**United
states**
 **SECURITIES
AND EXCHANGE COMMISSION**
 **Washington,
D.C. 20549**
 
 **FORM
10-KSB**
 
 
 **[
      X ]**
    **ANNUAL
      REPORT UNDER SECTION 13 0R 15(****d****)
      OF THE SECURITIES EXCHANGE ACT OF
1934**
 
 For the
fiscal year ended  **December
31, 2004**
 
 **[  
      ]**
    **TRANSITION
      REPORT UNDER SECTION 13 0R 15(****d****)
      OF THE SECURITIES EXCHANGE ACT OF
1934**
 
 For the
transition period from    **** to
 Commission
file number
 
 
 **GLOBETRAC
      INC.**(Name
      of Small Business Issuer in its charter)
 
 
 Incorporated
      in the State of Delaware
      (State
      or other jurisdiction of incorporation or organization)
    33-0953557
      (I.R.S.
      Employer Identification No.)1100
      Melville Street, Suite 600, Vancouver, British Columbia,
      Canada
      (Address
      of principal executive offices)
    V6E
      4A6
      (Zip
      Code)
 
 Issuer’s
telephone number: 1-800-648-4287
 
 
 Securities
registered pursuant to Section 12(b) of the Act:
 **Title
      of each class**
    **Name
      of each exchange on which registered**None
    N/A
 
 
 Securities
registered pursuant to Section 12(g) of the Act:
 
 
 **Common
      Stock - $0.001 par value**(Title
      of Class)
 
 Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the last 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**
 
 Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. **[
]**
  
 ***Page
- 1***
 State
issuer’s revenues for its most recent fiscal year.   **$25,037**
 
 State the
aggregate market value of the voting and non-voting common equity held by **non-affiliates** computed
by reference to the price at which the common equity was sold, or the average
bid and asked price of such common equity, as of a specified date within the
past 60 days: **$362,475,
as of April 13, 2005 ($0.027 close)**
 
 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 April 13, 2005**Common
      Stock - $0.001 par value
    22,190,000
 
 Documents
incorporated by reference: Exhibit 2.1 (Articles of Incorporation) and Exhibit
2.2 (By-laws) both filed as exhibits to GlobeTrac’s registration statement on
Form SB-2 filed on August 2, 2001; Exhibit 10.1 (Master Distributorship
Agreement) filed as an exhibit to GlobeTrac’s Form 8-K (Current Report) filed on
September 11, 2002; and Exhibit 10.5 (Letter Agreement) filed as an exhibit to
GlobeTrac’s Form 8-K (Current Report) filed on December 22, 2004.
 
 Transitional
Small Business Disclosure Format (Check one): **Yes [  ] No [ x ]**
 
  ***Page
- 2***
  **PART
I**
 
 **Item
1.**  **Description
of Business.**
 
 **(a)**
    **Business
      Development**
 
 GlobeTrac
was incorporated under the laws of the State of Delaware on March 2, 2000 under
the original name “411 Place.com Inc”. On February 28, 2001, GlobeTrac changed
its name to “Artescope, Inc.”
 
 On May 6,
2002 all of the directors and officers of GlobeTrac resigned and a new director
and officer was appointed.
 
 On July
29, 2002, the company changed its name to “GlobeTrac Inc.” GlobeTrac has an
authorized capital of 205,000,000 shares with a par value of $0.001, consisting
of 200,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock
with 22,190,000 shares of Common Stock currently issued and
outstanding.
 
 GlobeTrac,
Inc. provided digital graphics design and production services for commercial and
corporate enterprises until August 27, 2002 when GlobeTrac changed its business
direction and began selling, marketing, distributing, and installing global
wireless tracking and telematics equipment in Europe.
 
 On August
27, 2002 the president of GlobeTrac resigned, but remained on as director and
the chief financial officer, and a new president and chief executive officer was
appointed.
 
 Also, on
August 27, 2002, GlobeTrac acquired all of the outstanding shares of Global
Axxess Corporation Limited for $1
and two of the directors of Global Axxess resigned and two new directors were
appointed. Global Axxess is a private Irish company that was incorporated on
December 31, 1997, as “Advance High Tech Development Enterprises Limited”. On
April 26, 2002, the company changed its name to “Global Axxess Corporation
Limited”. Global Axxess has the exclusive rights to distribute global wireless
tracking and telematics products in Europe. See Exhibit 10.1 - Master
Distributorship Agreement for more information.
 
 Also, on
August 27, 2002, Global Axxess acquired the beneficial ownership of all the
outstanding shares of Globetrac Limited for one British pound and all the
directors of Globetrac Limited resigned and two new directors were appointed. Globetrac
Limited was incorporated in the United Kingdom on March 28, 2002 as a private
limited company under the name “Global Axxess Tracking Limited”. On July 19,
2002 the company changed its name to Globetrac Limited. Globetrac Limited was in
the business of selling, marketing, distributing and installing the global
wireless tracking and telematics equipment.
 
 Effective
November 1, 2004, GlobeTrac decided to wind down its operations due to cash flow
limitations. Additionally, GlobeTrac reached an agreement with WebTech Wireless
to cancel the master distributorship agreement and to restructure its ongoing
business relationship with WebTech Wireless. See Exhibit 10.5 - Letter Agreement
for more information. Pursuant to the terms of the Letter Agreement WebTech
acquired specific assets and liabilities of GlobeTrac. WebTech has agreed to pay
a 6% commission/royalty on gross sales from qualified potential customers and
resellers, which will be included for commission purposes if such business
commences within 12 months of the signed agreement. There is no cap on the
royalty payable to GlobeTrac and royalties are to be paid by WebTech for 11
years beginning November 1, 2004.
 
 Since
November 1, 2004, GlobeTrac’s current principal business activity has been to
seek a suitable reverse acquisition candidate through acquisition, merger or
other suitable business combination method.
 
 Neither
GlobeTrac nor any of its subsidiaries have been involved in any bankruptcy,
receivership or similar proceedings. There have been no material
reclassifications, mergers, consolidations or purchases or sales of a
significant amount of assets not in the ordinary course of GlobeTrac’s business,
with the exception of the sale of certain assets to WebTech in accordance with
the terms set out in the Letter Agreement. See Exhibit 10.5 for more
information.
 
 **(b)**
    **Business
      of GlobeTrac**
 
 On
November 26, 2004, GlobeTrac entered into a letter agreement with WebTech
Wireless whereby GlobeTrac decided to wind down its operations effective
November 1, 2004 and WebTech Wireless agreed to acquire all of GlobeTrac’s
existing customers and resellers and portals in exchange for the 6%
commission/royalty.
 
 Since
November 1, 2004, GlobeTrac has had minimal operations. As of November 1, 2004,
GlobeTrac has no or nominal operations and with no or nominal assets or assets
consisting solely of cash and cash equivalents and significant liabilities.
GlobeTrac’s sole purpose at this time is to locate and consummate a merger or
acquisition with a private entity.
  ***Page
- 3***
 
 GlobeTrac
will attempt to locate and negotiate with a target business for the merger of a
target business into GlobeTrac. In certain instances, a target business may want
to become a subsidiary of GlobeTrac or may want to contribute assets to
GlobeTrac rather than merge. It is anticipated that management will contact
broker-dealers and other persons with whom they are acquainted who are involved
with corporate finance matters to advise them of GlobeTrac’s existence and to
determine if any companies or businesses that they represent have a general
interest in considering a merger or acquisition with GlobeTrac. No assurance can
be given that GlobeTrac will be successful in finding or acquiring a desirable
target business, given the limited funds that are expected to be available for
acquisitions. Furthermore, no assurance can be given that any business
opportunity, which does occur, will be on terms that are favorable to GlobeTrac
or its current stockholders.
 
 A target
business, if any, which may be interested in a business combination with
GlobeTrac may include (1) a company for which a primary purpose of becoming
public is the use of its securities for the acquisition of assets or businesses;
(2) a company that is unable to find an underwriter of its securities or is
unable to find an underwriter of securities on terms acceptable to it; (3) a
company that wants to become public with less dilution of its common stock than
would occur normally upon an underwriting; (4) a company that believes that it
will be able to obtain investment capital on more favorable terms after it has
become public; (5) a foreign company that wants to gain an initial entry into
the United States securities market; (6) a special situation company, such as a
company seeking a public market to satisfy redemption requirements under a
qualified Employee Stock Option Plan; or (7) a company seeking one or more of
the other perceived benefits of becoming a public company.
 
 Management
believes that there are perceived benefits to being a reporting company with a
class of publicly-registered securities. These are commonly thought to include
(1) the ability to use registered securities to make acquisition of assets or
businesses; (2) increased visibility in the financial community; (3) the
facilitation of borrowing from financial institutions; (4) improved trading
efficiency; (5) stockholder liquidity; (6) greater ease in subsequently raising
capital; (7) compensation of key employees through stock options; (8) enhanced
corporate image; and (9) a presence in the United States capital
market.
 
 GlobeTrac
anticipates that the target businesses or business opportunities presented to it
will (1) either be in the process of formation, or be recently organized with
limited operating history or a history of losses attributable to
under-capitalization or other factors; (2) experiencing financial or operating
difficulties; (3) be in need of funds to develop new products or services or to
expand into a new market, or have plans for rapid expansion through acquisition
of competing businesses; (4) or other similar characteristics. GlobeTrac intends
to concentrate its acquisition efforts on properties or businesses that
management believes to be undervalued or that management believes may realize a
substantial benefit from being publicly owned. Given the above factors,
investors should expect that any target business or business opportunity may
have little or no operating history, or a history of losses or low
profitability.
 
 GlobeTrac
does not propose to restrict its search for business opportunities to any
particular geographical area or industry, and may, therefore, engage in
essentially any business, to the extent of its limited resources. This includes
industries such as service, finance, natural resources, manufacturing, high
technology, product development, medical, communications and others. GlobeTrac’s
discretion in the selection of business opportunities is unrestricted, subject
to the availability of such opportunities, economic conditions, and other
factors. However, management believes that any potential business opportunity
must provide audited financial statements for review, for the protection of all
parties to the business combination. One or more attractive business
opportunities may choose to forego the possibility of a business combination
with us, rather than incur the expenses associated with preparing audited
financial statements.
 
 Management,
which in all likelihood will not be experienced in matters relating to the
business of a target business, will rely upon its own efforts in accomplishing
GlobeTrac’s business purposes. Outside consultants or advisors may be utilized
by GlobeTrac to assist in the search for qualified target companies. If
GlobeTrac does retain such an outside consultant or advisor, any cash fee earned
by such person will need to be assumed by the target business, as GlobeTrac has
no cash assets with which to pay such obligation.
 
 Management
does not have the capacity to conduct as extensive an investigation of a target
business as might be undertaken by a venture capital fund or similar
institution. The analysis of new business opportunities will be undertaken by,
or under the supervision of GlobeTrac’s officers and directors, who are not
professional business analysts. In analyzing prospective business opportunities,
management may consider such matters as:
 
 
 • the
available technical, financial and managerial resources;
 • working
capital and other financial requirements; history of operations, if
any;
 •
prospects for the future;
 • nature
of present and expected competition;
 • the
quality and experience of management services which may be available and the
depth of that management
 • the
potential for further research, development, or exploration
 •
specific risk factors not now foreseeable but which then may be anticipated to
impact our proposed activities;
 • the
potential for growth or expansion;
 • the
potential for profit; and
 • the
perceived public recognition or acceptance of products, services, or trades;
name identification.
  ***Page
- 4***
 
 A target
business may have an agreement with a consultant or advisor, providing that
services of the consultant or advisor be continued after any business
combination. Additionally, a target business may be presented to GlobeTrac only
on the condition that the services of a consultant or advisor be continued after
a merger or acquisition. Such preexisting agreements of target businesses for
the continuation of the services of attorneys, accountants, advisors or
consultants could be a factor in the selection of a target
business.
 
 In
implementing a structure for a particular target business acquisition, GlobeTrac
may become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. GlobeTrac may also
acquire stock or assets of an existing business. Depending upon the nature of
the transaction, the current officers and directors of GlobeTrac may resign
their management and board positions with GlobeTrac in connection with a change
of control or acquisition of a business opportunity and be replaced by one or
more new officers and directors.
 
 It is
anticipated that any securities issued in any reorganization would be issued in
reliance upon exemption from registration under applicable federal and state
securities laws. In some circumstances however, as a negotiated element of its
transaction, GlobeTrac may agree to register all or a part of such securities
immediately after the transaction is consummated or at specified times
thereafter. If such registration occurs, of which there can be no assurance, it
will be undertaken by the surviving entity after GlobeTrac has entered into an
agreement for a business combination or has consummated a business combination.
The issuance of additional securities and their potential sale into GlobeTrac’s
trading market may depress the market value of GlobeTrac’s securities in the
future.
 
 With
respect to any merger or acquisition negotiations with a target business,
management expects to focus on the percentage of GlobeTrac that the target
business stockholder would acquire in exchange for their shareholdings in the
target business. Depending upon, among other things, the target business’s
assets and liabilities, GlobeTrac’s shareholders will in all likelihood hold a
substantially lesser percentage ownership interest in GlobeTrac following any
merger or acquisition. Any merger or acquisition effected by GlobeTrac can be
expected to have a significant dilutive effect on the percentage of shares held
by GlobeTrac’s shareholders at that time.
 
 At the
present time, management has not identified any target business or business
opportunity that it plans to pursue, nor has GlobeTrac reached any agreement or
definitive understanding with any person concerning an acquisition or a business
combination. When any such agreement is reached or other material fact occurs,
GlobeTrac will file notice of such agreement or fact with the Securities and
Exchange Commission on Form 8-K. Persons reading this Form 10-KSB are advised to
determine if GlobeTrac has subsequently filed a Form 8-K.
 
