UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| [ X ] | QUARTERLY REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2012
| [ ] | TRANSITION REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 000-33309
| GLOBETRAC INC. |
| (Exact name of registrant as specified in its charter) |
Delaware (State or other jurisdiction of incorporation or organization) | 33-0953557 (I.R.S. Employer Identification No.) |
1100 Melville Street, Suite #610, Vancouver, British Columbia, Canada (Address of principal executive offices) | V6E 4A6 (Zip Code) |
1-800-648-4287 (Registrant’s telephone number, including area code) | |
n/a (Former name, former address and former fiscal year, if changed since last report) | |
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[ X ] Yes [ ] No
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 (s. 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 [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Larger accelerated filer | [ ] | Accelerated filer | [ ] | |||
| Non-accelerated filer | [ ] (Do not check if a smaller reporting company) | Smaller reporting company | [ X ] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[ ] Yes [ X ] No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.
| Class | Outstanding at May 9, 2011 |
| common stock - $0.001 par value | 100,183,198 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
GLOBETRAC INC.
BALANCE SHEETS
| March 31, 2012 | December 31, 2011 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 1,925 | $ | 707 | ||||
| Accounts receivable | 4,471 | 4,999 | ||||||
| Prepaids | - | - | ||||||
| $ | 6,396 | $ | 5,706 | |||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 4,875 | $ | 7,120 | ||||
| Accrued liabilities | 26,078 | 20,438 | ||||||
| Note payable | 20,671 | 20,264 | ||||||
| Due to related parties | 160,244 | 139,684 | ||||||
| 211,868 | 187,506 | |||||||
| Stockholders' deficit | ||||||||
Common stock $0.001 par value, 200,000,000 common shares authorized, 95,183,198 issued and outstanding at March 31, 2012 ( 2011 - 95,183,198) | 95,183 | 95,183 | ||||||
| Additional paid in capital | 1,228,565 | 1,228,565 | ||||||
| Accumulated deficit | (1,540,885 | ) | (1,517,213 | ) | ||||
| Accumulated other comprehensive income | 11,665 | 11,665 | ||||||
| (205,472 | ) | (181,800 | ) | |||||
| $ | 6,396 | $ | 5,706 | |||||
The accompanying notes are an integral part of these financial statements
GLOBETRAC INC.
STATEMENTS OF OPERATIONS
(unaudited)
| Three months ended March 31, | ||||||||
| 2012 | 2011 | |||||||
| Royalty income | $ | 6,169 | $ | 16,233 | ||||
| General and administrative expenses | 28,164 | 22,835 | ||||||
| Loss before other item | (21,995 | ) | (6,602 | ) | ||||
| Other item | ||||||||
| Interest expense | (1,677 | ) | (872 | ) | ||||
| Net loss | $ | (23,672 | ) | $ | (7,474 | ) | ||
| Net loss per share - basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
| Weighted average number of shares outstanding - basic and diluted | 95,183,198 | 89,883,198 | ||||||
The accompanying notes are an integral part of these financial statements
GLOBETRAC INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2012
| Common shares | ||||||||||||||||||||||||
Number of Shares | Amount | Additional Paid-in | Accumulated Deficit | Accumulated Other | Total | |||||||||||||||||||
| Balance at December 31, 2010 | 89,883,198 | $ | 89,883 | $ | 1,167,085 | $ | (1,452,213 | ) | $ | 13,412 | $ | (181,833 | ) | |||||||||||
| Shares issued for debt | 5,300,000 | 5,300 | 61,480 | - | - | 66,780 | ||||||||||||||||||
| Net loss for the year ended December 31, 2011 | - | - | - | (65,000 | ) | - | (65,000 | ) | ||||||||||||||||
| Comprehensive loss | - | - | - | - | (1,747 | ) | (1,747 | ) | ||||||||||||||||
| Balance at December 31, 2011 | 95,183,198 | 95,183 | 1,228,565 | (1,517,213 | ) | 11,665 | (181,800 | ) | ||||||||||||||||
| Net loss for the three months ended March 31, 2012 | - | - | - | (23,672 | ) | - | (23,672 | ) | ||||||||||||||||
| Balance at March 31, 2012 (unaudited) | 95,183,198 | $ | 95,183 | $ | 1,228,565 | $ | (1,540,885 | ) | $ | 11,665 | $ | (205,472 | ) | |||||||||||
The accompanying notes are an integral part of these financial statements
GLOBETRAC INC.
