UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 11, 2009
GLOBAL EMPLOYMENT HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 000-51737 | 43-2069359 | ||
| (State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 10375 Park Meadows Dr., Suite 375 Lone Tree, Colorado | 80124 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code:(303) 216-9500
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
EXPLANATORY NOTE
We previously filed a current report on Form 8-K on March 16, 2009 disclosing the entering into and closing of a transaction between Global Employment Holdings, Inc., referred to herein as Global, Temporary Placement Service, Inc., referred to herein as TPS, a wholly owned subsidiary of Global, and Eastern Staffing, LLC, d.b.a. Select Staffing, referred to herein as Select, pursuant to an Asset Purchase and Sale Agreement (the “Agreement”) under which Global sold to Select substantially all of the business of TPS. This current report on Form 8-K/A is filed to provide additional information about the transaction, such as filing exhibits and reporting the unaudited pro forma consolidated condensed balance sheet representing the historical balance sheet of Global, giving effect to the disposition as if it had been consummated on September 28, 2008 and the unaudited pro forma consolidated condensed statements of operations for the nine months ended September 28, 2008 and year ended December 30, 2007 representing the historical statements of operations of Global as if the disposition had been consummated on December 31, 2008 and January 2, 2007, the beginning of Global’s respective fiscal years.
Item 2.01 Completion of Acquisition or Disposition of Assets
On March 12, 2009, Global and TPS closed on the Agreement with Select. Under the Agreement, Select purchased substantially all of the property, assets, business and contracts of TPS, excluding the accounts receivable of TPS, and Select assumed certain liabilities of TPS. The aggregate purchase price was $1,950,000. The purchase price consists of a cash payment of $1,000,000 at closing, a $700,000 note due March 20, 2009 and a two-year $250,000 note, bearing interest at 6% per annum, with principal payable in quarterly installments of $20,000 and the balance due on the maturity date of March 9, 2011. Global retained the rights to collect customer accounts receivable of approximately $5,500,000.
Item 9.01 Financial Statements and Exhibits
Item 9.01 (b) Pro Forma Financial Information
INDEX TO FINANCIAL STATEMENTS
| Introduction and Notes to the Unaudited Pro Forma Consolidated Condensed Balance Sheet and Statements of Operations | F-1 | |||
| Unaudited Pro Forma Consolidated Condensed Balance Sheet as of September 28, 2008 | F-2 | |||
| Unaudited Pro Forma Consolidated Condensed Statement of Operations for the nine months ended September 28, 2008 | F-3 | |||
| Unaudited Pro Forma Consolidated Condensed Statement of Operations for the year ended December 30, 2007 | F-4 |
Introduction to the Unaudited Pro Forma Consolidated Condensed Balance Sheet and Statements of Operations
On March 12, 2009, Global and TPS closed on the Agreement with Select. Under the Agreement, Select purchased substantially all of the property, assets, business and contracts of TPS, excluding the accounts receivable of TPS, and Select assumed certain liabilities of TPS. The aggregate purchase price was $1,950,000. The purchase price consists of a cash payment of $1,000,000 at closing, a $700,000 note due March 20, 2009 and a two-year $250,000 note, bearing interest at 6% per annum, with principal payable in quarterly installments of $20,000 and the balance due on the maturity date of March 9, 2011. Global retained the rights to collect customer accounts receivable of approximately $5,500,000.
The unaudited pro forma consolidated condensed balance sheet represents the historical consolidated balance sheet of Global, giving effect to the disposition as if it had been consummated on September 28, 2008 and the unaudited pro forma consolidated condensed statements of operations for the nine months ended September 28, 2008 and year ended December 30, 2007 represents the consolidated historical statements of operations of Global as if the disposition had been consummated on December 31, 2008 and January 2, 2007, the beginning of Global’s respective fiscal years. You should read this information in conjunction with the consolidated financial statements and notes thereto included in the Global’s annual report on Form 10-K for the fiscal year ended December 30, 2007 andForm 10-Q for the nine months ended September 28, 2008.
