##### 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 December 30, 2007


Commission File Number 000-51737


GLOBAL EMPLOYMENT HOLDINGS, INC.




Delaware
    
    43-2069359(State or other jurisdiction 
of incorporation)
    
    (IRS Employer
Identification Number)10375 Park Meadows Drive, Suite 375
Lone 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

    
    Name of Each Exchange on Which Registered
N/A




o þ


o þ


þ o


þ




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


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
    
    
    20ITEM 6. SELECTED FINANCIAL DATA
    
    
    22ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    23ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
    
    
    35ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    35ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    35ITEM 9A. CONTROLS AND PROCEDURES
    
    
    36ITEM 9B. OTHER INFORMATION
    
    
    38PART IIIITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
    
    
    38ITEM 11. EXECUTIVE COMPENSATION
    
    
    38ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
    
    
    38ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    38ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    38PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    39SIGNATURESExhibit 3.2Exhibit 31.1Exhibit 31.2Exhibit 32.1




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PART I.
 Cautionary Note
FORWARD LOOKING STATEMENTS
  
 ITEM 1. BUSINESS
 Overview of our business
  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
    Subsidiaries
      Temporary Placement Service, Inc. (TPS)
    
       Friendly Advanced Software Technology, Inc. (FAST)   Main Line Personnel Services, Inc. (Main Line)
    
       Excell Personnel Services Corporation (Excell)Our PEO services segment, collectively referred to as Southeastern, consists of:   Southeastern Personnel Management, Inc.
    
       Southeastern Staffing III, Inc.   Southeastern Staffing, Inc.
    
       Southeastern Staffing IV, Inc.   Bay HR, Inc.
    
       Southeastern Staffing V, Inc.   Southeastern Georgia HR, Inc.
    
       Southeastern Staffing VI, Inc.   Southeastern Staffing II, Inc.
    
       Keystone Alliance, Inc.
 Services
   3




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Staffing services
     PEO services
  Operations
  Recruitin g
  Marketing
   4




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Marketing in the Staffing Services Segment
  Marketing in the PEO Services Segment
  Customers
     Our Strategy and Competitive Strengths
 Support, Strengthen and Expand Branch Office Operations
  Increase Customer Utilization of our Services
  Enhance Management Information Systems
   5




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Penetrate Other Selected Markets
  Pursue Strategic Acquisitions
   Financial Information about Segments
  Financial Information about Geographic Areas
  New Market Segments
  Competition
    6




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Research and Development
  Seasonality
   Our Technology and Management Information Systems
   Risk Management Programs
     7




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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
    Regulation
   8




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Working Capital Practices
  Available information
  
 ITEM 1A. RISK FACTORS
  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.
    
    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.
    9




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Our staffing business is vulnerable to economic fluctuations because our customers tend to use
fewer temporary employees when economic activity slows, while recruiting employees to fill our
customers needs becomes increasingly difficult during economic booms.
  Our business is subject to risks associated with geographic market concentration.
  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.
   10




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We may not have sufficient liquidity and capital resources necessary to meet our future financial
obligations.
   11




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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.
   12




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Because we assume the obligation to make wage, tax and regulatory payments in respect of some
employees, we are exposed to customer credit risks.
  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.
  13




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Adverse developments in the market for excess workers compensation insurance could lead to an
increase in our costs.
  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.
   14




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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.
  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 with insurance proceeds
or working capital.
   15




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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.
  
    
    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.
   16




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A significant amount of common stock is eligible for sale, and its sale could depress the market
price of our common stock.
  A significant amount of common stock is subject to issuance upon the conversion of our convertible
subordinated 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.
   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.
   17




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Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls is time
consuming, difficult and costly.
  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
 None
  19




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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Market Information
  2006:
    
    High
    
    
    LowThird quarter ended October 1, 2006
    
    $
    5.30
    
    
    $
    5.15Fourth quarter ended December 31, 2006
    
    $
    5.25
    
    
    $
    5.15First 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
  Sales of unregistered securities and use of proceeds.
     Issuer purchases of securities for cash.
  Dividends
    20




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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
    
    
    1,499,540
    
    
    $
    2.97
    
    
    
    600,460Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,499,540
    
    
    $
    2.97
    
    
    
    600,460
   21




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ITEM 6. SELECTED FINANCIAL DATA
  Years Ended(All
amounts in thousands, except per share data)
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Revenues, net
    
    $
    173,893
    
    
    $
    128,790
    
    
    $
    111,563
    
    
    $
    97,126
    
    
    $
    85,568Gross profit
    
    $
    45,329
    
    
    $
    36,719
    
    
    $
    34,370
    
    
    $
    30,200
    
    
    $
    27,231SG&A expenses
    
    $
    37,432
    (d)
    
    $
    28,311
    (a)
    
    $
    45,478
    (b)
    
    $
    23,936
    
    
    $
    22,630Depreciation and amortization
    
    $
    2,563
    
    
    $
    573
    
    
    $
    729
    
    
    $
    734
    
    
    $
    707Operating income (loss)
    
    $
    5,334
    
    
    $
    7,835
    
    
    $
    (11,837
    )
    
    $
    5,530
    
    
    $
    3,894Other income (expense)
    
    $
    5,543
    
    
    $
    (7,959
    ) (c)
    
    $
    (256
    )
    
    $
    (703
    )
    
    $
    (798
    )Net income (loss)
    
    $
    10,966
    
    
    $
    1,309
    
    
    $
    (15,725
    )
    
    $
    2,793
    
    
    $
    1,673Dividend paid to Series C
preferred shareholders
    
    $
    
    
    
    $
    
    
    
    $
    (6,300
    )
    
    $
    
    
    
    $
    Valuation of redeemable
preferred stock
    
    $
    
    
    
    $
    
    
    
    $
    (36,693
    )
    
    $
    
    
    
    $
    Income (loss) available to
common stockholders
    
    $
    10,966
    
    
    $
    1,309
    
    
    $
    (58,718
    )
    
    $
    2,793
    
    
    $
    1,673Income (loss) per share:Basic earnings (loss) per shareIncome (loss) available to
common stockholders
    
    $
    1.67
    
    
    $
    0.23
    
    
    $
    (10.95
    )
    
    $
    0.51
    
    
    $
    0.30Weighted average number of
shares outstanding
    
    
    6,550
    
    
    
    5,745
    
    
    
    5,363
    
    
    
    5,471
    
    
    
    5,547Diluted earnings(loss) per shareIncome (loss) available to common stockholders
    
    $
    1.04
    
    
    $
    0.23
    
    
    $
    (10.95
    )
    
    $
    0.51
    
    
    $
    0.30Weighted average number of
shares outstanding
    
    
    15,586
    
    
    
    5,745
    
    
    
    5,363
    
    
    
    5,471
    
    
    
    5,547Total assets
    
    $
    69,486
    
    
    $
    57,202
    
    
    $
    52,920
    
    
    $
    51,014
    
    
    $
    51,953Long-term debt, net
    
    $
    16,114
    
    
    $
    15,138
    
    
    $
    
    
    
    $
    17,800
    
    
    $
    17,370Long-term mandatorily
redeemable preferred stock, net
    
    $
    4,588
    
    
    $
    2,013
    
    
    $
    
    
    
    $
    5,856
    
    
    $
    5,837Stockholders equity (deficit)
    
    $
    983
    
    
    $
    (19,641
    )
    
    $
    (24,921
    )
    
    $
    11,234
    
    
    $
    8,443
 (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.(d)
    
    Includes $2,355 of compensation expense related to the granting of stock options and conversion of warrants.  22




