UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended February 28, 2010o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ______________ to _____________
 
 Commission File Number  000-50643
  
 GLOBAL ENTERTAINMENT CORPORATION
 (Exact name of registrant as specified in its charter)
 
 Nevada
86-0933274(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)1600 N Desert Drive, Suite 301, Tempe, AZ
85281(Address of principal executive offices)
(Zip Code)
 
 (480) 994-0772
 (Registrant’s telephone number, including area code )
   (Former name, former address and former fiscal year, if changed since last report)
 
 Indicate by check mark if the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o
 
 Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o No o
 
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
  Large accelerated filer o
Accelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company x
 
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes o  No x


At April 12, 2010, 6,646,062 shares of Global Entertainment Corporation common stock were outstanding.
  
  GLOBAL ENTERTAINMENT CORPORATION
 INDEX
 REPORT ON FORM 10-Q
 FOR THE QUARTER ENDED FEBRUARY 28, 2010
 
 
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements
3Condensed Consolidated Balance Sheets – As of February 28, 2010 (Unaudited) and May 31, 2009
3Condensed Consolidated Statements of Operations (Unaudited) – Three and Nine Months EndedFebruary 28, 2010 and 2009
4Condensed Consolidated Statements of Changes in Equity – Year Ended May 31, 2009and Nine Months Ended February 28, 2010 (Unaudited)
5Condensed Consolidated Statements of Cash Flows (Unaudited) – Nine Months EndedFebruary 28, 2010 and 2009
6Notes to Condensed Consolidated Financial Statements
7Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
20Item 3. Quantitative and Qualitative Disclosures about Market Risk
27Item 4T. Controls and Procedures
27PART II. OTHER INFORMATIONItem 1. Legal Proceedings
28Item 1A. Risk Factors
28Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
28Item 3. Defaults upon Senior Securities
28Item 4. Submission of Matters to a Vote of Security Holders
28Item 5. Other Information
28Item 6. Exhibits
28
  2
  
 PART I – FINANCIAL INFORMATION
 
 Item 1.  Financial Statements
 
 GLOBAL ENTERTAINMENT CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS
 As of February 28, 2010 (Unaudited) and May 31, 2009
 (in thousands, except share and per share amounts)
 
 
 February 28,


May 31,2010


2009ASSETSCurrent Assets:Cash and cash equivalents

$
585


$
1,111Accounts receivable, net of $5 allowance at May 31, 2009


2,158



2,220Prepaid expenses and other assets


330



281Total Current Assets


3,073



3,612Property and equipment, net


114



708Accounts receivable


736



215Goodwill


519



519Other assets


119



114Total Assets

$
4,561


$
5,168LIABILITIES AND EQUITYCurrent Liabilities:Accounts payable

$
1,022


$
1,132Accrued liabilities


596



588Deferred revenues


316



64Note payable - current portion


97



111Total Current Liabilities


2,031



1,895Deferred income tax liability, net


5



5Note payable - long-term portion


—



69Total Liabilities


2,036



1,969Commitments and ContingenciesEquity:Global Entertainment Corporation Equity -Preferred stock - $.001 par value; 10,000,000 shares authorized;no shares issued or outstanding


—



—Common stock - $.001 par value; 50,000,000 shares authorized;6,646,062 and 6,633,112 shares issued and outstanding as ofFebruary 28, 2010 and May 31, 2009


7



7Paid-in capital


10,984



10,961Retained deficit


(8,510
)


(7,788
)Total Global Entertainment Corporation Equity


2,481



3,180Noncontrolling interest


44



19Total Equity


2,525



3,199Total Liabilities and Equity

$
4,561


$
5,168
 
 
 
 
 The accompanying notes are an integral part of the condensed consolidated financial statements.
  3
  GLOBAL ENTERTAINMENT CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Three and Nine Months Ended February 28, 2010 and 2009
 (Unaudited) (in thousands, except share and per share amounts)
 
 
 Three Months Ended


Nine Months EndedFebruary 28,


February 28,2010


2009


2010


2009Revenues:Project development fees

$
—


$
100


$
152


$
578Project management fees


203



247



1,182



1,473Facility management fees


1,116



1,067



3,554



2,240Ticket service fees


268



766



781



2,081Food service revenue


909



282



1,233



412Advertising sales commissions


74



115



265



493License fees - league dues and other


626



517



1,474



1,306License fees - initial and transfer


—



443



100



443Other revenue


29



—



188



101Total Revenues


3,225



3,537



8,929



9,127Operating Costs:Cost of revenues


1,962



1,939



5,041



4,337General and administrative costs


1,671



1,681



4,498



4,897Total Operating Costs


3,633



3,620



9,539



9,234Operating Loss


(408
)


(83
)


(610
)


(107
)Other Income (Expense):Interest income


4



6



5



18Interest expense


(2
)


(47
)


(7
)


(408
)Loss on investment in PVEC, LLC


(85
)


—



(85
)


—Total Other Expense


(83
)


(41
)


(87
)


(390
)Loss from Continuing Operations, before tax


(491
)


(124
)


(697
)


(497
)Income Tax Benefit


-



—



—



—Loss from Continuing Operations, net of tax


(491
)


(124
)


(697
)


(497
)Loss from Discontinued Operations, net of tax


-



—



—



(48
)Net Loss


(491
)


(124
)


(697
)


(545
)Net Loss, attributable to noncontrolling interest


8



18



25



13Net Loss, attributable to Global

$
(499
)

$
(142
)

$
(722
)

$
(558
)Loss Per Share - basic and diluted:Loss from continuing operations, attributable to Global common shareholders

$
(0.08
)

$
(0.02
)

$
(0.11
)

$
(0.08
)Loss from discontinued operations, attributable to Global common shareholders


—



—



—



—Net Loss, attributable to Global common shareholders

$
(0.08
)

$
(0.02
)

$
(0.11
)

$
(0.08
)Weighted Average Number of Shares Outstanding - basic and diluted


6,646,062



6,627,112



6,639,394



6,626,072Amounts attributable to Global common shareholdersLoss from continuing operations, net of tax, attributable to Global common shareholders

$
(499
)

$
(142
)

$
(722
)

$
(510
)Loss from discontinued operations, net of tax, attributable to Global common shareholders


—



—



—



(48
)Net loss, attributable to Global common shareholders

$
(499
)

$
(142
)

$
(722
)

$
(558
)
 
 
 
 
 The accompanying notes are an integral part of the condensed consolidated financial statements.
  4
  GLOBAL ENTERTAINMENT CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 For the Year Ended May 31, 2009 and the Nine Months Ended February 28, 2010
 (Unaudited)
 (in thousands, except share amounts)
 
 
 Global Entertainment Corporation


Non-Common Stock


Paid-in


Retained





Controlling


TotalShares


Amount


Capital


Deficit


Total


Interest


EquityBalance at May 31, 2008


6,625,114


$
7


$
10,930


$
(7,815
)

$
3,122


$
(38
)

$
3,084Issuance of restricted stock


8,000



—



—



—



—



—



—Stock-based compensation - restricted stock


-



—



31



—



31



—



31Other


(2
)


—



—



—



—



—



—Net income


—



—



—



27



27



57



84Balance at May 31, 2009


6,633,112



7



10,961



(7,788
)


3,180



19



3,199Stock-based compensation - restricted stock


-



—



23



—



23



—



23Issuance of restricted stock


12,950



—



—



—



—



—



—Net loss


—



—



—



(722
)


(722
)


25



(697
)Balance at February 28, 2010


6,646,062


$
7


$
10,984


$
(8,510
)

$
2,481


$
44


$
2,525
 
 
 
 
 The accompanying notes are an integral part of the condensed consolidated financial statements.
  5
  GLOBAL ENTERTAINMENT CORPORATION AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Nine Months Ended February 28, 2010 and 2009
 (Unaudited) (in thousands)
 
 
 2010


2009Cash flows from operating activities:Net loss, attributable to Global

$
(722
)

$
(558
)Adjustments to reconcile net loss to net cash used in operating activities-Depreciation


63



127Provision for doubtful accounts


23



270Noncontrolling interest


25



13Stock-based compensation - restricted stock


23



23Loss on investment in PVEC, LLC


85



—Gain on sale of property and equipment


(10
)


—Unbilled earnings on Wenatchee project


—



(555
)Discontinued operations and related impairment charges


—



5Changes in assets and liabilities, net of businesses disposed-Accounts receivable


(482
)


(810
)Prepaid expenses and other assets


(56
)


(473
)Accounts payable


(41
)


(944
)Accrued liabilities


8



179Deferred revenues


252



214Net cash used in operating activities


(832
)


(2,509
)Cash flows from investing activities:Proceeds from sale of property and equipment


586



—Purchase of property and equipment


(112
)


(674
)Investment in PVEC, LLC


(85
)


—Proceeds from sale of Wenatchee project


—



52,400Investment in Wenatchee project


—



(23,023
)Deposit of restricted cash


—



(1,250
)Release of restricted cash


—



1,250Proceeds from disposition of Our Old Car Company assets, net of expenses


—



1,790Net cash provided by investing activities


389



30,493Cash flows from financing activities:Notes payable proceeds


—



22,031Notes payable payments


(83
)


(49,225
)Net cash used in financing activities


(83
)


(27,194
)Net increase (decrease) in cash and cash equivalents


(526
)


790Cash and cash equivalents, beginning of period


1,111



443Cash and cash equivalents, end of period

$
585


$
1,233Supplemental Disclosures:Interest  paid

$
7


$
408Income taxes paid (received)

$
—


$
—
 
 
 
 
 The accompanying notes are an integral part of the condensed consolidated financial statements.
  6
  GLOBAL ENTERTAINMENT CORPORATION AND SUBSIDIARIES
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 
 
 Basis of Presentation and Use of Estimates
 
 Description of the Company
 
 Global Entertainment Corporation (referred to in this report as “we,” “us,” “Global”) is an integrated event and entertainment company that is engaged, through its wholly owned subsidiaries, in sports management, multipurpose events center development, facility and venue management and marketing, and venue ticketing.  We are primarily focused on projects located in mid-size communities.
 
