits and other
    
    
    652,000
    
    
    
    432,000Total
    
    $
    1,407,000
    
    
    $
    1,823,000
   Years2009
    
    $
    326,0002010
    
    
    336,0002011
    
    
    93,000Total
    
    $
    755,000
   F-15




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##### Table of Contents



NOTE E  INTANGIBLE ASSETS
   December
    
    
    DecemberAmortization
    
    
    2008
    
    
    2007Period
    
    
    Basis
    
    
    Amortization
    
    
    Basis
    
    
    AmortizationTrademark and trade name
    
    3 years
    
    $
    2,292,000
    
    
    $
    (1,401,000
    )
    
    $
    2,292,000
    
    
    $
    (637,000
    )Non-compete agreements
    
    1 year
    
    
    635,000
    
    
    
    (635,000
    )
    
    
    635,000
    
    
    
    (529,000
    )Temporary employee data base
    
    3 months
    
    
    49,000
    
    
    
    (49,000
    )
    
    
    49,000
    
    
    
    (49,000
    )Customer relationships
    
    5 years
    
    
    4,442,000
    
    
    
    (1,661,000
    )
    
    
    4,442,000
    
    
    
    (740,000
    )Customer
relationships  Georgia acquisition
    
    
    
    
    
    
    407,000
    
    
    
    (40,000
    )
    
    
    
    
    
    
    $
    7,825,000
    
    
    
    
    
    
    $
    7,418,000Less accumulated amortization
    
    
    
    
    
    
    
    
    
    
    (3,786,000
    )
    
    
    
    
    
    
    (1,955,000
    )Total
    
    
    
    
    
    
    
    
    
    $
    4,039,000
    
    
    
    
    
    
    $
    5,463,000
    Years2009
    
    $
    1,726,0002010
    
    
    1,120,0002011
    
    
    993,0002012
    
    
    200,0002013
    
    
    Total
    
    $
    4,039,000
  NOTE F  ACCRUED LIABILITIES
  December
    
    
    December2008
    
    
    2007Accrued payroll and related benefits
    
    $
    13,342,000
    
    
    $
    17,444,000Accrued workers compensation losses and premiums
    
    
    386,000
    
    
    
    2,584,000Unearned benefit deductions
    
    
    890,000
    
    
    
    1,086,000Current portion of accrued rent
    
    
    358,000
    
    
    
    303,000Other
    
    
    3,559,000
    
    
    
    2,320,000Total
    
    $
    18,535,000
    
    
    $
    23,737,000
  F-16




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##### Table of Contents



NOTE G  OTHER LONG TERM LIABILITIES
  NOTE H  CREDIT FACILITY
 Wells Fargo 2008 Agreement
    
    
    Beginning on April 30, 2009, the maximum amount of borrowings under the revolving
line of credit available under the WF facility will be reduced from $20 million to $15
million.
 
    
    The calculation of the interest rate on the outstanding balances was changed.
Interest is now calculated with reference to the WFBC Base Rate. The WFBC Base Rate
is, for any day, a fluctuating rate equal to the higher of (a) the Wells Fargo prime
rate in effect on such day or (b) a rate determined by Wells Fargo to be 1.50% above the
daily three month LIBOR rate (the rate of interest equal to LIBOR then in effect for
delivery for a three-month period).
 
    
    The interest rate on our revolving loan is now calculated with reference to the
WFBC Base Rate plus 0.5%. The interest rate on our term note is now calculated with
reference to the WFBC Base Rate plus 2.75%.
 
    
    The quarterly principal amortization payments of $20,000 under the $250,000
promissory note received from Select pursuant to the TPS Agreement will be used to
partially pay down the term note.
 
    
    We agreed not to incur or contract to incur capital expenditures of more than (a)
$500,000 in the aggregate during the 2009 fiscal year and (b) $200,000 thereafter until
new financial covenants are set.
 