 Management
anticipates that the selection of a business opportunity in which to participate
will be complex and without certainty of success. Management believes (but has
not conducted any research to confirm) that there are numerous firms seeking the
perceived benefits of a publicly registered corporation. Such perceived benefits
may include facilitating or improving the terms on which additional equity
financing may be sought, providing liquidity for incentive stock options or
similar benefits to key employees, increasing the opportunity to use securities
for acquisitions, and providing liquidity for stockholder’s investments.
Business opportunities may be available in many different industries and at
various stages of development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely difficult
and complex.
 
 **Competition**
 
 GlobeTrac
will remain an insignificant participant among the firms that engage in the
acquisition of business opportunities. There are many established venture
capital and financial concerns which have significantly greater financial and
personnel resources and technical expertise than GlobeTrac. In view of
GlobeTrac’s combined extremely limited financial resources and limited
management availability, GlobeTrac will continue to be at a significant
competitive disadvantage compared to its competitors.
  ***Page
- 5***
 
 GlobeTrac
expects to encounter substantial competition in its efforts to locate attractive
business combination opportunities. The competition may in part come from
business development companies, venture capital partnerships and corporations,
small investment companies, and brokerage firms. Some of these types of
organizations are likely to be in a better position than GlobeTrac to obtain
access to attractive business acquisition candidates either because they have
greater experience, resources and managerial capabilities than GlobeTrac,
because they are able to offer immediate access to limited amounts of cash, or
for a variety of other reasons. GlobeTrac also will experience competition from
other public companies with similar business purposes, some of which may also
have funds available for use by an acquisition candidate.
 
 **Patents/Trade
Marks/Licences/Franchises/Concessions/Royalty Agreements or Labour
Contracts**
 
 Neither
GlobeTrac nor its subsidiaries currently own any patents or trade marks. Also,
they are not party to any license or franchise agreements, concessions, royalty
agreements or labor contracts arising from any patents or trade marks, with the
exception of the terms set out in the Letter Agreement among Global Axxess,
WebTech Wireless International and WebTech Wireless Inc. See Exhibit 10.5 -
Letter Agreement for more information.
 
 **Expenditures
on Research and Development During the Last Two Fiscal
Years**
 
 GlobeTrac
has not spent any funds on research and development activities in the last two
fiscal years except for funds spent for the development of its
website.
 
 GlobeTrac
is not currently conducting any research and development activities.
 
 **Number
of Total Employees and Number of Full Time Employees**
 
 GlobeTrac
currently has no employees. Management expects to use consultants, attorneys and
accountants as necessary, and does not anticipate a need to engage any full-time
employees so long as it is seeking and evaluating business opportunities. The
need for employees and their availability will be addressed in connection with
the decision whether or not to acquire or participate in specific business
opportunities.
 
 
 **RISK
FACTORS**
 
 You
should consider each of the following risk factors and the other information in
this Annual Report, including GlobeTrac’s financial statements and the related
notes, in evaluating GlobeTrac’s business and prospects. The risks and
uncertainties described below are not the only ones that impact on GlobeTrac’s
business. Additional risks and uncertainties not presently known to GlobeTrac or
that GlobeTrac currently considers immaterial may also impair its business
operations. If any of the following risks actually occur, GlobeTrac’s business
and financial results could be harmed. In that case, the trading price of
GlobeTrac’s Common Stock could decline.
 
 **Risks
associated with GlobeTrac’s business:**
 
 **1.**
    **GlobeTrac
      lacks an operating history and has losses that it expects will continue
      into the future. If the losses continue GlobeTrac will have to suspend
      operations or cease operations.**
 
 GlobeTrac
has no operating history upon which an evaluation of its future success or
failure can be made. GlobeTrac has incurred significant operating losses since
inception and has limited financial resources to support it until such time that
it is able to generate positive cash flow from operations. GlobeTrac’s net loss
since inception is $3,963,224. For the 12 months ended December 31, 2004,
operating expenses decreased by $149,546 from $755,273 for the year ended
December 31, 2003 to $605,727 for the year ended December 31, 2004. See
“Management Discussion and Analysis” on page 11 for more details.
 
 GlobeTrac
      currently has few assets, significant liabilities, and limited
      financial resources. GlobeTrac will, in all likelihood, continue to
      sustain operating expenses without corresponding revenues, at least until
      the consummation of a business combination. This will most likely result
      in GlobeTrac incurring a net operating loss that will increase
      continuously until GlobeTrac can consummate a business combination with a
      target business. There is no assurance that GlobeTrac can identify such a
      target business and consummate such a business
  combination.
  
 ***Page
- 6***
 
 **2.**
    **GlobeTrac
      has no agreement for a business combination and there are no minimum
      requirements for a business
combination.**
 
 GlobeTrac
      has no current arrangement, agreement or understanding with respect to
      engaging in a business combination with a specific entity. There can be no
      assurance that GlobeTrac will be successful in identifying and evaluating
      suitable target businesses or business opportunities or in concluding a
      business combination. No particular industry or specific business within
      an industry has been selected for a target business. GlobeTrac has not
      established a specific length of operating history or a specified level of
      earnings, assets, net worth or other criteria that it will require a
      target business to have achieved, or without which GlobeTrac would not
      consider a business combination with such target business. Accordingly,
      GlobeTrac may enter into a business combination with a target business
      having no significant operating history, losses, limited or no potential
      for immediate earnings, limited assets, negative net worth or other
      negative characteristics. There is no assurance that GlobeTrac will be
      able to negotiate a business combination on terms favorable to
      GlobeTrac.
 
 **3.**  **GlobeTrac
does not have sufficient funds to acquire or operate a target
business.**
 
 GlobeTrac
      has very limited funds, and such funds, may not be adequate to take
      advantage of any available business opportunities. Even if GlobeTrac’s
      currently available funds prove to be sufficient to pay for its operations
      until it is able to acquire an interest in, or complete a transaction
      with, a target business, such funds will clearly not be sufficient to
      enable it to exploit the business opportunity. Thus, the ultimate success
      of GlobeTrac will depend, in part, upon its availability to raise
      additional capital. If GlobeTrac requires modest amounts of additional
      capital to fund its operations until it is able to complete a business
      acquisition or transaction, such funds, are expected to be provided by the
      principal shareholders. However, GlobeTrac has not investigated the
      availability, source, or terms that might govern the acquisition of the
      additional capital that is expected to be required in order to exploit a
      business opportunity, and will not do so until it has determined the level
      of need for such additional financing. There is no assurance that
      additional capital will be available from any source or, if available,
      that it can be obtained on terms acceptable to GlobeTrac. If not
      available, GlobeTrac operations will be limited to those that can be
      financed with its modest capital.
  **4.GlobeTrac has not
formalized the terms of the Letter Agreement into a final agreement with WebTech
and as a result may never receive a royalty/commission payment from WebTech,
which would negatively impact GlobeTrac’s current revenue stream and its
operations.**
 GlobeTrac
and WebTech are still negotiating and finalizing the terms of the letter
agreement and formalizing the terms into a more formal agreement. As of today,
WebTech has not paid any royalty/commission to GlobeTrac that is due and owing
and WebTech may never pay any royalty/commission to WebTech. WebTech ahs failed
to pay the royalty/commission as a result of the formal agreement not being
finalized and signed by the parties. The failure to pay the royalty/commission
now has negatively impacted GlobeTrac’s operations and if the royalty/commission
is not paid in the future GlobeTrac may have to cease operations.
 
 **Risks
associated with GlobeTrac’s industry:**
 
 **5.**
    **GlobeTrac
      faces significant competition for business opportunities and combinations
      and there may be a scarcity of available business
      opportunities.**
 
 GlobeTrac
is and will continue to be an insignificant participant in the business of
seeking mergers with and acquisitions of business opportunities. A large number
of established and well-financed entities, including venture capital firms, are
active in mergers and acquisitions of target businesses that may be merger or
acquisition target candidates for GlobeTrac. Nearly all such entities have
significantly greater financial resources, technical expertise and managerial
capabilities than GlobeTrac and, consequently, GlobeTrac will be at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Moreover, GlobeTrac will also
compete in seeking merger or acquisition candidates with other small public
companies, some of which may also have funds available for use by an acquisition
candidate. See “Business of GlobeTrac - Competition” for more
details.
 
 **6.**  **GlobeTrac’s
business and operating results may be harmed by inflation and
deflation.**
 
 Inflation
has had and may continue to have adverse effects on the economies and securities
markets of certain countries and could have adverse effects on GlobeTrac’s
clients in those countries, including their ability to obtain financing and
repay debts. Significant inflation or deflation could have a material adverse
effect on GlobeTrac’s business, operating results, liquidity and financial
position.
  ***Page
- 7***
 
 **7.**
    **Reporting
      requirements may delay or preclude any merger or acquisition, which may
      adversely affect GlobeTrac’s
business.**
 
 GlobeTrac
is required to provide certain information about significant acquisitions
including audited financial statements of the target business. Obtaining audited
financial statements are the economic responsibility of the target business. The
additional time and costs that may be incurred by some potential target
businesses to prepare such financial statements may significantly delay or
essentially preclude consummation of an otherwise desirable acquisition by
GlobeTrac. Acquisition prospects that do not have or are unable to obtain the
required audited statements may not be appropriate for acquisition so long as
the reporting requirements of the Exchange Act are applicable. Notwithstanding a
target business’s agreement to obtain audited financial statements within the
required time frame, such audited financials may not be available to GlobeTrac
at the time of effecting a business combination. In cases where audited
financials are unavailable, GlobeTrac will have to rely upon unaudited
information that has not been verified by outside auditors in making its
decision to engage in a transaction with the business entity. This risk
increases the prospect that a business combination with such a target business
might prove to be an unfavorable one for GlobeTrac.
 
 **8.**  **Regulation
under the Investment Act of 1940 may adversely affect GlobeTrac’s
business.**
 
 If
GlobeTrac engages in business combinations that would result in GlobeTrac
holding passive investment interests in a number of entities, GlobeTrac could be
subject to regulation under the Investment Company Act of 1940. In such event,
GlobeTrac would be required to register as an investment company and could be
expected to incur significant registration and compliance costs. GlobeTrac has
obtained no formal determination from the Securities and Exchange Commission as
to the status of GlobeTrac under the Investment Company Act of 1940 and,
consequently, any violation of such Act could subject GlobeTrac to material
adverse consequences.
 
 **Risks
associated with GlobeTrac and its subsidiaries:**
 
 **9.**  **GlobeTrac’s
stock price is volatile.**
 
 The stock
market in general, and the stock prices of GlobeTrac’s Common Stock in
particular, have experienced extreme volatility that often has been unrelated to
the operating performance of any specific public company. The market price of
GlobeTrac’s Common Stock has fluctuated in the past and is likely to fluctuate
in the future as well, especially if GlobeTrac’s Common Stock continues to be
thinly traded. Factors that may have a significant impact on the market price of
GlobeTrac’s Common Stock include:
 
 a.
    announcements
      concerning GlobeTrac or its competitors, including the negotiation for or
      acquisition of a target business;
 b.
    announcements
      regarding financial developments;
 c.
    government
      regulations, including stock option accounting and tax
      regulations;
 d.
    acts
      of terrorism and war; or
 e.
    rumors
      or allegations regarding GlobeTrac’s financial disclosures or
      practices.
 
 **10.**
    **A
      small number of GlobeTrac’s stockholders own a substantial amount of
      GlobeTrac’s Common Stock, and if such stockholders were to sell those
      shares in the public market within a short period of time, the price of
      GlobeTrac’s Common Stock could drop significantly.**
 
 Because
GlobeTrac’s officers and directors own more than 20.3% of the outstanding shares
of Common Stock, they will be able to significantly decide who will be directors
and any other stockholders may not be able to elect any directors. In addition,
other stockholders also own substantial amounts of shares of GlobeTrac’s Common
Stock. Sales of a large number of shares of GlobeTrac’s Common Stock or even the
availability of a substantial number of shares for sale could have the effect of
reducing the price per share of GlobeTrac’s Common Stock, especially if the
Common Stock continues to be thinly traded.
 
 **11.**
    **GlobeTrac
      may not be able to attract and retain qualified personnel necessary for
      the implementation of its business
strategy.**
 
 GlobeTrac’s
future success depends largely upon the continued service of its Board members,
executive officers and other key personnel. GlobeTrac’s success also depends on
its ability to attract, retain and motivate qualified personnel. GlobeTrac may
have particular difficulty attracting and retaining key personnel as a company
with no or minimal assets and financial sources. GlobeTrac does not maintain key
person life insurance on any of its personnel. The loss of one or more of its
key employees or its inability to attract, retain and motivate qualified
personnel could negatively impact GlobeTrac’s ability to locate and acquire a
target business.
  ***Page
- 8***
 
 **12.**
    **Current
      management of GlobeTrac may change and there may be a change in control of
      GlobeTrac as a result of the acquisition of a target
      business.**
 
 In
      conjunction with completion of a business acquisition, it is anticipated
      that GlobeTrac will issue an amount of GlobeTrac’s authorized but unissued
      Common Stock that represents the greater majority of the voting power and
      equity of GlobeTrac, which will, in all likelihood, result in shareholders
      of a target business obtaining a controlling interest in GlobeTrac. As a
      condition of the business combination agreement, the current shareholders
      of GlobeTrac may agree to sell or transfer all or a portion of GlobeTrac’s
      Common Stock they own so to provide the target business with all or
      majority control. The resulting change in control of GlobeTrac will likely
      result in removal of the current officers and directors of GlobeTrac and a
      corresponding reduction in or elimination of their participation in the
      future affairs of the Company.
 