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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Cautionary Statement
  Critical Accounting Policies
   Revenue Recognition
 Reporting Revenue Gross as a Principal versus Net as an Agent,
   23




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Allowance for Doubtful Accounts
   2007
    
    
    2006
    
    
    2005Balance, beginning of year
    
    $
    431,000
    
    
    $
    536,000
    
    
    $
    469,000Additions charged to cost and expense
    
    
    124,000
    
    
    
    394,000
    
    
    
    330,000Acquisition of Career Blazers
    
    
    319,000
    
    
    
    
    
    
    
    Accounts receivable written-off, net of recoveries
    
    
    ( 398,000
    )
    
    
    (499,000
    )
    
    
    (263,000
    )Balance, end of year
    
    $
    476,000
    
    
    $
    431,000
    
    
    $
    536,000
 Intangible Assets and Goodwill
 Business Combinations Goodwill and Other Intangible Assets.
      24




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Income Taxes
 Accounting for
Income Taxes
  Stock-Based Compensation
 Share-Based Payments Accounting for Stock-Based
Compensation, Accounting for Stock Issued to Employees,
   
    
    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.
   25




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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
       Recent Accounting Pronouncements
   26




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Executive Overview
 
 Fluctuations in Quarterly Operating Results
   27




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Results of Continuing Operations
  Year2007
    
    
    2006
    
    
    2005REVENUES:Staffing
    
    
    80.4
    %
    
    
    73.9
    %
    
    
    72.8
    %PEO
    
    
    19.6
    %
    
    
    26.1
    %
    
    
    27.2
    %TOTAL REVENUES, net
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %COST OF SERVICES
    
    
    73.9
    %
    
    
    71.5
    %
    
    
    69.2
    %GROSS PROFIT
    
    
    26.1
    %
    
    
    28.5
    %
    
    
    30.8
    %OPERATING EXPENSESSelling, general and administrative
    
    
    21.5
    %(d)
    
    
    22.0
    %(a)
    
    
    40.8
    %(b)Depreciation and amortization
    
    
    1.5
    %
    
    
    0.4
    %
    
    
    0.7
    %Total operating expenses
    
    
    23.0
    %
    
    
    22.4
    %
    
    
    41.5
    %OPERATING INCOME
    
    
    3.1
    %
    
    
    6.1
    %
    
    
    -10.7
    %OTHER INCOME (EXPENSE)Interest expense:Other interest expense, net of interest income
    
    
    -5.3
    %
    
    
    -5.1
    %
    
    
    -0.2
    %Fair market valuation of warrant liability
    
    
    8.7
    %
    
    
    1.3
    %
    
    
    0.0
    %Other income (expense)
    
    
    -0.2
    %
    
    
    -2.4
    %(c)
    
    
    0.0
    %Total other
income (expense), net
    
    
    3.2
    %
    
    
    -6.2
    %
    
    
    -0.2
    %INCOME (LOSS) BEFORE INCOME TAXES
    
    
    6.3
    %
    
    
    -0.1
    %
    
    
    -10.9
    %INCOME TAXES
    
    
    0.0
    %
    
    
    -1.1
    %
    
    
    3.2
    %NET INCOME (LOSS)
    
    
    6.3
    %
    
    
    1.0
    %
    
    
    -14.1
    %
 (a)
    
    Includes $1,048,000 (<1%) of non-recurring compensation expense in connection with the March 31,
2006 recapitalization.(b)
    
    Includes $21,152,000 (19.0%) of restricted stock compensation recorded in connection with the March
31, 2006 recapitalization.(c)
    
    Includes $3,359,000 (2.6%) of expenses recorded in connection with the March 31, 2006 recapitalization.(d)
    
    Includes $2,355,000 (1.4%) of compensation expense related to the granting of stock options and
conversion of warrants.  28




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Years
    

Gross reportingmethod
    
    
    Reclassification
    
    
    Net reportingmethod2007Revenues, 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
    
    
    $
    
    
    
    $
    45,329,0002006Revenues, net
    
    $
    507,906,000
    
    
    $
    (379,116,000
    )
    
    $
    128,790,000Cost of services
    
    
    (471,187,000
    )
    
    
    379,116,000
    
    
    
    (92,071,000
    )Gross profit
    
    $
    36,719,000
    
    
    $
    
    
    
    $
    36,719,0002005Revenues, net
    
    $
    439,991,000
    
    
    $
    (328,428,000
    )
    
    $
    111,563,000Cost of services
    
    
    (405,621,000
    )
    
    
    328,428,000
    
    
    
    (77,193,000
    )Gross profit
    
    $
    34,370,000
    
    
    $
    
    
    
    $
    34,370,000
 CHANGES IN RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 30, 2007 AND DECEMBER 31, 2006
  Revenues
    
    
    Additional revenue from the acquisition of Career Blazers of $47.1 million,
    
    3.8% increase in the number of billed hours in professional division of the staffing
services segment, excluding Career Blazer revenues;
    
    3.6% increase in average bill rates in the staffing services segment, excluding Career
Blazer revenues; offset by;
    
    4.6% decrease in billed hours in the commercial division of the staffing services segment.
   29




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##### Table of Contents



Gross profit and gross margin percentage
      Selling, general and administrative expenses
   Depreciation and amortization
   30




---



##### Table of Contents



Other expense
  Interest expense
  Income taxes
  Changes in Results of Operations for the Years Ended December 31, 2006 and January 1, 2006
 Revenues
        31




---



##### Table of Contents



Gross profit and gross margin percentage
    Selling, general and administrative expenses
  Depreciation
  Other expense
  Interest expense
  Income taxes
   32




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
  At December 30, 2007
          33




---



##### Table of Contents



Off-Balance Sheet Arrangements
  Contractual Obligations and Commitments
  Payments due by periodLess than
    
    
    1-3
    
    
    3-5
    
    
    AfterTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsLong-term debt
    
    $
    33,388,000
    
    
    $
    9,375,000
    
    
    $
    
    
    
    $
    24,013,000
    
    
    $
    Mandatorily redeemable
convertible preferred stock (a)
    
    
    19,991,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,991,000Operating leases (b)
    
    
    10,046,000
    
    
    
    2,020,000
    
    
    
    2,871,000
    
    
    
    1,672,000
    
    
    
    3,483,000Total contractual cash obligations
    
    $
    63,425,000
    
    
    $
    11,395,000
    
    
    $
    2,871,000
    
    
    $
    25,685,000
    
    
    $
    23,474,000
 (a)
    
    Fully accreted balance(b)
    
    Excluding sub lease rentals   34




---



##### Table of Contents



Inflation
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
  
 ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
   35




---



##### Table of Contents



ITEM 9A. CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures
   Managements Report on Internal Control over Financial Reporting
      Control Activities
   Control Activities
   36




---



##### Table of Contents



Control Environment
   Managements Plan for Remediation
    Changes in Internal Control over Financial Reporting
  Inherent Limitations
  CEO and CFO Certifications
   37




---



##### Table of Contents



ITEM 9B. OTHER INFORMATION.
  
 PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
 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.
   
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
   38




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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 December 30, 2007 and December 31, 2006
    
    
    F-2Consolidated Statements of Operations For the Years ended December 30, 2007,
December 31, 2006 and January 1, 2006
    
    
    F-3Consolidated Statements of Stockholders Equity (Deficit) For the Years ended
December 30, 2007, December 31, 2006 and January 1, 2006
    
    
    F-4Consolidated Statements of Cash Flows For the Years ended December 30, 2007,
December 31, 2006 and January 1, 2006
    
    
    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.
    