    
    Our ability to make new loans and advances to, and investments in, TPS may not
exceed certain thresholds.
      F-17




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CapitalSource Agreement
       F-18




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##### Table of Contents



2006 Wells Fargo agreement
    NOTE I  LONG-TERM DEBT
  December
    
    
    December2008
    
    
    2007Wells Fargo term note
    
    $
    4,247,000
    
    
    $
    Senior subordinated secured convertible notes,
net of unamortized discount of $4,719,000 and
$7,222,000, respectively
    
    
    15,228,000
    
    
    
    14,731,000Senior subordinated secured convertible notes
due to related parties, net of unamortized
discount of $247,000 and $677,000, respectively
    
    
    797,000
    
    
    
    1,383,000CapitalSource term note
    
    
    
    
    
    
    9,375,000Total
    
    
    20,272,000
    
    
    
    25,489,000Less current portion
    
    
    (3,185,000
    )
    
    
    (9,375,000
    )Total long-term debt
    
    $
    17,087,000
    
    
    $
    16,114,000
 Convertible Notes
    F-19




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##### Table of Contents




    
    The maximum amount of borrowings under the WF facility may not exceed $15 million
beginning on April 30, 2009.
 
    
    The aggregate amount outstanding under the WF facility revolving line of credit
and letters of credit may not at any time exceed $10 million.
 
    
    The maximum base interest rates (excluding default interest rate) allowed under
the WF facility may not exceed the WFBC Base Rate plus 3% (excluding commitment and
similar per annum fees) with respect to the revolving loan and the WFBC Base Rate plus
5% (excluding commitment and similar per annum fees) with respect to the term note.
     F-20




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##### Table of Contents



NOTE J  INCOME TAXES
  2008Current
    
    
    Deferred
    
    
    TotalU.S. Federal
    
    $
    
    
    
    $
    7,092,000
    
    
    $
    7,092,000State and local
    
    
    159,000
    
    
    
    757,000
    
    
    
    916,000Total
    
    $
    159,000
    
    
    $
    7,849,000
    
    
    $
    8,008,000
 2007Current
    
    
    Deferred
    
    
    TotalU.S. Federal
    
    $
    
    
    
    $
    (292,000
    )
    
    $
    (292,000
    )State and local
    
    
    235,000
    
    
    
    (32,000
    )
    
    
    203,000Total
    
    $
    235,000
    
    
    $
    (324,000
    )
    
    $
    (89,000
    )
  2008
    
    
    2007Tax computed at federal statutory rate
    
    
    34.0
    %
    
    
    34.0
    %State tax, net of federal tax benefit
    
    
    3.6
    
    
    
    1.4Mandatorily redeemable convertible
preferred stock accretion and
amortization
    
    
    133.7
    
    
    
    8.1Warrant valuation
    
    
    (296.9
    )
    
    
    (47.5
    )FICA tip credit, net
    
    
    (121.4
    )
    
    
    (5.0
    )Share-based compensation
    
    
    40.3
    
    
    
    5.9Valuation allowance
    
    
    1,369.0
    
    
    
    Permanent differences and other
    
    
    15.3
    
    
    
    2.3Effective Rate
    
    
    1,177.6
    %
    
    
    (0.8
    )%
  F-21




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##### Table of Contents



December
    
    
    DecemberDeferred tax asset (liability):
    
    2008
    
    
    2007Allowance for doubtful accounts
    
    $
    145,000
    
    
    $
    184,000Net operating loss carry forwards
    
    
    
    
    
    
    796,000AMT and FICA tip tax credit
    
    
    
    
    
    
    41,000Other reserves
    
    
    284,000
    
    
    
    788,000Valuation allowance
    
    
    (340,000
    )
    
    
    Deferred tax assets  current
    
    
    89,000
    
    
    
    1,809,000AMT and FICA tip tax credit
    
    
    5,341,000
    
    
    
    4,047,000Net operating loss carry forwards
    
    
    4,133,000
    
    
    
    1,988,000Share-based compensation
    
    
    401,000
    
    
    
    184,000Amortization of goodwill and other intangibles
    
    
    2,689,000
    
    
    
    3,094,000Depreciation of property and equipment
    
    
    
    
    
    
    120,000Other reserves
    
    
    56,000
    
    
    
    Valuation allowance
    
    
    (9,996,000
    )
    
    
    (1,027,000
    )Deferred tax assets  long-term
    
    
    2,624,000
    
    
    
    8,406,000Deferred tax liability  depreciation of property and equipment
    
    
    (347,000
    )
    
    
    Net deferred tax assets  long-term
    
    
    2,277,000
    
    
    
