Global Entertainment Holdings, Inc. - FORM 10-Q

Attached files

file	filename
EX-31.1 - Global Entertainment Holdings, Inc.	ex31-1.htm
EX-32.1 - Global Entertainment Holdings, Inc.	ex32-1.htm
EX-32.2 - Global Entertainment Holdings, Inc.	ex32-2.htm
EX-31.2 - Global Entertainment Holdings, Inc.	ex31-2.htm

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 1934

For the quarterly period ended September 30, 2010

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File number 000-49679

GLOBAL ENTERTAINMENT HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Nevada		93-1221399
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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

(702) 516-9684

(Registrant's telephone number, including area code)

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) Yes r No x

The number of shares of Common Stock, $0.001 par value, outstanding on November 12, 2010 was 23,507,844 shares.

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GLOBAL ENTERTAINMENT HOLDINGS, INC.

Table of Contents

		Page
PART I Financial Information

Item 1.	Financial Statements and Notes	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.	Controls and Procedures	23

PART II Other Information

Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	27
Item 4.	(Removed and Reserved)	27
Item 5.	Other Information	27
Item 6.	Exhibits

Signatures		30

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Global Entertainment Holdings, Inc.

Consolidated Balance Sheet

	September 30,		December 31,
	2010		2009
	(Unaudited)		(Audited)
Assets
Current assets:
Cash and cash equivalents	$	12,781	$	10,913
Accounts Receivable		10,000		10,000
Note Receivable		87,450		87,450
Accrued Interest Income		14,918		14,918
Total current assets		125,149		123,281

Fixed assets, net		7,879		12,425
Total fixed assets		7,879		12,425

Other assets:
Book Rights		1,864		1,864
TV Game / Reality Show		5,966		5,966
Film Rights		644,175		189,175
Movies		65,225		33,850
Website Software: Less Amortization		500		2,000
Other Assets		20,263		17,695
Producer Investments		150,000		150,000

Total other assets		887,993		400,550

Total assets	$	1,021,021	$	536,256

See notes to consolidated financial statements.

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Global Entertainment Holdings, Inc.

Consolidated Balance Sheet

	September 30,			December 31,
	2010			2009
	(Unaudited)			(Audited)
Liabilities and Stockholders' Equity
Liabilities not subject to compromise
Accounts payable	$	118,353		$	94,680
Accrued expenses		220,901			206,707
Deferred revenue		150,000			150,000
Notes payable		343,606			251,268

Total current liabilities not subject to compromise		832,860			702,655

Liabilities subject to compromise

Debentures		40,000			40,000
Total liabilities subject to compromise		40,000			40,000

Total liabilities		872,860			742,655

Stockholders' equity:

Series B Convertible preferred stock, par value $0.001,
4,000,000 shares authorized, 3,990,314 shares issued and outstanding		3,990			3,990
Series C Convertible preferred stock par value $0.001
6,500,000 shares authorized, 6,500,000 outstanding		6,500			6,500
Common stock, $0.001 par value, 230,000,000 shares
authorized, 23,487,844 and 22,567,844 shares issued and
Outstanding at September 30, 2010 and December 31, 2009, respectively		106,502			105,582
Shares authorized & unissued					10,000
Additional paid-in capital		11,239,445			11,180,765
Additional paid-in capital Preferred B		271,425			271,425
Additional paid-in capital Preferred C
Accumulated (deficit)		(11,479,701	)		(12,114,518	)
		148,161			(175,386	)
	$	1,021,021		$	536,256

See notes to consolidated financial statements.

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Global Entertainment Holdings, Inc.

Consolidated Statement of Operations

Unaudited

	Three months ended					Nine months ended
	September 30,					September 30,
	2010		2009			2010			2009
Net Revenue	$	1,046	$	-			451,046

Expenses:

General and Administrative expenses		47,481		62,972			114,397			317,242

Depreciation & Amortization		2,015		2,069			6,046			6,209
Total operating expenses		49,496		65,041			120,443			323,451

Net Operating Income (loss)		(48,450)		(65,041	)		330,603			(323,451	)

Other income (expenses):
Other income (expense)							598			5,000
Interest (expense) net of interest income				(1,215	)		(10,413	)		(3,783	)

Total other income (expenses)		0		(1,215)			(15,188)			1,217

Income tax (benefit) provision

Net Income (loss)	$	(48,450)	$	(66,256	)		315,415			(322,234	)


Net (loss) per share – basic	$	(0.002)	$	(0.003	)	$	0.01		$	(0.016	)

Weighted average number of common shares outstanding – basic		23,371,974		21,935,670			23,021,360			19,137,386

See notes to consolidated financial statements.

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Global Entertainment Holdings Inc.

Consolidated Statement of Cash Flows

Unaudited

	For the Nine months ended
	September 30,
	2010			2009
Cash flows from operating activities
Net income (loss)	$	315,415		$	(322,234	)
Adjustments to reconcile net income to net cash
provided by (used in operating activities)
Depreciation and amortization		6,045			6,209
Reserve for unsuccessful resolution of lawsuits
Share-based compensation
Changes in assets and liabilities:
Increase (decrease) in account receivables					(38,500	)
Increase (decrease) in other assets		1,467			6,500
Increase (decrease) in contingent advances
Notes receivable					150,000
Debt discount
Deferred stock compensation
Increase (decrease) in accounts payable and accrued expenses		603			168,102
Trade and other claims subject to compromise
Increase (decrease) in deferred revenue
Net cash (used in) operating activities	$	323,530			(36,423	)


Cash flows from investing activities:
Purchase of property and equipment		(455,000	)
Net cash (used in) investing activities

Cash flows from financing activities:
Cash from issuance of common stock		20,000			11,500
Cash from exercise of options & warrants
Common stock cancellation
Proceeds from notes payable		92,338			16,258
Repayments of notes payable					5,000
Proceeds from investor participation borrowings
Principal repayments on capital lease obligations
Value of Warrants issued		21,000			2,500
Net cash provided by financing activities	$	(321,662	)		35,258

Increase (decrease) in cash		1,868			(1,165)
Cash - beginning of period		10,913			2,553
Cash - ending of period	$	12,781		$	1,388

See notes to consolidated financial statements.

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Global Entertainment Holdings Inc.

Notes To Consolidated Financial Statements

Note 1 - Basis of Presentation

The condensed interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein. It is suggested that these condensed interim financial statements be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2009, and notes thereto included in the Company's Form 10-K annual report. The Company follows the same accounting policies in the preparation of interim reports.

Results of operation for the interim period are not indicative of annual results.

Fixed Assets

Fixed assets are stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over a period of the shorter of the related applicable lease term or the estimated useful lives of the assets ranging from 3 to 5 years. Depreciation expense for the nine months ending September 30, 2010 and 2009, was $6,046 and $6,209, respectively.

Long Term Assets

The Book, TV and Film Rights costs are recorded as assets as required by the AICPA Statement Of Position 00-2. The costs will be amortized using the individual film forecast computation method.

Global Universal Film Group, Inc., purchased the majority of the Books, TV and Movie Rights in January, 2006, for approximately $160,000. The total capitalized assets as of September 30, 2010, were $717,230, reflecting movie rights acquired for $450,000 during the nine month period ending September 30, 2010. The expenditures that are related to specific Film, TV or Book projects are capitalized as a long-term asset. The capitalized costs will be amortized using the individual film forecast computation method as film revenues are obtained.

Website Software

The Company adheres to the AICPA Statement of Position 98-1 Accounting For The Cost Of Computer Software Developed or Obtained For Internal Use. During the year 2007 the Company had expenditures of $6,000 for Global Universal film Group Inc. our subsidiary for the development of its website. Software purchased will be amortized over a period of three years straight-line basis. The amortization will begin in the year 2008. As of September 30, 2010, $1,500 has been amortized for the nine months ended September 30, 2010.