    Filed herewith4.1
    
    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).
  39




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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.
  40




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##### Table of Contents



Exhibit #
    
    Description
    
    Reference10.7
    
    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.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
amended10.10
    
    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).
  41




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##### Table of Contents



Exhibit #
    
    Description
    
    Reference21.1
    
    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
    
    Filed herewith.
  42




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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
    
    
    December2007
    
    
    2006ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    330,000
    
    
    $
    58,000Accounts receivable, less allowance for doubtful accounts of $476,000 and $431,000 for
2007 and 2006, respectively
    
    
    27,784,000
    
    
    
    23,478,000Deferred income taxes
    
    
    1,809,000
    
    
    
    2,095,000Prepaid expenses and other current assets
    
    
    2,344,000
    
    
    
    2,603,000Total current assets
    
    
    32,267,000
    
    
    
    28,234,000Property and equipment, net
    
    
    2,040,000
    
    
    
    1,168,000Deferred income taxes
    
    
    8,406,000
    
    
    
    7,796,000Other assets, net
    
    
    1,823,000
    
    
    
    1,256,000Intangibles, net of accumulated amortization of $1,955,000
    
    
    5,463,000
    
    
    
    Goodwill
    
    
    19,487,000
    
    
    
    18,748,000Total assets
    
    $
    69,486,000
    
    
    $
    57,202,000LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)CURRENT LIABILITIESBank overdrafts
    
    $
    1,220,000
    
    
    $
    2,176,000Accounts payable
    
    
    343,000
    
    
    
    614,000Accrued liabilities
    
    
    24,338,000
    
    
    
    19,542,000Current portion of long-term debt
    
    
    9,375,000
    
    
    
    2,903,000Line of credit
    
    
    6,735,000
    
    
    
    9,049,000Total current liabilities
    
    
    42,011,000
    
    
    
    34,284,000Warrant and conversion liability
    
    
    5,568,000
    
    
    
    24,496,000Warrant and conversion liability due to related parties
    
    
    222,000
    
    
    
    912,000Long-term debt, net of unamortized discount of $7,222,000 and $9,019,000
for 2007 and 2006, respectively
    
    
    14,731,000
    
    
    
    13,781,000Long-term debt due to related parties, net of unamortized discount of $677,000 and $946,000
for 2007 and 2006, respectively
    
    
    1,383,000
    
    
    
    1,357,000Mandatorily
redeemable preferred stock, net of unamortized discount of $10,069,000 and
$11,510,000 for 2007 and 2006, respectively
    
    
    4,588,000
    
    
    
    2,013,000Total liabilities
    
    
    68,503,000
    
    
    
    76,843,000COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY (DEFICIT)Series A preferred stock, $0.001 par value, 10,000,000 authorized shares designated, 12,750
issued and outstanding in 2007 and 2006. Included above under mandatorily
redeemable preferred stock, net
    
    
    
    
    
    
    Common
stock, $0.001 par value, 40,000,000 shares authorized; 10,555,010 issued,
10,548,330 outstanding in 2007 and 6,030,122 issued, 6,023,442 outstanding
in 2006
    
    
    1,000
    
    
    
    1,000Treasury Stock at cost, 6,680 shares for 2007 and 2006
    
    
    
    
    
    
    Additional paid in capital
    
    
    33,418,000
    
    
    
    23,760,000Accumulated deficit
    
    
    (32,436,000
    )
    
    
    (43,402,000
    )Total stockholders equity (deficit)
    
    
    983,000
    
    
    
    (19,641,000
    )Total liabilities and stockholders equity (deficit)
    
    $
    69,486,000
    
    
    $
    57,202,000
   F-2




---



##### Table of Contents



GLOBAL EMPLOYMENT HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Years EndedDecember
    
    
    December
    
    
    December2007
    
    
    2006
    
    
    2005REVENUES, net
    
    $
    173,893,000
    
    
    $
    128,790,000
    
    
    $
    111,563,000COST OF SERVICES
    
    
    128,564,000
    
    
    
    92,071,000
    
    
    
    77,193,000GROSS PROFIT
    
    
    45,329,000
    
    
    
    36,719,000
    
    
    
    34,370,000OPERATING EXPENSESSelling, general and administrative
    
    
    37,432,000
    
    
    
    28,311,000
    
    
    
    45,478,000Depreciation and amortization
    
    
    2,563,000
    
    
    
    573,000
    
    
    
    729,000Total operating expenses
    
    
    39,995,000
    
    
    
    28,884,000
    
    
    
    46,207,000OPERATING INCOME (LOSS)
    
    
    5,334,000
    
    
    
    7,835,000
    
    
    
    (11,837,000
    )OTHER INCOME (EXPENSE)Interest expense:Other interest expense, net of interest income
    
    
    (9,191,000
    )
    
    
    (6,507,000
    )
    
    
    (256,000
    )Fair market
valuation of warrant and conversion liability
    
    
    15,156,000
    
    
    
    1,634,000
    
    
    
    Other income (expense)
    
    
    (422,000
    )
    
    
    (3,086,000
    )
    
    
    Total other income (expense), net
    
    
    5,543,000
    
    
    
    (7,959,000
    )
    
    
    (256,000
    )INCOME (LOSS) BEFORE INCOME TAXES
    
    
    10,877,000
    
    
    
    (124,000
    )
    
    
    (12,093,000
    )INCOME TAX (BENEFIT) EXPENSE
    
    
    (89,000
    )
    
    
    (1,433,000
    )
    
    
    3,632,000NET INCOME (LOSS)
    
    
    10,966,000
    
    
    
    1,309,000
    
    
    
    (15,725,000
    )Valuation of redeemable preferred stock
    
    
    
    
    
    
    
    
    
    
    (36,693,000
    )Dividend paid to Series C preferred stockholders ($0.92 per share)
    
    
    
    
    
    
    
    
    
    
    (6,300,000
    )Income (loss) available to common stockholders
    
    $
    10,966,000
    
    
    $
    1,309,000
    
    
    $
    (58,718,000
    )Basic earnings (loss) per share of common stock
    
    $
    1.67
    
    
    $
    0.23
    
    
    $
    (10.95
    )Weighted average number of basic common shares outstanding
    
    
    6,550,054
    
    
    
    5,744,742
    
    
    
    5,362,600Diluted earnings (loss) per share of common stock
    
    $
    1.04
    
    
    $
    0.23
    
    
    $
    (10.95
    )Weighted average number of diluted common shares outstanding
    
    
    15,586,644
    
    
    
    5,744,742
    
    
    
    5,362,600
   F-3




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##### Table of Contents



GLOBAL EMPLOYMENT HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (DEFICIT)
  Preferred stock
    
    
    Common stock
    
    
    Treasury stock
    
    
    Additional
    
    
    AccumulatedAmount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    paid in capital
    
    
    deficit
    
    
    TotalBalances at January 2, 2005
    
    $
    
    
    
    
    
    
    
    $
    1,000
    
    
    
    5,433,241
    
    
    $
    
    
    
    
    
    
    
    $
    33,219,000
    
    
    $
    (21,986,000
    )
    
    $
    11,234,000Cash dividends ($1.20 per restricted common share and $0.92 per Series C share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,000,000
    )
    
    
    (7,000,000
    )Issuance of restricted common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91,762
    
    
    
    
    
    
    
    
    
    
    
    2,000
    
    
    
    
    
    
    
    2,000Repurchase of restricted common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (533
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reclassification of redeemable restricted stock to a liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (659,785
    )
    
    
    
    
    
    
    
    
    
    
    23,261,000
    
    
    