 Our current principal operating subsidiaries are Western Professional Hockey League, Inc., Global Properties I, International Coliseums Company, Inc., Global Entertainment Marketing Systems, Inc., Global Entertainment Ticketing, Encore Facility Management and GEC Food Service, LLC.
 
 We, through our wholly owned subsidiary, Western Professional Hockey League, Inc. (WPHL), operate the Western Professional Hockey League, a minor league professional hockey organization, and are the licensor of the independently owned hockey teams which participate in the league.  WPHL has entered into a joint operating agreement with the Central Hockey League, Inc. (CHL, Inc.).  The effect of the joint operating agreement is that the two leagues had their respective teams join together and operate under the “Central Hockey League” name (as the League).  The terms of the joint operating agreement define how the League will operate.
 
 The League currently consists of seventeen teams, (fifteen participating in the 2009-2010 season) located in mid-market communities throughout the Central, Western and Southern regions of the United States. Three teams, each of which was an original CHL, Inc. team, continue to operate under a sanction agreement that requires direct payments to the League pursuant to the terms and conditions of the original CHL, Inc. agreements.
 
 Global Properties I (GPI) provides services in targeted mid-sized communities across the United States related to the development of multipurpose events centers.  GPI's development of multipurpose events centers promotes the development of the League by assisting potential licensees in securing quality venues in which to play minor professional hockey league games.
 
 International Coliseums Company, Inc. (ICC) manages the construction of multipurpose events centers in mid-market communities.
 
 Global Entertainment Marketing Systems, Inc. (GEMS), promotes, markets, and sells various services related to multipurpose entertainment facilities, including all contractually obligated income (COI) sources such as facility naming rights, luxury suite sales, premium seat license sales, and facility sponsorship agreements.
 
 Global Entertainment Ticketing (GetTix) provides ticketing services for the multipurpose events centers developed by GPI, existing League licensees, and various other entertainment venues, theaters, concert halls, and other facilities and event coordinators.  GetTix provides a full ticketing solution by way of box office, outlet, phone, internet and print-at-home service that utilizes distribution outlets in each market.  GetTix uses third-party, state-of-the-art software to deliver ticketing capabilities that include database flexibility, easy season and group options, financial reporting and marketing resources.
 
 Encore Facility Management (Encore) provides a full complement of multipurpose events center operational services.  These services include providing administrative oversight in the areas of facility/property management and finance, event bookings, and food and beverage.  Encore is currently involved with facility management of multipurpose events centers developed by GPI.  Facility management operations are conducted under separate limited liability companies.
  7
  GEC Food Service, LLC (formerly Global Food Service, LLC) (Food Service), formed in fiscal 2009, manages facility food service operations.
 
 On August 1, 2008, we sold substantially all of the assets of Our Old Car Company (formerly known as Cragar Industries, Inc.).
 
 Basis of Presentation
 
 The accompanying condensed consolidated financial statements include the accounts of Global Entertainment Corporation and its wholly owned subsidiaries, WPHL, GPI, ICC, GEMS, GetTix, Encore, Food Service and Our Old Car Company (formerly known as Cragar Industries, Inc.), as well as the limited liability companies formed for facility management.  Intercompany balances and transactions have been eliminated in consolidation.
 
 The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q.  Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included.
 
 Operating results for the three and nine month periods ended February 28, 2010, are not necessarily indicative of the results that may be expected for the year ending May 31, 2010, or for any other period.
 
 For further information, refer to the consolidated financial statements and footnotes included in our report on Form 10-K for the year ended May 31, 2009.
 
 Certain reclassifications are reflected in prior periods for the purpose of consistent presentation.
 
 Use of Estimates
 
 Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States.  Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.  Actual results may vary from the estimates that were assumed in preparing the condensed consolidated financial statements.
 
 We believe our critical accounting policies and material estimates include, but are not limited to, revenue recognition, the allowance for doubtful accounts, arena guarantees and other contingencies, the carrying value of goodwill, the realization of deferred income tax assets, the fair value of a liability related to the secondary guarantee related to a worker’s compensation program, and the allocation of expenses and division of profit or loss relating to the joint operating agreement.  Due to the uncertainties inherent in the estimation process and the significance of these items, it is at least reasonably possible that the estimates in connection with these items could be materially revised within the next year.
 
 Accounting Developments
 
 In November 2007, the EITF modified GAAP to prohibit application of the equity method of accounting to activities performed outside of a separate legal entity and requires revenues and costs incurred with third parties in connection with collaborative agreements be presented gross or net based on other applicable accounting literature.  Payments to or from collaborators should be presented in an income statement based on the nature of the arrangement, whether the payments are within the scope of other accounting literature, and certain other criteria.  We adopted these standards effective June 1, 2009, and applied the standards to our accounting for CHL, Inc.’s interest in the League effective June 1, 2009.  Based on the nature of our arrangement with CHL, Inc., its interest is accounted for by analogy to the standards for the accounting and reporting of noncontrolling interests.
  8
  In December 2007, the FASB modified GAAP by establishing accounting and reporting standards for noncontrolling interests in a subsidiary and for the deconsolidation of a subsidiary.  The standards also provide income statement presentation guidance and require expanded disclosures.  We adopted these standards effective June 1, 2009, prospectively, except for the presentation and disclosure requirements which have been applied retrospectively for all periods presented.  We account for CHL, Inc.’s interest in the League in accordance with these new standards effective June 1, 2009.  The impact on our financial position and results of operations was as follows:
 
 ·
CHL, Inc.’s share of the results of League operations is reflected separately on the face of the consolidated statements of operations below net income (loss) rather than in other income (expense).
 
 ·
CHL, Inc.’s undistributed earnings (loss) in the League is presented as noncontrolling interest in the equity section of the consolidated balance sheets, for all periods presented.  Prior to adoption of these standards, CHL, Inc.’s undistributed earnings (loss) in the League had been presented in the consolidated balance sheets as a liability as of May 31, 2009, and an asset as of February 28, 2009.
 
 In September 2009, the EITF issued a consensus which revises the standards for recognizing revenue on arrangements with multiple deliverables.  Before evaluating how to recognize revenue for transactions with multiple revenue generating activities, an entity should identify all the deliverables in the arrangement and, if there are multiple deliverables, evaluate each deliverable to determine the unit of accounting and whether it should be treated separately or in combination.  The consensus removes certain thresholds for separation, provides criteria for allocation of revenue amongst deliverables and expands disclosure requirements.  The standards will be effective June 1, 2011, for our fiscal year 2012, unless we elect to early adopt the standards effective June 1, 2009 or June 1, 2010.  We have not yet evaluated the impact these standards will have on our financial position or results of operations.  We have not determined if we will early adopt the standards.
 
 In June 2009, the FASB changed the consolidation rules as they relate to variable interest entities.  The standards change the model for determining who should consolidate a variable interest entity, and require ongoing reassessment of whether we should consolidate a variable interest entity.  The standards will be effective June 1, 2010, for our fiscal year 2011.  We have not yet evaluated the impact these standards will have on our financial position or results of operations.
 
 
 Earnings (Loss) Per Share (EPS)
 
 Basic EPS is computed by dividing the applicable numerator for earnings (loss) by the weighted average number of shares of common stock outstanding during the period.  Diluted EPS is computed by dividing the applicable numerator for earnings (loss) by the total of the weighted average number of shares of common stock securities outstanding during the period and the effect of dilutive securities outstanding during the period.  The effect of dilutive securities is not included in the weighted average number of shares outstanding when inclusion would increase the earnings per share or decrease the loss per share for income (loss) from continuing operations, net of tax.
 
