Donnan-Exh 6, Exh 7, Exh 8, Exh 9, Exh 10

8/4/2019 Donnan-Exh 6, Exh 7, Exh 8, Exh 9, Exh 10

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EXHIBIT 6


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GLCSummaryOctober 28,2010After assessment of last 3 years income and expense statements, as well as an analysis ofinventory, we find the following:

I. Basic Operations are strong, creating real value (assuming normal debt cost)1. Sales have increased steadily from '08 to '10 results. Total sales in the 3-year periodwere $20mm, with 2010 accounting for just over Y2 of that totaL2. Gross profit margins On those sales have been steady in mid to high 50's. 2010 margin isprojected to be 57%.3. Cost ofGoods Sold over the three year period is $8.67mm, including a 2010 projection of$4.97mm .4. The Gross Profit over the 3-year period is $11.3, with 2010 at about $6.5mm.5. Operating costs have been steady in the las t 2 years after an increase in year 2 of about400% matching the increase in sales, there was no increase in operating-costs in year 3despite a near 200% increase in sales. The operating costs for the current level of salesappears mostly fixed atjust under $500k, currently about 5% of sales.6. The Net Ordinary Income over the period was $10.2mm, with about $6mm in 2010.7. These figures represent unleveraged operations before financing costs, but could supportdebt costs into mezzanine levels easily (low, mid 20's) as an interim step towardsnormalized (bank debt/single digit) levels.

n. Inventory has exceeded sales capacity, must be monetized to meet obligations1. The market value of inventory is estimated at $54mm assuming a normal sales period andeffort.2. The cost of that inventory is estimated at $24.5mm, yielding a gross profit margin of 54%(consistent with actuals).3. At 2010 sales velocity level, current inventory would require 4.7 years to deplete. If salesgrowth levels continue year-aver-year at same rate as increase from 2009-2010 (66%)then the sell-outtime is still 2 years.

m. Conclusions1. Financing has exceeded capacity of the operations. Too much capital has been raised andexcessive inventory was purchased. Overall financing picture raises questions about

variance between Sources and Uses:SOURCES:Invested capital:Proceeds from sales:Total sourcesUSES:Purchased Goods sold (COGS)Purchased Inventory unsoldOperating ExpensesCashTotal UsesVARIANCE:

$54mm$20mm$74mm

$ 8.70mm.$24.50inm$ 1.10mm$ O.75mm. $35.05 mm+/- $39mm

Must explain Variance. Financing should provide capital for operating costs and cost ofpurchased goods/merchandise. Debt Service payments should come from proceeds generatedby operations (NOl). Borrowing in excess of purchase needs yields non-productive capital athigh carry cost. Have investor payouts come from capital and not sales? Obligations do notinclude accrued interest (unknown at this time).

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2. Investor obligations (i.e., principle) outstanding could be met or slightly exceededilirough a sale of inventory at Market value however:a. Inventory cost (assume "fire sale") is Y2 current estimated investor obligations,and sales at that level yvould create a $25+mm shortfall.b. At the 2010 sales vel9city, it would take 4.7years to move the inventory andmonetize the $54mm market value.

3. Trading inventory should yield ahigher value or higher level of liquidity, or at least moveperishable or seasonal goods more quickly. It does not yield any higher value, accordingto the numbers we reviewed. Inventory acquired by direct purchase (not trade) has anestimated margin of 54%. InventOly acquired by trade also has an estimated margin of54%. Therefore, the time that it takes to accumulate the inventory actually decreases thevalue and the practice of trading should be more closely examined.

4. Inventory levels are excessive (4.7 year supply at current sales levels) and must bereduced even absent the current need for capital to meet investor obligations.5. Cost of capital at average of 60%/yr is mathematically feasible (although unnecessary)given high margins and manageable sales costs however inventory must turn within theyear.

Recommended Action: Immediate steps1. Review operational conclusions with Principle II to ensure we have properunderstanding. If assumptions and. conclusions are correct, move immediately with allresources towards monetizing the existing inventory at highest number possible - as soonas possible - focusing on increasing channels and buyers.2. Develop accurate account summary for each i n v e s t ~ r : principle, paid-to-date, accruedinterest. Develop strategy for each investor; anticipate settlement strategy.3. Advisors to work to build on Principle 1's letter to investors and develop a plan tocommunicate with investors in anticipation of a change in terms. Advisors to meet with3rd party resources week ofNovember 1 to discover optimal team to develop strategy forworkout including potential conversion of debt to equity.4. Principle I to initiate conversations with key investors signaling immediate change interms with a focus on managing the best outcome in light of changing economy and

business model.5. Investigate sources of capital to provide for quicker monetization of inventory and permitsome pay down of existing principle. .Goals:

Preservation ofInvestors' accounts & relationshipsEnsure accurate accounting of obligations to investors to remove pressure ofaccruing debt on idle capital.Management of onerous debt obligationsProtection of res(mrces of Principles I and II..Improvement of Operations and inventory management to increase margins,monetizeinventory quickly.Ultimate recapitalization to support profitable business with high margins,salvage value, go forward with reorganized and efficient structure.