    
    
    
    
    23,261,000Valuation of redeemable preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,693,000
    )
    
    
    
    
    
    
    (36,693,000
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,725,000
    )
    
    
    (15,725,000
    )Balances at January 1, 2006
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    4,864,685
    
    
    
    
    
    
    
    
    
    
    
    19,789,000
    
    
    
    (44,711,000
    )
    
    
    (24,921,000
    )Issuance of common stock to new investors
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    850,000
    
    
    
    
    
    
    
    
    
    
    
    4,250,000
    
    
    
    
    
    
    
    4,250,000Issuance of common stock to KRG Colorado, LLC for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    
    
    
    
    250,000Issuance of common stock to former shareholders of R&R Acquisition I, Inc.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    180,928
    
    
    
    
    
    
    
    
    
    
    
    905,000
    
    
    
    
    
    
    
    905,000Issuance of common stock to former debt holders of Global Employment Solutions, Inc.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85,315
    
    
    
    
    
    
    
    
    
    
    
    427,000
    
    
    
    
    
    
    
    427,000Warrant liability related to common stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,766,000
    )
    
    
    
    
    
    
    (2,766,000
    )Offering costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,049,000
    )
    
    
    
    
    
    
    (1,049,000
    )Extinguishment of related party debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,960,000
    
    
    
    
    
    
    
    1,960,000Issuance of preferred stock
    
    
    12,750,000
    
    
    
    12,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,750,000Reclassification of mandatorily redeemable preferred stock to liabilities
    
    
    (12,750,000
    )
    
    
    (12,750
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,750,000
    )Forfeiture of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,680
    )
    
    
    
    
    
    
    
    
    
    
    Repurchase of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (806
    )
    
    
    
    
    
    
    
    
    
    
    (6,000
    )
    
    
    
    
    
    
    (6,000
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,309,000
    
    
    
    1,309,000Balances at December 31, 2006
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    6,030,122
    
    
    
    
    
    
    
    (6,680
    )
    
    
    23,760,000
    
    
    
    (43,402,000
    )
    
    
    (19,641,000
    )Fractional shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    310
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock option 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 30, 2007
    
    $
    
    
    
    
    
    
    
    $
    1,000
    
    
    
    10,555,010
    
    
    $
    
    
    
    
    (6,680
    )
    
    $
    33,418,000
    
    
    $
    (32,436,000
    )
    
    $
    983,000
   F-4




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##### Table of Contents



GLOBAL EMPLOYMENT HOLDINGS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years endedDecember
    
    
    December
    
    
    December2007
    
    
    2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    10,966,000
    
    
    $
    1,309,000
    
    
    $
    (15,725,000
    )Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:Depreciation
    
    
    608,000
    
    
    
    540,000
    
    
    
    519,000Amortization of intangibles and other assets
    
    
    1,955,000
    
    
    
    33,000
    
    
    
    210,000Amortization of debt discount and issuance costs
    
    
    2,458,000
    
    
    
    1,951,000
    
    
    
    47,000Accretion of preferred stock
    
    
    1,134,000
    
    
    
    773,000
    
    
    
    Amortization of warrant discount on preferred stock
    
    
    1,441,000
    
    
    
    1,039,000
    
    
    
    Bad debt expense
    
    
    124,000
    
    
    
    394,000
    
    
    
    330,000Deferred taxes
    
    
    (324,000
    )
    
    
    (1,707,000
    )
    
    
    3,355,000Stock option and warrant conversion compensation expense
    
    
    2,355,000
    
    
    
    
    
    
    
    Fair market
valuation of warrant and conversion liability
    
    
    (15,156,000
    )
    
    
    (1,634,000
    )
    
    
    Loss (gain) on debt repurchase
    
    
    395,000
    
    
    
    (273,000
    )
    
    
    Restricted common stock valuation
    
    
    
    
    
    
    80,000
    
    
    
    21,152,000Issuance of common stock to KRG Colorado, LLC for services
    
    
    
    
    
    
    250,000
    
    
    
    Issuance of common stock to former shareholders of R&R Acquisition I, Inc.
    
    
    
    
    
    
    905,000
    
    
    
    Changes in operating assets and liabilities, net of effects of acquisition:Accounts receivable
    
    
    (1,528,000
    )
    
    
    (2,178,000
    )
    
    
    (5,364,000
    )Prepaid expenses and other
    
    
    60,000
    
    
    
    348,000
    
    
    
    (648,000
    )Accounts payable
    
    
    (332,000
    )
    
    
    109,000
    
    
    
    101,000Income taxes payable
    
    
    
    
    
    
    (241,000
    )
    
    
    (388,000
    )Accrued expenses and other liabilities
    
    
    2,240,000
    
    
    
    3,681,000
    
    
    
    1,478,000Net cash flows provided by operating activities
    
    
    6,396,000
    
    
    
    5,379,000
    
    
    
    5,067,000CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property and equipment
    
    
    (745,000
    )
    
    
    (686,000
    )
    
    
    (324,000
    )Acquisition of Career Blazers, net of cash and cash equivalents acquired
    
    
    (9,689,000
    )
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (10,434,000
    )
    
    
    (686,000
    )
    
    
    (324,000
    )CASH FLOWS FROM FINANCING ACTIVITIES:Bank overdrafts
    
    
    (956,000
    )
    
    
    (533,000
    )
    
    
    2,266,000Net (repayments) borrowings on revolving credit facility
    
    
    (2,314,000
    )
    
    
    9,049,000
    
    
    
    Borrowings on term note
    
    
    12,000,000
    
    
    
    5,000,000
    
    
    
    Repayments of term notes
    
    
    (6,375,000
    )
    
    
    (1,250,000
    )
    
    
    Proceeds from convertible debt
    
    
    
    
    
    
    30,000,000
    
    
    
    Repurchase of convertible debt
    
    
    
    
    
    
    (4,997,000
    )
    
    
    Debt and stock issuance costs
    
    
    (802,000
    )
    
    
    (2,986,000
    )
    
    
    (25,000
    )Reduction of KRG subordinated note
    
    
    
    
    
    
    (1,460,000
    )
    
    
    Reduction of shareholder subordinated debt
    
    
    
    
    
    
    (14,064,000
    )
    
    
    Issuance of preferred stock
    
    
    
    
    
    
    12,750,000
    
    
    
    Issuance of restricted common stock
    
    
    
    
    
    
    
    
    
    
    2,000Issuance of common stock
    
    
    2,757,000
    
    
    
    4,250,000
    
    
    
    Repurchase of common stock
    
    
    
    
    
    
    (6,000
    )
    
    
    Repurchase of preferred stock and restricted common stock
    
    
    
    
    
    
    (40,526,000
    )
    
    
    Cash dividend paid
    
    
    
    
    
    
    
    
    
    
    (7,000,000
    )Net cash flows provided by (used in) financing activities
    
    
    4,310,000
    
    
    
    (4,773,000
    )
    
    
    (4,757,000
    )Net increase (decrease) in cash and cash equivalents
    
    
    272,000
    
    
    
    (80,000
    )
    
    
    (14,000
    )Cash and cash equivalents, beginning of year
    
    
    58,000
    
    
    
    138,000
    
    
    
    152,000Cash and cash equivalents, end of year
    
    $
    330,000
    
    
    $
    58,000
    
    
    $
    138,000Supplemental Disclosure of Cash Flow InformationCash paid during the period for income taxes
    
    $
    278,000
    
    
    $
    548,000
    
    
    $
    665,000Cash paid during the period for interest
    
    $
    4,158,000
    
    
    $
    2,276,000
    
    
    $
    208,000Supplemental Disclosure of Non-Cash InformationLandlord leasehold incentives recorded as leasehold improvements
    
    $
    363,000
    
    
    $
    
    
    
    $
    Conversion of senior subordinated secured convertible notes for common stock
    
    $
    243,000
    
    
    $
    
    
    
    $
    
   F-5




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##### Table of Contents



Global Employment Holdings, Inc.
 