Revenue Recognition

Film revenue from licensing agreements is recognized when the license period Begins and the licensee and the Company become contractually obligated under a non-cancellable agreement. All revenue recognition for license agreements is in compliance with the AICPA's Statement of Position 00-2, Accounting by Producers or Distributors of Films. To date, Global Universal has not produced any film revenue.

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Note 2 - Bankruptcy Petition and Reorganization

On April 2, 2003, certain creditors filed an involuntary bankruptcy petition under Chapter 7 of the United States Bankruptcy Code against LitFunding Corp., a Nevada corporation.

On June 17, 2004, a Plan of Reorganization was approved by the Bankruptcy Court. The only remaining bankruptcy liability at September 30, 2010, are $40,000 in principal amount of the Company’s 9% Debentures, which matured on June 30, 2008.

Note 3 – Notes Receivable

Subject to financing of the Film, GUP agreed to pay the Company an all inclusive one-time fee of (i) U.S. $150,000, evidenced by a Promissory Note due March 31, 2009 (the "Fee"), and (ii) revenue representing 50% of GUP's "Net Receipts" from the sale of the Film rights in the worldwide marketplace.

The original terms of the October 2, 2008 secured promissory note of $150,000 called for a due date March 31, 2009 with interest to accrue at 10% per annum. However, due to pending GUP’s litigation against Film Finances of Canada, Ltd. (the Completion Bond company), the Company has agreed to extend the maturity date of this Note until December 31, 2010. GUP has made periodic payments totaling $62,550, and the outstanding balance, as of September 30, 2010, is $87,450, plus accrued interest of $14,918.

Note 4 - Deferred Revenue

As a condition to the license, GUP agreed to credit the Company as the source of the original concept for the Film and Mr. Gary Rasmussen, the Company's Chief Executive Officer, as an Executive Producer.

The $150,000 fee has been recorded as deferred revenue and will be amortized as a percentage of the net receipts from the sale of the film rights.

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Note 5 – Film Participation Agreements

On September 22, 2008, the Company entered into an Exclusive License Agreement with its Canadian affiliate, Global Universal Pictures, Inc. (“GUP”), whereby the Company granted a worldwide, exclusive license to GUP to use the work entitled "Blue Seduction" (the "Film"). The license includes: (1) the right to promote the Film throughout the world in all languages and in all distribution markets, including TV, home video, DVD and non-theatrical and theatrical markets, and (2) merchandise rights relating to all goods and services appearing in the Film. The Company received a one-time fee of $150,000, evidenced by a promissory note (See Note 3 above) and is entitled to receive fifty (50%) of the Net Revenue received by GUP from the exploitation of the Film. Additionally, Global Universal Film Group (GUFG), the Company’s wholly-owned subsidiary responsible for film sales and web operations, invested $150,000 into B & J Pictures, Inc., the special purpose vehicle formed by GUP to produce and own the Film in exchange for a preferred return of its investment and the exclusive sales rights for all territories, with the exception of Canada.

On April 13, 2009, the Company entered into an Exclusive License Agreement with its Canadian affiliate, Global Universal Pictures, Inc. (“GUP”), whereby the Company granted a worldwide, exclusive license to GUP to use the work entitled "American Sunset" (the "Film"). The license includes: (1) the right to promote the Film throughout the world in all languages and in all distribution markets, including TV, home video, DVD and non-theatrical and theatrical markets, and (2) merchandise rights relating to all goods and services appearing in the Film. Pursuant to the Exclusive License Agreement, the Company is entitled to receive a one-time fee of $150,000 and is entitled to receive fifty (50%) of the Net Revenue received by GUP from the exploitation of the Film. As a condition to the license agreement, GUP agreed to credit the Company as the source of the original concept for the Film and Mr. Gary Rasmussen, the Company’s Chief Executive Officer, as Executive Producer.

Additionally, Global Universal Film Group (GUFG), the Company’s wholly-owned subsidiary responsible for film sales and web operations, invested $150,000 into 643402 N.B., Inc. (doing business as American Sunset Pictures), the special purpose vehicle formed by GUP to produce and own the Film in exchange for a preferred return of its investment and the exclusive sales rights for all territories, with the exception of Canada. The finalization of certain documentation supporting this transaction was delayed and not completed until May of 2010, and reported in the Company’s second fiscal quarter of 2010.

On January 4, 2010, the Company entered into an Exclusive License Agreement with its Canadian affiliate, Global Universal Pictures, Inc. (“GUP”), whereby the Company granted a worldwide, exclusive license to GUP to use the work entitled "Plaster Rock" (the "Film"). The license includes: (1) the right to promote the Film throughout the world in all languages and in all distribution markets, including TV, home video, DVD and non-theatrical and theatrical markets, and (2) merchandise rights relating to all goods and services appearing in the Film. The Company received a one-time fee of $150,000 and is entitled to receive thirty (30%) of the Net Profits received from the exploitation of the Film. As a condition to the license agreement, GUP agreed to credit the Company as the source of the original concept for the Film and Mr. Gary Rasmussen, the Company’s Chief Executive Officer, as Executive Producer.

Additionally, Global Universal Film Group (GUFG), the Company’s wholly-owned subsidiary responsible for film sales and web operations, invested $150,000 into 647241 N.B. Ltd. (doing business as Crush Pictures), the special purpose vehicle formed by GUP to produce and own the Film in exchange for a preferred return of its investment and the exclusive sales rights for all territories, with the exception of Canada.

Additionally, Global Universal Film Group (GUFG), the Company’s wholly-owned subsidiary responsible for film sales and web operations, invested $150,000 into 649679 N.B. Ltd. (doing business as The Night Pictures), the special purpose vehicle formed by GUP to produce and own the Film in exchange for a preferred return of its investment and the exclusive sales rights for all territories, with the exception of Canada.

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In April and May of 2010, the Company finalized its pending transaction with Global Universal Pictures and its subsidiary, 643402 N.B., Inc. (doing business as American Sunset Pictures), relating to the Company’s involvement with the feature film titled, “American Sunset” (the “Film”). The Canadian Audio-Visual Certification Office (CAVCO) had requested an amendment of the original Exclusive Licensing Agreement, as well as other supporting documentation, which was originally signed in 2009, to include the transfer of the copyright for American Sunset. The transfer of the copyright rights was done by an amendment to the Exclusive License Agreement, which was signed on May 28, 2010. Additionally, on April 21, 2010, the Company’s subsidiary, Global Universal Film Group, entered into a Restated Investment Undertaking, replacing the Company in the original, and a Representation Agreement, whereby the Company’s subsidiary would make the investment in the Film and be entitled to receive a sales fee on all sales of the rights to the Film, with the exception of any Canadian sales. The foregoing description of this transaction is qualified in its entirety by reference to the more complete information set forth in the full text of the related Agreements, which have been filed as exhibits to this report.

On June 10, 2010, the Company entered into a Co-Production and Screenplay Purchase agreement with MPH Productions to acquire the rights to a screenplay entitled “Seeing Things”, and to co-produce said screenplay into a feature film in cooperation with MPH Productions. The terms of the agreement call for the Company to purchase the screenplay at a price of $25,000, with an immediate payment of $15,000 and the balance due within one year. The Company will have the exclusive right to co-produce the feature film based on the script for a period of one year, with an option to extend said exclusive right for an additional one year upon payment of an additional $5,000. The screenplay was written by the principals of MPH and entails the true-life story about a spiritual being that has inhabited their Los Angeles residence for the past 18 years. The story of Seeing Things has been well documented by paranormal investigators and the subject of several television shows. More recently, Seeing Things was the focus of a SyFy Channel television program called “Fact or Faked: Paranormal Files”, that was broadcast on July 29, 2010. Additional information on the story can be found at the following website, which is not operated by the Company: http://www.drkrm.com/ghost2.html.