    8,406,000Net deferred tax assets
    
    $
    2,366,000
    
    
    $
    10,215,000
    NOTE K  STOCKHOLDERS EQUITY
    F-22




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##### Table of Contents



Series A Mandatorily Redeemable Convertible Preferred Stock
      F-23




---



##### Table of Contents



December 2008
    
    
    December 2007Non Related PartyPrincipal and premium
    
    $
    15,022,000
    
    
    $
    14,657,000Discount
    
    
    (8,108,000
    )
    
    
    (10,069,000
    )Net
    
    $
    6,914,000
    
    
    $
    4,588,000Related PartyPrincipal and premium
    
    $
    654,000
    
    
    $
    Discount
    
    
    (353,000
    )
    
    
    Net
    
    $
    301,000
    
    
    $
    
 Warrants to purchase common stock
    Number of shares
    
    
    Number of sharesunderlying
    
    
    underlyingwarrants prior to
    
    
    warrants after
    
    
    Originaltransaction
    
    
    transaction
    
    
    Expiration dateNote Warrants
    
    
    551,287
    
    
    
    
    
    
    March 31, 2011Preferred Warrants
    
    
    2,358,948
    
    
    
    112,440
    *
    
    March 31, 2013Common Warrants
    
    
    1,205,678
    
    
    
    
    
    
    March 31, 2013Placement Agent Warrants
    
    
    558,758
    
    
    
    
    
    
    March 31, 2013Backstop Warrants
    
    
    1,838,339
    
    
    
    
    
    
    September 30, 2014TOTAL
    
    
    6,513,010
    
    
    
    112,440
 *
    
    - All held by a single holder and subject to exercise as explained above  F-24




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##### Table of Contents



Compensation
  Stock Options
       F-25




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##### Table of Contents




    
    The stock options are granted at-the-money;
    
    Exercisability is conditional only on performing service through the vesting date;
    
    If an employee terminates service prior to vesting, the employee would forfeit the stock options;
    
    If an employee terminates service after vesting, the employee would have a limited time to
exercise the vested stock options (typically 30-90 days);
    
    The stock options are nontransferable and nonhedgeable; and
    
    The Company utilizes the Black-Scholes closed-form model for valuing its employee stock options.
     F-26




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##### Table of Contents



Wgt. Avg.RemainingRange of
    
    
    
    
    
    
    Wgt. Avg.
    
    
    Contractual
    
    
    Wgt. Avg.
    
    
    AggregateExercise
    
    
    
    
    
    
    Exercise
    
    
    Life
    
    
    Grant Date
    
    
    IntrinsicPrices
    
    
    Stock Options
    
    
    Price
    
    
    (Years)
    
    
    Fair Value
    
    
    Value2007 ActivityIssued
    
    
    
    
    
    
    1,557,361
    
    
    $
    3.05
    
    
    
    
    
    
    $
    2.60
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    57,821
    
    
    $
    5.00
    
    
    
    
    
    
    $
    2.62
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    As of December 2007Outstanding
    
    $
    1.50  $3.00
    
    
    
    1,499,540
    
    
    $
    2.97
    
    
    
    9.32
    
    
    $
    2.58
    
    
    $
    28,500Vested and exercisable
    
    $
    3.00
    
    
    
    273,329
    
    
    $
    3.00
    
    
    
    9.13
    
    
    $
    3.04
    
    
    $
    Nonvested
    
    $
    1.50  $3.00
    
    
    
    1,226,211
    
    
    $
    2.96
    
    
    
    9.36
    
    
    $
    2.48
    
    
    $
    28,5002008 ActivityIssued
    
    
    
    
    
    
    1,561,661
    
    
    $
    0.86
    
    
    
    9.66
    
    
    $
    0.47
    
    
    $
    288,000Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    34,250
    
    
    $
    3.00
    
    
    
    
    
    
    $
    1.69
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    As of December 2008Outstanding
    
    $
    0.23  $3.00
    
    
    
    3,026,951
    
    
    $
    1.88
    
    
    
    9.01
    
    
    $
    1.49
    
    
    $
    288,000Vested and exercisable
    
    $
    1.50  $3.00
    
    
    
    761,737
    
    
    $
    2.98
    
    
    
    8.24
    
    
    $
    2.74
    
    
    