 Notes to Consolidated Financial Statements
 NOTE A  SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
 Organization
    Subsidiaries
   
    
    Temporary Placement Service, Inc. (TPS)
    
    
    
    Friendly Advanced Software Technology, Inc. (FAST)
    
    Main Line Personnel Services, Inc.
(Main Line)
    
    
    
    Excell Personnel Services Corporation (Excell)
  
    
    Southeastern Personnel Management, Inc.
    
    
    
    Southeastern Staffing III, Inc.
    
    Southeastern Staffing, Inc.
    
    
    
    Southeastern Staffing IV, Inc.
    
    Bay HR, Inc.
    
    
    
    Southeastern Staffing V, Inc.
    
    Southeastern Georgia HR, Inc.
    
    
    
    Southeastern Staffing VI, Inc.
    
    Southeastern Staffing II, Inc.
    
    
    
    Keystone Alliance, Inc.
 Consolidation of
Variable Interest Entities  an interpretation of ARB No. 51.
 Basis of Presentation
   F-6




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
 Fiscal Year
  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



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
 Financial Instruments
   2007
    
    2006
    
    2005Georgia
    
    
    37
    %
    
    
    52
    %
    
    
    48
    %Florida
    
    
    19
    %
    
    
    25
    %
    
    
    27
    %New York
    
    
    27
    %
    
    
    *
    
    
    
    *Pennsylvania
    
    
    *
    
    
    
    10
    %
    
    
    11
    %
 *
    
    - Less than 10%   Accounts Receivable and Allowance for Doubtful Accounts
      F-8




---



##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
 Property and Equipment
  
  Long-Lived Assets
 , Accounting for the Impairment or Disposal of Long-Lived Assets
 Goodwill and Identifiable Intangible Assets
 Goodwill and Other Intangible Assets
   Workers Compensation Insurance
   F-9




---



##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
   Advertising Expense
  Income Taxes
  Treasury Stock
  Stock-Based Compensation
 Share-Based Payments
  F-10




---



##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
 Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
 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
   Net Earnings (Loss) per Share of Common Stock
     Basic Net Income
    
    $
    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
    
    $
    16,179,000
  F-11




---



##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
 Weighted average number of basic common shares outstanding
    
    
    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
    
    
    15,586,644
 (a)
    
    As more fully explained in Note H, the Company currently has assumed payment of the
present value of interest under a redemptive event in cash. 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
 Disclosures about Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133. Accounting for Derivative Instruments and Hedging Activities,
 Business Combinations.
  F-12




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
 Noncontrolling Interests in Consolidated Financial
Statements-an amendment of ARB No. 151.
 The Fair Value Option for Financial Assets and
Financial LiabilitiesIncluding an amendment of FASB Statement No. 115. Fair Value Measurements.
 Fair Value Instruments.
  NOTE B  MASTER INVESTMENT AGREEMENT
   F-13




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
  Shares ofCash
    
    
    common stock inDistribution
    
    
    HoldingsRestricted stockholders
    
    $
    11,624,000
    
    
    
    1,924,889Series C preferred stockholders
    
    
    22,243,000
    
    
    
    869,426Series D preferred stockholders
    
    
    6,653,000
    
    
    
    2,070,371Senior Subordinated Notes
    
    
    13,593,000
    
    
    
    74,703Purchase Money Subordinated Notes
    
    
    471,000
    
    
    
    2,588KRG Subordinated Notes
    
    
    1,460,000
    
    
    
    8,023Total
    
    $
    56,044,000
    
    
    
    4,950,000
 NOTE C  ACCOUNTS RECEIVABLE
  December
    
    
    December2007
    
    
    2006Accounts receivable billed
    
    $
    14,588,000
    
    
    $
    12,653,000Accounts receivable unbilled
    
    
    11,955,000
    
    
    
    10,971,000Accounts receivable other
    
    
    1,717,000
    
    
    
    285,000Allowance for doubtful accounts
    
    
    (476,000
    )
    
    
    (431,000
    )Total
    
    $
    27,784,000
    
    
    $
    23,478,000
  2007
    
    
    2006
    
    
    2005Balance, beginning of year
    
    $
    431,000
    
    
    $
    536,000
    
    
    $
    469,000Additions charged to cost and expense
    
    
    124,000
    
    
    
    394,000
    
    
    
    330,000Acquisition of Career Blazers
    
    
    319,000
    
    
    
    
    
    
    
    Accounts receivable written-off, net of recoveries
    
    
    (398,000
    )
    
    
    (499,000
    )
    
    
    (263,000
    )Balance, end of year
    
    $
    476,000
    
    
    $
    431,000
    
    
    $
    536,000
 NOTE D  PROPERTY AND EQUIPMENT
  December
    
    
    December2007
    
    
    2006Office equipment
    
    $
    1,938,000
    
    
    $
    1,924,000Furniture and fixtures
    
    
    759,000
    
    
    
    685,000Computer software
    
    
    1,017,000
    
    
    
    957,000Leasehold improvements
    
    
    955,000
    
    
    
    451,0004,669,000
    
    
    
    4,017,000Less accumulated depreciation and amortization
    
    
    (2,629,000
    )
    
    
    (2,849,000
    )Total
    
    $
    2,040,000
    
    
    $
    1,168,000
   F-14




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
 NOTE E  OTHER ASSETS
  December
    
    
    December2007
    
    
    2006Debt issuance costs, net of accumulated amortization of
$857,000 and $428,000 for 2007 and 2006, respectively
    
    $
    1,391,000
    
    
    $
    1,126,000Deposits and other
    
    
    432,000
    
    
    
    130,000Total
    
    $
    1,823,000
    
    
    $
    1,256,000
  Years2008
    
    $
    477,0002009
    
    
    516,0002010
    
    
    325,0002011
    
    
    73,000Total
    
    $
    1,391,000
  NOTE F  ACCRUED LIABILITIES
  December
    
    
    December2007
    
    
    2006Accrued payroll and related benefits
    
    $
    17,444,000
    
    
    $
    13,884,000Accrued workers compensation losses and premiums
    
    
    2,584,000
    
    
    
    2,651,000Unearned benefit deductions
    
    
    1,086,000
    
    
    
    1,019,000Accrued rent and leasehold incentives
    
    
    904,000
    
    
    
    182,000Other
    
    
    2,320,000
    
    
    
    1,806,000Total
    
    $
    24,338,000
    
    
    $
    19,542,000
  F-15




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
 NOTE G  CREDIT AND SECURITY AGREEMENT
 CapitalSource agreement
        Election
    
    Rate
    
    
    AmountRevolving line of credit
    
    Prime + 2.25%
    
    
    9.50
    %
    
    $
    1,735,00090 day Libor + 3.50%
    
    
    8.56
    %
    
    $
    5,000,000Term Note
    
    90 day Libor + 5.00%
    
    
    10.06
    %
    
    $
    9,375,000
   F-16




---



##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
 2006 Wells Fargo agreement
        F-17




---



##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
 NOTE H  LONG-TERM DEBT
  December
    
    
    December2007
    
    
    2006CapitalSource term note
    
    $
    9,375,000
    
    
    $
    Senior subordinated secured convertible
notes, net of unamortized discount of
$7,222,000 and $9,019,000, respectively
    