Note 6 - Debentures

During the year ended December 31, 2002, the Company issued $200,000 in principal amount, 5-year, 9% convertible debenture, due January 1, 2007. Included was one debenture due to a related party for $10,000. Interest is due semi-annually on the first day of June and December of each year, commencing June 1, 2003 until fully paid. As part of the plan of reorganization, these debentures were amended with a new maturity of June 30, 2008. In December 2007, the Company converted $150,000 principal amount of the debentures, plus approximately $21,000 in accrued interest, into 171,000 shares of Common Stock. At September 30, 2010 the Company had debentures outstanding of $40,000, with accrued interest totaling $16,200.

The registered holders of the debentures have the right, after one year prior to maturity, to convert the principal at the original conversion price of $10 for one Common share or at the adjusted conversion price. If and whenever on or after the date of the debenture, the Company issues or sells any share of common stock for a consideration per share less than the initial conversion rate, then upon such issue or sale, the initial conversion rate shall be reduced to the lowest net price per share at which such share of common stock have been issued. The debentures are subordinated to all the senior indebtedness, including debts under equity participation agreements.

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Note 7- Debt

Notes payable at September 30, 2010 is comprised of the following:

Note payable to entity, original balance of $19,181. Principal and interest due June 15, 2006. The Note is unsecured. In default.	$	9,591

Note payable to entity, original balance $32,187. This note is unsecured. Due May 15, 2006. In default.	$	6,094

Note payable to entity, original balance of $15,000 due in three monthly installments of $5,000 beginning April 15, 2006. The Note is unsecured. In default.	$	10,000

Note payable to entity, original balance of $30,502 due in two monthly installments of $15,251 beginning April 15, 2006. The Note is unsecured. In default.	$	15,251

Advances to be converted into notes. Net of EME advances of $12,000	$	16,339

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

Note payable face amount $40,000, dated May 1, 2008, interest rate 12% due date April 30, 2009. Currently in default. An extension is being pursued.	$	40,000

Note payable face amount $20,000, dated May 1,2008, interest rate 12% due date April 30, 2009. Currently in default. An extension is being pursued.	$	20,000

Note payable face amount $8,000, dated July 7, 2008, interest rate 12% due date March 31, 2009. Currently in default. An extension is being pursued.	$	8,000

Note payable face amount $4,500, dated July 8, 2008, interest rate 12% due date March 31, 2009. Currently in default. An extension is being pursued.	$	4,500

Note payable face amount $4,500 date August 19, 2008, interest rate 12% due date March 31, 2009. Currently in default. An extension is being pursued.	$	4,500

Global Notes with no specified due dates and varying interest rates.	$	60,253

Note payable face amount $25,000 date January 13, 2009, interest rate 10% due date March 31, 2009 with a 30-day grace period. Currently in default. An extension is being pursued.	$	25,000

Note payable face amount $2,000 date February 17, 2009, interest rate 6% due date April 15, 2010.	$	2,000

Note payable face amount $1,500 date March 6, 2009, interest rate 6% due date April 15, 2010.	$	1,500

Note payable face amount $10,000 date January 29, 2010, interest rate 6% due date September 30, 2010.	$	10,000

Note payable face amount $5,000 date March 22, 2010, interest rate 6 % due date October 31, 2010.	$	5,000

Note payable face amount $5,000 date April 12, 2010, interest rate 6% due date October 31, 2010.	$	5,000

Note payable face amount $1,300 date April 21, 2010, interest rate 6% due date December 31, 2010.	$	1,300

Note payable face amount $1,800 date June 3, 2010, interest rate 6% due date October 31, 2010.	$	1,800

Note payable face amount $15,000 date June 9, 2010, interest rate 6% due date June 30, 2011.	$	15,000

Note payable (convertible into common stock) face amount $17,500 dated June 23, 2010, interest rate 8%, due date March 23, 2011.	$	17,500

Note payable (convertible into common stock) face amount $15,000 dated September 30, 2010, interest rate 8% due date May 23, 2011.	$	15,000

Note payable face amount $10,000 date September 30, 2010 interest rate 6 % due date December 31, 2011.	$	10,000

Total	$	343,606

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Note 8 – Stockholders’ Equity

Common Stock – Issued

The following common stock was issued during the nine months ending September 30, 2010.

On March 30, 2010, the Company issued 100,000 restricted shares of its $0.001 par value common stock to a private investor. These shares were purchased in April of 2009, pursuant to the terms of a Subscription Agreement; however, the shares were not issued until March of 2010 at the request of the investor.

On March 30, 2010 the Company issued 400,000 restricted shares of its $0.001 par value common stock to an individual investor at a price of $0.05, per share, as documented by a Subscription agreement dated January 29, 2010.

On March 30, 2010 the Company issued 10,000 restricted shares of its $0.001 par value common stock at $0.05 to a individual as compensation for services performed.

On May 14, 2010 the Company issued 50,000 restricted shares of its $0.001 par value common stock at $0.01 to an executive officer in accordance with the terms of his employment agreement.

On July 6, 2010, the Company issued 110,000 restricted shares of its $0.001 par value common stock to Global Renaissance Entertainment Group, Inc. (“GREG”), in exchange for a five percent (5%) non-diluted equity interest in GREG, pursuant to the terms of a Share Exchange Agreement entered into on July 1, 2010, in connection with its obligation under a Joint Venture Agreement with GREG dated October 19, 2009.

On August 9, 2010, the Company issued 50,000 restricted shares of its $0.001 par value common stock at $0.01 to an executive employee pursuant to the terms of an employment agreement.

On August 9, 2010, the Company issued 100,000 restricted shares of its $0.001 par value common stock at $0.01 to an executive employee pursuant to the terms of an employment agreement.

On August 9, 2010, the Company issued 100,000 restricted shares of its $0.001 par value common stock at $0.05 to an executive employee pursuant to the terms of an employment agreement.

On October 12, 2010 the Company issued 10,000 free trading and 10,000 restricted shares of its $0.001 par value common stock at $0.10 to a individual as compensation for services to be performed.

Series “B” Convertible Preferred Stock

On December 6, 2006, pursuant to the terms of a certain reverse tri-party merger with Global Universal Film Group, Inc., dated March 7, 2006 (Merger Agreement), we issued a total of 1,500,000 shares of our Series B, Convertible Preferred Stock (“Series B Stock”) to the stockholders of Global Universal. Global Universal became a wholly-owned subsidiary of the Company. Gary Rasmussen, our CEO, owned 50% of the shares of Global Universal and received 750,000 shares pursuant to the merger. Jackelyn Giroux, President of Global Universal, received 750,000 shares.

Pursuant to the Merger Agreement, Global Universal had the unilateral right to “spin-off” from the Company to become a separate, reporting, publicly held company, in exchange for a $200,000 management fee. Global Universal paid the Company $26,000 in cash and executed a promissory note for the balance of $174,000. Pursuant to the Merger Agreement, the Company would retain 10% of Global Universal shares and was required to timely file a registration statement covering said shares of Global Universal thereby effecting the spin-off. The Company failed to file the registration statement.

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On October 16, 2006, the Global Universal shareholders elected to spin-off from the Company and the Merger Agreement was amended to provide that if the registration statement was not filed on or before June 30, 2007, then Global Universal would be entitled to a complete refund of the management fee and to effect a private spin-off. The Company’s former management failed to file the registration statement by June 30, 2007.

In September of 2007, Mr. Rasmussen (a former 50% shareholder of Global Universal prior to the Merger Agreement) was appointed to the Board of Directors and elected CEO of the Company. At that time, the Company’s debt was in excess of $3 Million and its core business and primary assets were essentially worthless. The former shareholders of Global Universal (now holders of Series B Stock) decided to restructure the Company and remain a part of it rather than effect a spin off. Accordingly, the Series B Stock was amended to remove the right to effect a spin-off of Global Universal and a new Series C Convertible Preferred stock was authorized by the Board of Directors and issued to the holders of the Series B Stock to reflect changes agreed to between the Board of Directors and the former shareholders of Global Universal.