    Nonvested
    
    $
    0.23  $3.00
    
    
    
    2,265,214
    
    
    $
    1.51
    
    
    
    9.27
    
    
    $
    1.07
    
    
    $
    288,000
  Assumptions:
    
    2008
    
    
    2007Expected Volatility
    
    
    52.7%  58.0
    %
    
    
    52.7%  55.2
    %Weighted-Average Volatility
    
    
    55.0
    %
    
    
    53.6
    %Expected Dividends
    
    
    0
    %
    
    
    0
    %Expected Term (years)
    
    
    4.1  6.0
    
    
    
    5.6  6.0Risk-Free Rate
    
    
    2.19
    %
    
    
    4.29
    %Total intrinsic value of options exercised:
    
    
    
    
    
    
    Total fair value of shares vested:
    
    $
    2,085,000
    
    
    $
    832,000Unrecognized compensation cost related to nonvested awards:
    
    $
    1,260,000
    
    
    $
    2,388,000Weighted-average period over which nonvested awards are expected
to be recognized:
    
    2.16 years
    
    
    1.13 years
 NOTE L  WARRANT AND CONVERSION FEATURE VALUATION
 Accounting for Derivative Instruments and
Hedging Activities Accounting for Derivative Financial Instruments Indexed to,
and Potentially Settled in, a Companys Own Stock
  F-27




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##### Table of Contents



2008
    
    
    2007Average expected volatility
    
    
    52.7
    %
    
    
    55.1
    %Contractual term
    
    
    2.25 to 4.25 years
    
    
    
    3.25 to 6.75 yearsAverage risk free interest rate
    
    
    2.2
    %
    
    
    4.2
    %Expected dividend rate
    
    
    0
    %
    
    
    0
    %
 NOTE M  COMMITMENTS AND CONTINGENCIES
 Contingencies
   Operating Leases
   Years2009
    
    $
    2,241,0002010
    
    
    1,715,0002011
    
    
    1,328,0002012
    
    
    1,148,0002013 and thereafter
    
    
    5,725,000Total minimum lease payments
    
    $
    12,157,000
    F-28




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##### Table of Contents



NOTE N  EMPLOYEE BENEFIT PLANS
    NOTE O  RELATED PARTIES
   NOTE P  SEGMENT INFORMATION
   F-29




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##### Table of Contents



2008
    
    
    2007Staffing revenues
    
    $
    137,286,000
    
    
    $
    139,877,000PEO revenues
    
    $
    31,190,000
    
    
    $
    34,016,000Total Company revenues
    
    $
    168,476,000
    
    
    $
    173,893,000Staffing depreciation
    
    $
    400,000
    
    
    $
    231,000PEO depreciation
    
    $
    197,000
    
    
    $
    162,000Total Company depreciation
    
    $
    858,000
    
    
    $
    608,000Staffing amortization
    
    $
    1,831,000
    
    
    $
    1,955,000PEO amortization
    
    $
    
    
    
    $
    Total Company amortization
    
    $
    1,831,000
    
    
    $
    1,955,000Staffing income (loss) before income taxes
    
    $
    5,454,000
    
    
    $
    7,109,000PEO income before income taxes
    
    $
    6,108,000
    
    
    $
    6,650,000Total Company income (loss) before income taxes
    
    $
    680,000
    
    
    $
    10,877,000Staffing capital expenditures
    
    $
    322,000
    
    
    $
    420,000PEO capital expenditures
    
    $
    62,000
    
    
    $
    99,000Total Company capital expenditures
    
    $
    507,000
    
    
    $
    745,000
 As ofDecember 2008
    
    
    December 2007Staffing assets
    
    $
    44,282,000
    
    
    $
    43,874,000PEO assets
    
    $
    36,799,000
    
    
    $
    33,684,000Total Company assets
    
    $
    55,112,000
    
    
    $
    69,486,000Staffing goodwill and intangibles
    
    $
    12,686,000
    
    
    $
    12,860,000PEO goodwill and intangibles
    
    $
    12,090,000
    
    
    $
    12,090,000Total Company goodwill and intangibles
    
    $
    24,776,000
    
    
    $
    24,950,000
 NOTE Q  QUARTERLY FINANCIAL INFORMATION (Unaudited)
  2008 Quarters
    