 A
      business combination involving the issuance of GlobeTrac’s Common Stock
      will, in all likelihood, result in shareholders of a private company
      obtaining a controlling interest in GlobeTrac. Any such business
      combination may require GlobeTrac’s management to sell or transfer all or
      a portion of GlobeTrac’s Common Stock held by them, and/or resign as
      members of the Board of Directors. The resulting change in GlobeTrac’s
      control could result in removal of one or more present officers and
      directors and a corresponding reduction in or elimination of their
      participation in GlobeTrac’s future
affairs.
 
 **13.**  **GlobeTrac
does not expect to pay dividends in the foreseeable
future.**
 
 GlobeTrac
has never paid cash dividends on its Common Stock and has no plans to do so in
the foreseeable future. GlobeTrac intends to retain earnings, if any, to develop
and expand its business.
 
 **14.**
    **Dilution.**
 
 A
      business combination normally will involve the issuance of a significant
      number of additional shares. Depending upon the value of the assets
      acquired in such business combination, the per share value of GlobeTrac’s
      Common Stock may increase or decrease, perhaps
    significantly.
 
 **15.**  **“Penny
Stock” rules may make buying or selling GlobeTrac’s Common Stock difficult, and
severely limit their market and liquidity.**
 
 Trading
in GlobeTrac’s securities is subject to certain regulations adopted by the SEC
commonly known as the “penny stock” rules. These rules govern how broker-dealers
can deal with their clients and “penny stocks”. The additional burdens imposed
upon broker-dealers by the “penny stock” rules may discourage broker-dealers
from effecting transactions in GlobeTrac’s securities, which could severely
limit their market price and liquidity of its Common Stock. See “Penny Stock
rules” on page 11 for more details.
 
 **Item
2.**  **Description
of Property.**
 
 
 GlobeTrac
currently does not have a principal executive office. GlobeTrac’s mailing
address is 1100 Melville Street, Suite 600, Vancouver, British Columbia, V6E
4A6, Canada. Other than this mailing address, GlobeTrac does not currently
maintain any other office facilities, and does not anticipate the need for
maintaining office facilities at any time in the foreseeable future. GlobeTrac
pays no rent or other fees for the use of the mailing address as these offices
are used virtually full-time by other businesses of GlobeTrac’s
CFO.
 
 It is
likely that GlobeTrac will not establish an office until it has completed a
business acquisition transaction, but it is not possible to predict what
arrangements will actually be made with respect to future office
facilities.
 
 **Item
3.**  **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
  ***Page
- 9***
 
 **Item
4.**  **Submission
of Matters to a Vote of Security Holders.**
 
 No matter
was submitted to a vote of security holders, through the solicitation of proxies
or otherwise, during the fourth quarter of the fiscal year covered by this
report.
 
 **PART
II**
 
 **Item
5.**  **Market
for Common Equity and Related Stockholder Matters.**
 
 **(a)**  **Market
Information**
 
 GlobeTrac’s
Common Stock has been quoted on the NASD OTC Bulletin Board since March 2002
under the symbol “GBTR” (formerly “ARTE”). However, from March 2002 to June
2002, GlobeTrac’s Common Stock did not trade. The first trade occurred on June
28, 2002. The table below gives the high and low bid information for each fiscal
quarter since GlobeTrac’s Common Stock has been quoted. The bid information was
obtained from Nasdaq.com and OTC Bulletin Board and reflects inter-dealer
prices, without retail mark-up, mark-down or commission, and may not represent
actual transactions.
 
 
 High
      & Low BidsPeriod
      ended
    High
    Low
    Source13
      April 2005
    0.03
    0.026
    OTC
      Bulletin Board31
      March 2005
    0.05
    0.025
    OTC
      Bulletin Board31
      December 2004
    0.14
    0.03
    OTC
      Bulletin Board30
      September 2004
    0.28
    0.13
    OTC
      Bulletin Board30
      June 2004
    0.49
    0.20
    OTC
      Bulletin Board31
      March 2004
    $0.51
    $0.29
    OTC
      Bulletin Board31
      December 2003
    $1.40
    $0.52
    OTC
      Bulletin Board30
      September 2003
    $2.30
    $1.01
    OTC
      Bulletin Board30
      June 2003
    $1.09
    $0.75
    OTC
      Bulletin Board31
      March 2003
    $1.08
    $0.51
    Nasdaq.com
 
 **(b)**  **Holders
of Record**
 
 There are
approximately 130 holders of record of GlobeTrac’s Common Stock.
 
 **(c)**  **Dividends**
 
 GlobeTrac
has declared no dividends on its Common Stock, with the exception of the
following, and is not subject to any restrictions that limit its ability to pay
dividends on its shares of Common Stock. Dividends are declared at the sole
discretion of GlobeTrac’s Board of Directors.
 
 On May
17, 2002, the Board of Directors declared a stock dividend of three shares for
every one share of Common Stock issued. The stock dividend was paid out on May
28, 2002.
 
 **(d)**  **Recent
Sales of Unregistered Securities**
  There
have been no sales of unregistered securities within the last three years that
would be required to be disclosed pursuant to Item 701 of Regulation S-B, except
for the following:
   In
November 2003, GlobeTrac issued 900,000 units to three investors at an offering
price of $1.00 per unit. Each unit consists of one restricted share of Common
Stock and one restricted warrant. Each restricted warrant is convertible into
one restricted share of Common Stock. The restricted warrant was exercisable for
two years at an exercise price of $1.10 each. The units were issued in a
transaction that management believed satisfied the requirements of the exemption
from the registration and prospectus delivery requirements of the Securities Act
of 1933, which exemption is specified by the provisions of Section 4(2) of that
Act and Regulation S promulgated pursuant to that act by the Securities and
Exchange Commission. Specifically, the offer was made to “accredited investors”,
as that term is defined under applicable federal and state securities laws. The
value of the shares was arbitrarily set by GlobeTrac and had no relationship to
its assets, book value, revenues or other established criteria of value. There
were no commissions paid on the sale of these shares. The net proceeds to
GlobeTrac were $900,000.
  Also in
November 2003, GlobeTrac received an aggregate $250,000 in subscription funds
and two Regulation S subscription agreements for a total of 250,000 units at an
offering price of $1.00 per unit. Each unit consists of one restricted share of
Common Stock and one restricted warrant. Each restricted warrant is convertible
into one restricted share of Common Stock. The restricted warrant is exercisable
for two years at an exercise price of $1.10 each. Management is satisfied that
the requirements of the exemption from the registration and prospectus delivery
requirements of the Securities Act of 1933 have been fully complied with, which
exemption is specified by the provisions of Section 4(2) of that Act and
Regulation S promulgated pursuant to that act by the Securities and Exchange
Commission. Specifically, the offer was made to “accredited investors”, as that
term is defined under applicable federal and state securities laws. The value of
the shares was arbitrarily set by GlobeTrac and had no relationship to its
assets, book value, revenues or other established criteria of value. There were
no commissions paid on the sale of these shares. The net proceeds to GlobeTrac
were $250,000. The units have not yet been issued to the subscribers but
GlobeTrac expects to issue and deliver the units shortly.
  ***Page
- 10***
 
 There are
no other outstanding options or warrants to purchase, or securities convertible
into, shares of GlobeTrac’s Common Stock.
 
 **(e)**
    **Penny
      Stock Rules**
 
 Trading
in GlobeTrac’s Common Stock is subject to the “penny stock” rules. The SEC has
adopted regulations that generally define a penny stock to be any equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions. These rules require that any broker-dealer who recommends
GlobeTrac’s Common Stock to persons other than prior customers and accredited
investors, must, prior to the sale, make a special written suitability
determination for the purchaser and receive the purchaser’s written agreement to
execute the transaction. Unless an exception is available, the regulations
require the delivery, prior to any transaction involving a penny stock, of a
disclosure schedule explaining the penny stock market and the risks associated
with trading in the penny stock market. In addition, broker-dealers must
disclose commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities they offer. The
additional burdens imposed upon broker-dealers by such requirements may
discourage broker-dealers from effecting transactions in GlobeTrac’s securities,
which could severely limit their market price and liquidity of GlobeTrac’s
securities.
 
 **Item
6.**  **Management’s
Discussion and Analysis or Plan of Operation.**
 
 THE
FOLLOWING IS A DISCUSSION AND ANALYSIS OF THE CONSOLIDATED FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF GLOBETRAC FOR THE
FISCAL YEARS ENDED DECEMBER 31, 2004 AND 2003. THE FOLLOWING SHOULD BE READ IN
CONJUNCTION WITH THE CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES
APPEARING ELSEWHERE HEREIN.
 
 **Overview**
 
 GlobeTrac
was incorporated in the state of Delaware on March 2, 2000 under the name
411Place.com. In February 2001, GlobeTrac changed its name to Artescope, Inc,
was headquartered in Fountain Valley, California, and was in the business of
providing digital graphic design and production services for commercial and
corporate enterprises. On July 29, 2002 GlobeTrac changed its name to “GlobeTrac
Inc.” and changed its business direction to selling, marketing, distributing and
installing global position system location, information and tracking systems in
Europe.
 
 On August
27, 2002, GlobeTrac acquired all of the shares of Global Axxess Corporation
Limited for $1. Global Axxess is a private Irish company that was incorporated
on December 31, 1997, as “Advance High Tech Development Enterprises Limited”. On
April 26, 2002, the company changed its name to Global Axxess Corporation
Limited. On June 19, 2002, Global Axxess entered into a master distributorship
agreement with WebTech Wireless Inc. (“WebTech”) whereby WebTech granted Global
Axxess the exclusive right to distribute the Quadrant System TM, a wireless
vehicle tracking, communications and telematics system composed of hardware and
software products in Europe **.** On June
4, 2003, Globetrac England and WebTech entered into a letter agreement whereby
Global Axxess’ exclusive distribution rights were extended to October 15, 2006
and the minimum purchase requirements were amended.
 
 Also, on
August 27, 2002, Global Axxess acquired the beneficial ownership of all of the
issued and outstanding shares of Globetrac Limited (“Globetrac England”) for one
British pound. Globetrac England was incorporated in the United Kingdom on March
28, 2002 as a private limited company under the name “Global Axxess Tracking
Limited”. On July 19, 2002 the company changed its name to “Globetrac Limited”.
Globetrac England was in the business of selling, marketing, distributing and
installing the global wireless tracking and telematics equipment. As part of
GlobeTrac acquiring all of the shares of Global Axxess, Jim Pratt was appointed
to the board of directors of GlobeTrac and appointed its president on September
3, 2002. Also, on August 27, 2002, Jim Pratt and John daCosta were appointed to
the board of directors of each of Global Axxess and Globetrac
England.
  ***Page
- 11***
 
 On
November 1, 2004, GlobeTrac began to wind down its European operations and
entered into negotiations with WebTech. In order not to affect existing
customers/resellers, WebTech agreed to acquire all of GlobeTrac’s existing
customers/resellers and portals effective November 1, 2004 based on a letter
agreement dated November 26, 2004.
 
 WebTech
acquired specific assets and liabilities of GlobeTrac Limited and, in
consideration for this and all of the time and effort expended by GlobeTrac
Limited in launching the European market, WebTech has agreed to pay a six
percent commission/royalty on gross sales. This royalty is based on both
existing and qualified potential customers/resellers that GlobeTrac Limited had
either procured or previously contacted. A list of customers/resellers,
including qualified potential customers/resellers was provided to WebTech. Sales
from qualified potential customers/resellers will be included for commission
purposes if such business commences within 12 months of the signed agreement.
There is no cap on the royalty payable to the Company and royalties are to be
paid by WebTech for 11 years from November 1, 2004.
 
 Globetrac
management believes that due to slower than expected sales, warranty issues,
faulty product, insufficient funding, insufficient margins and the potential
risk of becoming insolvent this agreement is in the best interest of both
parties and will allow Globetrac the ability to seek new business
opportunities.
 
 GlobeTrac
has accumulated a deficit of approximately $4 million to date and will require
additional financing to continue operate and to seek out new business
opportunities. GlobeTrac plans to mitigate its losses in future years by the
closing of its European operations, through receipt of the royalty payments from
WebTech and reducing certain operating expenses that were associated with their
European operations. However, there is no assurance that GlobeTrac will be able
to obtain additional financing or that they will be successful in seeking new
business opportunities or that they will receive any royalties from WebTech or
that they will be able to reduce operating expenses associated with closing down
their European operations. The financial statements do not include any
adjustments that might result from the outcome of those
uncertainties.
 
 **Results
of Operations**
 
 Revenues
 
 Revenue
increased by $25,037 or 100% from $nil for the year ended December 31, 2003 to
$25,037 for the year ended December 31, 2004. The increase was due to a 6%
royalty which relates to the letter agreement Globetrac entered into on November
26, 2004. The current and prior year’s sales from the wireless tracking business
have been reclassified as part of loss from discontinued
operations.
 
 Revenue
increased by $411,000 or 972% from $42,000 for the year ended December 31, 2002
to $454,000 for the year ended December 31, 2003. The increase in revenue was
caused by GlobeTrac’s sales and marketing programs aimed at gaining market share
through brand recognition in the wireless tracking industry. During 2004,
GlobeTrac changed its market focus from selling its products to end-users and
concentrated its efforts on selling to resellers. By concentrating on resellers
GlobeTrac managed to get more products into the market, which allowed its
wireless tracking devices to more quickly gain market recognition and in turn
greater market acceptance. However, continuing product problems, diminishing
margins and escalating costs made the continuance of the business
unviable.
 
 Cost
of Sales
 
 Cost of
sales remained at $nil for the years ended December 31, 2004 and December 31,
2003. Due to the letter agreement GlobeTrac entered into on November 26, 2004,
cost of sales for the years ended December 31, 2004 and 2003, were reclassified
to loss from discontinued operations. GlobeTrac’s gross margin increased by
$25,037 or 100% from $nil for the year ended December 31, 2003 to $25,037 for
the year ended December 31, 2004.
 