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(annualized)2008 2009 2010 3 YrTotalsINCOME

Sales $ 1,687,332 $ 6,870,410 S 11,430,000 $ 19,987,742Trnnsfer $ S S$ S STOTAL INCOME $ 1,687,332 $ 6,870,410 S 11,430,000 $ 19,987,742COGS

COGS S 793,241 2,910,360 4,970,000 $ 8,673,601Purchases $Merchandise $TOTALCOGS S 793,241 2,910,360 4,970,000 $ 8,673,601

GROSS PROFIT $ 894,091 3,960,050 6,460,000 $ 11,314,141Margin (GP/Sales) 53% 58% 57% 57%

EXPENSESUnexplained/NonStd Exps

Tmnsfur $ $ $Investor S $ $Loan Repay $ $ $LoanD]'s $ $ $GLCEntLoan $ $ $Loan $ $ SlvIiscellaneous $ S $$ s $., % ofttlexp 0% 0% 0%

Std Operatingfups 121,022 S 487,000 475,000 $ 1,083,022as % of sales 7.17% 7.09% 4.16%

TOTAL OPERATINGEXPENSES 121,022 $ 487,000 475,000 $ 1,083,022NET ORDINARYINCOlvlE $ 773,069 3,473,050 5,985,000 $ 10,231,119Other Expenses $Other IncomeNET INCOME $ 773,069 3,473,050 5,985,000 $ 10,231,119

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From: "David S. Dwyer" SUbject: DRAFTDate: October 19,201012:28:40 PM EDTTo: "J; Derek Imes" CALL ME.JimI enjoyed getting to meet you this moming, and getting to hear more about GLC Limited.I had one meeting Immediately after ours and recently returned to mydesk to start to focus on what we discussed.In addition to what you gave us this morning I wlll a lso need;1. Year End Financial statements for GLC Limited. I think you sa id you had these for 2009 and 2008. This would Include:a) Balance Sheetb) P&Ulncome Statementc) Cashflowd) Statementof Shareholder EquityYou sent with us today the monthly P&L for 2010 from Jan-June. Those monthly statements for the current year are part of what we need so I thank youfor that. Let me know when JUly- Sept statements are available. On the YE stuff, It is best if we have the audited statements from your accountantThis is the critical first step - getting a quantifiable picture of the business. I'm going to dive into what you gave me beginning today. and I will likely havesome questions. Some of those might be answered by the YE statements, but once I've reviewed those then I can compile a list of questions to keepus on track.The next step will be drafting the story that details the past success and translates it into a future stream of income. I have already started that businessplan draft and I am sure that I will need to get with you soon to fill In some of the holes.With past experience and recent conversations with the folks we're going to take this to, we have a good sense of what we need 10 pull together. Asyou get Ihe financial information please email It 10 me and Derek, or call me and I will come and get a copy. Again, I'm looking forward to working withyou on this.You now have my contact information, including my phone which I always have on me and I will remain available to you as you need.DSDDavid S. Dwyer(404) [email protected]

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IFrom: "David S. Dwyer" SUbject: Fwd: DonnanDate: October 18,20103:18:45 PM EDTTo: "J. Derek Imes"

Hope a ll is OK with your family. Give me a buzz when you can.Warren is going to China on Thursday. He's worried Donnan will go cold on this unless we get to him quick.DSD

Begin forwarded message:From: "Warren Goodstone" Date: October 18, 2010 2:46:17 PM EDTTo: "'David S. Dwyer'" , "'J. Derek Imes lll Subject: DonnanCan we shoot fo r early tomorrow, say 9 or 8.3 please. I have to be in At lanta by 11.30.Kind Regards

Warren Goodstonewww.wirko.comwww.manorism.com

David S. Dwyer(404) [email protected]

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From: "David S. Dwyer" SUbject: big lotsDate: August 24, 201010:41 :13 AM EDTTo: "J. Derek Imes" , WarrenGoodstone From WSJ this am:

"Shares of Big Lots Inc. (BIG) ral lied 15% in premarket trade after the retaHer l if ted its ful l-year outlook and reported a 37% jump inquarterly profit." .The business plan for GL, should we have the opportunity to create it, will write itself. This is the era of saving money.