    1st
    
    
    2nd
    
    
    3rd
    
    
    4thRevenues, net
    
    $
    46,018
    
    
    $
    43,310
    
    
    $
    41,598
    
    
    $
    37,550Gross profit
    
    $
    11,134
    
    
    $
    11,518
    
    
    $
    11,117
    
    
    $
    9,006Net income (loss)
    
    $
    (169
    )
    
    $
    2,781
    
    
    $
    223
    
    
    $
    (10,163
    )Income (loss) per share:Basic
    
    $
    (0.02
    )
    
    $
    0.26
    
    
    $
    0.02
    
    
    $
    (0.96
    )Diluted
    
    $
    (0.04
    )
    
    $
    0.19
    
    
    $
    0.02
    
    
    $
    (0.96
    )
  F-30




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##### Table of Contents



2007 Quarters
    
    1st
    
    
    2nd
    
    
    3rd
    
    
    4thRevenues, net
    
    $
    36,621
    
    
    $
    44,338
    
    
    $
    46,889
    
    
    $
    46,045Gross profit
    
    $
    10,177
    
    
    $
    11,859
    
    
    $
    12,149
    
    
    $
    11,144Net income (loss)
    
    $
    991
    
    
    $
    8,788
    
    
    $
    8,947
    
    
    $
    (7,760
    )Income (loss) per share:Basic
    
    $
    0.16
    
    
    $
    1.46
    
    
    $
    1.48
    
    
    $
    (0.98
    )Diluted
    
    $
    0.16
    
    
    $
    0.77
    
    
    $
    0.57
    
    
    $
    (0.98
    )
 th
   NOTE R  ACQUISITIONS
   Pro Forma Results of Operations (Unaudited)
  2007Revenue
    
    $
    182,098,000Gross profit
    
    $
    46,655,000Net income
    
    $
    11,038,000Basic earnings per share
    
    $
    1.69Diluted earnings per share
    
    $
    1.04
  F-31




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##### Table of Contents



NOTE S  SUBSEQUENT EVENT
   December 2008
    
    
    December 2007Revenue
    
    $
    59,063,000
    
    
    $
    63,886,000Gross profit
    
    $
    8,922,000
    
    
    $
    10,155,000Income before income taxes
    
    $
    1,616,000
    
    
    $
    2,694,000
  F-32




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##### Table of Contents



SIGNATURES
  Global Employment Holdings, Inc.RegistrantApril 6, 2009
    
    By:
    
    /s/ Howard Brill

Howard BrillPresident and Chief Executive Officer
 th
 Principal Executive Officer and Director:
 /s/ Howard Brill

Howard Brill
    
    President, Chief Executive Officer and Director
 Principal Financial and Accounting Officer:
 /s/ Dan Hollenbach

Dan Hollenbach
    
    Chief Financial Officer, Treasurer and Secretary
 Directors:
 /s/ Luci Staller Altman

Luci Staller Altman
    
    Director/s/ Charles Gwirtsman

Charles Gwirtsman
    
    Director/s/ Richard Goldman

Richard Goldman
    
    Director/s/ Steven List

Steven List
    
    Chief Operating Officer and Director




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##### Table of Contents



EXHIBIT INDEX
 Exhibit #
    
    Description
    
    Reference3.1
    
    
    Amendment No. 1 to Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock of Global Employment Holdings, Inc.
    
    Incorporated by reference to Exhibit 3.1 to the Registrants Current Report on Form 8-K filed with the Securities and Exchange Commission on March 6,
2007 (File No. 000-51737), as amended.3.2
    
    
    Amended Articles of Incorporation of Global Employment Holdings, Inc.
    
    Incorporated by reference to Exhibit 3.2 to the Registrants Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 15,
2008 (File No. 000-51737).4.1
    
    
    Form of Warrant issued under Subscription Agreement, dated as of October 3, 2007
    
    Incorporated by reference to Exhibit 4.1 to the Registrants Current Report on Form 8-K filed with the Securities and Exchange Commission on October 9,
2007 (File No. 000-51737).10.1
    *
    
    Employment Agreement, dated as of March 14, 2007, among Global Employment Holdings, Inc., Global Employment Solutions, Inc. and Steven List
    
    Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed with the Securities and Exchange Commission on March 20,
2007 (File No. 000-51737).10.2
    