STATEMENTS OF CASH FLOWS
(unaudited)
| Three months ended March 31, | ||||||||
| 2012 | 2011 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (23,672 | ) | $ | (7,474 | ) | ||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 528 | (202 | ) | |||||
| Accounts payable | (2,245 | ) | 6,942 | |||||
| Accrued liabilities | 5,640 | (3,430 | ) | |||||
| Accrued interest | 407 | - | ||||||
| Due to related parties | 8,560 | 872 | ||||||
| Net cash used in operating activities | (10,782 | ) | (3,292 | ) | ||||
| Cash flows from financing activities | ||||||||
| Due to related parties | 12,000 | - | ||||||
| Net cash provided by financing activities | 12,000 | - | ||||||
| Net increase (decrease) in cash | 1,218 | (3,292 | ) | |||||
| Cash, beginning | 707 | 5,400 | ||||||
| Cash, ending | $ | 1,925 | $ | 2,108 | ||||
| Cash paid for: | ||||||||
| Income tax | $ | - | $ | - | ||||
| Interest | $ | - | $ | - | ||||
The accompanying notes are an integral part of these financial statements
GLOBETRAC INC.
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2012
(unaudited)
NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS
GlobeTrac Inc. (the “Company”) was incorporated in the state of Delaware on March 2, 2000. The Company was in the global wireless tracking business in Europe until November 1, 2004 when it exchanged this business for a royalty of 6% on future gross sales (Note 3).
Basis of Presentation
The unaudited financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. They do not include all information and notes required by generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in the Annual Report on Form 10-K of GlobeTrac Inc. for the year ended December 31, 2011. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results that may be expected for any other interim period or the entire year. For further information, these unaudited financial statements and the related notes should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2011 included in the Company’s report on Form 10-K.
NOTE 2 – DUE TO RELATED PARTIES
March 31, 2012 | December 31, 2011 | |||||||
| Due to a company controlled by a director – unsecured, 0% interest, due on demand | $ | 44,870 | $ | 37,579 | ||||
| Due to a company controlled by a relative of a major shareholder – unsecured, 0% interest, due on demand | 33,107 | 33,107 | ||||||
| Due a major shareholder – unsecured, 7% interest, due on demand | 16,534 | 16,248 | ||||||
| Convertible notes due to a relative of a major shareholder – unsecured, 7% interest, due on demand | 38,247 | 37,585 | ||||||
| Convertible notes due to a relative of a major shareholder – unsecured, 8% interest, due on demand | 27,486 | 15,165 | ||||||
| Due to related parties | $ | 160,244 | $ | 139,684 | ||||
The convertible notes are convertible at the lower of $0.50 or the market price of the shares at the time of conversion. During the three months ended March 31, 2012 and 2011, the Company paid or accrued $16,800 and $16,800 in administrative fees by a company controlled by a director.
NOTE 3 – ROYALTY AGREEMENT
On November 1, 2004, the Company entered into an agreement to discontinue marketing, distributing and installing global wireless tracking and telematics equipment in Europe, which was carried on through its wholly-owned subsidiary, GlobeTrac Limited, in exchange for certain assets and liabilities and a 6% royalty to be paid on gross sales of all existing and qualified potential customers that the Company had. This royalty agreement expires on October 31, 2015.
NOTE 4 – LICENSE AGREEMENT
On March 12, 2012, the Company entered into a license agreement with Teak Shield Corp. (the “Teak Shield License”) and its owners Robert and Marion Diefendorf (the “Licensors”) whereby the Company has acquired a license to market and sell Teak Shield’s licensed products. In exchange, the Company will pay a 5% royalty to the Licensors with a minimum $100,000 annual royalty payment, and agreed to issue to the Licensors 5,000,000 shares of the Company.
GLOBETRAC INC.
