UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.   20549





FORM 10-Q/A


(Amendment No. 1)


(Mark One)





[ X ]
QUARTERLY REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the quarterly period ended March 31, 2011





[    ]
TRANSITION REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the transition period from  to





Commission file number 000-33309





GLOBETRAC INC.(Exact name of registrant as specified in its charter)





Delaware

(State or other jurisdiction of incorporation or organization)
33-0953557

(I.R.S. Employer Identification No.)1100 Melville Street, Suite #610, Vancouver, British Columbia, Canada

(Address of principal executive offices)
V6E 4A6

(Zip Code)1-800-648-4287

(Registrant’s telephone number, including area code)n/a

(Former name, former address and former fiscal year, if changed since last report)





Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


[ X ] Yes         [    ]  No





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (s. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


[    ] Yes         [    ]  No





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.





Larger accelerated filer
[     ]
Accelerated filer
[     ]Non-accelerated filer
[     ] (Do not check if a smaller reporting company)
Smaller reporting company
[ X ]





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


[    ] Yes         [ X ]  No





APPLICABLE ONLY TO CORPORATE ISSUERS





State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.





Class
Outstanding at May 12, 2011common stock - $0.001 par value
89,883,198








EXPLANATORY NOTE
 
 This Amendment No. 1 on Form 10-Q/A (“Form 10-Q/A”) is being filed to amend our Quarterly Report on Form 10-Q for the period ended March 31, 2011, which was filed with the Securities and Exchange Commission on May 13, 2011 (the “Original Form 10-Q”).
 
 This Form 10-Q/A is being filed for the sole purpose of including Exhibit 32.1 and Exhibit 32.2, which were inadvertently not filed with our Original Form 10-Q due to a transmission error. No other items included in the Original Form 10-Q have been amended and this Form 10-Q/A does not provide an update for any events that have occurred subsequent to the filing of our Original Form 10-Q.







PART I – FINANCIAL INFORMATION





Item 1.  Financial Statements.





GLOBETRAC INC.BALANCE SHEETSMarch 31, 2011


December 31, 2010unauditedASSETSCurrent assetsCash

$
2,108


$
5,400Accounts receivable


5,813



5,611Prepaids


999



999Total current assets

$
8,920


$
12,010LIABILITIES AND STOCKHOLDERS' DEFICITCurrent liabilitiesAccounts payable

$
62,961


$
56,019Accrued liabilities


4,300



3,730Accrued professional fees


45,281



49,281Convertible note  payable to related parties, including accrued interest


51,078



50,206Due to related parties


34,607



34,607Total current liabilities


198,227



193,843Commitments and contingencies


-



-Stockholders' deficitPreferred stock $0.001 par value, 5,000,000 authorized, none issued andoutstanding at  March 31, 2011 and December 31 , 2010


-



-Common stock $0.001 par value, 200,000,000 common shares authorized,89,883,198 issued and outstanding at  March 31, 2011 and December 31, 2010


89,883



89,883Additional paid in capital


1,167,085



1,167,085Accumulated deficit


(1,459,687
)


(1,452,213
)Accumulated other comprehensive income


13,412



13,412Total stockholders' deficit


(189,307
)


(181,833
)Total liabilities and stockholders' deficit

$
8,920


$
12,010The accompanying notes are an integral part of these financial statements









GLOBETRAC INC.STATEMENTS OF OPERATIONSFOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010(UNAUDITED)Three months ended March 31, 2011


Three months ended March 31, 2010Royalty income

$
16,233


$
11,005Operating expenses:General and administrative


22,835



19,298Net loss before interest


(6,602
)


(8,293
)Interest Expense


(872
)


-Net loss

$
(7,474
)

$
(8,293
)Net loss per share - basic and diluted

$
(0.00
)

$
(0.00
)Weighted average number of shares outstanding - basic and diluted


89,883,198



89,883,198The accompanying notes are an integral part of these financial statements









GLOBETRAC INC.STATEMENT OF STOCKHOLDERS' DEFICIT AND COMPREHENSIVE INCOMEFOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010AccumulatedCommon Stock Issued


Additional





OtherNumber of





Paid-in


Accumulated


ComprehensiveShares


Amount


Capital


Deficit


Income (Loss)