 Reconciliations of the numerators and denominators in the EPS computations for income (loss) from continuing operations, net of tax, for the three and nine months ended February 28, 2010 and 2009, follow:
  9
  
 Three Months Ended


Nine Months EndedFebruary 28,


February 28,2010


2009


2010


2009NUMERATOR- basic and diluted (in thousands):Loss from continuing operations, net of tax,attributable to Global common shareholders

$
(499
)

$
(142
)

$
(722
)

$
(510
)DENOMINATOR:Basic EPS - weighted average shares outstanding


6,646,062



6,627,112



6,639,394



6,626,072Effect of dilutive securities


—



—



—



—Diluted EPS - weighted average shares outstanding


6,646,062



6,627,112



6,639,394



6,626,072Number of shares of common stock which could have beenpurchased with average outstanding securities not included indiluted EPS because effect would be antidilutive-Stock options (average price of $4.99 for the three and nine


293,500



305,333



293,925



344,906months ended February 28, 2010)Warrants (average price of $7.10 for the three and nine months


215,800



235,800



215,800



253,365ended February 28, 2010)Restricted stock


25,283



30,500



25,750



25,467
 
 The impacts of all outstanding options, warrants and restricted stock outstanding at February 28, 2010, were not included in the calculation of diluted EPS for the three and nine months ended February 28, 2010, because to do so would be antidilutive.  Outstanding options, warrants and restricted stock could potentially dilute EPS in the future.
 
 Property and Equipment
 
 The City of Wenatchee, Washington purchased our food service equipment, in its entirety for $0.6 million.  We discontinued depreciation of the equipment in July 2009 and received the $0.6 million cash purchase price in October 2009.  The gain on the sale was $10 thousand.  As of February 28, 2010 and May 31, 2009, property and equipment was comprised of the following (in thousands):
 
 
 February 28,


May 31,2010


2009

Range of initial useful livesOffice furniture and equipment

$
315


$
276

5 to 7 yearsComputer equipment


394



390

2 to 7 yearsFood service equipment


—



636

5 to 20 years709



1,302Less: accumulated depreciation


(595
)


(594
)$
114


$
708
 
 
 Note Payable
 
 As of February 28, 2010, note payable consists entirely of a note payable we entered into in fiscal year 2008 in connection with settlement of a legal matter.  The note calls for 36 payments of $10 thousand monthly through December 2010.  We recorded the present value of the payments, discounted at 7.0%, as notes payable and general and administrative costs. The note had an initial present value of $0.3 million.
  10
  We had a $1.75 million line of credit that expired October 1, 2009.  The line of credit bore interest at a daily adjusting LIBOR rate plus 2%, subject to certain adjustments.  We had received no cash advances on this credit facility prior to its expiration.
 
 PVEC, LLC Joint Venture
 
 During fiscal year 2006, we entered into an agreement with Prescott Valley Signature Entertainment, LLC (PVSE, LLC) to form Prescott Valley Events Center, LLC (PVEC, LLC) to engage in the business of developing, managing, and leasing the Prescott Valley Events Center in Prescott Valley, Arizona (the Town).  We are the managing member of PVEC, LLC.  Construction of the center, which opened in November 2006, was funded by proceeds from the issuance of $35 million in Industrial Development Authority of the County of Yavapai Convention Center Facilities Excise Tax Revenue Bonds, Series 2005 (the Bonds).
 
 We account for our investment in PVEC, LLC under the equity method.  Our interest in this entity is not a controlling one, as we do not own a majority voting interest and our ability to affect the business operations is significantly limited by the PVEC, LLC operating agreement.  The operating agreement also provides that a majority-in-interest of the members may replace the managing member, or if the managing member is in default, a majority-in-interest of the remaining members may replace the managing member.
 
 In addition to a $1 thousand initial capital contribution, we contributed $250 thousand as an initial preferred capital contribution and PVSE, LLC contributed land with an approximate value of $1.5 million as an initial preferred capital contribution.  Payment of the $250 thousand was made to PVEC, LLC in December 2008.  We recorded losses on our investment in fiscal 2008, in the amount of $251 thousand, to bring our investment to zero.  Our investment was zero at May 31, 2009.  In the quarter ended February 28, 2010, we advanced $85 thousand of cash to PVEC, LLC.  These advances have been expensed as equity method losses and our net investment remains zero as of the date of this filing.  Subsequent to February 28, 2010, we may make additional advances to PVEC, LLC.
 
 PVEC, LLC lease payments on the facility are equal to debt service payments on the Bonds.  In the event of any shortfalls in debt service payments, amounts will be paid by the Town from transaction privilege tax (TPT) collected from the surrounding project area.
 
 Operating revenues of the center, as defined, are first used to pay operating expenses, as defined, second to pay our base management fee (4% of the center’s operating revenue), third to pay debt service, then to fund other items.  As a result, we may be required to defer receipt of our management fees should operating revenues, as defined, be insufficient to pay operating expenses, as defined.  Through February 28, 2010, no management fees had been deferred.
 
 Cash distributions and distributions in liquidation are to be made to each member in the following priority: 1) to the extent needed to pay taxes, 2) to each member to the extent of loans in the form of our unpaid management fees and PVSE, LLC’s unpaid parking fees, and 3) to PVSE, LLC, until their preferred account equals ours (including preferred returns of 5% thereon) and then 50/50.  Therefore, in fiscal 2008 we recognized 100% of PVEC, LLC’s losses to the extent of our funding commitment ($251 thousand).  We will recognize additional losses to the extent of any loans to PVEC, LLC, should they accumulate, in the form of deferred management fees.
  11
  PVEC, LLC’s unaudited financial information for the three and nine months ended February 28, 2010 and 2009, follows (in thousands):
 
 Three Months Ended


Nine Months EndedFebruary 28,


February 28,2010


2009


2010


2009Operating revenue

$
903


$
894


$
1,812


$
2,621Operating profit (loss)


(26
)


(66
)


(547
)


(232
)Net income (loss)


(46
)


(75
)


(594
)


(263
)
 
 Selected PVEC, LLC unaudited financial information as of February 28, 2010 and May 31, 2009, follows (in thousands):
 
 February 28


May 31,2010


2009Property and equipment, net

$
28,086


$
29,251Receivable from Town


8,927



6,558Total assets


40,388



38,758Debt payable


35,000



35,000Retained deficit


1,651



1,054Members' equity


173



685
 
 Effective September 1, 2009, we ceased recognizing PVEC, LLC advertising sales commissions and facility management fees, exclusive of payroll costs and reimbursed expenses, as collections are deemed no longer reasonably assured.  As of February 28, 2010, our receivable from PVEC, LLC totals $386 thousand and is classified as long-term as collections are not expected within the next twelve months.  Our consolidated financial statements reflect the following related to transactions between us and PVEC, LLC (in thousands).
 
 
 Three Months Ended


Nine Months EndedFebruary 28,


February 28,2010


2009


2010


2009Facility management fees, exclusive of payroll costsand reimbursed expenses (Encore)

$
—


$
19


$
—


$
48Facility management fees, payroll costs (Encore)


203



199



512



525Facility management fees, reimbursed expenses (Encore)


9



21



30



69Advertising sales commission (GEMS)


—



56



40



135Ticket service fees (GetTix)


19



61



57



103Cost of revenues, facility payroll (Encore)


203



199



512



525Cost of revenues, reimbursed expenses (Encore)


9



21



30



69
 
 February 28,


May 31,2010


2009Accounts receivable, short -term

$
—


$
100Accounts receivable, long-term


386



—
  12
  
 
 Commitments and Contingencies
 
 Operating Leases
 
 We lease 10,392 square feet of office space for our Tempe, Arizona headquarters pursuant to a lease with a sixty-six month initial term beginning January 2008.  The lease is renewable for an additional sixty-month period.  Leasehold improvements at the location are depreciated over the initial lease term.  Non-level rents are recognized on a straight-line basis over the initial lease term.  Liabilities related to non-level rents of $84 thousand and $96 thousand were included in accrued liabilities at February 28, 2010 and May 31, 2009.
 
 In addition we are committed under an equipment and maintenance contract to pay $1 thousand monthly through December 2010.
 
 Litigation
 
 As with all entertainment facilities there exists a degree of risk that the general public may be accidentally injured.  As of February 28, 2010, there were various claims outstanding in this regard that management does not believe will have a material effect on our financial condition or results of operations.  To mitigate this risk, we maintain insurance coverage, which we believe effectively covers any reasonably foreseeable potential liability.  There is no assurance that our insurance coverage will adequately cover all liabilities to which we may be exposed.
 