We present the unaudited pro forma consolidated condensed financial information for informational purposes only. The pro forma information is not necessarily indicative of what our operating results actually would have been had we completed the disposition on September 28, 2008, the last day of our fiscal third quarter of 2008 or December 31, 2008 or January 2, 2007, the beginning of Global’s respective fiscal years. In addition, the unaudited pro forma consolidated condensed financial information does not purport to project the future financial position or operating results of Global.
Notes to the Unaudited Pro Forma Consolidated Condensed Financial Statements
| DESCRIPTION OF TRANSACTION AND BASIS OF PRESENTATION |
Refer to the description of the transaction above.
| (a) | To adjust assets acquired and liabilities assumed by Select. | |
| (b) | To adjust unallocated intangibles related to our acquisition of certain assets in June 2008 used in TPS’ business. | |
| (c) | To record the pay down of senior credit facility from cash received at closing. | |
| (d) | To reflect the net tax benefit of the pro forma adjustments at an effective rate of approximately 37%. | |
| (e) | To record the estimated net gain of the disposition. | |
| (f) | To adjust net interest expense based on the estimated average balance of senior debt and interest income on the $250,000 note. | |
| (g) | To record adjustment to net deferred tax assets for tax basis of goodwill and intangibles and state net operating loss carry forwards. | |
| (h) | To record notes receivable from Select. | |
| (i) | To accrue for expenses and other costs of the transaction. |
F-1
GLOBAL EMPLOYMENT HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
| September 2008 | ||||||||||||
| Global | Global | |||||||||||
| Employment | Employment | |||||||||||
| Holdings, Inc. | Pro Forma | Holdings, Inc. | ||||||||||
| (As Reported) | Adjustments | (Pro Forma) | ||||||||||
| ASSETS | ||||||||||||
| CURRENT ASSETS | ||||||||||||
| Cash and cash equivalents | $ | 5,000 | $ | — | $ | 5,000 | ||||||
| Restricted cash | 202,000 | — | 202,000 | |||||||||
| Accounts receivable, net | 23,730,000 | — | 23,730,000 | |||||||||
| Deferred income taxes | 943,000 | — | 943,000 | |||||||||
| 780,000 | (h) | |||||||||||
| Prepaid expenses and other current assets | 2,256,000 | (91,000 | )(a) | 2,945,000 | ||||||||
| Total current assets | 27,136,000 | 689,000 | 27,825,000 | |||||||||
| Property and equipment, net | 2,553,000 | (227,000 | )(a) | 2,326,000 | ||||||||
| Deferred income taxes | 10,056,000 | (233,000 | )(g) | 9,823,000 | ||||||||
| Other assets, net | 1,402,000 | (44,000 | )(a) | 1,528,000 | ||||||||
| 170,000 | (h) | |||||||||||
| Intangibles, net | 4,418,000 | — | 4,418,000 | |||||||||
| Goodwill | 19,487,000 | (300,000 | )(b) | 19,187,000 | ||||||||
| Total assets | $ | 65,052,000 | $ | 55,000 | $ | 65,107,000 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||
| CURRENT LIABILITIES | ||||||||||||
| Bank overdrafts | $ | 1,771,000 | $ | — | $ | 1,771,000 | ||||||
| Accounts payable | 196,000 | — | 196,000 | |||||||||
| Accrued liabilities | 20,566,000 | (161,000 | )(a) | 20,556,000 | ||||||||
| 151,000 | (i) | |||||||||||
| Current portion of long-term debt — credit facility | 2,550,000 | — | 2,550,000 | |||||||||
| Line of credit | 10,087,000 | (300,000 | )(c) | 9,787,000 | ||||||||
| Total current liabilities | 35,170,000 | (310,000 | ) | 34,860,000 | ||||||||
| Other long-term liabilities | 760,000 | (42,000 | )(a) | 718,000 | ||||||||
| Warrant and conversion liability | 479,000 | — | 479,000 | |||||||||