TotalBalance at January 1, 2010


89,883,198


$
89,883


$
1,167,085


$
(1,408,292
)

$
13,412


$
(137,912
)Net loss for the three months ended March 31, 2010


-



-



-



(8,293
)


-



(8,293
)Balance at March 31, 2010 (unaudited)


89,883,198



89,883



1,167,085



(1,416,585
)


13,412



(146,205
)Net loss for the nine months ended December 31, 2010


-



-



-



(35,628
)


-



(35,628
)Balance at December 31, 2010


89,883,198



89,883



1,167,085



(1,452,213
)


13,412



(181,833
)Net loss for the three months ended March 31, 2011


-



-



-



(7,474
)


-



(7,474
)Balance at March 31, 2011 (unaudited)


89,883,198


$
89,883


$
1,167,085


$
(1,459,687
)

$
13,412


$
(189,307
)Note: There is no Preferred Stock issued and outstanding.The accompanying notes are an integral part of these financial statements







GLOBETRAC INC.STATEMENTS OF CASH FLOWSFOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010(UNAUDITED)2011


2010Cash flows from operating activities:Net loss

$
(7,474
)

$
(8,293
)Changes in operating assets and liabilities:Accounts receivable


(202
)


(1,198
)Prepaids


-



-Accounts payable


6,942



(2,971
)Accrued liabilities


570



(4,735
)Accrued professional fees


(4,000
)


(6,000
)Due to related party


872



14,886Net cash used in operating activities


(3,292
)


(8,311
)Effect of foreign currency exchange


-



-Net decrease in cash


(3,292
)


(8,311
)Cash, beginning of period


5,400



13,438Cash, end of period

$
2,108


$
5,127Supplemental disclosure of cash flow information:Cash paid during the year for:Income taxes

$
-


$
-Interest

$
-


$
-The accompanying notes are an integral part of these financial statements









GLOBETRAC INC.
 NOTES TO FINANCIAL STATEMENTS
 MARCH 31, 2011
 UNAUDITED




NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS





Nature of Operations





GlobeTrac Inc. (GlobeTrac or 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 Canada.  On August 27, 2002 the Company acquired 100% of the shares of Global Axxess Corporation Limited (Global Axxess), a company incorporated in Ireland.  On June 12, 2008 the Company sold its shares of Global Axxess, its only subsidiary.  Global Axxess owned 100% of the issued and outstanding shares of Globetrac Limited (Limited), a company incorporated in the United Kingdom, until March 20, 2007 when Limited was officially dissolved and all of Limited’s assets and liabilities were assumed by GlobeTrac. As a result of terminating its operations in Europe, the Company is seeking new business opportunities.





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.





In these notes, the terms “Company”, “we”, “us” or “our” mean GlobeTrac Inc. whose operations are included in these unaudited financial statements.





Basis of Presentation





The unaudited financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.  They do not include all information and notes required by generally accepted accounting principles for complete financial statements.  However, except as disclosed herein, there has been no material change in the information disclosed in the notes to the financial statements included in the Annual Report on Form 10-K of GlobeTrac Inc. for the year ended December 31, 2010. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the three months ended March 31, 2011 are not necessarily indicative of the results that may be expected for any other interim period or the entire year.  For further information, these unaudited financial statements and the related notes should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2010 included in the Company’s report on Form 10-K.





NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Accounting Estimates





The preparation of the 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 amounts on deposit with financial institutions and highly liquid investments with an original maturity of 90 days or less to be cash equivalents.  At March 31, 2011 and December 31, 2010, the Company had no cash equivalents.





Accounts Receivable





Receivables represent valid claims against debtors for royalties arising on or before the balance sheet date and are reduced to their estimated net realizable value.  An allowance for doubtful accounts is based on an assessment of the collectibility of all past due accounts. At March 31, 2011 and December 31, 2010, our allowance for doubtful accounts was $0.








GLOBETRAC INC.
 NOTES TO FINANCIAL STATEMENTS
 MARCH 31, 2011
 UNAUDITED




NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Revenue Recognition





Royalty revenue is recognized when pervasive evidence of an agreement exists, when it is received or when the royalty income is determinable and collectibility is reasonably assured.