 We are a plaintiff and a counter-defendant in a lawsuit involving the City of Rio Rancho, New Mexico filed June 24, 2009, in the New Mexico 13th Judicial District, Sandoval County, Case No. 01329 CV091504.  Our claim seeks resolution of matters stemming from the time during which we managed the events center in Rio Rancho, New Mexico.  Specifically, our claim is based on breach of contract and other matters.  The complaint seeks payment of monies due in excess of $0.3 million and declaratory judgment that we have no liability to third-party creditors of the center.  The city’s counterclaim alleges breach of contract, among other claims, and seeks judgment in excess of $0.2 million.  We believe the counterclaim is without merit.
 
 Global Entertainment Corporation, PVEC, LLC and two of our directors (James Treliving and Richard Kozuback) are four of sixteen defendants in a series of suits: Allstate Life Insurance Company v. Robert W. Baird & Co., Global Entertainment Corporation, et al.; United States District Court, District of Arizona, Case No. 3:09-cv-08162-FJM filed September 18, 2009; Covin, et al. v. Robert W. Baird & Co., Global Entertainment Corporation, et al.; United States District Court, District of Arizona, Case No. 3:09-cv-8174-MEA filed September 30, 2009; Wells Fargo Bank, N.A. v. Robert W. Baird & Co., Global Entertainment Corporation, et al.; Maricopa County Superior Court, Case No. CV2009-030148 filed September 30, 2009.  The litigation relates to the offering for the Bonds, issued to support the construction of the events center in Prescott Valley, Arizona.  Allstate is a bond holder and the complaint alleges the bond offering failed to properly disclose certain facts, that the underwriters and certain law firms acted with deliberate recklessness and that the bond documents are defective.  Allstate seeks unspecified damages and/or reimbursement of its investment, in excess of $26 million.  We have indemnified all our former and current directors and officers in connection with this matter.  We believe the claims against Global Entertainment Corporation, PVEC, LLC and the two directors are without merit.  Our insurance carrier has been notified.Our insurance carrier has indicated an intention to decline coverage of Global Entertainment Corporation in this matter.  Defense costs allocated to Global Entertainment Corporation are being expensed as incurred and defense costs allocated to the directors are being expensed as incurred up to the amount of the applicable deductible ($75 thousand or $100 thousand, depending on how the claim is ultimately classified).
  13
  All litigation settlement expenses are included in general and administrative costs.  The following summarizes litigation settlement activity for the three and nine months ended February 28, 2010 and 2009, and the balance sheet classification of litigation settlement liabilities at February 28, 2010 and May 31, 2009 (in thousands).
 
 Three Months Ended


Nine Months EndedFebruary 28,


February 28,2010


2009


2010


2009Litigation settlement liabilities, beginning of period

$
150


$
232


$
330


$
283Cash payments


(53
)


(26
)


(233
)


(77
)Litigation settlement liabilities, end of period

$
97


$
206


$
97


$
206
 
 February 28,


May 31,2010


2009Accounts payable

$
—


$
125Accrued liabilities


—



25Note payable - current portion


97



111Note payable - long-term portion


—



69$
97


$
330
 
 Legal services costs are expensed as incurred.  At February 28, 2010 and May 31, 2009, accounts payable included $37 thousand and $176 thousand in legal services costs.  At February 28, 2010 and May 31, 2009, accrued liabilities included $4 thousand and $21 thousand in legal services costs.
 
 Contingencies
 
 We enter into indemnification provisions under our agreements with other companies in the ordinary course of business, typically with business partners and customers.  Under these provisions we generally indemnify and hold harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of our activities.  The maximum potential amount of future payments we could be required to make under these indemnification provisions is unlimited.  We have not incurred material costs to defend lawsuits or settle claims related to these indemnification agreements.  As a result, we believe the estimated fair value of these agreements is minimal.  Accordingly, we have no liabilities recorded for these agreements as of February 28, 2010.
 
 As of February 28, 2010, we have entered into various employment contracts with key employees.  Under certain circumstances we may be liable to pay amounts based on the related contract terms.  We also have initiated legal actions against certain individuals which could result in awards in our favor.
  14
  Guarantees
 
 In February 2008, we entered into an agreement to manage a multi-purpose events center to be constructed in Texas.  The initial term of this agreement is fifteen years, with an option by the city to renew for an additional five years under certain conditions.  This agreement includes a guarantee that the events center will operate at a break-even point and without cost to the city, not including any capital reserves and any other off-sets described in the agreement.  This guarantee requires that all amounts reasonably required for the operation and maintenance of the events center will be generated by the operation of the events center, or otherwise paid by us.  The agreement includes a provision that the city will fund an operating account with three months of operating revenue, as defined.  The monies in that operating account may be used to fund operations of the events center, but if used, must be repaid by us within thirty days after the first operating year, as defined.  Should we be obligated to fund any operational shortfalls, the agreement provides for reimbursement to us from future profits from the events center.  The maximum amount of future payments we could be required to make under this operational guarantee is theoretical due to various unknown factors.  However, the guarantee would be limited to the operational loss from the facility for each year of the guarantee, less any reimbursements from the facility.  Although no assurance can be made, we do not believe, that any potential guarantee payments would be material based on the operating results of similar facilities.  The facility opened in November 2009.
 
 In April 2009, we entered into an agreement with the city in Texas to fund a performance reserve related to having a hockey team play in the facility.  Under the agreement we delay receipt of advertising sales commissions otherwise payable to us to fund a performance reserve.  To the extent the performance reserve falls below the required reserve, we must fund cash.  The required performance reserve levels are as follows:
 
 ·
November 1, 2009 - $200 thousand, reduced to $150 thousand when a hockey team played the 2009-2010 season opener
 ·
November 1, 2010 - $150 thousand, reduced to $100 thousand when a hockey team plays the 2010-2011 season opener
 ·
November 1, 2011 - $100 thousand, reduced to $50 thousand when a hockey team plays the 2011-2012 season opener
 ·
November 1, 2012 - $50 thousand, reduced to zero when a hockey team plays 2012-2013 season opener.
 
 If no hockey team plays a season opener through the 2018-2019 season opener, the amount then in the reserve account is forfeited and future advertising sales commission are forfeited until either a hockey team plays in a season opener or a total of $300 thousand is forfeited.  In no event is the amount forfeited to exceed $300 thousand.  A hockey team played the 2009-2010 season opener and we believe the likelihood we will forfeit anything under this guarantee is remote.  As of February 28, 2010, $150 thousand is in the performance reserve - $100 thousand is included in other assets and $50 thousand is included in prepaid and other assets in the accompanying balance sheets.
  15
  In May 2008, we entered into an agreement to manage a multi-purpose events center to be constructed in Missouri.  The initial term of this agreement ends fifteen years from facility opening, and the city may renew the agreement for an additional five years under the same terms.  The facility opened in November 2009.  Our compensation under the agreement may only come from the facility operating account, which is to be funded by facility operations, as defined in the agreement.  The management agreement includes a guarantee that we will subsidize the operations of the facility to the extent that funds in the facility operating account and a temporary operating account are not adequate.  Under the terms of the agreement the city has advanced $0.5 million to fund a temporary operating reserve account, which may be used to fund shortfalls in the facility operations account.  Excess funds in the facility operating account each operating year, after paying operating expenses, our base Encore fee and GEMS commission, are to be used in the following priority: 1) to reimburse us for any subsidy payments we have made, 2) to replenish the temporary operating reserve account, 3) to fund the capital reserve account and 4) to pay on a co-equal basis our incentive fee and deposits to three additional reserve accounts.  The maximum amount of future payments we could be required to make under the guarantee is theoretical due to various unknown factors.  However, once the temporary operating reserve account is depleted, the guarantee subsidy payments would be limited to the operational loss each operating year, plus the amount of our facility management fees and advertising sales commissions.  We do not expect to make guarantee subsidy payments based on operating results of similar facilities, however, no assurance can be made that a payment pursuant to this guarantee would not be paid in the future and that such payment would not be material.
 
 In addition, under the terms of the management agreement, an amount not to exceed $0.50 per ticket, and excess operating funds, are to be used to fund a capital reserve account up to $150 thousand in each of the first five operating years and up to $250 thousand thereafter.  Should the capital reserve account not be fully funded for two consecutive years, the management agreement terminates, unless the city elects to renew the agreement.
 
 We provide a secondary guarantee on a standby letter of credit in favor of Ace American Insurance Company for $0.6 million related to a guarantee under a workers compensation program.  This letter of credit is fully collateralized by third parties.  No amounts have been drawn on this letter of credit as of February 28, 2010.  We believe the amount of payments under this guarantee will be negligible, and as such, have assigned no value to this guarantee at February 28, 2010.
 
 We have guaranteed payment of a lease for equipment used by PVEC, LLC.  As of February 28, 2010, twenty-one payments averaging $11 thousand per month, including principal and interest were outstanding.  The fair value of the lease obligation at February 28, 2010, was approximately $219 thousand.  The lease is secured by the equipment.  We believe the amount of payments under this guarantee, if any, will be negligible, and as such, have assigned no value to this guarantee at February 28, 2010.
 