 Cost of
sales increased by $291,000 or 974% from $30,000 for the year ended December 31,
2002 to $321,000 for the year ended December 31, 2003. The increase was due to
an increase in sales during the year. GlobeTrac’s gross margin increased
$120,000 or 969% from $12,000 for the year ended December 31, 2002 to $132,000
for the year ended December 31, 2003. As a percentage of revenue, the gross
margin was 29% for both fiscal 2003 and 2002.
 
 
 ***Page
- 12***
 
 
 Operating
Expenses
 
 Operating
expenses decreased by $149,546 or 20% from $755,273 for the year ended December
31, 2003 to $605,727 for the year ended December 31, 2004. The decrease was
primarily due to decreases of $50,008 in consulting fees, $11,738 in office
expenses, $1,048 in bank charges, $56,499 in management fees, $1,421 in
telephone and $43,712 in marketing, offset by increases of $2,365 in
professional fees, $3,076 in filing fees and $9,439 in travel. Due to the
November 26, 2004 letter agreement, whereby GlobeTrac disposed of their wireless
tracking business, the expenses associated with this business have been
reclassified in loss from discontinued operations.
 
 Operating
expenses increased by $1,004,000 or 129% from $780,000 for the year ended
December 31, 2002 to $1,784,000 for the year ended December 31, 2003. The
increase was primarily due to increases of $202,000 in management fees, $201,000
in consulting fees, $234,000 in professional fees, $109,000 in office expenses,
$61,000 in rent, $262,000 in wages and commissions, $22,000 in telephone
expenses, $33,000 in travel and entertainment, $72,000 in installation expenses,
offset primarily by a decrease in marketing and advertising of $13,000, in
filing fees of $7,000 and in a charge for impairment of goodwill of $175,000.
The increase in operating costs was caused by GlobeTrac operating in the
wireless tracking field for twelve months during 2003 as opposed to
approximately three months during 2002.
 
 Deferred
Tax Assets
 
 GlobeTrac
had deferred tax assets of approximately $1,075,978 and $726,090 at December 31,
2004 and 2003. GlobeTrac has established a valuation allowance equal to the full
amount of the deferred tax assets because GlobeTrac’s ability to use these
losses is uncertain.
 
 Interest
Expense
 
 Interest
expense increased by $31,892 or 36% from $88,694 at December 31, 2003 to
$120,676 at December 31, 2004, primarily due to interest on convertible notes
payable and the note due to a related party.
 
 Interest
expense increased by $74,000 or 318% from $23,000 at December 31, 2002 to
$98,000 at December 31, 2003 primarily due to interest on convertible notes
payable and the note due to a related party.
 
 Foreign
Exchange
 
 Foreign
exchange transaction losses decreased by $448 from $1,344 at December 31, 2003
to $896 at December 31, 2004 primarily due to strengthening of the United
Kingdom pound in relation to the United States dollar and due to
reclassification of foreign exchange associated with the wireless tracking
business to loss from discontinued operations.
 
 Foreign
exchange transaction losses increased by $18,000 from $2,000 at December 31,
2002 to $20,000 at December 31, 2003 primarily due to strengthening of the
United Kingdom pound in relation to the United States dollar.
 
 **Liquidity
and Capital Resources**
 
 GlobeTrac
had cash of $1,342 and a working capital deficit of $2,754,119 at December 31,
2004. During the year ended December 31, 2004, GlobeTrac used $391,128 in cash
for operating activities, primarily for an operating loss of $1,363,889, an
increase in accounts receivable of $1,110 offset by a decrease in inventory of
$378,713, a decrease in prepaids of $19,145, an increase in accounts payable and
accrued liabilities of $59,425, an increase in accounts payable to related
parties of $361,272, an increase in interest payable to a related party of
$50,000, an increase in accrued interest payable on convertible notes of
$95,981, depreciation of $2,396 and a loss on sale of fixed assets of $6,939.
Cash used in operations of $391,128 was financed by an increase in convertible
notes payable of $390,915 which was offset by a decrease in advances payable of
$2,141 and by purchases of fixed assets of $2,208.
 
 A
decrease in working capital of $1,359,668 was due to a decrease in current
assets of $404,216 and an increase in current liabilities of $955,452. GlobeTrac
has accumulated a deficit of $3,963,224 since inception and has a stockholders’
deficiency of $2,754,119. GlobeTrac has no contingencies or long-term
commitments.
  ***Page
- 13***
 
 GlobeTrac
had cash of $9,000 and a working capital deficit of $1,014,000 at December 31,
2003. During the year ended December 31, 2003, GlobeTrac used $1,700,000 in cash
for operating activities, primarily for an operating loss of $1,800,000, an
increase in inventory of $208,000 and decrease in accounts payable and accrued
liabilities of $4,000, offset by a decrease in accounts receivable of $8,000, a
decrease in prepaid expenses of $73,000, depreciation of $2,000, an increase in
accrued interest payable to a related party of $50,000, an increase in accounts
payable to related parties of $65,000 and an increase in accrued interest
payable on convertible debt of $48,000. Cash used in operations of $1,700,000
was financed by issuing common stock for $900,000, share subscriptions of
$250,000 and advances payable of $381,000 as well the effect of exchange rate
changes on cash of $13,000 offset by a decrease in cash of $201,000 and an
equipment purchase of $5,000.
 
 A
decrease in working capital of $1,087,000 was due to a decrease in current
assets of $74,000 and an increase in current liabilities of $1,013,000.
GlobeTrac has accumulated a deficit of $2,600,000 since inception and have a
stockholders’ deficiency of $1,400,000. GlobeTrac has no contingencies or
long-term commitments except for the agreement with WebTech Wireless
Inc.
 
 **Plan
of Operation for the Next Twelve Months**
 
 Over the
next twelve months Globetrac plans to seek new business opportunities and
collect royalty payments from WebTech.
 
 GlobeTrac
anticipates funding its working capital needs for the next 12 months through the
royalty payments from WebTech, the equity capital markets, private advances, and
loans. Although the foregoing actions are expected to cover its anticipated cash
needs for working capital and capital expenditures for at least the next 12
months, no assurance can be given that GlobeTrac will be able collect any
royalty payments or raise sufficient cash to meet these cash requirements.
 
 GlobeTrac
plans to cover operating costs until such time as a new business opportunity is
located, by receiving royalty payments from WebTech raising additional capital
through private placements of stock, private advances, and loans.
 
 GlobeTrac
is not currently conducting any research and development activities. GlobeTrac
does not anticipate conducting such activities in the near future. If GlobeTrac
seeks out a new business opportunity, GlobeTrac may be required to hire
additional employees, independent contractors as well as purchase or lease
additional equipment.
 
 GlobeTrac
anticipates continuing to rely on equity sales of Common Stock to fund its
operations and seek out new business opportunities, the issuance of any
additional Common Stock will result in dilution to existing shareholders of
GlobeTrac.
 
 **Critical
Accounting Policies**
 
 GlobeTrac’s
financial statements and accompanying notes are prepared in accordance with
accounting principles generally accepted in the United States of America.
Preparing financial statements requires management to make estimates and
assumption that affect the reported amounts of assets, liabilities, revenue and
expenses. The following paragraphs include a discussion of accounting policies
critical to GlobeTrac:
 
 Accounts
Receivable
 
 Receivables
represent valid claims against debtors for sales 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 collectability
of all past due accounts.
 
 Foreign
Currency
 
 The
financial statements of GlobeTrac’s UK and Irish subsidiaries are measured using
the British Pound and Euro as the functional currencies. Assets and liabilities
of these subsidiaries are translated at exchange rates as of the balance sheet
date. Revenues and expenses are translated at average exchange rates for the
year. The resulting cumulative translation adjustments have been recorded as a
separate component of stockholders’ equity. Foreign currency transaction gains
and losses are included in consolidated net income.
 
 Comprehensive
Income
 
 Comprehensive
income reflects changes in equity that result from transactions and economic
events from non-owner sources. Comprehensive income for the current period
represents foreign currency translation items associated with GlobeTrac’s UK and
Irish operations.
  ***Page
- 14***
 
 Contractual
Obligations
 
 The
following table provides a summary of GlobeTrac’s debt obligation as of December
31, 2004. GlobeTrac has not included repayments of notes payable because these
notes are repayable on demand and GlobeTrac does not know when or if payment
will be demanded.
 
 Contractual
Payment Due by Period
 2005
 
 Note
Payable to Related Party    $604,795
 
 **Internal
and External Sources of Liquidity**
 
 GlobeTrac
has funded its operations principally from issuance and subscription for Common
Stock, borrowings in the form of advances payable, demand loans and funds
received from related parties.
 
 **Inflation**
 
 GlobeTrac
does not believe that inflation will have a material impact on its future
operations.
 
 **Uncertainties
relating to Forward Looking Statements**
 
 This Form
10-KSB Annual Report contains “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements may be
identified by their use of words like “plans”, “expect”, “aim”, “believe”,
“projects”, “anticipate”, “intend”, “estimate”, “will”, “should”, “could” and
other expressions that indicate future events and trends. All statements that
address expectations or projections about the future, including statements about
GlobeTrac’s strategy for growth, product development, market position,
expenditures and financial results are forward-looking statements.
 
 Forward-looking
statements in this Form 10-KSB include statements regarding the following
expectations:
 
 1.
WebTech will pay GlobeTrac a six percent commission/royalty on gross sales.
 2.
GlobeTrac will receive the six percent commission/royalty from WebTech for
eleven years.
 3. The
WebTech agreement is in the best interest of both parties.
 4.
GlobeTrac will be successful in locating a new business
opportunity.
 5.
GlobeTrac will require additional financing.
 6.
GlobeTrac will reduce operating expenses.
 7.
GlobeTrac will be able to fund its working capital needs for the next 12 months
through receipt of royalty payments, the equity capital markets, private
advances and loans.
 8.
GlobeTrac will cover operating costs through receipt of royalty payments,
raising additional capital through private placements of stock, private advances
and loans.
 9.
GlobeTrac will have to hire additional employees, independent contractors and
purchase or lease additional equipment.
 10.
Inflation will not have a material impact on GlobeTrac’s future
operations.
 
 All
forward-looking statements are made as of the date of filing of this Form 10-KSB
and GlobeTrac disclaims any duty to update such statements.
 
 Certain
parts of this Form 10-KSB may contain “forward-looking statements” within the
meaning of the Securities Exchange Act of 1934 based on current managements
expectations. Actual results could differ materially from those in the forward
looking statements due to a number of uncertainties including, but not limited
to, those discussed in this section. Factors that could cause future results to
differ from these expectations include general economic conditions, particularly
related to demand for GlobeTrac’s products and services; changes in business
direction or strategy; competitive factors (including competitors introducing
superior products); pricing pressure (including competitors offering similar
products at lower prices); inability to attract, develop or retain technical,
consulting managerial, sales personnel, agents, distributors or independent
contractors; changes in consumer tastes; inability to obtain product from the
manufacturer and evolving industry products and standards. As a result, the
identification and interpretation of data and other information and their use in
developing and selecting assumptions from and among reasonable alternatives
requires the exercise of judgment. To the extent that the assumed events do not
occur, the outcome may vary substantially from anticipated or projected results,
and accordingly, no opinion is expressed on the achievability of those
forward-looking statements. No assurance can be given that any of the
assumptions relating to the forward-looking statements specified in the
following information are accurate.
  ***Page
- 15***
 
 GlobeTrac
may, from time to time, make oral forward-looking statements. GlobeTrac strongly
advises that the above paragraph and the risk factors described in this annual
report and in GlobeTrac’s other documents filed with the United States
Securities and Exchange Commission should be read for a description of certain
factors that could cause the actual results of GlobeTrac to materially differ
from those in the oral forward-looking statements. GlobeTrac disclaims any
intention or obligation to update or revise any oral or written forward-looking
statements whether as a result of new information, future events or otherwise.
 
 
 **Item
7.**  **Financial
Statements**
 
 See
audited financial statements for the period ended December 31, 2004 and 2003
attached as Exhibit A to this Form 10-KSB.
 
 **Item
8.**  **Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure.**
 
 GlobeTrac’s
principal independent accountant, Tim Quintanilla of Hall & Company,
Certified Public Accountants Inc., has not changed since the date of
incorporation and there have been no disagreements with GlobeTrac’s principal
independent accountant.
 
 **Item
8A.**  **Controls
and Procedures.**
 
 GlobeTrac
maintains disclosure controls and procedures that are designed to ensure that
information required to be disclosed in GlobeTrac’s Securities Exchange Act of
1934 reports is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms, and that such information is
accumulated and communicated to GlobeTrac’s management, including its chief
executive officer and chief financial officer, as appropriate, to allow timely
decisions regarding required disclosure. Based on their most recent evaluation,
which was completed within 90 days of the filing of this Form 10-KSB,
GlobeTrac’s Chief Executive Officer and Chief Financial Officer believe
GlobeTrac’s disclosure controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) are effective to ensure that information required to be
disclosed by GlobeTrac in this report is accumulated and communicated to
GlobeTrac’s management, including its principal executive officer and principal
financial officer, as appropriate, to allow timely decisions regarding required
disclosure. Based upon the foregoing, GlobeTrac’s chief executive officer and
chief financial officer concluded that GlobeTrac’s disclosure controls and
procedures are effective in connection with the filing of this Annual Report on
Form 10-KSB for the year ended December 31, 2004.
 
 There
were no significant changes in GlobeTrac’s internal controls or other factors
that could significantly affect these controls subsequent to the date of their
evaluation, including any significant deficiencies or material weaknesses of
internal controls that would require corrective action.
 
 **Item
8B. Other Information**
 
 During
the fourth quarter of the fiscal year covered by this Form 10-KSB, GlobeTrac had
no information to be disclosed as required on a Form 8-K.
 