| Warrant and conversion liability due to related parties | 40,000 | — | 40,000 | |||||||||
| Long-term debt — credit facility | 1,700,000 | (700,000 | )(c) | 1,000,000 | ||||||||
| Long-term debt — convertible notes, net | 14,052,000 | — | 14,052,000 | |||||||||
| Long-term debt — convertible notes, due to related parties, net | 1,475,000 | — | 1,475,000 | |||||||||
| Mandatorily redeemable preferred stock, net | 6,047,000 | — | 6,047,000 | |||||||||
| Mandatorily redeemable preferred stock, due to related parties, net | 499,000 | — | 499,000 | |||||||||
| Total liabilities | 60,222,000 | (1,052,000 | ) | 59,170,000 | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||
| STOCKHOLDERS’ EQUITY | ||||||||||||
| Series A preferred stock, $.001 par value, 10,000,000 authorized shares designated, 12,750 issued and outstanding in 2008. Included above under mandatorily redeemable preferred stock, net | ||||||||||||
| Common stock, $.001 par value, 40,000,000 shares authorized; 10,555,010 issued, 10,548,330 outstanding in 2008 | 1,000 | — | 1,000 | |||||||||
| Treasury stock, at cost, 6,680 shares in 2008 | — | — | — | |||||||||
| Additional paid in capital | 34,430,000 | — | 34,430,000 | |||||||||
| Accumulated deficit | (29,601,000 | ) | 1,107,000 | (e) | (28,494,000 | ) | ||||||
| Total stockholders’ equity | 4,830,000 | 1,107,000 | 5,937,000 | |||||||||
| Total liabilities and stockholders’ equity | $ | 65,052,000 | $ | 55,000 | $ | 65,107,000 | ||||||
The accompanying notes are an integral part of these unaudited pro forma consolidated condensed financial statements
F-2
GLOBAL EMPLOYMENT HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
| Nine months ended September 2008 | ||||||||||||||||
| Global | Global | |||||||||||||||
| Employment | Temporary | Employment | ||||||||||||||
| Holdings, Inc. | Placement | Pro Forma | Holdings, Inc. | |||||||||||||
| (As Reported) | Services, Inc. | Adjustments | (Pro Forma) | |||||||||||||
| REVENUES, net | $ | 130,926,000 | $ | (46,994,000 | ) | $ | — | $ | 83,932,000 | |||||||
| COST OF SERVICES | 97,157,000 | (39,808,000 | ) | — | 57,349,000 | |||||||||||
| GROSS PROFIT | 33,769,000 | (7,186,000 | ) | — | 26,583,000 | |||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Selling, general and administrative | 27,287,000 | (5,630,000 | ) | — | 21,657,000 | |||||||||||
| Depreciation and amortization | 2,020,000 | (161,000 | ) | — | 1,859,000 | |||||||||||
| Total operating expenses | 29,307,000 | (5,791,000 | ) | — | 23,516,000 | |||||||||||
| OPERATING INCOME | 4,462,000 | (1,395,000 | ) | — | 3,067,000 | |||||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Interest expense: | ||||||||||||||||
| Other interest expense, net of interest income | (6,673,000 | ) | 10,000 | 50,000 | (f) | (6,613,000 | ) | |||||||||
| Fair market valuation of warrant and conversion liability | 5,071,000 | — | — | 5,071,000 | ||||||||||||
| Other (expense) | (636,000 | ) | — | — | (636,000 | ) | ||||||||||
| Total other income (expense), net | (2,238,000 | ) | 10,000 | 50,000 | (2,178,000 | ) | ||||||||||
| INCOME BEFORE INCOME TAX (BENEFIT) | 2,224,000 | (1,385,000 | ) | 50,000 | 889,000 | |||||||||||
| INCOME TAX (BENEFIT) | (611,000 | ) | — | (499,000 | )(d) | (1,110,000 | ) | |||||||||
| NET INCOME | $ | 2,835,000 | $ | (1,385,000 | ) | $ | 549,000 | $ | 1,999,000 | |||||||
| Basic earnings per share of common stock | $ | 0.27 | $ | 0.19 | ||||||||||||
| Weighted average number of basic common shares outstanding | 10,548,330 | 10,548,330 | ||||||||||||||
| Diluted earnings per share of common stock | $ | 0.27 | $ | 0.19 | ||||||||||||