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From: "David S. Dwyer" Subject: Re: flnancialsDate: August 2,20104:59:00 PM EDTTo: "J. Derek Imes" Cc: Warren Goodstone Warren and I spoke.I think we have to consider that they have the same skepticism as you do.They are likely saying ''these guys want usto spend $1OOk and they can't even say where the money is coming trom"Putting it in that light will either make us cut the cord and move on with our l ives or try to swallow and persevere.What we can do for them is great, and we have to prove that. I'm willing to continue to show that proof because of the upside for them and for us.First, we need to respond today and say it 's not $100k.Derek, didn't we think it was more like $25-30 between lawyers and accountants and we could get it back for them inside ot 6months?Hell I'll pay i t back to them if we get th is going! I 'll pay them 2x the cost I don't care.Secondly we need to be more specific about what the dId effort is, and is not.Is it a full audit? Will guys with green eyeshades and sleeve garters come in and go through their books.we need to right now just talk abouttha misperceptions.Then we need to address his concerns and talk about what we can actually do.I hear you D, I sense the frustration and I f you don't want to keep chasing it it's cool.I have some tuelleft in the tank and I'm wiling to keep going with it.I can't blame you it you don't. Warren and i both think there is room for something here but I do think we have to pony up some info.So today it's just how much and what is involved - basically. Not down to the details.In the next few days it's what can we do.DSD

On Aug 2, 20tO, at 3:18 PM, J. Derek Imes wrote:This is mindless. After we have asked for even a minimal amount of records to authenticatethis operation, we are supposed topony up $3 million and then we can see what's going on.It is nowhere near $100k in costs to getsome third party accounting eyes on the operations up to this point, and J have no idea why.he would think that. 50mebody's been eating retard sandWiches. How is that for entertainment.BTW - he calls and texts me at 10:30 at night, and he can't call back to tell me he did close on this money and update me on whatGreg said.50 now that Igot that out of the way, somebody start th e conversation for me where I ask for $3 million bucks to hand to an exfootball coach who buys surplus and seconds and has no accounting to back anything up.Iam sure this is not an actual Ponzi scheme, but Iam betting time weighted returns arestrating to trail off and therefore the assetsand liabilities are slightly upside down at times.Any ideas.J. Derek ImesPrincipia Investment Advisors LLC325 Milledge Avenue, Suite AAthens, GA 30601Office 706.549.4383 FAX 706.549.4382 Mobile 706.202.2077Email: [email protected]: www.piadv.com

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From: Warren Goodstone [mailto:[email protected]: Monday, August 02, 2010 1:47 PMTo: J. Derek Imes; 'David Dwyer'.Subject: FW: financialsIts getting entertaining!From: Jim Donnan [maiIto:[email protected]]Sent: Monday, August 02, 20101:16 PMTo: WarrenGoodstoneSubject: Re: fmancialsWeare not interested in paying out almost 100 k in due diligence until you guys can prove you can bring some investmentmoney to the table.Startwith 3 mil and then we can go on with the reorganization.I discussed with Derrick that we had received some new money that we started out at low payments.You could add yoursto this.JimOn Aug 2,2010, at 10:46 AM, WarrenGoodstone wrote:

Coach, our efforts are not about short term stuff. We intend to set you up to be able to get single digit interest rates acrossyour entire capital base, create a company that has a tangible value to someone else if you ever decided to sellout, take outthe current SEC and investor lawsuit risks to you and Greg personally and to help youmake maximize the potentialof thisbusiness without major change to your current modus operandi. We will even help execute the plan with my directinvolvement if that appears beneficial.So rather than just shelve it, how about we proceed with the work required to get you guys and your families where you willbenefit most?Kind Regards

Warren Goodstonewww.wirko.comwww.manorism.comFrom: Jim Donnan [mai1to:[email protected]]Sent: Monday, August 02, 2010 10:25 AMTo: Warren GoodstoneSubject: Re: fmancialsI feel like we are on a hold for now-we have new money without restructuringJimOnAug 2,2010, at 10:19 AM, WarrenGoodstone wrote:

Morning Coach, where are we at with respect to getting the financials moving please? I am in town today and then off todo another furniture install in BatonRouge tomorrow, Is there any benefit to catch up today and keep this moving forwardbefore I leave as we are completely committed to the plan and maximizing the GL potential.KindRegards