 In addition to our commitments and guarantees described above we also have the commitments and guarantees described in the PVEC, LLC Joint Venture Note.
 
 Discontinued Operations
 
 On August 1, 2008, we sold substantially all of the assets of Our Old Car Company (formerly known as Cragar Industries, Inc).  The assets consisted primarily of intangibles, including trademarks, service marks and domain names.  The cash from the transaction of approximately $1.8 million, net of transaction costs, was allocated primarily to the intangibles, with the remainder to tooling, inventory and other assets.
 
 The following table presents selected operating data for Our Old Car Company for the nine months ended February 28, 2009 (in thousands):
 
 2009Revenues

$
60Loss on disposal


(51
)Loss before income taxes


(48
)Loss from discontinued operations, net of income tax


(48
)
  16
  
 Credit Risk
 
 Our business activities and accounts receivable are with customers in various industries located throughout the United States.  We perform ongoing credit evaluations of our customers and maintain allowances for potential credit losses.
 
 As of February 28, 2010, $736 thousand of trade receivables were classified as long-term assets.  This classification was done in contemplation of the current economic conditions and the anticipated timing of collections.  Management, after careful review and analysis, believes these receivables to be fully collectible and as such, no allowance for doubtful accounts has been established against these receivables.
 
 The League operates primarily in mid-sized communities in the Central, Western and Southern regions of the United States, including Arizona, Colorado, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, South Dakota, and Texas.  Our facility management fees and project management fees are derived primarily from events centers currently operating in, or being constructed in Arizona, Kansas, Missouri and Texas.  The economic downturn which has affected these markets has negatively impacted our operating results and will most likely continue to do so until an economic recovery is complete.
 
 We depend on contracts with cities or related governmental entities to design, develop, and manage new multipurpose facilities and adjacent real estate.  Typically we must expend 20-30 months of effort to obtain such contracts.  We depend on these contracts for the revenue they generate and the facilities resulting from these contracts are potential facilities in which our licensees may operate.  Failure to timely secure these contracts may negatively impact our results.  Many governments are struggling to maintain tax revenue and raise capital in the current economic environment and may have less interest in developing new multipurpose facilities or less ability to finance construction of new multipurpose facilities.  Our revenues, project development fees and project management fees in particular, could be negatively impacted.  As of February 28, 2010, our accounts receivable from cities, related governmental entities, and PVEC, LLC total approximately 50% of total accounts receivable.
 
 Purchasing a League license requires significant capital and commencing operation is a significant expense which limits the pool of potential licensees.  We depend on a critical mass of licensees to capture the economies of scale inherent in the League’s operations and to facilitate intra-league play.  There can be no assurance that we will be able to attract qualified candidates for licenses.  We anticipate that expansion of the League will be difficult because of the high capital costs of licenses, competitive pressures from sports leagues and entertainment providers both within and outside of the markets where we currently operate, and the lack of arenas for new licensees.
 
 The minor league hockey industry in which we conduct business is subject to significant competition from other sports and entertainment alternatives as well as both the National Hockey League and its minor league hockey system, the American Hockey League, and other independent minor hockey leagues.  Even teams of the National Hockey League, which is the largest professional hockey league with the greatest attendance, have struggled to remain financially viable.  A significant portion of our revenues result from payments made by our licensees.  There can be no assurance that licensees will not default under their license agreements.
 
 The League may be unable to attract new licensees and existing licensees may not be able to make the continuing payments required by their license agreements in the current economic environment.  There can be no assurance that any payments will be made by new or current licensees.
 
 Related Party Transactions
 
 Rudy Miller, a principal and major equity holder of Miller Capital Markets, LLC (MCM) and Miller Capital Corporation (MCC), beneficially owns approximately 8% of our common stock.
  17
  Investment Banking Agreement
 
 In March 2010, we entered into an investment banking service agreement with MCM.  The agreement is effective February 2010, and has a term of one year.  Pursuant to this agreement, MCM will advise us with respect to potential mergers, acquisitions, and public and private financing transactions.
 
 In consideration for these services, MCM will receive 10% of the gross proceeds of any private placement of equity and 4% of the gross proceeds of any private placement of debt.  With respect to public offerings, MCM will receive a percentage of the gross proceeds of such offerings as follows: (i) 2.75% for offerings of $10 million or less, (ii) 2.25% for offerings of $10 million to $20 million, (iii) 1.75% for offerings of $20 million to $30 million, and (iv) 1.25% of offerings of $30 million or more.  MCM will also have the right to receive warrants to purchase shares or units equivalent to 10% of the shares or units issued as part of any equity transaction wherein MCM provided services under this agreement, with the exercise price of such warrants being equal to 110% of the per share or unit value of the equity securities issued.  Warrants would expire in five years from the date of the equity offering, and would include piggyback registration rights for MCM on any future registration statements we file.  At any time within 12 months of a successful debt or equity financing event during the term of this agreement, MCM will have the right of first refusal to serve as our investment banker for any other financing transaction.
 
 If we are acquired or involved in a merger with or acquisition of another business or entity, MCM will receive (i) 5% of the consideration from $1 up to $3 million, plus (ii) 4% of the consideration from $3 million to $6 million, plus (iii) 3% of the consideration from $6 million to $9 million, plus (iv) 2% of the consideration from $9 million to $12 million, plus (v) 1% of the consideration in excess of $12 million.
 
 Financial Services Consulting Agreement
 
 In March 2010, we entered into a consulting agreement with MCC.  The agreement is effective February 2010, with a term of one year.  MCC will provide us with financial consulting services related to our funding requirements, public and private debt and equity financing, potential merger and acquisition transactions, and investor relations.  As consideration for its services, MCC will receive twelve monthly payments of $9 thousand, additionally, MCC received a restricted stock grant of 2,000 shares of our common stock February 2010 with a thousand shares vesting February 2011, and the remaining thousand shares vesting February 2012.
 
 Segment Information
 
 Each of our subsidiaries is a separate legal entity with a separate management structure.  Our corporate operations exist solely to support our subsidiary segments.  As such, certain corporate overhead costs are allocated to the operating segments.  There are no differences in accounting principles between the operations.
 
 In all periods presented, goodwill relates to our International Coliseums segment.
 
 The Food Service segment began operations in fiscal 2009.
 
 No interest expense was allocated to discontinued operations in any period in fiscal 2010 or fiscal 2009.
  18
  
 Nine Months EndedGross Revenues


Income (Loss) from Continuing Operations, Before Tax


Identifiable AssetsFebruary 28, 2010Global Entertainment Corporate Operations

$
136


$
(869
)

$
907

(a)GEC Food Service (b)


1,244



127



107Central Hockey League/WPHL


1,574



294



951Global Properties I


152



(321
)


73International Coliseums


1,182



641



1,115

(c)Encore Facility Management


3,554



(49
)


845

(d)Global Entertainment Marketing Systems


306



(20
)


262Global Entertainment Ticketing


781



(500
)


301Global Entertainment Corporation Consolidated

$
8,929


$
(697
)

$
4,561February 28, 2009Global Entertainment Corporate Operations

$
101


$
(1,586
)

$
1,596

(a)GEC Food Service (b)


412



(83
)


682Central Hockey League/WPHL


1,749



371



939Global Properties I


578



56



202International Coliseums


1,473



912



724

(c)Encore Facility Management


2,240



(88
)


231

(d)Global Entertainment Marketing Systems


493



139



164Global Entertainment Ticketing


2,081



(218
)


622Global Entertainment Corporation Consolidated

$
9,127


$
(497
)

$
5,160
   (a)
Global Entertainment Corporate Operations assets include cash and cash equivalents and restricted cash of $0.6 million and $1.2 million at February 28, 2010 and 2009.
 (b)
The GEC Food Service segment began operations October 2008 in Wenatchee, Washington.  The Wenatchee food service contract ended effective August 2009.  We sold $0.6 million of food service equipment in October 2009. In November 2009, GEC Food Service began food service operations in Independence, Missouri using equipment owned by the city.
 (c)
The International Coliseums segment assets at February 28, 2010, include $0.2 million in accounts receivable from a city to fund furniture, fixture and equipment purchases made as agent for the city.  February 28, 2009 assets included no comparable amounts.
 (d)
The Encore Facility Management segment assets at February 28, 2010, includes $0.8 million in accounts receivable from cities and assets at February 28, 2009, includes $0.2 million in accounts receivable from cities.  The increase is due to the opening of the facilities in Independence, Missouri and Allen, Texas, in November 2009, as well as a $0.1 million increase in receivables from PVEC, LLC.
  19
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
 Forward-Looking Disclosure
 
 This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995 regarding future events, including statements concerning our future operating results and financial condition and our future capital needs and sources.  These statements are based on current expectations, estimates, forecasts, and projections as well as our beliefs and assumptions.  Words such as “outlook”, “believes”, “expects”, “appears”, “may”, “will”, “should”, “anticipates” or the negatives thereof or comparable terminology, are intended to identify such forward-looking statements.  These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict.  Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.  Factors that might cause or contribute to such differences include, but are not limited to those discussed in our report on Form 10-K for the fiscal year ended May 31, 2009.  You should not place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report.  We undertake no obligation to revise or update publicly any forward-looking statements for any reason, unless otherwise required by law.
 