Financial Instruments





Foreign Exchange Risk





The Company is subject to foreign exchange risk on our royalty revenue which is denominated in UK pounds and some purchases which are denominated in Canadian dollars. Foreign currency risk arises from the fluctuation of foreign exchange rates and the degree of volatility of these rates relative to the United States dollar.  Foreign exchange rate fluctuations may adversely impact the Company’s results of operations as exchange rate fluctuations on transactions denominated in currencies other than our functional currency (the US dollar) result in gains and losses that are reflected in our Income Statement. To the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign currency-denominated transactions will result in increased net revenue. Conversely, the Company’s net revenue will decrease when the U.S. dollar strengthens against foreign currencies. The Company does not believe that it has any material risk due to foreign currency exchange.





Foreign exchange gains or losses were immaterial for the three months ending March 31, 2010.




Fair Value of Financial Instruments





The Company’s financial instruments include cash, accounts receivable, accounts payable, accrued liabilities and accrued professional fees. The fair value of these financial instruments approximate their carrying values due to their short maturities.





Concentration of Credit Risk





Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and trade accounts receivable.





At March 31, 2011 and  December 31, 2010, the Company had $2,108 and $5,400 respectively, in cash on deposit with a large chartered Canadian bank.  At March 31, 2011 and December 31, 2010, $526 and $635 respectively, of this cash was not insured.  As part of its cash management process, the Company performs periodic evaluations of the relative credit standing of this financial institution.  The Company has not experienced any losses in cash balances and does not believe it is exposed to any significant credit risk on its cash.





Accounts receivable consists of royalty income from one customer and is not collateralized.  Management continually monitors the financial condition of its customer to reduce the risk of loss.  The Company routinely assesses the financial strength of its source of revenue income and as a consequence, concentration of credit risk is limited. At March 31, 2011 and December 31, 2010, the Company had $5,813 and $5,611 in royalties’ receivable from this customer.





Comprehensive Income





Comprehensive income reflects changes in equity that results from transactions and economic events from non-owner sources.  At March 31, 2011 and December 31, 2010 the Company had $13,412 in accumulated other comprehensive losses from its foreign currency translation. The Company recorded no comprehensive income due to gains or losses from foreign currency translation.











GLOBETRAC INC.
 NOTES TO FINANCIAL STATEMENTS
 MARCH 31, 2011
 UNAUDITED





NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





Income Taxes





Income tax expense is based on pre-tax financial accounting income.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.  Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.





Stock-Based Compensation





The Company accounts for Stock-Based Compensation in accordance with Financial Accounting Standards Board (FASB) Accounting Standard Codification (ASC) 718 “Compensation – Stock Compensation”, which requires recording expense for stock compensation based on a fair value based method.





The Company uses the “modified prospective method” which requires the Company to recognize compensation costs for all stock-based payments granted, modified or settled in financial statements.





The Company had no outstanding options or warrants at March 31, 2011 and December 31, 2010.





Basic and Diluted Net Earnings (Loss) Per Common Share (EPS)





Basic net earnings (loss) per share is computed by dividing the net earnings (loss) attributable to the common stockholders by the weighted average number of common shares outstanding during the reporting period.  Diluted net income per common share includes the potential dilution that could occur upon exercise of the options and warrants to acquire common stock computed using the treasury stock method which assumes that the increase in the number of shares is reduced by the number of shares which could have been repurchased by the Company with the proceeds from the exercise of the options and warrants (which were assumed to have been made at the average market price of the common shares during the reporting period).





The Company had convertible debt at March 31, 2011 and December 31, 2010, of $49,500, and convertible interest of $1,578 and $706 respectively.





Segment Reporting





The Company is centrally managed, has limited operations and operates in one business segment.





Recent Accounting Pronouncements





In June 2009, the Financial Accounting Standards Board (FASB) issued Statement No. 168, Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162 (ASC 105,Generally Accepted Accounting Principles) “ASC 105”. ASC 105 became the single source of authoritative nongovernmental U.S. generally accepted accounting principles ("GAAP"), superseding existing FASB, American Institute of Certified Public Accountants ("AICPA"), Emerging Issues Task Force ("EITF"), and related accounting literature. ASC 105 reorganizes the thousands of GAAP pronouncements into roughly 90 accounting topics and displays them using a consistent structure. Also included is relevant Securities and Exchange Commission guidance organized using the same topical structure in separate sections. ASC 105 will be effective for financial statements issued for reporting periods that end after September 15, 2009, which means July 1, 2009 for GlobeTrac, Inc. The adoption of the Codification did not have an impact on our financial position or results of operations.