 **PART
III**
 
 **Item
9.**  **Directors,
Executive Officers, Promoters and Control Persons; Compliance with Section 16(a)
of the Exchange Act.**
 
 **(a)**  **Identify
Directors and Executive Officers**
 
 Each
director of GlobeTrac or its subsidiaries holds office until (i) the next annual
meeting of the stockholders, (ii) his successor has been elected and qualified,
or (iii) the director resigns.
  ***Page
- 16***
 
 GlobeTrac’s
and its subsidiaries’ management teams are listed below.
 
 **Management
      Teams**CompaniesOfficer’s
      Name
    **GlobeTrac
      Inc.**
    **Global
      Axxess****(1)**
    **Globetrac
      Limited**Jim
      Pratt
    Director,
      CEO,
      President
    Director
    Director
      CEO,
      PresidentDavid
      Patriquin
    Director
    n/a
    n/aJohn
      daCosta
    Chief
      Financial Officer,
      Treasurer,
      Corporate Secretary
    Director
    Director
      Chief
      Financial Officer,
      Treasurer,
      Corporate SecretaryEdward
      Duncan
    n/a
    Director
      Corporate
      Secretary
    n/aColin
      Albert
    n/a
    n/a
    Chief
      Operating OfficerLloyd
      Crook
    n/a
    n/a
    Chief
      Technology Officer
  **(1)** The
corporate laws governing this company do not require the appointment of
officers, with the exception of a corporate secretary. Directors perform all
management duties of this company, with the exception of Edward Duncan. Mr.
Duncan, who is a resident in Ireland, has been appointed the corporate secretary
as required by the residency requirement of the corporate law of Ireland. Mr.
Duncan is not involved in any of the day-to-day management of the Global
Axxess.
  *Jim
Pratt* ● Mr.
Pratt (56 years old) **** has been
a director and the CEO of GlobeTrac since September 2002. Mr. Pratt has been a
director of Global Axxess since August 2002. Mr. Pratt has been a director and
the CEO of Globetrac Limited since August 27, 2002. In the past five years, Mr.
Pratt served as the CEO of Peoples Phone in Hong Kong and is currently the
Managing Director of Asia Wireless, a Division of Telstra On Air, Telstra
Corporation of Australia. He oversees all of Telstra Group’s wireless operations
and is responsible for their various investments throughout the Asia Pacific
Region. Mr. Pratt has more than thirty years international management experience
in the Asia-Pacific telecommunications industry. Also, Mr. Pratt currently
represents Singtel Optus Limited as the chairman of the GSM Association. Mr.
Pratt is also a non-executive director of Brek Energy Corporation, a
NASDAQ-quoted company.
  *David
Patriquin* ● Mr.
Patriquin (62) **** has been
a director of GlobeTrac since November 2002. Mr. Patriquin is a businessman who
operates several private businesses, including a private mortgage business, a
restaurant and lounge for the past 24 years and a real estate investment company
for the past 29 years.
  *John
daCosta* ● Mr.
daCosta (40) **** has been
the CFO of GlobeTrac since May 2002. Mr. daCosta has been a director of Global
Axxess since August 2002. Mr. daCosta has been a director of Globetrac Limited
since August 27, 2002 and the corporate secretary since February 25, 2003. In
the past five years, Mr. daCosta has worked with numerous public and private
companies in providing accounting and management services.
 
 *Colin
Albert* ● Mr.
Albert (38) has been appointed the chief operating officer of Globetrac Limited.
Mr. Albert is responsible for devising and implementing sales and marketing
methodologies to expand the breadth and productivity of Globetrac Limited’s
sales and marketing efforts, and achieving the highest levels of customer
satisfaction. Mr. Albert comes to Globetrac Limited with more than 10 years
experience in operations management, sales and marketing, and business
development. Mr. Albert previously worked for AstraZeneca Pty Ltd (NYSE:AZN),
one of the world’s largest pharmaceutical companies, where he held positions in
national sales management, regional business management and product management,
playing a key role in setting corporate strategy for defined areas of the
company in sales and marketing.
 
 *Lloyd
Crook* ● Mr.
Crook (47) has been appointed Lloyd Crook as the chief technology officer of
Globetrac Limited. Previously, Mr. Crook was an engineering support manager for
Lucent Technologies and was instrumental in implementing, supporting and
maintaining Lucent's 3G 1X network in Romania.
 
 **(b)**  **Identify
Significant Employees**
 
 GlobeTrac
does not have any significant employees.
  ***Page
- 17***
 
 **(c)**  **Family
Relationships**
 
 There are
no family relationships among the directors, executive officers or persons
nominated or chosen by GlobeTrac to become directors or executive
officers.
 
 **(d)**  **Involvement
in Certain Legal Proceedings**
 
 (1)
    No
      bankruptcy petition has been filed by or against any business of which any
      director was a general partner or executive officer either at the time of
      the bankruptcy or within two years prior to that
time.
 
 (2)
    No
      director has been convicted in a criminal proceeding and is not subject to
      a pending criminal proceeding (excluding traffic violations and other
      minor offences).
 
 (3)
    No
      director has been subject to any order, judgement, or decree, not
      subsequently reversed, suspended or vacated, of any court of competent
      jurisdiction, permanently or temporarily enjoining, barring, suspending or
      otherwise limiting his involvement in any type of business, securities or
      banking activities.
 
 (4)
    No
      director has been found by a court of competent jurisdiction (in a civil
      action), the Securities Exchange Commission or the Commodity Futures
      Trading Commission to have violated a federal or state securities or
      commodities law, that has not been reversed, suspended, or
      vacated.
 
 **(e)**  **Compliance
with Section 16(a) of the Exchange Act.**
 
 All
reports were filed with the SEC on a timely basis and GlobeTrac is not aware of
any failures to file a required report during the period covered by this annual
report, with the exception of the following. Gregory Pek failed to file a Form 5
(Annual Statement of Beneficial Ownership). The other affiliates, in lieu of
filing a Form 5, provided GlobeTrac with a written representation that a Form 5
was not required.
 
 **(f)**  **Audit
Committee Financial Expert**
 
 GlobeTrac
has no financial expert. Management believes the cost related to retaining a
financial expert at this time is prohibitive.
 
 **(g)**  **Code
of Ethics**
 
 GlobeTrac
has adopted a code of ethics that applies to all its executive officers and
employees, including its CEO and CFO. A copy of GlobeTrac’s adopted code of
ethics is attached to this annual report. See Exhibit 99.1 - Code of Ethics for
more information. Also, GlobeTrac’s code of ethics has been posted on its
website at www.globetrac.com. GlobeTrac undertakes to provide any person with a
copy of its code of ethics free of charge. Please contact Brad Long at
1-800-648-4287 to request a copy of GlobeTrac’s code of ethics. Management
believes GlobeTrac’s code of ethics is reasonably designed to deter wrongdoing
and promote honest and ethical conduct; provide full, fair, accurate, timely and
understandable disclosure in public reports; comply with applicable laws; ensure
prompt internal reporting of code violations; and provide accountability for
adherence to the code.
  ***Page
- 18***
  
 **Item
10. Executive Compensation.**
 
 GlobeTrac
has paid $372,418 in compensation to its named executive officers during its
2004 fiscal year.
 
 **SUMMARY
COMPENSATION TABLE**
 
 Long-term
      compensation***Annual
      compensation***
    **Awards**
    **Payouts**Name
      and principal position
      (a)
    Year
      (b)
    Salary
      ($)
      (c)
    Bonus
      ($)
      (d)
    Other
      annual compen-sation
      ($)
      (e)
    Restricted
      stock awards
      ($)
      (f)
    Securities
      underlying options/
      SARs
      (#)
      (g)
    LTIP
      Pay-
      outs
      ($)
      (h)
    All
      other compen-sation
      ($)
      (i)Jim
      Pratt, CEO
      Sept
      2002 -Present
    2002
      2003
      2004
    80,415
      270,829
      25,000
    nil
      nil
      nil
    nil
      21,074(2)
      20,693(3)
    nil
      nil
      nil
    nil
      nil
      nil
    nil
      nil
      nil
    nil
      nil
      nil(7)John
      daCosta, CFO(1)
      May
      2002-Present
    2002
      2003
      2004
    12,000
      24,000
      11,301
    nil
      nil
      nil
    nil
      nil
      nil
    nil
      nil
      nil
    nil
      nil
      nil
    nil
      nil
      nil
    nil
      80,000(8)
      80,000(8)Colin
      Albert, COO
      June
      2003 - Oct 2004
    2002
      2003
      2004
    n/a
      61,618
      136,717
    n/a
      nil
      nil
    n/a
      10,735(4)
      15,982(5)
    n/a
      nil
      nil
    n/a
      nil
      nil
    n/a
      nil
      nil
    n/a
      nil
      nil(9)Lloyd
      Crook, CTO
      July
      2003 - Oct 2004
    2002
      2003
      2004
    n/a
      38,259
      nil
    n/a
      nil
      nil
    n/a
      3,697(6)
      nil
    n/a
      nil
      nil
    n/a
      nil
      nil
    n/a
      nil
      nil
    n/a
      nil
      82,725(10)
      (11)Renee
      Close - President
      Mar
      2000 - May 2002
    2002
      2003
      2004
    nil
      n/a
      n/a
    nil
      n/a
      n/a
    nil
      n/a
      n/a
    nil
      n/a
      n/a
    nil
      n/a
      n/a
    nil
      n/a
      n/a
    nil
      n/a
      n/a
 (1) John
daCosta was also the CEO of GlobeTrac from May 2002 to September
2002.
 (2) GlobeTrac reimbursed Jim Pratt $17,734 for house rent and $3,700 in car
allowance.
 (3) GlobeTrac reimbursed Jim Pratt $20,693 for house rent.
 (4) Colin
Albert received $6,779 in national insurance benefits and $3,956 for a car
allowance.
 (5) GlobeTrac paid $8,722 in national insurance benefits on behalf of Colin
Albert.
 (6) Lloyd
Crook received 3,697 for a car allowance.
 (7) Jim
Pratt is owed $239,090 for back salary.
 (8) Paid to
DaCosta Management Corp., which John daCosta is the sole director and
shareholder, for management fees for administrative and accounting
services.
 (9) Colin
Albert is owed $8,578 for termination layouts.
 (10) Paid to
FormFin, a company wholly owned by Lloyd Crook, for consulting fees, and car
allowance.
 (11) Lloyd
Crook is owed $27,990 for termination layouts.
 
 Since
GlobeTrac’s inception, no stock options, stock appreciation rights, or long-term
incentive plans have been granted, exercised or repriced.
 
 Currently,
there are no arrangements between GlobeTrac and any of its directors or between
any of the subsidiaries and any of its directors whereby such directors are
compensated for any services provided as directors.
 
 There are
no other employment agreements between GlobeTrac or the Subsidiary and any named
executive officer, and there are no employment agreements or other compensating
plans or arrangements with regard to any named executive officer which provide
for specific compensation in the event of resignation, retirement, other
termination of employment or from a change of control of GlobeTrac or from a
change in a named executive officer’s responsibilities following a change in
control.
  ***Page
- 19***
  
 **Item
11. Security Ownership of Certain Beneficial Holders and
Management.**
 
 (a)  **Security
Ownership of Certain Beneficial Owners (more than 5%)**
 
 **(1)**
      **Title
      of Class**
    **(2)**
      **Name
      and Address of Beneficial Owner**
    **(3)**
      **Amount
      and Nature of**
      **Beneficial
      Owner**[1]
    **(4)**
      **Percent**
      **of
      Class**[2]Common
      Stock
    Jim
      Pratt
      32
      Greenwich Road, Greenwich
      Sydney,
      NSW 2065 Australia
    3,500,000
    15.77%Common
      Stock
    Gregory
      M. Pek
      19/F,
      80 Gloucester Road
      Wanchai,
      Hong Kong
    4,000,000
    18.03%
 [1] The
listed beneficial owner has no right to acquire any shares within 60 days of the
date of this Form 10-KSB from options, warrants, rights, conversion privileges
or similar obligations excepted as otherwise noted.
 [2] Based on
22,190,000 shares of Common Stock issued and outstanding as of April 14,
2005.
  **(b)**  **Security
Ownership of Management**
  
 **(1)**
      **Title
      of Class**
    **(2)**
      **Name
      and Address of Beneficial Owner**
    **(3)**
      **Amount
      and Nature of Beneficial Owner**
    **(4)**
      **Percent**
      **of
      Class**[1]Common
      Stock
    Jim
      Pratt
      32
      Greenwich Road, Greenwich
      Sydney,
      NSW 2065 Australia
    3,500,000
    15.77%Common
      Stock
    David
      Patriquin
      2306
      Folkstone Way
      West
      Vancouver, BC V7S 3C7
    1,015,000[2]
    4.63%Common
      Stock
    John
      daCosta
      600
      - 1100 Melville Street
      Vancouver,
      BC V6E 4A6
    0
    0%Common
      Stock
    Colin
      Albert
      Unit
      5, #11 Carnarvan Road
      Reading,
      Berkshire
      U.K.
      RG1 5SB
    0
    0%Common
      Stock
    Lloyd
      Crook
      25
      Thornton Way
      Spencers
      Wood, Berkshire
      U.K.
      RG7 1WY
    0
    0%Common
      Stock
    Directors
      and Executive Officers (as a group)
    4,515,000
    20.35%
 [1] Based on
22,190,000 shares of Common Stock issued and outstanding as of April 14,
2005.
 [2] This
number includes 320,000 shares that are beneficially owned indirectly and
500,000 shares that may be acquired as part of a call option.
 