 General
 
 The following is management’s discussion and analysis of certain significant factors affecting our financial position and operating results during the periods included in the accompanying condensed consolidated financial statements.
 
 Description of the Company
 
 Our current principal operating subsidiaries are Western Professional Hockey League, Inc., Global Properties I, International Coliseums Company, Inc., Global Entertainment Marketing Systems, Inc., Global Entertainment Ticketing, Encore Facility Management and GEC Food Service, LLC.
 
 Pursuant to a joint operating agreement between us and Central Hockey League Inc. (CHL, Inc.), WPHL operates and manages a minor professional hockey league known as the Central Hockey League (the League), which currently consists of seventeen teams (fifteen participating in the 2009-2010 season) located in mid-market communities throughout the Central, Western and Southern regions of the United States.
 
 Global Properties I (GPI) provides services in targeted mid-sized communities across the United States related to the development of multipurpose events centers.  GPI's development of multipurpose events centers promotes the development of the League by assisting potential licensees in securing quality venues in which to play minor professional hockey league games.
 
 International Coliseums Company, Inc. (ICC) manages the construction of multipurpose events centers in mid-market communities.
 
 Global Entertainment Marketing Systems, Inc. (GEMS), promotes, markets, and sells various services related to multipurpose entertainment facilities, including all contractually obligated income (COI) sources such as facility naming rights, luxury suite sales, premium seat license sales, and facility sponsorship agreements.
 
 Global Entertainment Ticketing (GetTix) provides ticketing services for the multipurpose events centers developed by GPI, existing League licensees, and various other entertainment venues, theaters, concert halls, and other facilities and event coordinators.  GetTix provides a full ticketing solution by way of box office, outlet, phone, internet and print-at-home service that utilizes distribution outlets in each market.  GetTix uses third-party, state-of-the-art software to deliver ticketing capabilities that include database flexibility, easy season and group options, financial reporting and marketing resources.
  20
  Encore Facility Management (Encore) provides a full complement of multipurpose events center operational services.  These services include providing administrative oversight in the areas of facility/property management and finance, event bookings, and food and beverage.  Encore is currently involved with facility management of multipurpose events centers developed by GPI.  Facility management operations are conducted under separate limited liability companies.
 
 GEC Food Service, LLC (formerly Global Food Service, LLC) (Food Service), formed in fiscal 2009, manages facility food service operations.
 
 On August 1, 2008, we sold substantially all of the assets of Our Old Car Company (formerly known as Cragar Industries, Inc.).
 
 Critical Accounting Policies, Estimates and Judgments
 
 Significant accounting policies are described in the audited consolidated financial statements and notes thereto included in our Report on Form 10-K for the year ended May 31, 2009.  We believe our most critical accounting policies and estimates relate to revenue recognition, the allowance for doubtful accounts, arena guarantees and other contingencies, the carrying value of goodwill, the realization of deferred income tax assets, the fair value of a liability related to the secondary guarantee related to a worker’s compensation program, and the allocation of expenses and division of profit or loss relating to the joint operating agreement.  Due to the uncertainties inherent in the estimation process and the significance of these items, it is at least reasonably possible that the estimates in connection with these items could be materially revised within the next year.
 
 Overview and Forward Looking Information
 
 During fiscal year 2008 we decided to divest of Our Old Car Company (formerly Cragar Industries, Inc.).  As a result, the operations of Our Old Car Company have been classified as loss from discontinued operations in the consolidated statements of operations for all periods presented.  Revenues and operating costs in the consolidated statements of operations now exclude all accounts of Our Old Car Company.
 
 Total revenue in the nine months ended February 28, 2010, included $0.3 million in facility management fees, ticket service fees, and food service revenues from contracts with the facility in Wenatchee, Washington, which opened in October 2008.  The contracts related to that facility were terminated effective August 31, 2009.
 
 We managed construction projects for facilities in Allen, Texas and Independence, Missouri until the facilities opened in November 2009.  We have contracted to provide facility management service, ticket service and advertising sales at those facilities.  We earned advertising sales commissions and certain preopening related facility management fees from both facilities prior to opening, and expect to continue to earn advertising sales commissions and facility management fees from both facilities, now operating, under our multi-year contracts.  We began recognizing food service revenues from the Independence, Missouri facility beginning in November 2009.
 
 Ground breaking on the facility in Dodge City, Kansas occurred in October 2009.  Under our agreements related to the facility, we earned the last of the contractual project development fees in our second quarter ended November 30, 2009.  We began earning project management fees related to this project in the fourth quarter of fiscal 2009 and fees are expected to be earned over a total of twenty-two months.  As of February 28, 2010, we have no active contracts providing for project development fees.
 
 Our multi-year contracts with PVEC, LLC to provide facility management services, ticket services and advertising sales were active in the three and nine months ended February 28, 2010, and remain active through the date of this filing.  However, we have ceased recognizing advertising sales commissions and facility management fees, exclusive of payroll and reimbursed expense, as collections are deemed no longer reasonably assured.
 
 We believe high unemployment levels and continued economic weakness have impacted our revenues and, in particular, contributed to 1) a decline in our ticket service fees and advertising sales commissions in the second quarter ended February 28, 2010, compared to the prior year quarter and 2) our inability to enter into arrangements to generate additional project development fees.
  21
  Three Months Ended February 28, 2010, Compared to Three Months Ended February 28, 2009
 
 Revenues(in thousands):
 
 Three Months Ended February 28,2010


% of Revenue


2009


% of Revenue


Change


% ChangeProject development fees

$
—



—


$
100



2.8


$
(100
)


(100.0
)Project management fees


203



6.3



247



7.0



(44
)


(17.8
)Facility management fees


1,116



34.6



1,067



30.2



49



4.6Ticket service fees


268



8.3



766



21.7



(498
)


(65.0
)Food service revenue


909



28.2



282



8.0



627



222.3Advertising sales commissions


74



2.3



115



3.3



(41
)


(35.7
)License fees - league dues and other


626



19.4



517



14.6



109



21.1License fees - initial and transfer


—



—



443



12.5



(443
)


(100.0
)Other


29



0.9



—



—



29


NMTotal Revenues

$
3,225



100.0


$
3,537



100.0


$
(312
)


(8.8
)
 
 At $3.2 million, total revenues were 8.8% lower in the quarter ended February 28, 2010, than in the quarter ended February 28, 2009.
 
 Facility management fees remained relatively unchanged at $1.1 million for the quarter ended February 28, 2010, and the quarter ended February 28, 2009.  Facility management fees include both recurring fees for management of facilities and fees for preopening services.  The year-over-year increase in recurring fees from the Allen, Texas and Independence, Missouri facilities, which opened in November 2009, was offset by declines in monthly management fees from the Rio Rancho, New Mexico facility, which ended in January 2009, the Wenatchee, Washington facility, which ended in August 2009, and the Prescott Valley facility.
 
 Ticket service fees decreased $0.5 million, to $0.3 million for the quarter ended February 28, 2010, from $0.8 million in the prior year quarter.  This decrease in ticket service fees reflects declines in the number of events held, attendance at events and venues under contract.
 
 Food service revenues increased $0.6 million in the quarter ended February 28, 2010, to $0.9 million, compared to $0.3 million in the prior year quarter.  The quarter ended February 28, 2010, was the first full quarter of food service operations at the Independence, Missouri facility, which opened in November 2009.  Food service revenue is currently derived almost entirely from the Independence, Missouri facility.
 
 Advertising sales commissions were relatively unchanged at $0.1 million for both the quarter ended February 28, 2010, and the quarter ended February 28, 2009.  Sales commissions from the Allen, Texas and Independence, Missouri projects in the quarter ended February 28, 2010, offset the decrease from the loss of sales commissions from the Rio Rancho, New Mexico facility, no longer under contract,  the Wenatchee, Washington facility, no longer under contract, and the Prescott Valley, Arizona facility.
 
 License fees – league dues and other increased $0.1 million in the quarter ended February 28, 2010, to $0.6 million, compared to $0.5 million in the prior year quarter.  The increase was the result of an increase in corporate sponsorship revenue.
 