In December 2007, we agreed to issue an additional 2,490,134 shares of Series B Stock in exchange for the cancellation of $273,915 in debt of Global Universal. Mr. Rasmussen received 343,227 shares directly in his name, and Rochester Capital Partners received 641,225 shares. Ms. Giroux received 1,505,682 shares directly in her name. However, said shares were not issued by our transfer agent until April 22, 2008. The total 3,990,314 shares of our Series B Stock outstanding are convertible into 3,990,134 shares of common stock at anytime. The Series B Stock is not affected by any stock splits. A full description of the terms and conditions of the series B Convertible Preferred stock is contained in the Company’s filing on Form 8-K, as filed on December 12, 2007.

Series C Convertible Preferred Stock

In January, 2008, in keeping with the restructuring efforts of the present management team, the Board authorized the issuance of 6,000,000 shares of a non-dilutive, convertible preferred stock entitled, Series C Convertible Preferred Stock (“Series C Stock”). The Series C Stock is non-dilutive and, the initial 6,000,000 shares authorized, will convert into 60% of the Company’s outstanding common stock as calculated immediately after such conversion. On April 4, 2008, the Company filed a Certificate of Designation relating to its Series C Convertible Preferred Stock with the Nevada Secretary of State. A full description of the terms and conditions of the Series C Preferred Stock is listed as exhibit 3.3, incorporated as a part of this document on Form 10-QSB.

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

Note 9 – Contingencies

The Company is not a party to any litigation as of the date of this quarterly report.

Note 10 – Warrants and Options

During the three months ended September 30, 2010, the following stock options were issued:

Pursuant to the terms of an employment agreement of an executive, the Company agreed to grant the executive an option to purchase up to 240,000 shares of its restricted common stock at a price of $.10 per share. The option will vest at the rate of 30,000 shares for each quarter in which the executive has remained an employee in good standing with the Company. The executive is presently entitled to exercise purchase rights with respect to a total of 60,000 shares.

Options and Warrants Exercised

Sixty thousand stock options were issued during the nine month period ending September 30, 2010.

During the nine months ended September 30, 2010, there were 300,000 warrants extended to March 31, 2011.

Options and Warrants Exercised

During the nine months ended September 30, 2010, there were no stock options exercised. There were no warrants exercised.

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The summary of activity for the Company's stock options/warrants is presented below:

During the three months ended September 30, 2010, there were 30,000 stock options issued and no warrants issued. During the period, 300,000 warrants had their exercise date extended until March 31, 2011, from July 31, 2010; the exercise prices were not changed.

During the nine months ended September 30, 2010, there were sixty thousand stock options issued.

The summary of activity for the Company's stock options/warrants is presented below:

	Nine months September 30, 2010		Weighted Average Exercise Price
Options/warrants outstanding at beginning of period		530,675	$	1.39
Granted		60,000	$	.10
Exercised			$
Amended		300,000		.38
Terminated/Expired		327,925	$	.52
Options/warrants outstanding at end of period		590,675	$	1.39
Options/warrants exercisable at end of period		590,675	$	1.39

Price per share of options outstanding	$	0.05 -70.00

Weighted average remaining contractual lives	2.7 years

Weighted average fair value of options or warrants granted or extended during the period.	$	0.01

Note 11 – Related Party Transactions (See Note 5 – Film Participation Agreements)

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

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

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In October of 2008, National Bank of Canada agreed to fund approximately $1.1M Canadian for the production of Blue Seduction. The bank financing was contingent upon the bank's receipt of a Completion Bond that guaranteed that the film was actually produced and delivered. This allowed the bank certainty that it would be able to collect on available Canadian tax credits, as well as distribution guarantees from the Film’s distributor. The Completion Bond Company, Film Finances of Canada, Ltd., requested that the Company provide a guarantee for any amounts that they may lose in the transaction. The contingent liability of the Company was difficult to determine at the time of the transaction, but was eventually determined to be zero, as the Film was produced and the tax and distribution incentives were collected by the bank.

On April 13, 2009, the Company entered into an Exclusive License Agreement with its Canadian affiliate, Global Universal Pictures, Inc. (“GUP”), whereby the Company granted a worldwide, exclusive license to GUP to use the work entitled "American Sunset" ("American Sunset"). The Company received a one-time fee of $150,000, plus an ongoing thirty percent (30%) equity interest in the net revenues received by GUP from exploitation of the rights to in consideration of a one-time fee of $150,000, plus a 30% interest in the Net Profits of American Sunset. As a condition to the license agreement, GUP agreed to credit the Company as the source of the original concept for the Film and Mr. Gary Rasmussen, the Company’s Chief Executive Officer, as Executive Producer. Additionally, Global Universal Film Group (GUFG), the Company’s wholly-owned subsidiary responsible for film sales and web operations, invested $150,000 into the ownership of American Sunset and was appointed as the Exclusive Sales Agent for American Sunset for all worldwide territories, except Canada. The original rights to American Sunset were acquired by the Company from Jackie Giroux in connection with her employment as President of Global Universal Film Group, a wholly-owned subsidiary of the Company. Ms. Giroux will receive a fee as Producer of the Film directly from GUP.

On January 4, 2010, the Company entered into an Exclusive License Agreement with its Canadian affiliate, Global Universal Pictures, Inc. (“GUP”), whereby the Company granted a worldwide, exclusive license to GUP to use the work entitled "Plaster Rock – Terror on the Tobique" ("Plaster Rock"), The Company received a one-time fee of $150,000, plus an ongoing thirty percent (30%) equity interest in the net revenues received by GUP from exploitation of the rights to Plaster Rock. As a condition to the license agreement, GUP agreed to credit the Company as the source of the original concept for the Film and Mr. Gary Rasmussen, the Company’s Chief Executive Officer, as Executive Producer. Additionally, Global Universal Film Group (GUFG), the Company’s wholly-owned subsidiary responsible for film sales and web operations, invested $150,000 into the ownership of Plaster Rock and was appointed as the Exclusive Sales Agent for Plaster Rock for all worldwide territories, except Canada. The original rights to Plaster Rock were acquired by the Company from Jackie Giroux in connection with her employment as President of Global Universal Film Group, a wholly-owned subsidiary of the Company. Ms. Giroux will receive a fee as Producer of the Film directly from GUP.

On March 19, 2010, the Company entered into an Exclusive License Agreement with its Canadian affiliate, Global Universal Pictures, Inc. (“GUP”), whereby the Company granted a worldwide, exclusive license to GUP to use the work entitled "The Night" (“The Night"). The Company received a one-time fee of $150,000, plus an ongoing thirty percent (30%) equity interest in the net revenues received by GUP from exploitation of the rights to The Night. As a condition to the license agreement, GUP agreed to credit the Company as the source of the original concept for the Film and Mr. Gary Rasmussen, the Company’s Chief Executive Officer, as Executive Producer. Additionally, Global Universal Film Group (GUFG), the Company’s wholly-owned subsidiary responsible for film sales and web operations, invested $150,000 into the ownership of American Sunset and was appointed as the Exclusive Sales Agent for The Night for all worldwide territories, except Canada. The original rights to the story for The Night were acquired by the Company from a third party and licensed to GUP. Also, the story was written into a screen play by Ms. Giroux in connection with her employment as President of Global Universal Film Group, a wholly-owned subsidiary of the Company. Ms. Giroux will receive a fee as Producer of The Night directly from GUP.

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Note 12 - Subsequent Events

On October 13, 2010, the Company announced the online distribution and sales of DVD's and Blu-Ray disc's of its film American Sunset, exclusively on the film's website: www.AmericanSunsetTheMovie.com, operated by Global Universal Film Group (GUFG), a wholly-owned subsidiary. GUFG has entered into agreements with third parties for the duplication and fulfillment of DVD and Blu-Ray disc's of American Sunset, establishing the Company's subsidiary in the business of online retail sales of DVD and Blu-Ray disc's.

On November 4, 2010, the Company announced that it had entered into a partnership agreement with InnerGate Entertainment, a privately owned company, to collaborate on the financing, production and marketing of a slate of several high-quality, feature films. InnerGate is expected to arrange financing for the films, while the Company will undertake production operations, may incur liabilities in connection with such production operations, and will likely issue shares of common stock or grant stock options as an equity incentive to potential investors.