 **(c)**  **Changes
in Control**
 
 GlobeTrac
is not aware of any arrangement that may result in a change in control of
GlobeTrac.
  ***Page
- 20***
 
 **Item
12. Certain Relationships and Related Transactions.**
 
 **(a)**  **Relationships
with Insiders**
 
 No member
of management, executive officer or security holder has had any direct or
indirect interest in any transaction to which GlobeTrac or any of its
subsidiaries was a party with the exception of the following:
 
 **Loan
from David Patriquin to GlobeTrac**
 
 On
November 27, 2002, GlobeTrac borrowed $500,000 from David Patriquin, a director
of GlobeTrac. Interest on the loan accrues at 10% compounded annually. All
outstanding interest and principal was due and payable on November 27, 2004.
GlobeTrac may repay the loan in whole or in part at anytime without penalty. See
Exhibit 10.2 - Loan Agreement for more information.
 
 **(b)**  **Transactions
with Promoters**
 
 GlobeTrac
does not currently have a promoter. No one has received anything of value from
GlobeTrac or its subsidiaries nor is any person entitled to receive anything of
value from GlobeTrac or its subsidiaries for services provided as a promoter of
GlobeTrac or its subsidiaries.
 
 **Item
13. Exhibits and Reports on Form 8-K.**
 
 **(a)**  **Index
to and Description of Exhibits.**
 
 **Exhibit**
    **Description**
    **Status****Exhibit
      A**
    1.
      Audited Financial Statements for the period ended December 31, 2004
    Included**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**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 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 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 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 filed on December 22, 2004, and
      incorporated herein by reference
    Filed
   ***Page
- 21***
   **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**99.1**
    Code
      of Ethics filed as an exhibit to GlobeTrac’s Form 10-KSB filed on April
      15, 2003, and incorporated herein by reference.
    Filed
 
 
 **Item
14.   Principal Accounting Fees and Services**
  **(1)
  Audit Fees**
   The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal accountant for GlobeTrac’s audit of annual
financial statements and for review of financial statements included in
GlobeTrac’s Form 10-QSB’s or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for those fiscal years was:
   2004 -
$38,000- Hall & Company, Certified Public Accountants Inc.
 2003 -
$18,923 - Hall & Company, Certified Public Accountants Inc.
  2004 -
$5,000 - Westbury Accountants and Business Advisers
 2003 -
$4,900 - Westbury Accountants and Business Advisers
   **(2)
  Audit-Related Fees**
   The
aggregate fees billed in each of the last two fiscal years for assurance and
related services by the principal accountants that are reasonably related to the
performance of the audit or review of GlobeTrac’s financial statements and are
not reported in the preceding paragraph:
   2004 - $0
- Hall & Company, Certified Public Accountants Inc.
 2003 -
$666 - Hall & Company, Certified Public Accountants Inc.
  2004 - $0
- Westbury Accountants and Business Advisers
 2003 -
$5,084 - Westbury Accountants and Business Advisers
   **(3)
  Tax Fees**
   The
aggregate fees billed in each of the last two fiscal years for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning was:
   2004 -
$3,071.25 - Hall & Company, Certified Public Accountants Inc.
 2003 -
$1,782 - Hall & Company, Certified Public Accountants Inc.
  2004 -
$872 - Westbury Accountants and Business Advisers
 2003 - $0
- Westbury Accountants and Business Advisers
   ***Page
- 22***
   
   **(4)
  All Other Fees**
   The
aggregate fees billed in each of the last two fiscal years for the products and
services provided by the principal accountant, other than the services reported
in paragraphs (1), (2), and (3) was:2003 - $3,964 - Hall & Company,
Certified Public Accountants Inc.
   2004 - $0
- Westbury Accountants and Business Advisers
 2003 - $0
- Westbury Accountants and Business Advisers
   (5)
  GlobeTrac’s audit committee’s pre-approval policies and procedures
described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the
audit committee pre-approve all accounting related activities prior to the
performance of any services by any accountant or auditor.
   (6)
  The percentage of hours expended on the principal accountant’s engagement
to audit GlobeTrac’s financial statements for the most recent fiscal year that
were attributed to work performed by persons other than the principal
accountant’s full time, permanent employees was nil%.
  
  ***Page
- 23***
  
 
 **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.**
 
 */s/
Jim Pratt*
 By :      ******
 Name:  **Jim
Pratt**
 Title **:**  **Director
and CEO**
 Dated:  **April
15, 2005**
 
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the following
persons on behalf of GlobeTrac Inc. and in the capacities and on the dates
indicated have signed this report below.
 
 
 **Signature**
    **Title**
    **Date***/s/
      Jim Pratt*
    President,
      CEO, and
      member
      of the Board of Directors
    April
      15, 2005*/s/
      David Patriquin*
    Member
      of the Board of Directors
    April
      15, 2005*/s/
      John daCosta*
    Corporate
      Secretary, Treasurer
      and
      Chief Financial Officer
    April
      15, 2005
 
  ***Page
- 24***
  
 
 **Exhibit
31**
 
 
 
  ***Page
- 25***
   **GLOBETRAC
INC.**
 **CERTIFICATIONS
PURSUANT TO**
 **SECTION
302 OF THE SARBANES-OXLEY ACT OF 2002**
   **CERTIFICATION**
   I, Jim
Pratt, certify that:
   1.  
I have reviewed this annual report on Form 10-KSB of GlobeTrac Inc.;
   2.  
Based on my knowledge, this annual report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this annual report;
   3.  
Based on my knowledge, the financial statements, and other financial information
included in this annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this annual report;
   4.  
The registrant’s other certifying officer and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and GlobeTrac has:
   a)  
designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
   b)  
evaluated the effectiveness of the registrant’s disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the “Evaluation Date”); and
   c)  
presented in this annual report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
   5.  
The registrant’s other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant’s auditors and the audit committee of
registrant’s board of directors (or persons performing the equivalent function):
   a)  
all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant’s ability to record, process,
summarize and report financial data and have identified for the registrant’s
auditors any material weaknesses in internal controls; and
   b)  
any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant’s internal controls; and
   6.  
The registrant’s other certifying officers and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
   Date:
April 15, 2005
   */s/
Jim Pratt* **
 Jim Pratt
 Chief
Executive Officer
  
  ***Page
- 26***
   **GLOBETRAC
INC.**
 **CERTIFICATIONS
PURSUANT TO**
 **SECTION
302 OF THE SARBANES-OXLEY ACT OF 2002**
   **CERTIFICATION**
   I, John
daCosta, certify that:
   1.  
I have reviewed this annual report on Form 10-KSB of GlobeTrac Inc.;
   2.  
Based on my knowledge, this annual report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this annual report;
   3.  
Based on my knowledge, the financial statements, and other financial information
included in this annual report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this annual report;
   4.  
The registrant’s other certifying officer and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and GlobeTrac has:
   a)  
designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;
   b)  
evaluated the effectiveness of the registrant’s disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the “Evaluation Date”); and
   c)  
presented in this annual report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
   5.  
The registrant’s other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant’s auditors and the audit committee of
registrant’s board of directors (or persons performing the equivalent function):
   a)  
all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant’s ability to record, process,
summarize and report financial data and have identified for the registrant’s
auditors any material weaknesses in internal controls; and
   b)  
any fraud, whether or not material, that involves management or other employees
who have a significant role in the registrant’s internal controls; and
   6.  
The registrant’s other certifying officers and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
   Date:
April 15, 2005
   **
   ** */s/
John daCosta*
 John
daCosta
 Chief
Financial Officer
  
  ***Page
- 27***
  
 
 **Exhibit
32**
 
 
 
  ***Page
- 28***
   **CERTIFICATION
PURSUANT TO**
 **18
U.S.C. SECTION 1350,**
 **AS
ADOPTED PURSUANT TO**
 **SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002**
   
   In
connection with the Annual Report of GlobeTrac Inc. (“GlobeTrac”) on Form 10-KSB
for the period ending December 31, 2004 as filed with the Securities and
Exchange Commission on the date hereof (the “Report”), I, Jim Pratt, President
and Chief Executive Officer of GlobeTrac and a member of the Board of Directors,
certify, pursuant to s.906 of the Sarbanes-Oxley Act of 2002, that:
   (1)
  The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
   (2)
  The information contained in the Report fairly represents, the financial
condition and result of operations of the Company.
   
   ***/s/
Jim Pratt*
 Jim Pratt
 Chief
Executive Officer
   April 15,
2005
   ***Page
- 29***
   **CERTIFICATION
PURSUANT TO**
 **18
U.S.C. SECTION 1350,**
 **AS
ADOPTED PURSUANT TO**
 **SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002**
   
   In
connection with the Annual Report of GlobeTrac Inc. (“GlobeTrac”) on Form 10-KSB
for the period ending December 31, 2004 as filed with the Securities and
Exchange Commission on the date hereof (the “Report”), I, John daCosta,
Secretary, Treasurer, and Chief Financial Officer of GlobeTrac and a member of
the Board of Directors, certify, pursuant to s.906 of the Sarbanes-Oxley Act of
2002, that:
   (1)
  The Report fully complies with the requirements of section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
   (2)
  The information contained in the Report fairly represents, the financial
condition and result of operations of the Company.
   
   */s/
John daCosta*
 John
daCosta
 Chief
Financial Officer
   April,
15, 2005
   
 ***Page
- 30***
  **GLOBETRAC
INC.**
 
 **CONSOLIDATED
FINANCIAL STATEMENTS**
 
 **AS
AT DECEMBER 31, 2004 and 2003**
 **AND
FOR THE YEARS ENDED DECEMBER 31, 2004 and 2003**
 
 
 
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
 
 CONSOLIDATED BALANCE SHEETS
 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT AND
COMPREHENSIVE INCOME
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
   ***Page
- 31***
  16140
SAND CANYON AVE., SUITE 100
 IRVINE,
CALIFORNIA 92618
 **H** **ALL** **&** **C** **OMPANY** **** *Certified
Public Accountants, Inc* *.*  (949)
910-HALL (4255)
 TAX,
FINANCIAL AND MANAGEMENT CONSULTING SERVICES  FAX (949)
910-4256
 
 
 **Report of Independent Registered Public Accounting
Firm**
 
 
 April 14,
2005
 
 To the
Board of Directors and Stockholders of
 GlobeTrac
Inc.
 
 
 We have
audited the accompanying consolidated balance sheets of GlobeTrac Inc. of
December 31, 2004 and 2003, and the related consolidated statements of
operations, changes in stockholders’ deficit, and cash flows for the years then
ended. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of GlobeTrac Inc. as of
December 31, 2004 and 2003, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
 
 The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 10 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and a net capital deficiency that raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 10. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
 
 
 HALL
& COMPANY
  ***Page
- 32***
 **GLOBETRAC
      INC.****CONSOLIDATED BALANCE SHEETS****As
      at December 31, 2004 and 2003**
  **2004**
    
    **2003****ASSETS****CURRENT
      ASSETS**Cash
    
    
    
    
    $
    1,342
    
    $
    8,810Accounts
      receivableNet
      of allowance for doubtful accounts of $nil and $30,396
    
    
    
    
    
    63,866
    
    
    62,756Inventory
    
    
    
    
    
    -
    
    
    378,713Prepaids
    
    
    
    
    
    -
    
    
    19,14565,208
    
    
    469,424Fixed
      assetsNet
      of $nil and $3,443 accumulated depreciation
    
    
    
    
    
    -
    
    
    7,127**TOTAL
      ASSETS**
    
    
    
    
    $
    65,208
    
    $
    476,551**LIABILITIES
      AND STOCKHOLDERS' DEFICIT****CURRENT
      LIABILITIES**Accounts
      payable and accrued liabilities
    
    
    
    
    $
    142,322
    
    $
    149,418Convertible
      notes payable on demand
    
    
    
    
    
    1,605,730
    
    
    673,805Due
      to related parties
    
    
    
    
    
    571,275
    
    
    160,003Note
      payable to related party
    
    
    
    
    
    500,000
    
    
    500,000Advances
      payable
    
    
    
    
    
    -
    
    
    380,6492,819,327
    
    
    1,863,875Commitment
      and Contingencies**STOCKHOLDERS'
      DEFICIT**Share
      capitalAuthorized200,000,000
      common shares, $0.001 par value5,000,000
      preferred shares, $0.001 par valueIssued,
      outstanding and subscribed:22,190,000
      common shares
    
    
    
    
    
    22,190
    
    
    22,190Additional
      paid in capital
    
    
    
    
    
    1,167,085
    
    
    1,167,085Accumulated
      deficit
    
    
    
    
    
    (3,963,224
    )
    
    (2,599,335
    )Other
      comprehensive income:Foreign
      currency translation adjustment
    
    
    
    
    
    19,830
    
    
    22,736**Total
      Stockholders' Deficit**
    
    
    
    
    
    (2,754,119
    )
    
    (1,387,324
    )**TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT**
    
    
    
    
    $
    65,208
    
    $
    476,551
  The
      accompanying notes are an integral part of these consolidated financial
      statements
 
 ***Page
- 33***
    **GLOBETRAC
      INC.****CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
      INCOME****FOR
      THE YEARS ENDED DECEMBER 31, 2004 and 2003**
  **2004**
    
    
    **2003****REVENUE**
    
    $
    25,037
    
    $
    -**OPERATING
      EXPENSES**Administrative
      expenses
    
    
    595,179
    
    
    710,454Selling
      expenses
    
    
    10,546
    
    
    44,819Total
      Operating Expenses
    
    
    605,725
    
    
    755,273Loss
      from operations
    
    
    (580,688
    )
    
    (755,273
    )**OTHER
      EXPENSES**Foreign
      exchange transaction losses
    
    
    (896
    )
    
    (1,344
    )Interest
      expense
    
    
    (120,676
    )
    
    (88,694
    )Total
      Other Expenses
    
    
    (121,572
    )
    
    (90,038
    )**Net
      loss for the year before tax provision****and
      discontinued operations**
    