    
    Asset Purchase Agreement, dated as of December 29, 2006, by and among Global Employment Holdings, Inc., Career Blazers Personnel Services, Inc., Career Blazers Contingency Professionals, Inc., Career Blazers Personnel Services of Washington, D.C., Inc. and CapeSuccess LLC
    
    Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed with the Securities and Exchange Commission on January 5,
2007 (File No. 000-51737).10.3
    
    
    Amendment to Asset Purchase Agreement, dated as of February 28, 2007, by and among Global Employment Holdings, Inc., Career Blazers Personnel Services, Inc., Career Blazers Contingency Professionals, Inc., Career Blazers Personnel Services of Washington, D.C., Inc., and CapeSuccess LLC
    
    Incorporated by reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K filed with the Securities and Exchange Commission on March 6,
2007 (File No. 000-51737), as amended.10.4
    
    
    Credit Agreement, dated as of February 28, 2007, by and among Global Employment Solutions, Inc., Global Employment Holdings, Inc., Temporary Placement Service, Inc., Southeastern Personnel Management, Inc., Main Line Personnel Services, Inc., Friendly Advanced Software Technology, Inc., Excell Personnel Services Corporation, Southeastern Staffing, Inc., Bay HR, Inc., Southeastern Georgia HR, Inc., Southeastern Staffing
II, Inc., Southeastern Staffing III, Inc., Southeastern Staffing IV, Inc., Southeastern Staffing V, Inc., Southeastern Staffing VI, Inc., Keystone Alliance, Inc., and CapitalSource Finance LLC, as administrative agent for the lenders, and the lenders from time to time parties hereto
    
    Incorporated by reference to Exhibit 10.3 to the Registrants Current Report on Form 8-K filed with the Securities and Exchange Commission on March 6,
2007 (File No. 000-51737), as amended.




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##### Table of Contents



Exhibit #
    
    Description
    
    Reference10.5
    
    
    Subordination Agreement, dated as of February 28, 2007, by and among Whitebox Convertible Arbitrage Partners, L.P., for itself and in its capacity as collateral agent for the subordinated creditors, Radcliffe SPC, Ltd., for and on behalf of the Class A Convertible Crossover Segregated Portfolio, Magnetar Capital Master Fund, Ltd., Guggenheim Portfolio
XXXI, LLC, Pandora Select Partners, LP, Whitebox Intermarket Partners, LP, Context Advantage Master Fund, L.P., on behalf of itself, Context Advantage Fund, LP, f/k/a Context Convertible Arbitrage Fund, L.P., and Context Offshore Advantage Fund, Ltd., f/k/a Context Convertible Arbitrage Offshore, Ltd., Context Opportunistic Master Fund, L.P., Gwirtsman
Family Partners, LLC, Luci Altman, Gregory Bacharach, Howard Brill, Richard Goldman, Daniel Hollenbach, Terry Koch, Michael Lazrus, Steven List, Kenneth Michaels, Steven Pennington, Fred Viarrial, and Jay Wells, for the benefit of CapitalSource Finance LLC, for itself and as agent for the lenders now or hereafter existing under the Credit Agreement
    
    Incorporated by reference to Exhibit 10.4 to the Registrants Current Report on Form 8-K filed with the Securities and Exchange Commission on March 6,
2007 (File No. 000-51737), as amended.10.6
    
    
    Security Agreement, dated as of February 28, 2007, by and among Global Employment Solutions, Global Employment Holdings, Inc., Temporary Placement Service, Inc., Southeastern Personnel Management, Inc., Main Line Personnel Services, Inc., Friendly Advanced Software Technology, Inc., Excell Personnel Services Corporation, Southeastern Staffing, Inc., Bay HR, Inc., Southeastern Georgia HR, Inc., Southeastern Staffing II,
Inc., Southeastern Staffing III, Inc., Southeastern Staffing IV, Inc., Southeastern Staffing V, Inc., Southeastern Staffing VI, Inc., Keystone Alliance, Inc., and CapitalSource Finance LLC, in its capacity as agent for the lender parties
    
    Incorporated by reference to Exhibit 10.5 to the Registrants Current Report on Form 8-K filed with the Securities and Exchange Commission on March 6,
2007 (File No. 000-51737), as amended.10.7
    
    
    Securities Pledge Agreement, dated as of February 28, 2007, between CapitalSource Finance LLC, as administrative agent for the lenders under the Credit Agreement, and Global Employment Holdings, Inc.
    