    
    14,731,000
    
    
    
    12,934,000Senior subordinated secured convertible
notes due to related parties, net of
unamortized discount of $677,000 and
$946,000, respectively
    
    
    1,383,000
    
    
    
    1,357,000Wells Fargo term note
    
    
    
    
    
    
    3,750,00025,489,000
    
    
    
    18,041,000Less current portion
    
    
    (9,375,000
    )
    
    
    (2,903,000
    )Total long-term debt
    
    $
    16,114,000
    
    
    $
    15,138,000
 Convertible Notes
      Non Related Party
    
    
    Related Party
    
    
    Discount
    
    
    NetIssuance of senior
secured convertible
notes
    
    $
    30,000,000
    
    
    $
    
    
    
    $
    (14,099,000
    )
    
    $
    15,901,000Amortization of discount
    
    
    
    
    
    
    
    
    
    
    1,658,000
    
    
    
    1,658,000Repurchase of notes by
the Company
    
    
    (5,744,000
    )
    
    
    
    
    
    
    2,476,000
    
    
    
    (3,268,000
    )Purchase of notes by
related parties
    
    
    (2,303,000
    )
    
    
    2,303,000
    
    
    
    
    
    
    
    Balance at December 2006
    
    
    21,953,000
    
    
    
    2,303,000
    
    
    
    (9,965,000
    )
    
    
    14,291,000Amortization of discount
    
    
    
    
    
    
    
    
    
    
    1,981,000
    
    
    
    1,981,000Conversion of notes by
related parties
    
    
    
    
    
    
    (243,000
    )
    
    
    85,000
    
    
    
    (158,000
    )Balance at December 2007
    
    $
    21,953,000
    
    
    $
    2,060,000
    
    
    $
    (7,899,000
    )
    
    $
    16,114,000
  F-18




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
     Senior Subordinated Notes and Put Warrants
  Purchase Money Subordinated Notes
   F-19




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
 KRG Subordinated Notes
  NOTE I  INCOME TAXES
  2007Current
    
    
    Deferred
    
    
    TotalU.S. Federal
    
    $
    
    
    
    $
    (292,000
    )
    
    $
    (292,000
    )State and local
    
    
    235,000
    
    
    
    (32,000
    )
    
    
    203,000Total
    
    $
    235,000
    
    
    $
    (324,000
    )
    
    $
    (89,000
    )
 2006Current
    
    
    Deferred
    
    
    TotalU.S. Federal
    
    $
    
    
    
    $
    (1,521,000
    )
    
    $
    (1,521,000
    )State and local
    
    
    274,000
    
    
    
    (186,000
    )
    
    
    88,000Total
    
    $
    274,000
    
    
    $
    (1,707,000
    )
    
    $
    (1,433,000
    )
 2005Current
    
    
    Deferred
    
    
    TotalU.S. Federal
    
    $
    159,000
    
    
    $
    3,253,000
    
    
    $
    3,412,000State and local
    
    
    118,000
    
    
    
    102,000
    
    
    
    220,000Total
    
    $
    277,000
    
    
    $
    3,355,000
    
    
    $
    3,632,000
  2007
    
    
    2006
    
    
    2005Tax computed at federal statutory rate
    
    
    34.0
    %
    
    
    34.0
    %
    
    
    34.0
    %State tax, net of federal tax benefit
    
    
    1.4
    
    
    
    (146.3
    )
    
    
    (0.6
    )Mandatorily redeemable convertible
preferred stock accretion and
amortization
    
    
    8.1
    
    
    
    (498.2
    )
    
    
    Warrant valuation
    
    
    (47.5
    )
    
    
    1,101.6
    
    
    
    FICA tip credit, net
    
    
    (5.0
    )
    
    
    369.8
    
    
    
    2.8Restricted stock valuation
    
    
    
    
    
    
    107.8
    
    
    
    (58.5
    )Stock issued to former shareholders
of R&R Acquisition, Inc.
    
    
    
    
    
    
    (248.9
    )
    
    
    Stock compensation
    
    
    5.9
    
    
    
    348.0
    
    
    
    Permanent differences and other
    
    
    2.3
    
    
    
    87.8
    
    
    
    (7.7
    )Effective Rate
    
    
    (0.8
    )%
    
    
    1,155.6
    %
    
    
    (30.0
    )%
  F-20




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
  December
    
    
    DecemberDeferred tax asset (liability):
    
    2007
    
    
    2006Allowance for doubtful accounts
    
    $
    184,000
    
    
    $
    164,000Net operating loss carry forwards
    
    
    796,000
    
    
    
    1,157,000AMT and FICA tip tax credit
    
    
    41,000
    
    
    
    Other reserves
    
    
    788,000
    
    
    
    774,000Deferred tax assets  current
    
    
    1,809,000
    
    
    
    2,095,000AMT and FICA tip tax credit
    
    
    4,047,000
    
    
    
    3,282,000Net operating loss carry forwards
    
    
    1,988,000
    
    
    
    1,791,000Stock options
    
    
    184,000
    
    
    
    Amortization of goodwill and other intangibles
    
    
    3,094,000
    
    
    
    3,323,000Depreciation of property and equipment
    
    
    120,000
    
    
    
    144,000Valuation allowance
    
    
    (1,027,000
    )
    
    
    (744,000
    )Deferred tax assets  long-term
    
    
    8,406,000
    
    
    
    7,796,000Net deferred tax assets
    
    $
    10,215,000
    
    
    $
    9,891,000
    NOTE J  STOCKHOLDERS EQUITY
    F-21




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
   Series A Mandatorily Redeemable Convertible Preferred Stock
     F-22




---



##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
  Principal
    
    
    Discount
    
    
    NetBalance at issuance on March 31, 2006
    
    $
    12,750,000
    
    
    $
    (12,549,000
    )
    
    $
    201,0008% accretion
    
    
    773,000
    
    
    
    
    
    
    
    773,000Amortization of discount
    
    
    
    
    
    
    1,039,000
    
    
    
    1,039,000Balance at December 2006
    
    
    13,523,000
    
    
    
    (11,510,000
    )
    
    
    2,013,0008%/9.5% accretion
    
    
    1,134,000
    
    
    
    
    
    
    
    1,134,000Amortization of discount
    
    
    
    
    
    
    1,441,000
    
    
    
    1,441,000Balance at December 2007
    
    $
    14,657,000
    
    
    $
    (10,069,000
    )
    
    $
    4,588,000
 Warrants to purchase common stock
    Number of
    
    
    Number ofshares
    
    
    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-23




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
   Compensation
  Series C and D preferred stock
   Classification and Measurement of
Redeemable Securities.
  Stock Options
    F-24




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
      
    
    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-25




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
   Wgt. Avg.Wgt. Avg.
    
    
    Remaining
    
    
    Wgt. Avg.
    
    
    AggregateExercise
    
    
    Contractual
    
    
    Grant Date
    
    
    IntrinsicStock Options
    
    
    Price
    
    
    Life (years)
    
    
    Fair Value
    
    
    ValueAs of January 2007Outstanding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Nonvested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Period ActivityIssued
    
    
    1,557,361
    
    
    $
    3.05
    
    
    
    
    
    
    $
    2.60
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    57,821
    
    
    $
    5.00
    
    
    
    
    
    
    $
    2.62
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    As of December 2007Outstanding
    
    
    1,499,540
    
    
    $
    2.97
    
    
    
    9.32
    
    
    $
    2.58
    
    
    $
    28,500Vested
    
    
    273,329
    
    
    $
    3.00
    
    
    
    9.13
    
    
    $
    3.04
    
    
    
    Nonvested
    
    
    1,226,211
    
    
    $
    2.96
    
    
    
    9.36
    
    
    $
    2.48
    
    
    $
    28,500
 Outstanding:
 Wgt. Avg.Wgt. Avg.
    