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2012
(unaudited)
NOTE 5 – SUBSEQUENT EVENTS
On April 13, 2012, the purchase of the Teak Shield License was completed and the 5,000,000 shares with a fair value of $900,000 were issued. As part of the agreement the Company acquired a two year option to purchase 100% of the Licensor’s ownership and interest in its proprietary rights and assets (the “Teak Shield Option”) including all licensed products, manufacturing, patents, intellectual property, technology, contracts, trademarks and goodwill for $250,000. To exercise the Teak Shield Option the Company must pay an additional $2,750,000.
In connection with the purchase of the Teak Shield Option, on April 19, 2012 the Company, signed a loan agreement for $260,000, repayable in six months from the date of the loan agreement. Interest is calculated at 3.5% per month for an effective rate of 51% per annum. The minimum interest payable on the loan is $26,000. The loan is secured by the Teak Shield License.
Item 2. Management Discussion and Analysis
Forward Looking Statements
The information in this quarterly report on Form 10-Q contains forward-looking statements. These forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business strategy and expectations. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as may, will, should, expect, plan, intend, anticipate, believe, estimate, predict, potential or continue, the negative of such terms or other comparable terminology. Actual events or results may differ materially from those events or results included in the forward-looking statements. In evaluating these statements, you should consider various factors, including the risks outlined from time to time in the reports we file with the Securities and Exchange Commission. Some, but not all, of these risks include, among other things:
| * | our inability to obtain the financing we need to continue our operations; |
| * | changes in regulatory requirements that adversely affect our business; |
| * | a decline in our royalty revenue; and |
| * | risks over which we have no control, such as a general downturn in the economy which may adversely affect our royalty revenue and ability to obtain working capital. |
We do not intend to update forward-looking statements. You should refer to and carefully review the information in future documents we file with the Securities and Exchange Commission.
General
This discussion and analysis should be read in conjunction with our interim unaudited financial statements and related notes included in this Form 10-Q and the audited financial statements and related notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011. The inclusion of supplementary analytical and related information herein may require us to make estimates and assumptions to enable us to fairly present, in all material respects, our analysis of trends and expectations with respect to our results of operations and financial position taken as a whole. Actual results may vary from the estimates and assumptions we make.
When we use the words “we”, “us” or “our” in this report, we are referring to GlobeTrac Inc. which we sometimes refer to in this report as “GlobeTrac”.
Overview
We were incorporated in the state of Delaware on March 2, 2000, as 411 Place.com Inc. On February 28, 2001, we changed our name to Artescope, Inc. and on July 29, 2002, changed the name to GlobeTrac Inc. Our principal executive offices are headquartered in Canada. On August 27, 2002, we acquired 100% of the shares of Global Axxess Corporation Limited (Global Axxess), a company incorporated in Ireland. On June 12, 2008, we sold our shares of Global Axxess, our only subsidiary. Global Axxess owned 100% of the issued and outstanding shares of Globetrac Limited (Limited), a company incorporated in the United Kingdom, until March 20, 2007, when Limited was officially dissolved and all of Limited’s assets and liabilities were assumed by GlobeTrac.
On April 13, 2012, the purchase of the Teak Shield License was completed and the 5,000,000 shares with a fair value of $900,000 were issued. As part of the agreement the Company acquired a two year option to purchase 100% of the Licensor’s ownership and interest in its proprietary rights and assets (the “Teak Shield Option”) including all licensed products, manufacturing, patents, intellectual property, technology, contracts, trademarks and goodwill for $250,000. To exercise the Teak Shield Option the Company must pay an additional $2,750,000.
In connection with the purchase of the Teak Shield Option, on April 19, 2012 the Company, signed a loan agreement for $260,000, repayable in six months from the date of the loan agreement. Interest is calculated at 3.5% per month for an effective rate of 51% per annum. The minimum interest payable on the loan is $26,000. The loan is secured by the Teak Shield License.
At March 31, 2012, our only source of income was a six percent commission/royalty that we receive from WebTech Wireless Inc. (“WebTech”), based on all qualified sales of any product or service offered by WebTech. A qualified sale means all of WebTech’s invoiced sales of products or services to a customer that has ordered at least one product or service before November 26, 2005, whether sold by WebTech or by a licensee, affiliate or agent of WebTech. A list of customers was provided to WebTech by GlobeTrac. There is no cap on the royalty receivable and royalties are to be paid by WebTech for eleven years, beginning November 1, 2004, and ending October 31, 2015.