    
    (702,260
    )
    
    (845,311
    )Provision
      for income tax
    
    
    (800
    )
    
    (3,848
    )Net
      loss for the year before discontinued operations
    
    
    (703,060
    )
    
    (849,159
    )**DISCONTINUED
      OPERATIONS**Loss
      on disposal of business
    
    
    (84,512
    )
    
    -Loss
      from discontinued operations
    
    
    (576,317
    )
    
    (923,537
    )(660,829
    )
    
    (923,537
    )**NET
      LOSS FOR THE YEAR**
    
    $
    (1,363,889
    )
    $
    (1,772,696
    )**OTHER
      COMPREHENSIVE LOSS**Foreign
      currency translation adjustments
    
    
    (2,906
    )
    
    12,795**COMPREHENSIVE
      LOSS**
    
    $
    (1,366,795
    )
    $
    (1,759,901
    )**Basic
      and diluted loss per share:******Continuing
      operations
    
    $
    (0.03
    )
    $
    (0.04
    )Discontinued
      operations
    
    
    (0.03
    )
    
    (0.04
    )$
    (0.06
    )
    $
    (0.08
    )**WEIGHTED
      AVERAGE****SHARES
      OUTSTANDING**
    
    
    22,190,000
    
    
    21,377,123
  The
      accompanying notes are an integral part of these consolidated financial
      statements
  ***Page
- 34***
  **GLOBETRAC
      INC.****CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
      AND COMPREHENSIVE INCOME****FOR
      THE YEARS ENDED DECEMBER 31, 2004 AND
2003**
  ****
    
    
    **Common
      Stock Issued**
    
    
    **Common
      Stock******
    
    
    
    
    
    
    
    
    
    
    **Subscribed**
    
    
    
    
    
    
    
    **Accumulated****Additional**
    
    
    
    
    
    
    
    
    
    
    **Other******
    
    **Number
      of**
    
    
    
    
    **Paid-in**
    
    
    **Number
      of**
    
    
    
    
    
    **Accumulated**
    
    
    **Comprehensive******
    
    
    **Shares**
    
    
    **Amount**
    
    
    **Capital**
    
    
    **Shares**
    
    
    **Amount**
    
    
    **Deficit**
    
    
    **Income**
    
    
    **Total****Balance,
      January 1, 2003**
    
    
    **21,040,000**
    
    **$**
    **21,040**
    
    **$**
    **18,235**
    
    
    **-**
    
    **$**
    **-**
    
    **$**
    **(826,637**
    **)**
    **$**
    **9,941**
    
    **$**
    **(777,421**
    **)**Common
      stock subscribed,November
      21, 2003
    
    
    -
    
    
    -
    
    
    -
    
    
    250,000
    
    
    250,000
    
    
    -
    
    
    -
    
    
    250,000Reg
      S, Private Placement, shares issuedfor
      cash, November 24, 2003
    
    
    900,000
    
    
    900
    
    
    899,100
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    900,000Net
      loss for the year ended,December
      31, 2003
    
    
    **-**
    
    
    **-**
    
    
    **-**
    
    
    **-**
    
    
    **-**
    
    
    (1,772,698
    )
    
    **-**
    
    
    (1,772,698
    )Foreign
      currency translation adjustments
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    12,795
    
    
    12,795**Balance,
      December 31, 2003**
    
    
    **21,940,000**
    
    
    **21,940**
    
    
    **917,335**
    
    
    **250,000**
    
    
    **250,000**
    
    
    **(2,599,335**
    **)**
    
    **22,736**
    
    
    **(1,387,324**
    **)**Reg
      S, Private Placement, shares issued****for
      cash, June 9, 2004
    
    
    250,000
    
    
    250
    
    
    249,750
    
    
    (250,000
    )
    
    (250,000
    )
    
    **-**
    
    
    **-**
    
    
    **-**Net
      loss for the year endedDecember
      31, 2004
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (1,363,889
    )
    
    -
    
    
    (1,363,889
    )Foreign
      currency translation adjustments
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (2,906
    )
    
    (2,906
    )**Balance,
      December 31, 2004**
    
    
    **22,190,000**
    
    **$**
    **22,190**
    
    **$**
    **1,167,085**
    
    
    **-**
    
    **$**
    **-**
    
    **$**
    **(3,963,224**
    **)**
    **$**
    **19,830**
    
    **$**
    **(2,754,119**
    **)**
  The
      accompanying notes are an integral part of these consolidated financial
      statements
   ***Page
- 35***
  **GLOBETRAC
      INC.****CONSOLIDATED STATEMENTS OF CASH
    FLOWS****For
      the Years Ended December 31, 2004 and
2003**
  **2004**
    
    **2003****CASH
      FLOWS FROM OPERATING ACTIVITIES**Net
      loss for the year
    
    $
    (1,363,889
    )
    $
    (1,772,698
    )Adjustment
      to reconcile net loss to net cashused
      in operating activities:Depreciation
    
    
    2,396
    
    
    2,125Loss
      on sale of fixed assets
    
    
    6,939
    
    
    -Change
      in operating assets and liabilities:(Increase)
      Decrease in accounts receivable
    
    
    (1,110
    )
    
    7,861Decrease
      (Increase) in inventory
    
    
    378,713
    
    
    (208,031
    )Decrease
      in prepaids
    
    
    19,145
    
    
    72,626Increase
      (Decrease) in accounts payable and accrued liabilities
    
    
    59,425
    
    
    (4,392
    )Increase
      in accrued interest payable to related party
    
    
    50,000
    
    
    50,000Increase
      in accounts payable to related parties
    
    
    361,272
    
    
    64,675Increase
      in accrued interest payable on convertible notes
    
    
    95,981
    
    
    48,242**NET
      CASH USED IN OPERATING ACTIVITIES**
    
    
    (391,128
    )
    
    (1,739,592
    )**NET
      CASH USED IN INVESTING ACTIVITIES**Purchase
      of fixed assets
    
    
    (2,208
    )
    
    (5,271
    )**NET
      CASH USED IN INVESTING ACTIVITIES**
    
    
    (2,208
    )
    
    (5,271
    )**CASH
      FLOWS PROVIDED BY FINANCING ACTIVITIES**Advances
      payable
    
    
    (2,141
    )
    
    380,649Net
      proceeds from issuance of common stock
    
    
    -
    
    
    900,000Net
      proceeds for shares subscribed
    
    
    -
    
    
    250,000Increase
      in convertible notes payable
    
    
    390,915
    
    
    -**CASH
      FLOWS PROVIDED BY FINANCING ACTIVITIES**
    
    
    388,774
    
    
    1,530,649Effect
      of exchange rate changes on cash
    
    
    (2,906
    )
    
    12,795**DECREASE
      IN CASH**
    
    
    **(7,468**
    **)**
    
    **(201,419**
    **)****CASH,
      BEGINNING OF PERIOD**
    
    
    8,810
    
    
    210,229**CASH,
      END OF PERIOD**
    
    **$**
    **1,342**
    
    **$**
    **8,810**Supplemental
      disclosure of cash flow information:Cash
      paid during the period for:Income
      taxes
    
    $
    800
    
    $
    1,511Interest
      on debt
    
    $
    -
    
    $
    -Non-cash
      financing transactions:Conversion
      of accrued interest payable to convertible notes payable
    
    $
    66,521
    
    $
    -Conversion
      of advances payable to convertible notes payable
    
    $
    378,508
    
    $
    -
  The
      accompanying notes are an integral part of these consolidated financial
      statements
  ***Page
- 36***
   **GLOBETRAC
INC.**
 **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
31, 2004 AND 2003**
 
 
 **NOTE
1 - ORGANIZATION AND NATURE OF OPERATIONS**
 
 **Nature
of Operations**
 GlobeTrac
Inc. (the “Company”) was incorporated in the state of Delaware on March 2, 2000
as 411 Place.com Inc. On February 28, 2001, the Company changed its name to
Artescope, Inc. and on July 29, 2002 changed its name to GlobeTrac Inc. The
Company’s principal executive offices are headquartered in the United Kingdom.
On August 27, 2002 the Company acquired 100% of the shares of Global Axxess
Corporation Limited (“Global Axxess”), a company incorporated in Ireland. Global
Axxess owns 100% of the issued and outstanding shares of Globetrac Limited, a
company incorporated in the United Kingdom.
 
 On May 6,
2002, all of the directors and officers of the Company resigned and a new
director and officer was appointed. On August 27, 2002, all of the directors of
Global Axxess, and its wholly owned subsidiary Globetrac Limited, resigned and
two new directors were appointed.
 
 The
Company was in the business of selling, marketing, distributing and installing
global wireless tracking and telematics equipment in Europe until November 1,
2004 when they exchanged certain of their assets and certain liabilities in
Globetrac Limited and their rights to the global wireless tracking and
telematics business in Europe for a six percent royalty on gross sales of all
existing and qualified potential customers that the Company has in Europe. As a
result of terminating its operations in Europe, the Company is seeking new
business opportunities.
 
 **NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 **Principles
of Consolidation**
 The
consolidated financial statements include the accounts of the Company and the
consolidated accounts of its subsidiary. All significant intercompany balances
and transactions have been eliminated.
 
 **Accounting
Estimates**
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
 
 **Cash
Equivalents**
 For
purposes of the balance sheets and statements of cash flows, the Company
considers all highly liquid debt instruments purchased with maturity of three
months or less to be cash equivalents. At December 31, 2004 and 2003, the
Company had no cash equivalents.
 
 **Accounts
Receivable**
 Receivables
represent valid claims against debtors for sales 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.
 
 **Inventory**
 Inventory
is stated at the lower of cost (first-in, first-out) or market value. Market
value represents the lower of replacement cost or estimated net realizable
value.
 
 
 ***Page
- 37***
 
 
 **GLOBETRAC
INC.**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 
 
 **NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued**
 
 **Concentration
of Credit Risk**
 Financial
instruments that potentially subject the Company to concentrations of credit
risk consist primarily of cash and trade accounts receivable. The Company places
its cash with various major financial institutions and, by policy, limits the
amount of credit exposure with any one financial institution. The Companies
trade accounts receivable are primarily from transportation customers located
throughout Europe. The Company routinely assesses the financial strength of its
customers and as a consequence, concentrations of credit risk are limited.
 
 **Fixed
Assets**
 Computer
equipment is stated at cost. Depreciation is computed over the estimated useful
life of the depreciable assets using the straight-line method. The useful life
for computer equipment is estimated to be 4 years.
 
 Computer
equipment is reviewed each year to determine whether any events or circumstances
indicate that the carrying amount of the assets may not be recoverable. Such
review is performed based on estimated undiscounted cash flows compared with the
carrying value of the assets. If the future cash flows (undiscounted and without
interest charges) are less than the carrying value, a write-down would be
recorded to reduce the related asset to its estimated fair value. On November 1,
2004 all fixed assets were disposed of.
 
 **Revenue
Recognition**
 Revenue
is recognized when the product is shipped to a reseller or end-user or when
installation of the wireless tracking and telematics equipment has been
completed, price is fixed or determinable and collectability is reasonably
assured.
 
 **Fair
Value of Financial Instruments**
 The
carrying values reflected in the consolidated balance sheets for cash, accounts
receivable, accounts payable and accrued liabilities and convertible debt
approximate their fair values because of the short maturity of these
instruments.
 
 **Income
Taxes**
 Income
tax expense is based on pre-tax financial accounting income. The Company
recognizes deferred tax assets and liabilities based on differences between the
financial reporting and tax bases of assets and liabilities using the enacted
tax rates and laws that are expected to be in effect when the differences are
expected to be recovered. The Company provides a valuation allowance for
deferred tax assets for which it does not consider realization of such assets to
be more likely than not.
 
 **Long-Lived
Assets**
 Statement
of Financial Accounting Standards No. 144 “Accounting for the Impairment or
Disposal of Long-Lived Assets” (“SFAS 144”) requires the recognition of an
impairment loss on long-lived assets if the carrying amount exceeds its fair
value, as determined using undiscounted cash flows expected to result from the
use and eventual disposition of the asset. The Company accounts for its
long-lived assets as prescribed by SFAS 144 and no impairment losses have been
recorded for the years ended December 31, 2004 and 2003.
 
 
 
 
 ***Page
- 38***
 
 
 
 
 
 **GLOBETRAC
INC.**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 
 
 **NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued**
 
 **Advertising
Costs**
 Sales
incentives the form of sales discounts that relate to customer rebate, sales
discounts and cooperative advertising programs are generally treated as a cost
of sales. Costs incurred by the Company for advertising include telemarketing,
brochures and direct mailing and other advertising costs. These costs have been
expensed as incurred and are included in selling expenses.
 
 Advertising
expenses, as described above, amounted to $nil for the year ended December 31,
2004 and all of the advertising costs related to the year ended December 31,
2003 have been reclassified to loss from discontinued operations.
 
 **Stock-Based
Compensation**
 The
Company has chosen to continue to account for stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board (“APB”) Opinion
No. 25, “Accounting for Stock Issued to Employees,” and related interpretations.
Accordingly, compensation expense for stock options is measured as the excess,
if any, of the estimate of the market value of our stock at the date of the
grant over the amount an employee must pay to acquire the stock. The Company
follows the disclosure provision of SFAS No. 148 in its financial
reports.
 
 **Basic
and Diluted Net Loss Per Common Share**
 Basic
loss per share includes no dilution and is computed by dividing net income
available to common shareholders by the weighted average number of outstanding
common shares during the year. Diluted earnings per share reflect the potential
dilution of securities that could occur if securities or other contracts (such
as convertible debt, stock options and warrants) to issue common stock were
exercised or converted into common stock. The Company had no outstanding options
at December 31, 2004 or 2003. The convertible debt has no specific date for
conversion and the Company is not sure if or when it will be converted. The
Company has 1,150,000 warrants outstanding which had no effect on diluted loss
per share because potential common shares are excluded from the diluted loss per
share computation in net loss periods as their effect would be anti-dilutive.
 