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Warren Goodstonewww.wirko.comwww.manorism.com


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Global Liquidators New Capital StructureExplanation ofPrincipiaRole - July 31,2010

Last week Principia requested financial information (corporate andpersonal fmancial statements, personal and corporate tax returns,and an accounting of current capitalization) from GlobalLiquidators. In anticipation of the receipt of that infonnation, wesee a good opportunity to underscore our goals for GlobalLiquidators, and explain the need for that information.The overall goal is to find the lowest price possible for thecapital Global Liquidators needs for its operations andcontinued growth. Global Liquidators' current capitalizationmethodology was necessary during the start-up phase, but thecompany's success has created the opportunity to dramaticallyreduce its costs of capital.Principia is proposing to create, manage, and execute the planningand the execution of a transition between the initial capitalmethodology and the new financing at a lower cost. It beginswith a translation of the success into a professional documentto serve as proof that Global Liquidators is "Investable", Itquantifies Global Liquidators' success and uses data and worddescriptions to give confidence to an educated and savvy investor.The paperwork Principia requested is. necessary to compilethat document. The document is vital to this transition because ofthe need to change the reason investors are willing to put moneyinto the company. Currently, investors' security and willingness toinvest is supported by a personal knowledge: of Jim Donnan. Theresult is a universe of potential investors limited to those with thatpersonal knowledge. This is problematic for four (4) key reasons:

1. Coach Donnan is required to remain involved at a very highlevel.

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2. This type of basis for investment leads to over-pricing (as weare seeing now). Investors willing to pay a more riska d j u s ~ e d price for capital MUST be able to quantifiablyassess their risks, and this document gives them that ability.3. There is now a dangerous and unnecessary liability for CoachDonnan, creating enormous exposure to investor suits, andpossibly even SEC violations.

4. No matter how clean an investment is, without certainpaperwork there will always be looming questions that alsolimit the number of potential investors. It is unwise to becompared to unscrupulous investment when the means arethere to show the true value and legitimacy of the business.This is more than just finding cheaper money. Given the currentcapital structure and its associated costs, there will always besomeone to offer a lower price (to a point). The professional,disciplined effort Principia is proposing will: Find the lowest price of funds possible Make limitless the universe ofpotential suppliers of capital. Create tangible value that can be sold, transferred, orleveraged for additional growth. This is not an option in thecurrent capital structure. Eliminate the need for Global Liquidators' principles tospend valuable time and resources raising capital

Dramatically reduce dangerous exposure to the currentprinciplesThese benefits speak to the on-goiilgnature of Principia'scommitment. Principia will constantly . monitor the market toensure that the goals met on the front eiid are maximized goingforward. Ultimately, this transition will increase the wealth thatthe principles of Global Liquidators have to pass on to theirchildren and grandchildren. The transition will create tangiblevalue in the business beyond the projected revenue stream.

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Global Liquidators probes the depths ofwhere supply and demandintersect in consumer goods. Principia will use its resources tofmd that intersection for Global Liquidators' cost of operations andexpansion.

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You asked us to bringyou $3mm.What happened?EXECUTIVE SUMMARYFirst we had to deal with a misread ofwhat you wanted. But once we realized what youwanted we went out to pursue it. .We thought youwanted to preserve your currentinvestors at their rates so we developed an elaborate structure to do that. Now that weknow you justwant growth capital and some flexibility, we are talking about simple, notcomplicated.We went to our sources and found a great willingness to invest in Global Liquidators.P I ~ s , the rates are single digit - far, far belowwhere you are paying now. There are twohurdles - both ofwhich we can get you over:

1. These guys represent disciplined money and they require some basic evidence ofyour success. Mostof it you have right now and what you don't have we cancreate for you. Now we no longer need personal fmancials, too. You willhave nopersonal guarantee.2. Your success has put you to where you can get their attention, but they want tostart at $1Omm, not $3mm. Surely we canfmd a way for you to use $1Omm if theabsolute borrowing costs are about the same as for $3mm ($ 1Omm at 7% vs.$3mm at 20%)

As long as it can save you $19-20mm ($60mm at 40% vs. $60mrn at 7.25%) whywouldn't you do it? There is no need for a thorough audit (your prepared financials willdo) and we can write the business planto get you ready. Plus, there is a strong chancewe can get to money as cheap as 4-5%.