On June 9, 2011, we signed a letter of intent with a company named Thermoforte Green Inc. and Angelo Scola, to acquire certain of their assets. On September 8, 2011, after performing our due diligence, we announced the termination of this agreement.
On September 26, 2011, we entered into a letter agreement with David Bernard and Michael Avatar with the intention and objective of both parties to negotiate the purchase and sale of all of the shares of Equities.com, Inc. On January 23, 2012, David Bernard and Michael Avatar terminated the Letter Agreement. Mr. Bernard and Mr. Avatar advised GlobeTrac that they decided to terminate the Letter Agreement as a result of failing to secure the requisite third-party financing for the proposed share purchase.
On March 12, 2012, GlobeTrac entered into a license agreement with an option to purchase with Teak Shield Corp. (“Teak Shield”) and its owners Robert and Marion Diefendorf (jointly the “Licensors”), such agreement titled: Technology License Agreement with Option to Purchase. Pursuant to the terms and conditions of the Agreement, GlobeTrac has acquired a license to market and sell certain Licensed Products, and in exchange GlobeTrac agreed to pay a 5% royalty on all sales of the Licensed Products with a minimum $100,000 yearly royalty payment, and to issue to Licensors five million shares of GlobeTrac common stock.
Results of Operation
Our operating results for the three months ended March 31, 2012 and 2011 and the changes between those periods, are summarized as follows:
| Three Months Ended March 31, | ||||||||||||
| 2012 | 2011 | Increase (Decrease) Between the Three Months Ended March 31, 2012 and 2011 | ||||||||||
| Royalty income | $ | 6,169 | $ | 16,233 | $ | (10,064 | ) | |||||
| Operating expenses: | ||||||||||||
| General and administrative | 28,164 | 22,835 | 5,329 | |||||||||
| Net loss before other items | 21,995 | 6,602 | 15,393 | |||||||||
| Interest | 1,677 | 872 | 805 | |||||||||
| Net loss | $ | 23,672 | $ | 7,474 | $ | 16,198 | ||||||
Revenues
Our royalty revenue decreased by $10,064 or 62% from $16,233 for the three months ended March 31, 2011, to $6,169 for the three months ended March 31, 2012.
All of our revenue was the result of a 6% royalty which relates to the Termination and Transfer Agreement signed on October 18, 2005. The revenue we receive from WebTech is in British Pounds. The 62% decrease in revenue during the three months ended March 31, 2012, was due primarily to a decrease in the revenue earned in British Pounds. Changes in the exchange rates had no effect on the revenue received. We expect our revenue to increase with the purchase of Teak Shield.
Operating Expenses
Our operating expenses increased by $5,329 or 23% from $22,835 for the three months ended March 31, 2011 to $28,164 for the three months ended March 31, 2011. This increase was primarily caused by increases in professional and filing fees of $2,909and $3,073, respectively, due to increased regulatory requirements and $1,319 increase in advertising and promotion expenses. These increases were offset by decrease in foreign exchange losses of $796.
Over the next year our plan is to continue to control our operating costs. We expect our operating costs to remain approximately the same over the next year; unless the purchase of Teak Shield Corp. is finalized, which will substantially increase our operating costs.
Franchise Tax
Our franchise tax increased by $491 from a recovery of $61 for the three months ended March 31, 2011, to $430 for the three months ended March 31, 2012. The recovery of $61 for the three months ended March 31, 2011, was due to a refund from the State of California for overpayment of franchise taxes in a previous year.