On November 10, 2010, the Company announced that GUFG, its sales and distribution subsidiary, is implementing a state-of-the-art video distribution and online application technology called AppFlikTM. The Company has contracted Level4 Stonehenge Development Partners to embed and market its movies as downloadable film applications available worldwide on the Internet through well established, online storefronts such as Apple's iTunes. The first film the Company will distribute employing this new technology is American Sunset, which is expected to be available on the iTunes website before year end.

Note 13 - Going Concern

Although the Company has recently realized profits, those profits were derived from the sale of intellectual property rights to our affiliated company, Global Universal Pictures, and were immediately invested into the films being produced by GUP in exchange for the worldwide sales rights for the films, with the exception of Canada. As a result, the Company did not receive any cash flow for working capital purposes and has realized significant losses and lack of cash flow over the past two years. Unless significant additional investment capital is obtained by the Company, or a major reduction in operating losses occurs from positive cash flow from its film sales, the Company could be in jeopardy of continuing operations. The Company seeks to generate needed funds to continue ongoing operations from debt or equity sources, formation of joint ventures, the sale of Company stock through a Private Placement and/or advances from the primary shareholder.

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FORWARD-LOOKING STATEMENTS

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

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

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

o increased competitive pressures from existing competitors and new entrants;

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

o deterioration in general or regional economic conditions;

o adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a

regulator with respect to existing operations;

o loss of customers or sales weakness;

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

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

o operational inefficiencies in distribution or other systems.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW AND OUTLOOK

Since the Fall of 2008, management of the Company focused efforts and resources on building its core business of developing, financing and producing feature-length films, which operations are conducted primarily through its wholly-owned subsidiaries of Global Universal Entertainment, Inc. (U.S. Film Productions) and Global Universal Film Group, Inc. (Film Sales and Internet Operations), as well as through its 30% owned Canadian affiliate, Global Universal Pictures, Inc. (Canadian Film Productions). The Company has been developing the brand name “Global Universal”, under which certain members of management have conducted operations for over twenty years. Additionally, the Company recently formed Global Renaissance Funding, LLC., a 51% owned subsidiary that the Company plans to carry out financing activities to fund the U.S. production of a slate of films in cooperation with Global Renaissance Entertainment Group (GREG), a company organized by Arthur Wylie, who owns the remaining 49% of Global Renaissance Funding.

The past two years have been beneficial to the Company in terms of successfully producing four feature films and realizing its first corporate profits from the film business, despite economic conditions that have drastically reduced film sales within the motion picture industry and caused many independent film companies to suffer hardship due to lack of capital available for film production. Management believes that its low overhead and financial strategy in funding film productions have been key factors in its success. The Company utilizes a combination of high yielding tax credits, bankable pre-sales and reinvestment of its producer's fee to offset a majority of a film's cost. The Company also contributed the intellectual property rights for its films (i.e., the screenplay), which resulted in profits prior to the sale of any film rights. Such profits were invested into the production of the films in exchange for worldwide sales rights, with the exception of Canada (due to Canadian tax rules requiring sales of such rights in Canada to be undertaken by a Canadian company).

Because of the financing strategy noted above, the risk of the Company's investment in the production of its films is reduced considerably and profitability may be possible for even a direct-to-video release, followed by additional income derived from pay, cable, satellite, free and syndicated television exhibition. The Company anticipates that at least one of the films it intends to produce in a slate of films (subject to availability of financing) may warrant and receive a theatrical release prior to its video distribution. There is, of course, no guarantee of a theatrical release for any film that may be produced by the Company, although the Company anticipates that any distribution company it selects will use its “best efforts” to obtain U.S. theatrical release through an “out put” or “first look” arrangement with a major film studio.

Current Operations

We have proven our ability to finance and produce films and validated our financial strategy of significantly mitigating investment risk. The Company plans to expand its present business operations of producing low-to-medium budget, genre pictures with recognizable, name talent, conducted primarily through Global Universal Pictures (Canada), while the Company and our U.S. subsidiaries will focus efforts on raising significant capital for the production of films in the U.S. Such films will be produced by Global Universal Entertainment, who will concentrate on developing a higher quality, slate of several films with “B+” and “A” rated talent, which are more likely to bring in significant revenues, as well as the potential for a theatrical release and/or major distribution that could provide the Company with valuable name recognition within the film industry. Furthermore, by producing a slate of planned films in the U.S. (through our wholly-owned subsidiary, GUE), the Company will reap greater rewards in terms of increasing assets and building a significant revenue stream, because such U.S. films will be 100% owned and accounted for on the Company's financial statements, as opposed to films produced by our 30% owned Canadian affiliate, Global Universal Pictures (GUP), which the Company accounts for as an investment and neither the film asset nor its revenues flow directly to the Company. However, the Company will be able to realize revenues from the sale of film rights of films produced by GUP because Global Universal Film Group (GUFG) is the sales agent for such films as a result of its investment in the films.

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One of the ways the Company plans to facilitate production operations in the US is by employing joint ventures. On July 1, 2010, the Company and Arthur Wylie, CEO of Global Renaissance Entertainment Group ("GREG") finalized a joint venture that will operate as a 51% owned subsidiary called Global Renaissance Funding, LLC. (GRF). The joint venture agreement called for the Company to issue 110,000 restricted shares of its $0.001 par value common stock to GREG in exchange for a five percent (5%), non-diluted equity interest in the capital stock of GREG, which owns the exclusive rights to adapt certain literary works written by NY Times Best Selling Author, Omar Tyree, into feature-length motion pictures, including his best selling novels of Flyy Girl and Leslie. According to Simon & Schuster Publishing, Tyree's novels have grossed over $50 Million; Leslie, alone, is reported to have sold over 8 million copies. Additionally, on behalf of our joint venture company, GREG has recently commenced activities in Michigan in an effort to secure production facilities, which, if successful, will aid in leveraging Michigan state tax incentives available for production of the Tyree novels.

Just recently, the Company formed a potentially advantageous partnership with InnerGate Entertainment to collaborate on the financing, production and marketing of a slate of high quality, feature films. InterGate's primary role will be to facilitate the financing required to produce the multiple films the companies intend to produce, while the Company's U.S. production subsidiary, Global Universal Entertainment, is expected to undertake production operations in cooperation with InnerGate, and may incur liabilities in connection with such operations, as well as the issuance of Company securities (e.g., shares of stock or options) as an equity incentive to potential investors. The Company will bring years of production expertise and extensive industry contacts to the partnership. InnerGate Entertainment is a privately held company that develops and produces diverse and original entertainment content for theatrical motion pictures and television programming.

Other Business

On October 13, 2010, the Company announced its entry into the business of online distribution and sales of DVD's and Blu-Ray disc's, which operations will be conducted through Global Universal Film Group (GUFG), a wholly-owned subsidiary. The Company's American Sunset has been offered for sale since September 13, 2010, exclusively on the film's website: www.AmericanSunsetTheMovie.com, operated by GUFG. Just prior to the end of the third quarter, the Company received its first revenues from online sales. The Company plans to offer Plaster Rock: Terror on the Tobique for sale on the film's website: www.PlasterRockMovie.com, also operated by GUFG. The Company has entered into agreements with third parties for the duplication and fulfillment of DVD and Blu-Ray disc's, thus establishing the Company's business of online retail sales of DVD and Blu-Ray disc's.

In early November, 2010, Global Universal Film Group, a wholly-owned subsidiary, signed an agreement with Level 4 Stonehenge Development Partners (Level4), that will enable the electronic distribution of American Sunset on Apple's iTunes website, using a State-of-the-Art application technology developed by Level4 called "AppFlikTM". This new embedded application technology is being featured initially on iTunes due to the huge success of the iPhone and iPad, which are currently the viewing screens of choice. However, with the recent introduction and high degree of consumer acceptance of other platforms (i.e. Google TV, Apple’s iTv, Sprint's EVO 4g and DroidX), the potential market for the delivery of film content using the AppFlikTM is accelerating rapidly and could help the Company achieve significant results with its online sales. American Sunset, featuring the late Corey Haim (www.CoreyHaimRemembered.com), is expected to be available for sale on Apple's iTunes app store before year's end.