| Weighted average number of diluted common shares outstanding | 10,548,330 | 10,548,330 | ||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma consolidated condensed financial statements
F-3
GLOBAL EMPLOYMENT HOLDINGS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
| Year Ended December 2007 | ||||||||||||||||
| Global | Global | |||||||||||||||
| Employment | Temporary | Employment | ||||||||||||||
| Holdings, Inc. | Placement | Pro Forma | Holdings, Inc. | |||||||||||||
| (As Reported) | Services, Inc. | Adjustments | (Pro Forma) | |||||||||||||
| REVENUES, net | $ | 173,893,000 | $ | (63,886,000 | ) | $ | — | $ | 110,007,000 | |||||||
| COST OF SERVICES | 128,564,000 | (53,730,000 | ) | — | 74,834,000 | |||||||||||
| GROSS PROFIT | 45,329,000 | (10,156,000 | ) | — | 35,173,000 | |||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Selling, general and administrative | 37,432,000 | (7,610,000 | ) | — | 29,822,000 | |||||||||||
| Depreciation and amortization | 2,563,000 | (80,000 | ) | — | 2,483,000 | |||||||||||
| Total operating expenses | 39,995,000 | (7,690,000 | ) | — | 32,305,000 | |||||||||||
| OPERATING INCOME | 5,334,000 | (2,466,000 | ) | — | 2,868,000 | |||||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Interest expense: | ||||||||||||||||
| Other interest expense, net of interest income | (9,191,000 | ) | — | 18,000 | (f) | (9,173,000 | ) | |||||||||
| Fair market valuation of warrant and conversion liability | 15,156,000 | — | — | 15,156,000 | ||||||||||||
| Other (expense) | (422,000 | ) | — | — | (422,000 | ) | ||||||||||
| Total other income (expense), net | 5,543,000 | — | 18,000 | 5,561,000 | ||||||||||||
| INCOME BEFORE INCOME TAX (BENEFIT) | 10,877,000 | (2,466,000 | ) | 18,000 | 8,429,000 | |||||||||||
| INCOME TAX (BENEFIT) | (89,000 | ) | — | (916,000 | )(d) | (1,005,000 | ) | |||||||||
| NET INCOME | $ | 10,966,000 | $ | (2,466,000 | ) | $ | 934,000 | $ | 9,434,000 | |||||||
| Basic earnings per share of common stock | $ | 1.67 | $ | 1.44 | ||||||||||||
| Weighted average number of basic common shares outstanding | 6,550,054 | 6,550,054 | ||||||||||||||
| Diluted earnings per share of common stock | $ | 1.04 | $ | 0.94 | ||||||||||||
| Weighted average number of diluted common shares outstanding | 15,586,644 | 15,586,644 | ||||||||||||||
The accompanying notes are an integral part of these unaudited pro forma consolidated condensed financial statements
F-4
Item 9.01 (d) Exhibits
| Exhibit # | Description | Reference | ||
| 10.1 | Asset Purchase and Sale Agreement dated as of March 9, 2009, By and Between Global Employment Holdings, Inc., Temporary Placement Service, Inc., And Eastern Staffing, LLC, d.b.a. Select Staffing | Filed herewith | ||
| 10.2 | $250,000 Promissory Note | Filed herewith | ||
| 10.3 | $700,000 Promissory Note | Filed herewith | ||
| 10.4 | Non-Competition Agreement | Filed herewith | ||
| 10.5 | Guarantee | Filed herewith |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GLOBAL EMPLOYMENT HOLDINGS, INC. | ||||
| Date: March 18, 2009 | By: | /s/ Dan Hollenbach | ||
| Dan Hollenbach | ||||
| Chief Financial Officer | ||||
EXHIBIT INDEX
| Exhibit # | Description | Reference | ||
| 10.1 | Asset Purchase and Sale Agreement dated as of March 9, 2009, By and Between Global Employment Holdings, Inc., Temporary Placement Service, Inc., And Eastern Staffing, LLC, d.b.a. Select Staffing | Filed herewith | ||
| 10.2 | $250,000 Promissory Note | Filed herewith | ||
| 10.3 | $700,000 Promissory Note | Filed herewith | ||
| 10.4 | Non-Competition Agreement | Filed herewith | ||
| 10.5 | Guarantee | Filed herewith |