Cost of Funds

40,000,00035,000,00030,000,00025,000,00020,000,00015,000,00010,000,0005,000,000

60.00% 20.00% . 7.25% 3.50%

The cost? There are fees in the range of2-5% for the fIrst line only. That's for theinvestment bankers. They are necessary in this economy. We will do all the work suchas preparation of the business plan, communication, and negotiation. Then we stay on tomonitor and always look to make more improvements. We are asking for_% ofthecompany.So i fwe can get prepared fmancials and some time with you to prepare the business plan,we'11 go right to work.

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EXHIBIT 10


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PART II: ElaborationYou have been using discretionary or loosemoney and it is expensive. It has to be tocompensate for high risk it's willing to take or the small amounts that it is willing toinvest. It's never easy to get, and not everyone can get it. But it requires returns that areout of scale with the benefits it brings and it should only be used when absolutelyrequired. Otherwise the value and wealth that the borrower is creating is paiddisproportionately to the lender/investor that did not create the value or the wealth, butbenefits from it.DisciplinedMoney is reasonable. But to get it you have to show that investment dollarsare going towards a functioning, provenprocess - notmerely an idea with great peoplebehind it.With Global Liquidators, there was a time when loose money was all you could get. Youwere unproven - a startup. It is no surprise that the banks turned you down. You had toresort to very high cost financing. Butnowyou have outgrown that and there is noreason for you to be paying the rates that you are.Your ability to get money - even the expensive loose money - was based on who you areand your reputation for being a national figure with great integrity. Thatis always arequirement for any money in the magnitude that you are getting it. But now that you alsohave all the elements of an investable company, why not let us assemble andpackagethose elements so you can get single digit borrowing rates?That still help'S you butnow you have a track record for the business. With a littleworkwe can translate that into an investable organization that can attract and get disciplinedmoney. What also helps is that certain groups- groups we're working with - have-aspecialty in the kind ofbusiness you have. They understand it and have systems alreadyin place to lend to your business. In fact TM Capital says it's their favorite kind ofbusiness and they have worked with GordonBrothers and other industry leaders andwe're confident our work can get you to whatever point you want to be.

Originally we thought you wanted to grow and completely recapitalize andwe thoughtyou wanted to preserve the returns of your investors. To accommodate that wedeveloped a very complicated structure but it accomplished what we thought youwanted.Two things have happened:1. We've understood your goals better and now we knowwe canmeet those goalswithout a complicated structure. In fact, we're just going to bring you money inthe format you've been getting it- Debt- but youwill just pay about 80% lessthan what you were paying.2. We've also learned that we cannot bring youjust $3mm, that we need to begetting to $10mm to be able to fully benefit from this disciplined money.

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From all signs, this money is a much better fit for you and it will allow you to keep moreofwhat youmake. Actually, there is no reason to pay the high rates any longer. Here'swhat we need to do:

1. Address the financial due diligence needs of the lenders. No longer do we need anew audit as your existing fmancial statements will likely do. Nor do we needpersonal financial statements as these lenders will not require a personalguarantee. See the one-page sheet that GE Capital provides. It is typical of whatthese guys will need.

2. Getyou to spend some time with us so we can complete a business plantoaddress the general items required for the lenders. This is creating the story thatthey can buy into as they underwrite. It is simply a write up ofyour history, yourbasic business activity, and howyouwill sustain your past performance into thefuture. We can getwhat weneedfrom you in a few hours and thenwe can writeit up based onwhat we hear the lenders are looking for.

. 3. Talk about what your needs are for the money: either to grow or to replaceexpensive money you are using now, or both. With thatwe can gauge how muchmoney youwill need (forecast) and that will help the pricing.

From that point we will compile whatwe need and get you through the process. Wethink itwill take a few months. But the time, the rate, and the amount are all up in the airat least until we see the fmancials and can discuss them with the lenders.

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GE Capital Commercial Finance

Preliminary Information Checklist(Prospect N a m ~ )GENERALBrief History; Description of Business, Products and Competitors

Sources and Uses of Funds at Closing

Legal Structure (Borrowing Entities, Where are Assets?)

FINANCIALAudited Financial Statements (3/5 Yrs.)

Interim Financial Statements with com parables (B/S, IncomeStatement, Cash Flow)

Annual Financial Projections (3-5 Years)

Monthly Financial Projections

COLLATERALAIR Aging; Dilution and Write-off Data Over Last 2 Years

Inventory Composition (!?y: RM, WIP, FG and Location)

Borrowing Base CertificateAppraisals (if applicable)

Donnan-Exh 6, Exh 7, Exh 8, Exh 9, Exh 10

Documents