The AppFlikTM differs from current streaming resources currently available on the Internet in that it functions as a securely embedded movie and video content that is loaded into a downloadable application with free social networking capabilities, which interact with viewers worldwide, Security against theft is greatly enhanced, there are no streaming or buffering issues, and the delivery is a hi-resolution viewing experience for the consumer.

The Company plans to offer the AppFlikTM application as a "free" download on the iTunes website, with free access to video content associated with American Sunset, such as the film's official trailer, a "Behind the Scenes" video featuring the cast and crew, etc. Once downloaded on the consumer's computer or PDA, the movie can be easily unlocked and instantly viewed, as the consumer's iTunes account is billed. Pending the initial expected success of American Sunset's sales on the iTunes website, management will act quickly to employ this embedded application technology in the distribution of Plaster Rock and The Night, as well as additional films the Company intends to produce or with distribution rights that it may acquire from third party film production companies.

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Results of Operations

The following overview provides a summary of key information concerning our financial results for the third quarter of 2010 and 2009.

Total operating expenses were $49,496 and $65,041, for the three month period ended September 30, 2010, and September 30, 2009, respectively. The decrease of $15,545 in General and Administrative expenses was primarily the result of all executives forgoing their salary payments and accruals. The remaining difference was due to cost-cutting measures instituted by management, as well as normal fluctuations in operating expenses based on business operations.

Our net loss was $48,450 for the three months ended September 30, 2010, as compared to a net loss of $66,259 for the three months ended September 30, 2009. The loss of $48,450 was the result of no sales of movie scripts for the quarterly period, and marginally off-set by limited start up revenue from online sales of DVDs., as well as a reduction in General and Administration expenses described above.

The following provides a summary of key information concerning our financial results for the nine months ending September 30, 2010 and 2009.

Total operating expenses were $120,443 and $323,451 for the nine-month period ended September 30, 2010, and September 30, 2009, respectively. The decrease of $203,006 was due to a reduction in General and Administrative expenses.

Our net income was $315,415 for the nine months ended September 30, 2010, as compared to a net loss of $322,234 for the nine months ended September 30, 2009. The increase in the net income of $637,649 is as a result of the sales described in the preceding paragraph above, as well as the cost-cutting measures described therein.

Operation Plan

During the next twelve months we plan to focus our efforts on raising capital to cover our basic operating needs and continue production of lower budgeted films, as well as raising significant capital to develop, finance and produce a slate of several, higher quality, feature films through Global Universal Entertainment, our U.S. subsidiary.

We had minimal cash on hand as of September 30, 2010, and, additional funds will be required to satisfy our working capital requirements for the next twelve months. Our plan of operation entails our continued production of films through our Canadian affiliate, which has produced four, feature films in since November of 2008 and is currently working on two additional films scheduled for production in 2011.

Additionally, we will endeavor to raise funds to continue to implement our business plan of developing, financing and producing feature films. We plan to raise these funds through private and institution or other equity offerings, including interest bearing debentures. To this end, we may retain various consultants, finders and/or brokers to assist us in our efforts to raise larger amounts of capital for investment in the films we produce. As compensation, we may grant these entities incentive stock or stock options and/or render payments in cash.

We will also consider establishing relationships with selected business partners and film production companies, whose contributions include cash, such as our joint venture company, Global Renaissance Funding (with GREG), and our recently announced partnership and co-production agreement with InnerGate Entertainment, Inc. Through its relationship with InnerGate, Global Universal is already in discussions with several third party financing sources that have previous experience in providing capital for motion picture production and distribution. In addition, the InnerGate/Global Universal partnership has two feature films by an award-winning screenwriter, Patrick Nicholas, that are in development.

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The Company is also in active discussions with other third party financiers, including lending institutions, private investors, or other sources who are seeking to finance several high quality motion picture projects that will feature well known, recognizable acting talent. These productions will expand the company into “higher quality” product that will command wider distribution both domestically and in foreign markets. While there can be no assurance that the present negotiations will conclude successfully, management is cautiously optimistic about the negotiations and prospects of outside financing for its intended film projects. There is no guarantee that we will be able to raise sufficient capital to commence any film production and, if we are unable to obtain financing, our ability to continue with planned operations will be materially hindered.

The Company is also actively discussing a more significant relationship with several foreign sales companies which would represent and sell our library of pictures in overseas markets thereby establishing a reliable stream of revenue for the company.

The new, “higher quality” pictures into which the Company intends to expand, are expected to add revenue from both the domestic and foreign markets and also from increased exploitation through theatrical release as well as ancillary rights, merchandising, product placement and new media applications.

Liquidity and Capital Resources

Liquidity is a measure of a company’s ability to meet potential cash requirements. We have historically met our capital requirements through the issuance of stock and by borrowings. In the future we believe we will be able to provide the necessary liquidity we need by the issuance of debt and equity and revenues generated from our operations.

Satisfaction of our cash obligations for the next 12 months.

As of September 30, 2010, our cash balance was $12,781. Our plan for satisfying our cash requirements for basic operations over the next 12 months entails the sale of our securities to private individuals or institutions, or third party financing, and/or traditional bank financing. We intend to make appropriate plans to insure sources of additional capital in the future to fund growth and expansion through additional equity or debt financing or credit facilities. No assurance can be made that such financing would be available, and if available it may take either the form of debt or equity. In either case, the financing could have a negative impact on our financial condition and our Stockholders.

Despite our recent profits for the nine months ending September 30, 2010, we anticipate that we may incur operating losses over the next twelve months. Our lack of operating history and lack of a significant level of film sales makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving entertainment and technology markets. Such risks include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks we must, among other things, implement and successfully execute our business and marketing strategy, continue to develop and upgrade technology and products, respond to competitive developments, and continue to attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

Going Concern

The ability of the Company to continue as a going concern remains dependent upon successful implementation of our business plan, obtaining additional capital and financing, and generating positive cash flow from operations. The Company intends to seek additional capital either through debt or equity offerings and believes that our present business of film production will ultimately lead us to positive cash flows and profitability.

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Summary of product and research and development that we will perform for the term of our plan.

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

Expected Purchase or sale of plant and significant equipment.

We do not anticipate the purchase or sale of any plant or significant equipment, as such items are not required by us at this time or anticipated to be needed in the next twelve months.

Significant changes in the number of employees.

We currently employ four full time employees and several part-time employees and independent contractors. With the deterioration of the Company’s former operating business, LitFunding USA, and prior to its divestiture, we experienced a deleterious and damaging loss of key personnel as a result of financial difficulties associated with this business unit’s declining operations and poor management. Our recent transition into a new core business of developing and producing film and TV projects may require that we expand our personnel and/or hire independent contractors as we generate revenues and as our operations warrant. To this extent, Global Universal Entertainment, Inc., the Company’s wholly-owned subsidiary that is responsible for developing film production in the U.S., hired Daniel Sherkow in February, 2010, to serve as its Chief Operations Officer. Dan has a vast amount of experience in the motion picture industry having held senior management positions were he arranged financing and successfully produced award winning films for ABC, NBC and CBS television, Time-Life Films, Paramount Pictures, Tri-Star Pictures, and Dick Clark Productions.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

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

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ITEM 3. QUATITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the Company’s market risk exposures from those reported in our Annual Report on Form 10-K for the year ended December 31, 2009.