Liquidity and Capital Resources
Going Concern
The notes to our financial statements at March 31, 2012, disclose our uncertain ability to continue as a going concern. We were in the business of selling, marketing, distributing and installing global wireless tracking and telematics equipment in Europe until November 1, 2004, when we exchanged our rights to sell, market, distribute and install global wireless tracking and telematics equipment in Europe as well as specific assets and liabilities, for a royalty of 6% on future gross sales to current customers and qualified potential customers in Europe. There is no cap on the royalties and royalties are to be paid for the duration of 11 years, ending October 31, 2015. We have accumulated a deficit of $1,540,885 since inception and additional financing will be required to fund and support our operations. We plan to mitigate our losses in future years by controlling our operating expenses and through revenue from our Teak Shield line of products. However, there is no assurance that we will be able to obtain additional financing, control our operating expenses or receive sufficient revenue from our new business. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
As of March 31, 2012, we had a cash balance of $1,925, a working capital deficit of $205,472 and negative cash flows from operations of $10,782 for the three months then ended. During the three months ended March 31, 2012, we primarily funded our operations with $12,000 in loans received during this quarter, and 35,500 in a loans received last year and the royalty revenue we received from WebTech.
The following table summarizes our sources and uses of cash for the three months ended March 31, 2012 and 2011:
| March 31, | ||||||||
| 2012 | 2011 | |||||||
| Net cash used in operating activities | $ | (10,782 | ) | $ | (3,292 | ) | ||
| Net cash used in investment activities | - | - | ||||||
| Net cash provided by financing activities | 12,000 | - | ||||||
| Effect of foreign currency exchange | - | - | ||||||
| Net decrease in cash | $ | (1,218 | ) | $ | (3,292 | ) | ||
Net Cash Used in Operating Activities
Net cash used in operating activities during the three months ended March 31, 2012, was $10,782. This cash was primarily used to cover our operating loss of $23,672 and a decrease in accounts payable of $2,245. These uses of cash were primarily offset by increases in accrued liabilities and due to related parties of $5,640 and $8,560, respectively, and a decrease in accounts receivable of $528.
Net cash used in operating activities during the three months ended March 31, 2011, was $3,292. This cash was primarily used to cover our net loss of $7,474, a decrease in accrued liabilities of $3,430 and increase in accounts receivable of $202. These uses of cash were offset by increase in accounts payable and due to related parties of $6,942 and $872, respectively.
Net Cash Used In Investing Activities
We did not have any investing activities during the three months ended March 31, 2012 and 2011.
Net Cash Provided By Financing Activities
During the three months ended March 31, 2012 and 2011, we had $12,000 and $0 in financing activities from the issuance of a nonconvertible notes to a related party.
Challenges and Risks
We have accumulated a deficit of approximately $1.5 million to date and will require additional debt or equity financing to continue operations and to seek out new business opportunities. We plan to mitigate our losses in future years through the receipt of the royalty payments from Webtech and locating a viable business.
There is no assurance that we will be able to obtain additional financing, that our new business opportunity will receive sufficient revenues, that we will receive any royalties from WebTech or that we will be able to reduce operating expenses.
Other Trends, Events or Uncertainties that may Impact Results of Operations or Liquidity
Trends, Events, and Uncertainties
The economic downturn may make it harder for us to raise capital if we need it. Therefore, in the future, the economic downturn may have a material adverse effect on our ability to raise operating capital. Other than as discussed in this 10-K, we know of no other trends, events or uncertainties that have or are reasonably likely to have a material impact on our short-term or long-term liquidity.
Off-balance Sheet Arrangements
We have no off-balance sheet arrangements and no non-consolidated, special-purpose entities.
Contingencies and Commitments
We had no contingencies or long-term commitments at March 31, 2012 and December 31, 2011
Contractual Obligations
We had no contractual obligations at March 31, 2012 and December 31, 2011.
Critical Accounting Judgments
An appreciation of our critical accounting policies is necessary to understand our financial results. These policies may require management to make difficult and subjective judgments regarding uncertainties, and as a result, such estimates may significantly impact our financial results. The precision of these estimates and the likelihood of future changes depend on a number of underlying variables and a range of possible outcomes. Other than our accounting for our royalty revenue, our critical accounting policies do not involve the choice between alternative methods of accounting. We have applied our critical accounting policies and estimation methods consistently.
Revenue Recognition
Royalty revenue is recognized when pervasive evidence of an agreement exists, when it is received or when the royalty income is determinable and collectibility is reasonably assured.