    Incorporated by reference to Exhibit 10.6 to the Registrants Current Report on Form 8-K filed with the Securities and Exchange Commission on March 6,
2007 (File No. 000-51737), as amended.10.8
    
    
    Securities Pledge Agreement, dated as of February 28, 2007, between CapitalSource Finance LLC, as administrative agent for the lenders under the Credit Agreement, and Global Employment Solutions
    
    Incorporated by reference to Exhibit 10.7 to the Registrants Current Report on Form 8-K filed with the Securities and Exchange Commission on March 6,
2007 (File No. 000-51737), as amended.




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##### Table of Contents



Exhibit #
    
    Description
    
    Reference10.9
    
    
    Securities Pledge Agreement, dated as of February 28, 2007, between CapitalSource Finance LLC, as administrative agent for the lenders under the Credit Agreement, and Southeastern Staffing, Inc.
    
    Incorporated by reference to Exhibit 10.8 to the Registrants Current Report on Form 8-K filed with the Securities and Exchange Commission on March 6,
2007 (File No. 000-51737), as amended.10.10
    
    
    Securities Pledge Agreement, dated as of February 28, 2007, between CapitalSource Finance LLC, as administrative agent for the lenders under the Credit Agreement, and Excell Personnel Services Corporation
    
    Incorporated by reference to Exhibit 10.9 to the Registrants Current Report on Form 8-K filed with the Securities and Exchange Commission on March 6,
2007 (File No. 000-51737), as amended.10.11
    
    
    First Amendment to Senior Secured Convertible Notes, dated as of February 28, 2007, by and among Global Employment Holdings, Inc. and the holders of Global Employment Holdings, Inc. senior secured convertible notes
    
    Incorporated by reference to Exhibit 10.10 to the Registrants Current Report on Form 8-K filed with the Securities and Exchange Commission on March 6,
2007 (File No. 000-51737), as amended.10.12
    
    
    Letter from Global Employment Holdings, Inc., dated February 28, 2007, to holders of the senior convertible notes and the Series A convertible preferred stock regarding commitment to issue equity
    
    Incorporated by reference to Exhibit 10.11 to the Registrants Current Report on Form 8-K filed with the Securities and Exchange Commission on March 6,
2007 (File No. 000-51737), as amended.10.13
    *
    
    Amended and Restated Employment Agreement, dated as of January 2, 2007, between Global Employment Solutions, Inc. and Terry Koch
    
    Incorporated by reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K filed with the Securities and Exchange Commission on January 5,
2007 (File No. 000-51737).10.14
    
    
    Financial Statements of Career Blazers Personnel Services, Inc. and subsidiaries as of December 31, 2006 and 2005 and the related consolidated statements of operations, changes in stockholders equity (deficit) and cash flows for the years ended December 31, 2006, 2005 and 2004
    
    Incorporated by reference to Item 9.01 of Amendment No. 1 to the Registrants Current Report on Form 8-K filed on May 21, 2007 (File No. 000-51737).10.15
    
    
    Subscription Agreement, dated as of October 3, 2007, by and among Global Employment Holdings, Inc. and the purchasers signatory thereto
    
    Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on October 9, 2007 (File No. 000-51737).10.16
    
    
    Warrant Exercise and Cancellation Agreement dated as of December 26, 2007.
    
    Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on January 3, 2008 (File No. 000-51737).10.17
    
    
    Credit and Security Agreement dated as of April 29, 2009
    
    Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on May 5, 2008 (File No. 000-51737).10.18
    
    
    $20,000,000 Revolving Promissory Note dated as of April 29, 2009
    
    Incorporated by reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K filed on May 5, 2008 (File No. 000-51737).10.19
    
    
    $6,000,000 Term Note dated as of April 29, 2009
    
    Incorporated by reference to Exhibit 10.3 to the Registrants Current Report on Form 8-K filed on May 5, 2008 (File No. 000-51737).