ITEM 4. CONTROLS AND PROCEDURES (SEE NOTES)

The Company’s management under the supervision and with the participation of the Company’s Chief Executive Officer (the “CEO”) and Chief Financial Officer (the “CFO”), performed an evaluation of the effectiveness of the design, maintenance and operation of the Company’s disclosure controls and procedures as of September 30, 2010. Based on the evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective. There has been a significant change in the Company's internal controls with the addition of legal counsel for an outside review of disclosures and disclosure controls. Their have been no other changes in the Company’s internal controls or in other factors that materially affected, or would reasonably be likely to materially affect the Company’s internal control over financial reporting.

We conducted an evaluation, with the participation of Gary Rasmussen, our current Chief Executive Officer, and Stanley Weiner, our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of September 30, 2010, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, Messrs. Rasmussen and Weiner have concluded that as of September 30, 2010, our disclosure controls and procedures were effective at the reasonable assurance level.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

The Company is not currently a party to any litigation.

Item 1A. Risk Factors

We have a limited operating history and lack of long-term profitability.

Although we realized profitable operations for the period covering this report, there can be no assurance that we continue to be profitable and we may incur operating losses over the next twelve months. The Company has recently been restructured and has had no significant operations as a developer and producer of feature-length films, other than through its partially-owned affiliate, Global Universal Pictures, as well as its individual executive members in their capacities with other film production entities. Therefore, such lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies engaged in the film and television industry. Such risks include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks we must, among other things, implement and successfully execute our business and marketing strategy, continue to develop and upgrade technology and products, respond to competitive developments, and continue to attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

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

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

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

Previous to the current and preceding quarterly period, we have historically had losses from operations and losses may continue in the future, which may cause us to curtail operations.

Notwithstanding the results of our two most recent quarterly periods, we have not been profitable since inception and have lost money on both a cash and non-cash basis. However, for the three months ended September 30, 2010, we produced net loss of $48,450, and net income of $315,415 for the nine months September 30, 2010. Our accumulated deficit at the end of September 30, 2010, was $11,479,701. Future losses are likely to occur, as we are dependent on spending money to pay for our operations and currently rely on limited sales of intellectual rights to feature films produced by our Canadian affiliate, Global Universal Pictures, for off-setting revenue. No assurances can be given that we will be successful in maintaining profitable operations as realized in the current and previous quarterly periods. Accordingly, we may experience liquidity and cash flow problems during the next 12 months. If such problems are indeed realized, our ability to operate may be severely impacted or alternatively we may be forced to terminate some or all of our operations.

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We are subject to a working capital deficit, which means that our current assets on September 30, 2010, were not sufficient to satisfy our current liabilities and, therefore, our ability to continue operations is at risk.

We had a working capital deficit for the nine months ended September 30, 2010, which means that our current liabilities exceeded our current assets on September 30, 2010 by $705,903. Current assets are assets that are expected to be converted to cash within one year and, therefore, may be used to pay current liabilities as they become due. Our working capital deficit means that our current assets on September 30, 2010, were not sufficient to satisfy all of our current liabilities on September 30, 2010. If our ongoing operations do not begin to provide sufficient profitability to offset the working capital deficit, we may have to raise capital or debt to fund the deficit or curtail future operations.

Our stock price may be volatile and an investment in such common stock could suffer a decline in value.

Our common stock is listed on the OTCQB Market as a registered and fully reporting entity with the SEC. The market price of our common stock may fluctuate significantly and violently in response to a number of factors, some of which are beyond our control. These factors include:

·	Government regulatory action affecting our services or competitor’s services;

·	Actual or anticipated fluctuations in operating results;

·	The loss of key management or other personnel;

·	The loss of major customers;

·	The outcome of any future litigation;

·	Broad market fluctuations; and economic conditions in the United States or abroad.

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

Our success largely depends on the efforts and abilities of our Officers and Directors. The loss of their services could materially harm our business because of the cost and time necessary to find successors. Such a loss would also divert management attention away from operational issues. We do not have other key employees who manage our operations. To the extent that we are smaller than our competitors and have fewer resources, we may not be able to attract a sufficient number and quality of staff, when required.

Because our common stock is deemed a low-priced “Penny” stock, an investment in our common stock should be considered high risk and subject to marketability restrictions.

Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment even if and when a market develops for the common stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:

·	Deliver to the customer, and obtain a written receipt for, a disclosure document;

·	Disclose certain price information about the stock;

·	Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;

·	Send monthly statements to customers with market and price information about the penny stock; and

·	In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.

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Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future.

For a detailed description of these and other factors that could cause actual results to differ materially from those expressed in any forward-looking statement, please see “Factors That May Affect Our Plan of Operation” in this document and in our Annual Report on Form 10-K for the year ended December 31, 2009.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were sales of unregistered equity securities during the nine months ending September 30, 2010.

On March 30, 2010, the Company issued 400,000 restricted shares of its $0.001 par value common stock to a private investor at a price of $0.05 per share, in consideration of an investment of $20,000. The proceeds were used for working capital.

On March 30, 2010, the Company issued 10,000 restricted shares of its $0.001 par value common stock to an employee, at a price of $0.05 per share, in consideration work performed on the Company’s various websites.

On May 14, 2010, the Company issued 50,000 restricted shares of its $0.001 par value common stock at $0.01 to an employee pursuant to the terms of an employment agreement.

On August 9, 2010, the Company issued 50,000 restricted shares of its $0.001 par value common stock at $0.01 to an executive employee pursuant to the terms of an employment agreement.

On August 9, 2010, the Company issued 100,000 restricted shares of its $0.001 par value common stock at $0.01 to an executive employee pursuant to the terms of an employment agreement.

On August 9, 2010, the Company issued 100,000 restricted shares of its $0.001 par value common stock at $0.05 to an employee pursuant to the terms of an employment agreement.

On October 12, 2010 the Company issued 10,000 free trading and 10,000 restricted shares of its $0.001 par value common stock at $0.10 to a individual as compensation for services to be performed.

Each of the forgoing transactions is believed to be exempt from the registration provisions of the Securities Act of 1933, as amended, by virtue of Section 4(2) thereof. No commissions were paid in connection with these private issuances or sales.

Item 3. Defaults Upon Senior Securities

None.

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Item 4. (Removed and Reserved)

Item 5. Other Information

On October 29, 2010, the Company’s Board of Directors elected to exercise its option to terminate the employment agreement between its wholly-owned subsidiary, Global Universal Entertainment (“GUE”) and Jeffrey Bowler. Mr. Bowler was serving as a Consultant to the Company for a period of ninety days until November 1, 2010, when his contract would have been modified to elect him as an executive officer of GUE. According to the terms of his agreement, Mr. Bowler is not entitled to any severance pay of further compensation.