 License fees – initial and transfer were zero in the quarter ended February 28, 2010, and $0.4 million in the prior year quarter.  Since initial and transfer fees are not regularly recurring and are difficult to predict, there is no assurance we will be able to increase or sustain our operating capital from this source.
  22
  Operating Costs(in thousands):
 
 Three Months Ended February 28,2010


% of Revenue


2009


% of Revenue


Change


% ChangeCost of revenues

$
1,962



60.8


$
1,939



54.8


$
23



1.2General and administrative costs


1,671



51.8



1,681



47.5



(10
)


(0.6
)Total Operating Costs

$
3,633



112.7


$
3,620



102.3


$
13



0.4
 
 Total operating costs were relatively unchanged at $3.6 million for the quarter ended February 28, 2010, and the quarter ended February 28, 2009.  Cost of revenues increased to 60.8% of revenue in the quarter ended February 28, 2010, from 54.8% of revenue in the quarter ended February 28, 2009.  This increase is the result of changes in the mix of revenue between years.  The current year quarter includes no initial and transfer license fees, and the prior year quarter includes $0.4 million of such fees.  These fees typically have minimal associated cost of revenues.  General and administrative costs remained relatively unchanged between years.
 
 Loss from Continuing Operations(in thousands):
 
 Three Months Ended February 28,2010


% of Revenue


2009


% of Revenue


Change


% ChangeLoss from continuing operations, before tax

$
(491
)


(15.2
)

$
(124
)


(3.5
)

$
(367
)


296.0
 
 Loss from continuing operations, before tax, of $0.5 million for the quarter ended February 28, 2010, was $0.4 million higher than the loss from continuing operations, before tax, of $0.1 million for the quarter ended February 28, 2009.  The prior year quarter benefited from $0.4 million in initial and transfer license fees revenue.  There were no comparable revenues in the current year quarter.
 
 Nine Months Ended February 28, 2010, Compared to Nine Months Ended February 28, 2009
 
 Revenues(in thousands):
 
 Nine Months Ended February 28,2010


% of Revenue


2009


% of Revenue


Change


% ChangeProject development fees

$
152



1.7


$
578



6.3


$
(426
)


(73.7
)Project management fees


1,182



13.2



1,473



16.1



(291
)


(19.8
)Facility management fees


3,554



39.8



2,240



24.5



1,314



58.7Ticket service fees


781



8.7



2,081



22.8



(1,300
)


(62.5
)Food service revenue


1,233



13.8



412



4.5



821



199.3Advertising sales commissions


265



3.0



493



5.4



(228
)


(46.2
)License fees - league dues and other


1,474



16.5



1,306



14.3



168



12.9License fees - initial and transfer


100



1.1



443



4.9



(343
)


(77.4
)Other


188



2.1



101



1.1



87



86.1Total Revenues

$
8,929



100.0


$
9,127



100.0


$
(198
)


(2.2
)
 
 At $8.9 million, total revenues were 2.2% lower in the nine months ended February 28, 2010, than in the nine months ended February 28, 2009.
  23
  Project development fees for the nine months ended February 28, 2010, relate to the project for the facility in Dodge City, Kansas, signed in fiscal 2009, and the project for the facility in Allen, Texas.  No further development fees are expected on these projects.  Project development fees in the prior year period related to the projects in Independence, Missouri, Dodge City, Kansas and Allen, Texas.
 
 Project management fees of $1.2 million were 19.8% lower for the nine months ended February 28, 2010, than in the prior year nine months.  Project management fees related to the Allen, Texas and Independence, Missouri projects, for the nine months ended February 28, 2010, were lower than the prior year period fees on those projects, because fees ceased when those facilities opened in November 2009.  The Dodge City, Kansas project management fees for the nine months ended February 28, 2010, were insufficient to offset the Wenatchee, Washington project management fees in the prior year period.
 
 Facility management fees were $3.6 million for the nine months ended February 28, 2010, compared to $2.2 million in the nine months ended February 28, 2009.  Facility management fees include both recurring fees for management of facilities and fees for preopening services.  The $1.3 million increase in facility management fees is primarily the result of the $1.1 million increase in fees for preopening services, primarily on the Allen, Texas and Independence, Missouri projects.  The recurring fees increased $0.2 million year-over-year.  The increases in recurring fees from the Allen, Texas and Independence, Missouri facilities, which opened in November 2009, were largely offset by declines in monthly management fees from the Rio Rancho, New Mexico facility, which ended in January 2009, and the Wenatchee, Washington facility, which ended in August 2009, and the Prescott Valley facility.
 
 Ticket service fees decreased $1.3 million, to $0.8 million for the nine months ended February 28, 2010, from $2.1 million in the prior year period.  This decrease in ticket service fees reflects declines in the number of events held, attendance at events and venues under contract.
 
 Food service revenues increased $0.8 million in the nine months ended February 28, 2010, to $1.2 million, compared to $0.4 million in the prior year period.  The current year period includes revenues from operations at the Independence, Missouri facility, opened in November 2009, and the last three months of operations at the Wenatchee, Washington facility.
 
 Advertising sales commissions were $0.3 million for the nine months ended February 28, 2010, and $0.5 million for the nine months ended February 28, 2009.  Increases in sales commissions from the Allen, Texas and Independence, Missouri projects in the period ended February 28, 2010, were not sufficient to offset the loss of sales commissions from the Rio Rancho, New Mexico facility, no longer under contract, the Wenatchee, Washington facility, no longer under contract, and the Prescott Valley, Arizona facility.
 
 License fees – league dues and other were $1.5 million for the nine months ended February 28, 2010, and $1.3 million for the nine months ended February 28, 2009.  The current year period includes $0.1 million increase in corporate sponsorship revenue.
 
 License fees – initial and transfer for the nine months ended February 28, 2010, includes fees from a transfer in the quarter ended August 31, 2009.  Since initial and transfer fees are not regularly recurring and are difficult to predict, there is no assurance that we will be able to increase or sustain our operating capital through this source.
  24
  Operating Costs(in thousands):
 
 Nine Months Ended February 28,2010


% of Revenue


2009


% of Revenue


Change


% ChangeCost of revenues

$
5,041



56.5


$
4,337



47.5


$
704



16.2General and administrative costs


4,498



50.4



4,897



53.7



(399
)


(8.1
)Total Operating Costs

$
9,539



106.8


$
9,234



101.2


$
305



3.3
 
 Total operating costs increased $0.3 million to $9.5 million for the nine months ended February 28, 2010, from $9.2 million in the prior year period.  The nine months ended February 28, 2010, included $1.0 million of additional preopening costs, primarily for the Allen, Texas and Independence, Missouri projects, $0.2 million of additional food service costs, related to the increase in food service revenues, and $0.3 million of additional facility payroll expense.  Those increases in cost of revenues were offset by a $0.7 million decrease in ticket servicing costs related to the decline in ticket service fees.  General and administrative costs decreased year-over-year in several expense categories as a result of cost reduction initiatives.
 
 Loss from Continuing Operations(in thousands):
 
 Nine Months Ended February 28,2010


% of Revenue


2009


% of Revenue


Change


% ChangeLoss from continuing operations, before tax

$
(697
)


(7.8
)

$
(497
)


(5.4
)

$
(200
)


40.2
 
 Loss from continuing operations, before tax, was $0.7 million for the nine months ended February 28, 2010, compared to a loss from continuing operations, before tax, of $0.5 million for the nine months ended February 28, 2009.  Interest expense in the nine months ended February 28, 2010, was $0.4 million lower then in the prior year period due to the repayment of the Wenatchee project loan in December 2008.  The current year period includes $0.1 million in losses on the investment in PVEC, LLC.
 
 Liquidity and Capital Resources
 
 As of February 28, 2010, we had $0.6 million in cash and cash equivalents, including cash collected for GetTix tickets of less than $0.1 million for events scheduled to occur in the future.
 
 Under our performance guarantee related to the hockey team in Texas, $50 thousand of working capital, included in prepaid and other assets is currently unavailable to us.  We expect this working capital will be unavailable to us until November 2010, when we expect $50 thousand will be released.  In addition, accounts receivable for advertising sales commissions from the Texas facility, $0.1 million at February 28, 2010, are not being paid to us under normal terms.  We expect to receive payment of the advertising sales commission receivables earned through October 2010 at this facility, in November 2010.
 
 Cash used in operating activities was $0.8 million in the nine months ended February 28, 2010.  During the period ended February 28, 2010, we began receiving furniture, fixture and equipment on the project in Allen, Texas.  We generally pay the vendors for these items after obtaining funds from the city.  This furniture, fixture and equipment activity increased accounts receivable $0.2 million between May 31, 2009, and February 28, 2010, and increased accounts payable $0.2 million between May 31, 2009, and February 28, 2010.
 
 Cash provided by investing activities in the nine months ended February 28, 2010, was limited to fixed asset purchases, net of proceeds from disposal of our food service equipment.  We received $0.6 million when we sold our food service equipment to the City of Wenatchee, Washington in October 2009.  We use the city’s equipment to conduct food service operations in Independence, Missouri, beginning in November 2009, and do not expect to make any material capital expenditures in the remainder of fiscal 2010.
  25
  Cash used in financing activities for the nine months ended February 28, 2010, consisted entirely of scheduled payments on our note payable.  We do not currently have any intentions of entering into any additional financing arrangements.
 