Accounts Receivable
Receivables represent valid claims against debtors for royalties arising on or before the balance sheet date and are reduced to their estimated net realizable value. An allowance for doubtful accounts is based on an assessment of the collectibility of all past due accounts. At March 31, 2012 and December 31, 2011, our allowance for doubtful accounts was $0.
At March 31, 2012, accounts receivable consists of estimated royalty revenue for the months of February and March 2012. Our estimate was based on the amounts we received from WebTech for the months from November 2011 to January 2012. As of the date of filing we had not received payment of the accrued royalty revenue and thus our estimated accrual could vary materially from the amount we accrued at March 31, 2012.
Financial Instruments
Foreign Exchange Risk
We are subject to foreign exchange risk on our royalty revenue which is denominated in UK pounds and some purchases which are denominated in Canadian dollars. Foreign currency risk arises from the fluctuation of foreign exchange rates and the degree of volatility of these rates relative to the United States dollar. Foreign exchange rate fluctuations may adversely impact our results of operations as exchange rate fluctuations on transactions denominated in currencies other than our functional currency result in gains and losses that are reflected in our Statement of Operations. To the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign currency-denominated transactions will result in increased net revenue. Conversely, our net revenue will decrease when the U.S. dollar strengthens against foreign currencies. We do not believe that we have any material risk due to foreign currency exchange.
Fair Value of Financial Instruments
Our financial instruments include cash, accounts receivable, accounts payable, accrued liabilities and accrued professional fees. We believe the fair value of these financial instruments approximate their carrying values due to their short maturities.
Concentration of Credit Risk
Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and trade accounts receivable.
At March 31, 2012, we had approximately $1,925 in cash on deposit with a large chartered Canadian bank. At March 31, 2012, $1,138 of this cash was insured. As part of our cash management process, we perform periodic evaluations of the relative credit standing of this financial institution. We have not experienced any losses in cash balances and do not believe we are exposed to any significant credit risk on our cash.
Accounts receivable consists of royalty income from one source and is not collateralized. We continually monitor the financial condition of our customer to reduce the risk of loss. We routinely assess the financial strength of our source of revenue income and as a consequence, concentration of credit risk is limited. At March 31, 2012, we had $4,471 in royalties’ receivable from this source.
Recent Accounting Standards and Pronouncements
Recent accounting pronouncements issued by the Financial Accounting Standards Board or other authoritative standards groups with future effective dates are either not applicable or are not expected to be significant to the financial statements of the Company.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
GlobeTrac is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.
Item 4. Controls and Procedures.
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including John daCosta, GlobeTrac’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Mr. daCosta has evaluated the effectiveness of the design and operation of GlobeTrac’s disclosure controls and procedures (as such term is defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on such evaluation, Mr. daCosta has concluded that, as of the Evaluation Date, GlobeTrac’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports GlobeTrac files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required.
Changes in Internal Control Over Financial Reporting
During the quarter of the fiscal year covered by this report, there were no changes in GlobeTrac’s internal control over financial reporting or, to GlobeTrac’s knowledge, in other factors that have materially affected, or are reasonably likely to materially affect, GlobeTrac’s internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings.
GlobeTrac is not a party to any pending legal proceedings and, to the best of GlobeTrac’s knowledge, none of GlobeTrac’s property or assets are the subject of any pending legal proceedings.
Item 1A. Risk Factors.
GlobeTrac is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the quarter of the fiscal year covered by this report, (i) GlobeTrac did not modify the instruments defining the rights of its shareholders, (ii) no rights of any shareholders were limited or qualified by any other class of securities, and (iii) GlobeTrac did not sell any unregistered equity securities that have not previously been disclosed in a Form 8-K filed with the SEC.
Item 3. Defaults Upon Senior Securities.
During the quarter of the fiscal year covered by this report, no material default has occurred with respect to any indebtedness of GlobeTrac. Also, during this quarter, no material arrearage in the payment of dividends has occurred.
Item 4. (Removed and Reserved)
Item 5. Other Information.
During the quarter of the fiscal year covered by this report, GlobeTrac reported all information that was required to be disclosed in a report on Form 8-K.