Item 6. Exhibits

Exhibits

Exhibit Number		Description
2.1		Plan and agreement of merger between RP Entertainment Inc., RP Acquisition Corp. and LitFunding Corp. dated February 21, 2003 (Incorporated by reference to the exhibits to Form 8-K filed on March 11, 2003)
2.2		U.S. Bankruptcy Court Stipulation between LitFunding Corporation and Petitioning Creditors dated November 14, 2003 (Incorporated by reference to the exhibits to Form 8-K filed on December 4, 2003)
2.3		U. S. Bankruptcy Court Notice of Entry of Judgment (Incorporated by reference to the exhibits to Form 8-K filed on December 4, 2003)
2.4		U.S. Bankruptcy Court Chapter 11 Plan of Reorganization dated April 7, 2004 (Incorporated by reference to the exhibits to Form 8-K filed on July 6, 2004)
2.5		Agreement and Plan of Merger between LitFunding Inc., LFDG Subsidiary Corp. and Easy Money Express Inc. dated February 7 th , 2006 (Incorporated by reference to the exhibits to Form 8-K filed on February 13, 2006)
3(i).1		Articles of Incorporation dated July 2, 1996 (Incorporated by reference to the exhibits to Form SB-2 filed on June 19, 2001)
3(i).2		Certificate of Amendment to Articles of Incorporation dated September 4, 1996 (Incorporated by reference to the exhibits to Form SB-2 filed on June 19, 2001)
3(ii).1		By-Laws dated September 2, 1996 (Incorporated by reference to the exhibits to Form SB-2 filed on June 19, 2001)
3(ii).2		Amendment of By-laws dated March 5, 1997 (Incorporated by reference to the exhibits to Form SB-2 filed on June 19, 2001)
3.3		Certificate of Amendment to Designation of Series B Convertible Preferred Stock, dated December 6, 2007 (10)
3.4		Certificate of Designation of Series C Convertible Preferred Stock, dated January 9, 2008 ( Incorporated by reference to exhibit 3.3 to Form10-QSB filed on August 14, 2008 )
3.5*		Amendment of Certificate of Designation of Series C Convertible Preferred Stock, dated November 8, 2008
4.1		Common Stock Certificate Form (Incorporated by reference to the exhibits to Form SB-2 filed on June 19, 2001)
10.1		Agreement between RP Entertainment Inc. and Brutus Productions dated May 1, 1999 (Incorporated by reference to the exhibits to Form SB-2A filed on August 3, 2001)
10.2		Amended 2002 Employee Stock Compensation Plan Prospectus dated September 2, 2003 (Incorporated by reference to the exhibits to Form S-8 filed on September 10, 2003)
10.3		Amended 2002 Employee Stock Compensation Plan Certification of Plan Adoption dated September 2, 2003 (Incorporated by reference to the exhibits to Form S-8 filed on September 10, 2003)
10.4		2004 Stock Option Plan dated March 9, 2004 (Incorporated by reference to the exhibits to Form DEF 14A filed on July 13, 2004)
10.5		Employment Agreement between LitFunding USA and Stephen D. King dated October 2004 (Incorporated by reference to the exhibits to Form S-8 filed on October 28, 2004)

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10.6		Investment Agreement between LitFunding Corp. and Dutchess Private Equities Fund, L.P. dated January 14, 2005 (Incorporated by reference to the exhibits to Form 8-K filed on January 21, 2005)
10.7		Registration Rights Agreement between LitFunding Corp. and Dutchess Private Equities Fund, L.P. dated January 14, 2005 (Incorporated by reference to the exhibits to Form 8-K filed on January 21, 2005)
10.8		Option Agreement between Silver Dollar Productions Inc. and Morton Reed dated January 31, 2005 (Incorporated by reference to the exhibits to Form PRE 14C filed on March 21, 2005)
10.9		Certificate of Designation dated July 25, 2005 (Incorporated by reference to the exhibits to Form S-8 filed on July 28, 2005)
10.10		Binding letter of intent of merger between LitFunding Corp. and Cashwize Inc. dated September 15, 2005 (Incorporated by reference to the exhibits to Form 8-K filed on September 19, 2005)
10.11		Letter of intent of merger between LitFunding Corp. and Easy Money Express Inc. dated December 14, 2005 (Incorporated by reference to the exhibits to Form 8-K filed on January 3, 2006)
10.12		Binding Letter of Intent between Silver Dollar Productions, Inc. and Global Universal Film, Group Ent. Inc. dated December 21, 2005 (Incorporated by reference to the exhibits to Form 8-K filed on January 12, 2006)
10.13		Investment Agreement with Imperial Capital Holdings, dated January 16, 2006 (Incorporated by reference to the exhibits to Form 8-K filed on February 1, 2006)
10.14		Registration Rights Agreement with Imperial Capital Holdings, dated January 19, 2006 (Incorporated by reference to the exhibits to Form 8-K filed on February 1, 2006)
10.15		Placement Agent Agreement with Brewer Financial Services, LLC., dated January 16, 2006 (Incorporated by reference to the exhibits to Form 8-K filed on February 1, 2006)
10.16		2006 Non-Qualified Stock Compensation Plan (Incorporated by reference to the exhibits to Form S-8 filed on February 28, 2006)
10.19		Share Exchange Agreement with Easy Money Express, Inc., dated March 31, 2006

10.20		Service Agreement between Easy Money Express and M2 Internet, dated June 16, 2006 (1)
10.21		Restated Investment Agreement between the Registrant and Imperial Capital Holdings, dated July 28, 2006 (2)
10.22		Restated Registration Rights Agreement between the Registrant and Imperial Capital Holdings, dated July 28, 2006 (2)
10.23		Restated Placement Agent Agreement between the Registrant and Brewer Financial Services, dated July 28, 2006 (2)
10.24		Letter of Intent between the Registrant and CardMart Plus, dated November 17, 2006 (3)
10.25		Termination of Letter of Intent with CardMart Plus, dated February 20, 2007 (4)
10.26		Letter Agreement to Acquire Shares between the Registrant and Rochester Capital Partners, dated March 5, 2007 (6)
10.27		Acquisition of Hands Free Entertainment (Incorporated by reference to exhibits to Form 8-K, filed on January 4, 2008)
10.28		Disposition of LitFunding USA (Incorporated by reference to exhibits to Form 8-K, filed on April 8, 2008)
10.29		Recession Agreement With Hands Free Entertainment (Incorporated by reference to exhibits to Form 8-K, filed on April 10, 2008)
10.30		Exclusive License Agreement with Global Universal Pictures (Incorporated by reference to exhibits to Form 8-K, filed on December 11, 2008)
10.31		Music Rights Agreement with B & J Pictures (Incorporated by reference to exhibits to Form 8-K, filed on December 11, 2008)
10.32		Guarantee and Amended Exclusive License Agreement with Global Universal Pictures (Incorporated by reference to exhibits to Form 8-K, filed on December 11, 2008)
10.33		Joint Venture Agreement with Global Renaissance Entertainment Group (Incorporated by reference to Exhibit 10.1 to Form 8-K, filed on November 19, 2009)
10.34		Exclusive License Agreement with Global Universal Pictures for Plaster Rock, dated January 4, 2010
10.35		Executive Employment Agreement dated February 15, 2010

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10.36		Exclusive License Agreement with Global Universal Pictures for The Night, dated March 19, 2010
10.37		Exclusive License Agreement with Global Universal Pictures for American Sunset, dated April 13, 2009
10.38		Representation Agreement with American Sunset Pictures for Sales of American Sunset, dated April 21, 2010, and Restated Investment Undertaking dated April 21, 2010
10.39		Amended Exclusive License Agreement with Global Universal Pictures for American Sunset, dated May 28, 2010
10.40		Co-Production and Screenplay Purchase Agreement between the Company and MPH Productions, dated June 10, 2010
10.41		Share Exchange Agreement between the Company and Global Renaissance Entertainment Group, dated July 1, 2010
10.42		Executive Employment Agreement dated August 9, 2010
20		Letter to Shareholders dated March 11, 2003 (Incorporated by reference to the exhibits to Form 8-K filed on March 11, 2003)
21		List of Subsidiaries : California LitFunding, E. Evolution Expeditions and LitFunding USA (Incorporated by reference to the exhibits to Form 10-KSB filed on March 21, 2005)
21.1		List of Subsidiaries: Global Universal Film Group, Global Universal Entertainment (formerly Easy Money Express), Global Renaissance Funding, LLC., and Global Universal Pictures, a Canadian Corporation - 30% owned. (Incorporated by reference to the exhibits to Form 10-K, filed on April 14, 2010)
23.1*		Consent of Independent Registered Public Accounting Firm
31.1*		Certification of Gary Rasmussen pursuant to Section 302 of the Sarbanes-Oxley Act
31.2*		Certification of Stanley Weiner pursuant to Section 302 of the Sarbanes-Oxley Act
32.1*		Certification of Gary Rasmussen pursuant to Section 906 of the Sarbanes-Oxley Act
32.2*		Certification of Stanley Weiner pursuant to Section 906 of the Sarbanes-Oxley Act

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned.

	GLOBAL ENTERTAINMENT HOLDINGS, INC. (Registrant)

November 22, 2010	By:	/s/ Gary Rasmussen
		Gary Rasmussen
		Chief Executive Officer

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Global Entertainment Holdings, Inc. - FORM 10-Q - November 22, 2010

Attached files

Global Entertainment Holdings, Inc. Reports