 **Segment
Reporting**
 The
Company is centrally managed and operates in one business segment: selling,
marketing, distributing and installing global wireless tracking and telematics
equipment.
 
 **Foreign
Currency**
 The
financial statements of the Company’s English and Irish subsidiaries are
measured using the British Pound and the Euro as the functional currencies.
Assets and liabilities of these subsidiaries are translated at exchange rates as
of the balance sheet date. Revenues and expenses are translated at average
exchange rates for the year. The resulting cumulative translation adjustments
have been recorded as a separate component of stockholders’ equity. Foreign
currency transaction gains and losses are included in consolidated net income.
 
 **Comprehensive
Income**
 Comprehensive
income reflects changes in equity that result from transactions and economic
events from non-owner sources. Comprehensive income for the current period
represents foreign currency translation items associated with the Company’s
English and Irish operations.
  ***Page
- 39***
  **GLOBETRAC
INC.**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 
 
 **NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued**
 
 **Discontinued
Operations**
 SFAS No.
146 requires that a liability for a cost associated with an exit or disposal
activity be recognized and measured initially at fair value only when the
liability is incurred, not when it is planned. The Company’s termination of
their global wireless tracking and telematics equipment business in Europe
during November of 2004 caused the Company to reclassify and disclose separately
the costs associated with the disposal on the statement of operations and
comprehensive income for the years ended December 31, 2004 and 2003.
 
 **Reclassifications**
 Certain
prior year amounts in the accompanying financial statements have been
reclassified to conform to current year presentation. These reclassifications
had no effect on the results of operations or financial position for any
year/period presented.
 
 **New
Accounting Pronouncements**
 
 In April
2003, the FASB issued SFAS No. 149 (”SFAS 149”), “Amendment of Statement 133 on
Derivative Instruments and Hedging Activities,” which clarifies financial
accounting and reporting for derivative instruments, including certain
derivative instruments embedded in other contracts and for hedging activities
under SFAS 133, “Accounting for Derivative Instruments and Hedging Activities”.
SFAS 149 is effective for contracts entered into or modified after June 30, 2003
and for hedging relationships designated after June 30, 2003. The adoption of
SFAS 149 did not have a material effect on the Company’s financial condition or
results of operations for the year ended December 31, 2004.
 
 In May
2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity.” This statement
establishes standards for how an issuer classifies and measures in its statement
of financial position certain financial instruments with characteristics of both
liabilities and equity. In accordance with the standard, financial instruments
that embody obligations for the issuer are required to be classified as
liabilities. SFAS 150 is effective for all financial instruments created or
modified after May 31, 2003, and otherwise shall be effective at the beginning
of the first interim period beginning after June 15, 2003. The adoption of SFAS
150 did not have a material effect on the Company’s financial condition or
results of operations for the year ended December 31, 2004.
 
 In
December 2003, the Financial Accounting Standards Board (“FASB”) issued a
revised Interpretation No. 46 (“FIN 46R”), Consolidation of Variable Interest
Entities. FIN 46R addresses consolidation by business enterprises of variable
interest entities and significantly changes the consolidation application of
consolidation polices to variable interest entities and, thus improves
comparability between enterprises engaged in similar activities when those
activities are conduced through variable interest entities. As of December 31,
2004, the Company is not a party to any variable interest entity. The adoption
of FIN No. 46 or FIN 46R did not have a material effect on its financial
position or results of operations.
 
 In
November 2004, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 151, “Inventory Costs - an amendment of ARB No. 43, Chapter 4” in an
effort to unite the United States accounting standards for inventories with
International Accounting Standards leading to consistent application of certain
accounting requirements. SFAS 151 addresses accounting for abnormal amounts of
freight, handling costs, idle facility expense and spoilage (wasted material)
and requires that these costs be recognized as current period expenses.
Previously, these costs had to be categorized as “so abnormal as to require
treatment as current period charges.” In addition, allocation of fixed
production overheads to the costs of conversion must be based on the normal
capacity of the production facilities. SFAS 151 will be effective for fiscal
years beginning after June 15, 2005. The adoption of this statement is not
expected to impact the Company’s operating results, financial position or cash
flows.
 
 
 ***Page
- 40***
 **GLOBETRAC
INC.**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 
 
 **NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued**
 
 **New
Accounting Pronouncements, continued**
 In
December 2004, the FASB issued SFAS 153 “Exchanges of Non-monetary Assets - an
amendment of APB Opinion No. 29.” This statement requires that non-monetary
exchanges must be recorded at fair value and the appropriate gain or loss must
be recognized so long as the fair value is determinable and the transaction has
commercial substance. According to this statement, companies can no longer use
the “similar productive assets” concept to account for non-monetary exchanges at
book value with no gain or loss being recognized. SFAS 153 will be effective for
fiscal periods beginning after June 15, 2005. The adoption of this statement is
not expected to impact the Company’s operating results, financial position or
cash flows.
 
 In
December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment.” SFAS 123R
revises SFAS 123, “Accounting for Stock-Based Compensation”, and focuses on
accounting for share-based payments for services by employer to employee. The
statement requires companies to expense the fair value of employee stock options
and other equity-based compensation at the grant date. The statement does not
require a certain type of valuation model and either a binomial or Black-Scholes
model may be used. The provisions of SFAS 123R are effective for financial
statements for fiscal periods ending after June 15, 2005. The adoption of this
statement is not expected to impact the Company’s operating results, financial
position or cash flows.
 
 **NOTE
3 - CONVERTIBLE NOTES PAYABLE**
 
 At
December 31, 2004 and 2003, the Company had a note payable in the amount of
$162,149 plus accrued interest of $12,990 and $nil. This note is unsecured,
bears interest at 8%, is payable on demand and, at the option of the Company, is
convertible into common shares of the Company at $0.50 per share.
 
 At
December 31, 2004 and 2003, the Company has notes payable totaling $511,660 plus
accrued interest of $40,933
and $nil. These notes are unsecured, bear interest at 8%, are payable on demand
and, at the option of the Company, are convertible into common shares of the
Company at $0.50 per share.
 
 At
December 31, 2004 and 2003, the Company has notes payable totaling $835,940 and
$nil plus accrued interest of $42,058 and $nil. These notes are unsecured, bear
interest at 10% are payable on demand and at the option of either the Company or
the lender are convertible into common shares of the Company at market price
less 20%, with a minimum conversion price of $0.15 per share. (Note
6)
 
 **NOTE
4 - DUE TO RELATED PARTIES**
 
 At
December 31, 2004 and 2003, the Company was indebted to a company sharing a
common officer with the Company in the amount of $4,755. This debt is unsecured,
non-interest bearing and has no fixed terms of repayment. During the years ended
December 31, 2004 and 2003, this same related company was paid $nil and
$160,000, for administrative and corporate communication fees.
 
 At
December 31, 2004 and 2003, the Company was indebted to a company controlled by
an officer of the Company in the amount of $139,277 and $20,171. This debt is
unsecured, non-interest bearing and has no fixed terms of repayment. During the
years ended December 31, 2004 and 2003, this same company was paid $200,000 and
$80,000 for administrative services.
 
 At
December 31, 2004 and 2003, the Company was indebted to a company sharing a
common director in the amounts of $15,418 and $13,173. This debt is unsecured,
non-interest bearing and has no fixed terms of repayment.
 
 ***Page
- 41***
 
 **GLOBETRAC
INC.**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 
 
 **NOTE
4 - DUE TO RELATED PARTIES, continued**
 
 At
December 31, 2004 and 2003, the Company was indebted to a company controlled by
an officer of the Company in the amounts of $27,990 and $7,946. This debt is
unsecured, non-interest bearing and has no fixed terms of repayment. During the
years ended December 31, 2004 and 2003, this related party provided consulting
services to the Company amounting to $110,715 and $41,956.
 
 At
December 31, 2004 and 2003, the Company was indebted to a director in the
amounts of $239,090 and $59,163. During the years ended December 31, 2004 and
2003, the Company paid or had payable, to this same director $229,023 and
$291,903 for rent and management fees.
 
 At
December 31, 2004 and 2003, the Company had paid or has payable $191,277 and
$96,353 to directors and officers of the Company.
 
 **NOTE
5 - NOTE PAYABLE RELATED PARTY**
 
 At
December 31, 2004 and 2003, the Company had a note payable to a director of the
Company in the amount of $500,000, plus accrued interest of $104,795 and
$54,795. This note is unsecured, bears interest at 10% and was due November 27,
2004.
 
 **NOTE
6 - ADVANCE PAYABLE**
 
 At
December 31, 2004 and 2003, the Company had advances payable of $nil and
$380,649. During the year ended December 31, 2004, $378,508 of these advances
were converted into convertible notes payable. (Note 3)
 
 **NOTE
7 - COMMON STOCK**
 
 On August
8, 2003, the directors of the Company approved a private placement for up to 1
million units at $1 per unit, under Regulation S of the United States Securities
Act of 1933. Each unit consists of one restricted common share of the Company
and one non-transferable share purchase warrant. Each warrant entitles the
subscriber to purchase one additional restricted common share of the Company at
a price of $1.10 per share. On November 25, 2003, the directors of the Company
approved an increase in the private placement to 2 million units.
 
 On August
22, 2003, the Company entered into two Regulation S private placement agreements
whereby the Company agreed to issue 750,000 restricted units at $1 per unit,
consisting of 750,000 restricted common shares and one share purchase warrant
exercisable by the holder at $1.10 per share for up to 750,000 restricted common
shares of the Company, until August 26, 2005.
 
 On
October 1, 2003, the Company entered into a Regulation S private placement
agreement whereby the Company agreed to issue 150,000 restricted units at $1 per
unit, consisting of 150,000 restricted common shares and one share purchase
warrant exercisable by the holder at $1.10 per share for up to 150,000
restricted common shares of the Company, until October 7, 2005.
 
 On
November 21, 2003, the Company entered into two Regulation S subscription
agreements whereby the Company agreed to issue 250,000 restricted units at $1
per unit, consisting of 250,000 restricted common shares and one share purchase
warrant exercisable by the subscriber at $1.10 per share for up to 150,000 and
100,000 restricted common shares of the Company, until November 28, 2005 and
December 1, 2005.
 
 ***Page
- 42***
 
 
 **GLOBETRAC
INC.**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 
 
 **NOTE
8 - DISCONTINUED OPERATIONS**
 
 On
November 26, 2004, the Company entered into a letter agreement whereby they
agreed to discontinue, effective November 1, 2004, 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 six percent royalty to be paid
to GlobeTrac Inc. on gross sales of all existing and qualified potential
customers that the Company has in Europe. The discontinued operations resulted
in a loss on discontinuance of $84,512 due to the disposal of fixed assets and
inventory. Fixed assets and inventory of the discontinued operations included in
the accompanying consolidated balance sheet at December 31, 2003 were $7,127 and
$378,713. Revenues for the wireless tracking and telematics business were
$453,663 for the year ended December 31, 2003. Net losses in the wireless
tracking and telematics business for the years ended December 31, 2004 and 2003
were $576,317 and $1,772,698, have been recorded as in the a loss from
discontinued operations section, of the statements of operations and
comprehensive income.
  **NOTE
9 - INCOME TAXES**
 
 As
of December 31, 2004 and 2003, deferred tax assets consist of the
following:
 
 
 2004
    
    
    2003Federal
      loss carryforwards
    $
    616,000
    
    $
    418,000State
      loss carryforwards
    
    58,000
    
    
    37,000Foreign
      loss carryforwards
    
    402,000
    
    
    270,000Less:
      Valuation allowance
    
    (1,076,000
    )
    
    (
      725,000
    )$
    -
    
    $
    -
 
 At
December 31, 2004 and 2003, the Company had a net operating loss carryforward
(“NOL”) of approximately $3,945,000 and $2,580,000 for federal, state and
foreign tax purposes.
 
 At
December 31, 2003 and 2002 the Company had a deferred tax asset of approximately
$1,076,000 and $725,000 that primarily relates to net operating losses. A 100%
valuation allowance has been established, as management believes it is more
likely than not that the deferred tax assets will not be realized.
 
 The
federal and state NOL’s expire through December 31, 2024 and December 31,
2014.
 
 The
Company’s valuation allowance increased during 2004 and 2003 by $351,000 and
$498,000.
 
 NOL’s
incurred prior to May 6, 2002 are subject to an annual limitation due to the
ownership change (as defined under Section 382 of the Internal Revenue Code of
1986) which resulted in a change in business direction. Unused annual
limitations may be carried over to future years until the net operating losses
expire. Utilization of net operating losses may also be limited in any one year
by alternative minimum tax rules.
 
 ***Page
- 43***
 **GLOBETRAC
INC.**
 **NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS**
 
 
 
 
 **NOTE
10 - COMMITMENT AND CONTINGENCIES**
 
 The
Company was in the business of selling, marketing, distributing and installing
global wireless tracking and telematics equipment in Europe until November 1,
2004 when they exchanged their rights to sell, market, distribute and install
global wireless tracking and telematics equipment in Europe as well as all of
their fixed assets and inventory, offset by a trade account payable to the
acquirer, 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. The Company has
accumulated a deficit of $3,988,260 since inception and additional financing
will be required by the Company to fund and support its operations. Management
plans to mitigate its losses in future years by significantly reducing its
operating expenses and seeking out new business opportunities. However, there is
no assurance that the Company will be able to obtain additional financing,
reduce their operating expenses or be successful in locating or acquiring a
viable business. The financial statements do not include any adjustments that
might result from the outcome of those uncertainties.
 
 
  ***Page
- 44***