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##### Table of Contents



Exhibit #
    
    Description
    
    Reference10.20
    
    
    Pledge Agreement dated as of April 29, 2009
    
    Incorporated by reference to Exhibit 10.4 to the Registrants Current Report on Form 8-K filed on May 5, 2008 (File No. 000-51737).10.21
    
    
    Patent and Trademark Security Agreement dated as of April 29, 2009
    
    Incorporated by reference to Exhibit 10.5 to the Registrants Current Report on Form 8-K filed on May 5, 2008 (File No. 000-51737).10.22
    
    
    Copyright Security Agreement dated as of April 29, 2009
    
    Incorporated by reference to Exhibit 10.6 to the Registrants Current Report on Form 8-K filed on May 5, 2008 (File No. 000-51737).10.23
    
    
    Guarantee by Corporation dated as of April 29, 2009
    
    Incorporated by reference to Exhibit 10.7 to the Registrants Current Report on Form 8-K filed on May 5, 2008 (File No. 000-51737).10.24
    
    
    Security Agreement dated as of April 29, 2009
    
    Incorporated by reference to Exhibit 10.8 to the Registrants Current Report on Form 8-K filed on May 5, 2008 (File No. 000-51737).10.25
    
    
    Subordination Agreement dated as of April 29, 2009
    
    Incorporated by reference to Exhibit 10.9 to the Registrants Current Report on Form 8-K filed on May 5, 2008 (File No. 000-51737).10.26
    
    
    Agreement to Enter in New Subordination Agreement dated as of April 29, 2009
    
    Incorporated by reference to Exhibit 10.10 to the Registrants Current Report on Form 8-K filed on May 5, 2008 (File No. 000-51737).10.27
    
    
    First Amendment to Credit and Security Agreement and
Waiver of Default, dated as of March 11, 2009
    
    Incorporated by
reference to
Exhibit 10.1 to the
Registrants
Current Report on
Form 8-K filed on
March 17, 2009
(File No.
000-51737).10.28
    
    
    Consent and Second Amendment to Senior Secured Convertible Notes, dated as of March 11, 2009
    
    Incorporated by reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K filed on March 17, 2009 (File No. 000-51737).10.29
    
    
    Consent and First Amendment to Preferred Stock Securities Purchase Agreement, dated as of March 11, 2009
    
    Incorporated by reference to Exhibit 10.3 to the Registrants Current Report on Form 8-K filed on March 17, 2009 (File No. 000-51737).10.30
    
    
    Asset Purchase and Sale Agreement dated as of March 9, 2009, By and Between Global Employment Holdings, Inc., Temporary Placement Service, Inc., And Eastern Staffing, LLC, d.b.a. Select Staffing
    
    Incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on March 18, 2009 (File No. 000-51737).10.31
    
    
    $250,000 Promissory Note
    
    Incorporated by reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K filed on March 18, 2009 (File No. 000-51737).10.32
    
    
    $700,000 Promissory Note
    
    Incorporated by reference to Exhibit 10.3 to the Registrants Current Report on Form 8-K filed on March 18, 2009 (File No. 000-51737).10.33
    
    
    Non-Competition Agreement
    
    Incorporated by reference to Exhibit 10.4 to the Registrants Current Report on Form 8-K filed on March 18, 2009 (File No. 000-51737).




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##### Table of Contents



Exhibit #
    
    Description
    
    Reference10.34
    
    

Guaranty
    
    Incorporated by reference to Exhibit 10.5 to the Registrants Current Report on Form 8-K filed on March 18, 2009 (File No. 000-51737).21.1
    
    
    List of subsidiaries of Global Employment Holdings, Inc.
    
    Incorporated by reference to Exhibit No. 21.1 to the Post Effective Amendment No. 1 to the Registrants Registration Statement on Form S-1 (File No.
333-133666) as amended.31.1
    
    
    Certification of Howard Brill, Chief Executive Officer and President pursuant to Rule 13a-14(a) and the Exchange Act of 1934.
    
    Filed herewith.31.2
    
    
    Certification of Dan Hollenbach, Chief Financial Officer and Principal Accounting Officer pursuant to Rule 13a-14(a) and the Exchange Act of 1934.
    
    Filed herewith.32.1
    
    
    Certification of Howard Brill, Chief Executive Officer and President, and Dan Hollenbach, Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
    

Furnished herewith.
 *
    
    - Indicates management contract or compensatory plan or arrangement.