    
    RemainingStock Options
    
    
    Exercise
    
    
    ContractualRange of Exercise Prices
    
    Outstanding
    
    
    Price
    
    
    Life (years)$1.50 - $3.00
    
    
    1,499,540
    
    
    $
    2.97
    
    
    
    9.32
 Exercisable:
 Wgt. Avg.Wgt. Avg.
    
    
    Remaining
    

    
    AggregateStock Options
    
    
    Exercise
    
    
    Contractual
    

    
    IntrinsicRange of Exercise Prices
    
    Exercisable
    
    
    Price
    
    

Life (years)
    

    
    Value$3.00
    
    
    273,329
    
    
    $
    3.00
    
    
    
    9.13
    
    

    
    
 Assumptions:
 2007Expected Volatility
    
    52.7% - 55.2%Weighted-Average Volatility
    
    53.60%Expected Dividends
    
    0%Expected Term (years)
    
    5.6 - 6.0Risk-Free Rate
    
    4.29%
 Total intrinsic value of options exercised:
    
    $
    Total fair value of shares vested:
    
    $
    832,000Unrecognized compensation cost related to nonvested awards:
    
    $
    2,388,000Weighted-average period over which nonvested awards are expected to be recognized:
    
    1.13 years
  F-26




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
  Restricted Stock Plan
    Dividends
  NOTE K  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



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
     2007
    
    
    2006Average expected volatility
    
    55.1
    %
    
    59.7
    %Contractual term ranged from
    
    3.25 to 6.75 years
    
    
    4.25 to 7.0 yearsRisk free interest rate
    
    4.18
    %
    
    4.76
    %Expected dividend rate
    
    -0-
    
    
    -0-
 NOTE L  COMMITMENTS AND CONTINGENCIES
 Contingencies
   Operating Leases
   Years2008
    
    $
    2,020,0002009
    
    
    1,643,0002010
    
    
    1,228,0002011
    
    
    895,0002012 and thereafter
    
    
    4,260,000Total minimum lease payments
    
    
    10,046,000Less Sublease rentals
    
    
    (205,000
    )Total
    
    $
    9,841,000
  F-28




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
  NOTE M  EMPLOYEE BENEFIT PLANS
    NOTE N  RELATED PARTIES
      F-29




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
 NOTE O  SEGMENT INFORMATION
   2007
    
    
    2006
    
    
    2005Staffing revenues
    
    $
    139,877,000
    
    
    $
    95,135,000
    
    
    $
    81,175,000PEO revenues
    
    $
    34,016,000
    
    
    $
    33,609,000
    
    
    $
    30,388,000Total company revenues
    
    $
    173,893,000
    
    
    $
    128,790,000
    
    
    $
    111,563,000Staffing depreciation
    
    $
    231,000
    
    
    $
    116,000
    
    
    $
    124,000PEO depreciation
    
    $
    162,000
    
    
    $
    136,000
    
    
    $
    106,000Total Company depreciation
    
    $
    608,000
    
    
    $
    540,000
    
    
    $
    519,000Staffing amortization
    
    $
    1,955,000
    
    
    $
    
    
    
    $
    PEO amortization
    
    $
    
    
    
    $
    18,000
    
    
    $
    127,000Total Company amortization
    
    $
    1,955,000
    
    
    $
    33,000
    
    
    $
    210,000Staffing income before income taxes
    
    $
    7,109,000
    
    
    $
    7,175,000
    
    
    $
    7,881,000PEO income before income taxes
    
    $
    6,650,000
    
    
    $
    5,742,000
    
    
    $
    4,563,000Total company income (loss) before
income taxes
    
    $
    10,877,000
    
    
    $
    (124,000
    )
    
    $
    (12,093,000
    )Staffing assets
    
    $
    43,874,000
    
    
    $
    28,828,000
    
    
    $
    23,506,000PEO assets
    
    $
    33,684,000
    
    
    $
    31,618,000
    
    
    $
    26,612,000Total company assets
    
    $
    69,486,000
    
    
    $
    57,202,000
    
    
    $
    52,920,000Staffing goodwill and intangibles
    
    $
    12,860,000
    
    
    $
    6,658,000
    
    
    $
    6,658,000PEO goodwill and intangibles
    
    $
    12,090,000
    
    
    $
    12,090,000
    
    
    $
    12,090,000Total goodwill and intangibles
    
    $
    24,950,000
    
    
    $
    18,748,000
    
    
    $
    18,748,000Staffing capital expenditures
    
    $
    420,000
    
    
    $
    220,000
    
    
    $
    103,000PEO capital expenditures
    
    $
    99,000
    
    
    $
    146,000
    
    
    $
    134,000Total capital expenditures
    
    $
    745,000
    
    
    $
    686,000
    
    
    $
    324,000
  F-30




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
 NOTE P  QUARTERLY FINANCIAL INFORMATION (Unaudited)
  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) available to common shareholders
    
    $
    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
    )
 2006 Quarters
    
    1st
    
    
    2nd
    
    
    3rd
    
    
    4thRevenues, net
    
    $
    31,208
    
    
    $
    33,411
    
    
    $
    33,287
    
    
    $
    30,884Gross profit
    
    $
    8,844
    
    
    $
    9,710
    
    
    $
    9,203
    
    
    $
    8,962Net income (loss)
    
    $
    (1,691
    )
    
    $
    1,330
    
    
    $
    1,085
    
    
    $
    585Income (loss) available to common shareholders
    
    $
    (1,691
    )
    
    $
    1,330
    
    
    $
    1,085
    
    
    $
    585Income (loss) per share:Basic
    
    $
    (0.35
    )
    
    $
    0.22
    
    
    $
    0.18
    
    
    $
    0.10Diluted
    
    $
    (0.35
    )
    
    $
    0.21
    
    
    $
    0.18
    
    
    $
    0.10
   NOTE Q  ACQUISITION OF CAREER BLAZERS (Unaudited)
     F-31




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
  Current assets
    
    $
    2,979,000Property and equipment, net
    
    
    72,000Other assets
    
    
    19,000Intangible assets
    
    
    7,418,000Goodwill
    
    
    739,000Total assets acquired
    
    
    11,227,000Current liabilities
    
    
    1,538,000Long-term debt
    
    
    Total liabilities assumed
    
    
    1,538,000Net assets acquired
    
    $
    9,689,000
 
 AmortizationIdentifiable intangible assets
    
    Allocation
    
    
    periodTrademark and trade name
    
    $
    2,292,000
    
    
    3 yearsNon-compete agreements
    
    
    635,000
    
    
    1 yearTemporary employee data base
    
    
    49,000
    
    
    3 monthsCustomer relationships
    
    
    4,442,000
    
    
    5 yearsTotal intangible assets
    
    $
    7,418,000
   Years2008
    
    $
    1,758,0002009
    
    
    1,652,0002010
    
    
    1,016,0002011
    
    
    888,0002012
    
    
    149,000Total
    
    $
    5,463,000
  Introduction to the Unaudited Pro Forma Condensed Combining Statement of Operations
     F-32




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
 Notes to the Unaudited Pro Forma Condensed Combining Statement of Operations
 DESCRIPTION OF TRANSACTION AND BASIS OF PRESENTATION
  PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS(a)
    
    To reclassify insurance expense classified as SG&A by Holdings.(b)
    
    To eliminate an agreement with a third party service provider for back
office functions that was terminated as Holdings now performs the activities
covered by the previous agreement.(c)
    
    To record interest expense on additional borrowings on the term note and
revolving line of credit at a weighted average rate of approximately 9.6%.(d)
    
    To eliminate the expense related to the repayment of debt which would have
been recorded in the previous fiscal year.(e)
    
    To record the net tax expense of Career Blazers pre tax income and the pro
forma adjustments at an effective tax rate of approximately 38%.(f)
    
    To record amortization of identifiable intangible assets.(g)
    
    To eliminate the deferred tax benefit of Career Blazers.(h)
    
    To eliminate parent allocation of expense for services which were terminated.(i)
    
    To eliminate interest expense of Career Blazers.
  F-33




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
   Career BlazersGlobal
    
    
    PersonnelEmployment
    
    
    Services, Inc.
    