Item 6. Exhibits
| (a) | Index to and Description of Exhibits |
All Exhibits required to be filed with the Form 10-Q are included in this quarterly report or incorporated by reference to GlobeTrac’s previous filings with the SEC, which can be found in their entirety at the SEC website at www.sec.gov under SEC File Number 000-33309 and SEC File Number 333-66590.
| Exhibit | Description | Status |
| 3.1 | Articles of Incorporation filed as an Exhibit to GlobeTrac’s registration statement on Form SB-2 filed on August 2, 2001, and incorporated herein by reference. | Filed |
| 3.2 | Bylaws filed as an Exhibit to GlobeTrac’s registration statement on Form SB-2 filed on August 2, 2001, and incorporated herein by reference. | Filed |
| 3.3 | Certificate of Amendment to Articles of Incorporation changing the Issuer’s name to GlobeTrac Inc. filed as an exhibit to GlobeTrac’s Form 10-KSB filed on April 15, 2003, and incorporated herein by reference. | Filed |
| 3.4 | Notification of Dissolution for Globetrac Limited dated March 14, 2007, filed as an exhibit to GlobeTrac’s Form 10-KSB filed on April 16, 2007, and incorporated herein by reference. | Filed |
| 10.1 | Master Distributorship Agreement dated June 19, 2002 among WebTech Wireless International, WebTech Wireless Inc. and Global Axxess Corporation Limited filed as an attached exhibit to GlobeTrac’s Form 8-K (Current Report) filed on September 11, 2002, and incorporated herein by reference. | Filed |
| 10.2 | Loan Agreement dated November 27, 2002 between GlobeTrac Inc. and David Patriquin with attached promissory note dated November 27, 2002 filed as an exhibit to GlobeTrac’s Form 10-KSB (Annual Report) filed on April 15, 2003, and incorporated herein by reference. | Filed |
| 10.3 | Amendment Letter Agreement dated June 4, 2003, between WebTech Wireless International Inc. and Globetrac Limited for the purpose of amending terms of the Master Distributorship Agreement filed as an exhibit to GlobeTrac’s Form 10-KSB (Annual Report) filed on April 7, 2004, and incorporated herein by reference. | Filed |
| 10.4 | Amendment Letter Agreement dated March 8, 2004 between WebTech Wireless International Inc. and Globetrac Limited for the purpose of amending terms of the Master Distributorship Agreement filed as an exhibit to GlobeTrac’s Form 10-KSB (Annual Report) filed on April 7, 2004, and incorporated herein by reference. | Filed |
| 10.5 | Letter Agreement dated November 26, 2004 among Global Axxess Corporation Limited, WebTech Wireless International and WebTech Wireless Inc., filed as an exhibit to GlobeTrac’s Form 8-K (Current Report) filed on December 22, 2004, and incorporated herein by reference. | Filed |
| 10.6 | Termination and Transfer Agreement dated November 1, 2004 among GlobeTrac Inc., Global Axxess Corporation Limited, Globetrac Limited, WebTech Wireless Inc., and WebTech Wireless International, filed as an exhibit to GlobeTrac’s Form 8-K (Current Report) filed on November 14, 2005, and incorporated herein by reference. | Filed |
| 14 | Code of Ethics filed as an exhibit to GlobeTrac’s Form 10-KSB filed on April 15, 2003, and incorporated herein by reference. | Filed |
| 31 | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | Included |
| 32 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | Included |
| 101.INS** | XBRL Instance |
| 101.SCH** | XBRL Taxonomy Extension Schema |
| 101.CAL** | XBRL Taxonomy Extension Calculation |
| 101.DEF** | XBRL Taxonomy Extension Definition |
| 101.LAB** | XBRL Taxonomy Extension Labels |
| 101.PRE** | XBRL Taxonomy Extension Presentation |
| ** XBRL | Information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, GlobeTrac Inc. has caused this report to be signed on its behalf by the undersigned duly authorized person.
GLOBETRAC INC. | |||
Dated: May 9, 2012 | By: | /s/ John da Costa | |
| Name: | John da Costa | ||
| Title: | CEO, President and CFO (Principal Executive Officer and Principal Financial Officer) | ||