 We had a $1.75 million line of credit that expired October 1, 2009.  We did not renew the facility.
 
 As of February 28, 2010, $736 thousand of trade receivables is classified as long-term assets.  This classification was done in contemplation of the current economic conditions and the anticipated timing of collections.  Management, after careful review and analysis, believes these receivables to be fully collectible and as such, no allowance for doubtful accounts has been established against these receivables.
 
 We have experienced operating losses and a deterioration in liquidity since May, 31, 2009.  The economic downturn, which has affected the markets in which we operate, has negatively impacted our operating results and our liquidity, and may continue to do so until an economic recovery is complete.  If we sustain additional operating losses, our business or profitability continues to deteriorate, the timing of collections does not improve, or we incur unexpected expenses or asset impairments, it could have a material adverse effect on our liquidity and financial resources.  We are finalizing our business plans for fiscal 2011, and expect to be under cash flow pressure for the foreseeable future.  While we anticipate having adequate cash flow from available sources to fund our operating needs through February 28, 2011, there can be no assurance, that cash flow will be adequate, with or without realization of our plans.  We cannot guarantee that we would be able to obtain financing, if needed, on terms acceptable to us, if at all.
 
 We continue to evaluate the profitability of, and synergies among, our various subsidiaries and may determine to discontinue or dispose of one or more of them, as we move forward with our business plan.
 
 Accounting Developments
 
 In November 2007, the EITF modified GAAP to prohibit application of the equity method of accounting to activities performed outside of a separate legal entity and requires revenues and costs incurred with third parties in connection with collaborative agreements be presented gross or net based on other applicable accounting literature.  Payments to or from collaborators should be presented in an income statement based on the nature of the arrangement, whether the payments are within the scope of other accounting literature, and certain other criteria.  We adopted these standards effective June 1, 2009, and applied the standards to our accounting for CHL, Inc.’s interest in the League effective June 1, 2009.  Based on the nature of our arrangement with CHL, Inc., its interest is accounted for by analogy to the standards for the accounting and reporting of noncontrolling interests.
 
 In December 2007, the FASB modified GAAP by establishing accounting and reporting standards for noncontrolling interests in a subsidiary and for the deconsolidation of a subsidiary.  The standards also provide income statement presentation guidance and require expanded disclosures.  We adopted these standards effective June 1, 2009, prospectively, except for the presentation and disclosure requirements, which have been applied retrospectively for all periods presented.  We account for CHL, Inc.’s interest in the League in accordance with these new standards effective June 1, 2009.  The impact on our financial position and results of operations was as follows:
 
 ·
CHL, Inc.’s share of the results of League operations is reflected separately on the face of the consolidated statements of operations below net income (loss) rather than in other income (expense).
 
 ·
CHL, Inc.’s undistributed earnings (loss) in the League is presented as noncontrolling interest in the equity section of the consolidated balance sheets, for all periods presented.  Prior to adoption of these standards CHL, Inc.’s undistributed earnings (loss) in the League had been presented in the consolidated balance sheets as a liability as of May 31, 2009, and as an asset as of February 28, 2009.
  26
  In September 2009, the EITF issued a consensus which revises the standards for recognizing revenue on arrangements with multiple deliverables.  Before evaluating how to recognize revenue for transactions with multiple revenue generating activities, an entity should identify all the deliverables in the arrangement and, if there are multiple deliverables, evaluate each deliverable to determine the unit of accounting and whether it should be treated separately or in combination.  The consensus removes certain thresholds for separation, provides criteria for allocation of revenue amongst deliverables and expands disclosure requirements.  The standards will be effective June 1, 2011, for our fiscal year 2012, unless we elect to early adopt the standards effective June 1, 2009 or June 1, 2010.  We have not yet evaluated the impact these standards will have on our financial position or results of operations.  We have not determined if we will early adopt the standards.
 
 In June 2009, the FASB changed the consolidation rules as they relate to variable interest entities.  The standards change the model for determining who should consolidate a variable interest entity, and require ongoing reassessment of whether we should consolidate a variable interest entity.  The standards will be effective June 1, 2010, for our fiscal year 2011.  We have not yet evaluated the impact these standards will have on our financial position or results of operations.
 
 Item 3. Quantitative and Qualitative Disclosures about Market Risk
 
 Not applicable.
 
 Item 4T. Controls and Procedures
 
 Evaluation of Disclosure Controls and Procedures.
 
 Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15 as of February 28, 2010.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.  There were no changes in our internal control over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
 
 Our management, including its principal executive officer and the principal financial officer, do not expect that our disclosure controls and procedures will prevent all error and all fraud.  A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.  We monitor our disclosure controls and procedures and internal controls and make modifications as necessary; our intent in this regard is that the disclosure controls and procedures will be maintained as dynamic systems that change (including with improvements and corrections) as conditions warrant.
 
 Changes in Internal Control over Financial Reporting.
 
 There have not been changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the third quarter of fiscal 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
  27
  PART II – OTHER INFORMATION
 
 Item 1. Legal Proceedings
 
 We are a plaintiff and a counter-defendant in a lawsuit involving the City of Rio Rancho, New Mexico filed June 24, 2009, in the New Mexico 13th Judicial District, Sandoval County, Case No. 01329 CV091504.  Our claim seeks resolution of matters stemming from the time during which we managed the events center in Rio Rancho, New Mexico.  Specifically, our claim is based on breach of contract and other matters.  The complaint seeks payment of monies due in excess of $0.3 million and declaratory judgment that we have no liability to third-party creditors of the center.  The city’s counterclaim alleges breach of contract, among other claims, and seeks judgment in excess of $0.2 million.  We believe the counterclaim is without merit.
 
 Global Entertainment Corporation, PVEC, LLC and two of our directors (James Treliving and Richard Kozuback) are four of sixteen defendants in a series of suits: Allstate Life Insurance Company v. Robert W. Baird & Co., Global Entertainment Corporation, et al.; United States District Court, District of Arizona, Case No. 3:09-cv-08162-FJM filed September 18, 2009; Covin, et al. v. Robert W. Baird & Co., Global Entertainment Corporation, et al.; United States District Court, District of Arizona, Case No. 3:09-cv-8174-MEA filed September 30, 2009; Wells Fargo Bank, N.A. v. Robert W. Baird & Co., Global Entertainment Corporation, et al.; Maricopa County Superior Court, Case No. CV2009-030148 filed September 30, 2009.  The litigation relates to the offering for the Bonds, issued to support the construction of the events center in Prescott Valley, Arizona.  Allstate is a bond holder and the complaint alleges the bond offering failed to properly disclose certain facts, that the underwriters and certain law firms acted with deliberate recklessness and that the bond documents are defective.  Allstate seeks unspecified damages and/or reimbursement of its investment, in excess of $26 million.  We have indemnified all our former and current directors and officers in connection with this matter.  We believe the claims against Global Entertainment Corporation, PVEC, LLC and the two directors are without merit.  Our insurance carrier has been notified.Our insurance carrier has indicated an intention to decline coverage of Global Entertainment Corporation in this matter.  Defense costs allocated to Global Entertainment Corporation are being expensed as incurred and defense costs allocated to the directors are being expensed as incurred up to the amount of the applicable deductible ($75 thousand or $100 thousand, depending on how the claim is ultimately classified).
 
 Item 1A. Risk Factors
 
 Not applicable.
 
 Item2. Unregistered Sales of Equity Securities and Use of Proceeds
 
 None.
 
 Item 3. Defaults upon Senior Securities
 
 None.
 
 Item 4. Submission of Matters to a Vote of Security Holders
 
 None.
 
 Item 5. Other Information
 
 None.
 
 Item 6. Exhibits
 
 See Exhibit Index attached.
  28
  SIGNATURES
 
 Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
  GLOBAL ENTERTAINMENT CORPORATION(Registrant)April 14, 2010
By
/s/Richard KozubackRichard KozubackPresident & Chief Executive OfficerApril 14, 2010
By
s/James YeagerJames YeagerSenior Vice President & Chief Financial Officer
 29
  Exhibit Index
  The following exhibits are filed herewith or incorporated herein pursuant to Regulation S-K, Item 601:
  Exhibit31.1
Certifications Pursuant to 18 U.S.C. Section 1350-Section 302, signed by Richard Kozuback, Chief Executive Officer.*31.2
Certifications Pursuant to 18 U.S.C. Section 1350-Section 302, signed by James Yeager, Chief Financial Officer.*32
Certification Pursuant to 18 U.S.C. Section 1350-Section 906, signed by Richard Kozuback, Chief Executive Officer and James Yeager, Chief Financial Officer.*
 *
Filed herewith.