    
    
    
    
    
    Pro FormaHoldings, Inc.
    
    
    Two months
    
    
    
    
    
    
    CombinedYear ended
    
    
    ended
    
    
    
    
    
    
    Year endedDecember
    
    
    February
    
    
    Pro Forma
    
    
    December2007
    
    
    2007
    
    
    adjustments
    
    
    2007REVENUES, net
    
    $
    173,893,000
    
    
    $
    8,205,000
    
    
    $
    
    
    
    $
    182,098,000COST OF SERVICES
    
    
    128,564,000
    
    
    
    6,891,000
    
    
    
    (12,000
    ) (a)
    
    
    135,443,000GROSS PROFIT
    
    
    45,329,000
    
    
    
    1,314,000
    
    
    
    12,000
    
    
    
    46,655,000OPERATING EXPENSESSelling, general and administrative
    
    
    37,432,000
    
    
    
    1,122,000
    
    
    
    12,000
    (a)
    
    
    38,484,000(82,000
    ) (b)Depreciation and amortization
    
    
    2,563,000
    
    
    
    6,000
    
    
    
    381,000
    (f)
    
    
    2,950,000Total operating expenses
    
    
    39,995,000
    
    
    
    1,128,000
    
    
    
    311,000
    
    
    
    41,434,000OPERATING INCOME
    
    
    5,334,000
    
    
    
    186,000
    
    
    
    (299,000
    )
    
    
    5,221,000OTHER INCOME (EXPENSE)Interest expense:Other interest expense, net of interest income
    
    
    (9,191,000
    )
    
    
    (2,000
    )
    
    
    (167,000
    ) (c)
    
    
    (9,360,000
    )Fair market
valuation of warrant and conversion liability
    
    
    15,156,000
    
    
    
    
    
    
    
    
    
    
    
    15,156,000Other income (expense)
    
    
    (422,000
    )
    
    
    3,000
    
    
    
    395,000
    (d)
    
    
    (24,000
    )Total other income (expense)
    
    
    5,543,000
    
    
    
    1,000
    
    
    
    228,000
    
    
    
    5,772,000INCOME BEFORE INCOME TAXES
    
    
    10,877,000
    
    
    
    187,000
    
    
    
    (71,000
    )
    
    
    10,993,000INCOME TAX (BENEFIT) EXPENSE
    
    
    (89,000
    )
    
    
    
    
    
    
    44,000
    (e)
    
    
    (45,000
    )NET INCOME
    
    $
    10,966,000
    
    
    $
    187,000
    
    
    $
    (115,000
    )
    
    $
    11,038,000Basic earnings per share of common stock
    
    $
    1.67
    
    
    
    
    
    
    
    
    
    
    $
    1.69Weighted average number of basic common shares
outstanding
    
    
    6,550,054
    
    
    
    
    
    
    
    
    
    
    
    6,550,054Diluted earnings per share of common stock
    
    $
    1.04
    
    
    
    
    
    
    
    
    
    
    $
    1.04Weighted average number of diluted common shares
outstanding
    
    
    15,586,644
    
    
    
    
    
    
    
    
    
    
    
    15,586,644
  F-34




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##### Table of Contents



Global Employment Holdings, Inc.
Notes to Consolidated Financial Statements
   Global
    
    
    Career BlazersEmployment
    
    
    PersonnelHoldings, Inc.
    
    
    Services, Inc.
    
    
    
    
    
    
    Pro Forma CombinedYear ended
    
    
    Pro Forma
    
    
    Year endedDecember 2006
    
    
    adjustments
    
    
    December 2006REVENUES, net
    
    $
    128,790,000
    
    
    $
    54,210,000
    
    
    $
    
    
    
    $
    183,000,000COST OF SERVICES
    
    
    92,071,000
    
    
    
    44,078,000
    
    
    
    
    
    
    
    136,149,000GROSS PROFIT
    
    
    36,719,000
    
    
    
    10,132,000
    
    
    
    
    
    
    
    46,851,000OPERATING EXPENSESSelling, general and administrative
    
    
    28,311,000
    
    
    
    7,738,000
    
    
    
    (641,000
    ) (b)
    
    
    34,918,000
    
    
    
    
    
    
    
    (490,000
    ) (h)
    
    
    Depreciation and amortization
    
    
    573,000
    
    
    
    148,000
    
    
    
    2,336,000
    (f)
    
    
    3,057,000Total operating expenses
    
    
    28,884,000
    
    
    
    7,886,000
    
    
    
    1,205,000
    
    
    
    37,975,000OPERATING INCOME
    
    
    7,835,000
    
    
    
    2,246,000
    
    
    
    (1,205,000
    )
    
    
    8,876,000OTHER INCOME (EXPENSE)Interest expense:Other interest expense, net of interest income
    
    
    (6,507,000
    )
    
    
    (2,590,000
    )
    
    
    (1,124,000
    ) (c)
    
    
    (7,631,000
    )2,590,000
    (i)Fair market
valuation of warrant and conversion liability
    
    
    1,634,000
    
    
    
    
    
    
    
    
    
    
    
    1,634,000Other income (expense)
    
    
    (3,086,000
    )
    
    
    
    
    
    
    
    
    
    
    (3,086,000
    )Total other income (expense)
    
    
    (7,959,000
    )
    
    
    (2,590,000
    )
    
    
    1,466,000
    
    
    
    (9,083,000
    )INCOME (LOSS) BEFORE INCOME TAXES
    
    
    (124,000
    )
    
    
    (344,000
    )
    
    
    261,000
    
    
    
    (207,000
    )INCOME TAX (BENEFIT) EXPENSE
    
    
    (1,433,000
    )
    
    
    (1,292,000
    )
    
    
    99,000
    (e)
    
    
    (1,562,000
    )1,064,000
    (g)NET INCOME
    
    $
    1,309,000
    
    
    $
    948,000
    
    
    $
    (902,000
    )
    
    $
    1,355,000Basic and diluted earnings per share of common stock
    
    $
    0.23
    
    
    
    
    
    
    
    
    
    
    $
    0.24Weighted average number of basic and diluted
common shares outstanding
    
    
    5,744,742
    
    
    
    
    
    
    
    
    
    
    
    5,744,742
  F-35




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##### Table of Contents



SIGNATURES
  Global Employment Holdings, Inc.
RegistrantBy:
    /s/ Howard BrillApril 15, 2008
    
    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/s/ Jay Wells

Jay Wells
    
    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.
    
    Filed herewith4.1
    
    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.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




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##### Table of Contents



Exhibit #
    
    Description
    
    Reference10.10
    
    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).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.
    
    Filed herewith.