GLOBETRAC INC.
 NOTES TO FINANCIAL STATEMENTS
 MARCH 31, 2011
 UNAUDITED





NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)





FASB ASC 810 Consolidation(“ASC 810”) became effective for us on January 1, 2010, and was amended to change how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. The new authoritative accounting guidance requires additional disclosures about the reporting entity’s involvement with variable-interest entities and any significant changes in risk exposure due to that involvement as well as its affect on the entity’s financial statements. The new authoritative accounting guidance under ASC 810 was effective January 1, 2010 and did not have a significant impact on our financial statements.





FASB ASC 860 Transfers and Servicing(“ASC 860”) was amended to enhance reporting about transfers of financial assets, including securitizations, and where companies have continuing exposure to the risks related to transferred financial assets. The new authoritative accounting guidance eliminates the concept of a “qualifying special-purpose entity” and changes the requirements for derecognizing financial assets. The new authoritative accounting guidance also requires additional disclosures about all continuing involvements with transferred financial assets including information about gains and losses resulting from transfers during the period. The new authoritative accounting guidance under ASC 860 was effective January 1, 2010 and did not have a significant impact on our financial statements.





In April 2010, the FASB issued ASU 2010-17, Revenue Recognition – Milestone Method (“ASU 2010-17”). ASU 2010-17 provides guidance on the criteria that should be met for determining whether the milestone method of revenue recognition is appropriate. A vendor can recognize consideration that is contingent upon achievement of a milestone in its entirety as revenue in the period in which the milestone is achieved only if the milestone meets all criteria to be considered substantive. The following criteria must be met for a milestone to be considered substantive. The consideration earned by achieving the milestone should (1) be commensurate with either the level of effort required to achieve the milestone or the enhancement of the value of the item delivered as a result of a specific outcome resulting from the vendor’s performance to achieve the milestone; (2) related solely to past performance; and (3) be reasonable relative to all deliverables and payment terms in the arrangement. No bifurcation of an individual milestone is allowed and there can be more than one milestone in an arrangement. Accordingly, an arrangement may contain both substantive and nonsubstantive milestones. ASU 2010-17 is effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. Management is currently evaluating the potential impact of ASU 2010-17 on our financial statements.





NOTE 3 – GOING CONCERN





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 it exchanged its rights to sell, market, distribute and install global wireless tracking and telematics equipment in Europe as well as specific assets and liabilities, for a royalty of 6% on future gross sales to current customers and qualified potential customers in Europe. There is no cap on the royalties and royalties are to be paid for the duration of 11 years, ending October 31, 2015.  The Company has an accumulated deficit of $1,459,687 at March 31, 2011. Additional financing will be required by the Company to fund and support its operations.  Management plans to mitigate its losses in future years by controlling its operating expenses and seeking out new business opportunities.   However, there is no assurance that the Company will be able to obtain additional financing, control 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 these uncertainties.





NOTE 4 – DUE TO RELATED PARTIES





March 31,


December 31,2010


2010Due to a company sharing a common director (a)

$
1,500


$
1,500Due to a company controlled by a relative of a major shareholder


33,107



33,107Due to related parties

$
34,607


$
34,607





(a)  During the three months ended March 31, 2011 and 2010 the Company was billed $16,800 and $23,625 respectively, in administrative fees by a company sharing a common director. These fees are included in General and Administrative expenses on the Statement of Operations.









GLOBETRAC INC.
 NOTES TO FINANCIAL STATEMENTS
 MARCH 31, 2011
 UNAUDITED




NOTE 5 – CONVERTIBLE NOTES AND INTEREST PAYABLE TO RELATED PARTIES





March 31,


December 31,2011


2010Convertible notes and interest payable to a relative of a major shareholder

unsecured, bears interest at 7% per annum, due on demand

$
34,500


$
34,500Convertible note and interest payable to a company controlled by a major shareholder

unsecured, bears interest at 7% per annum, due on demand


15,000



15,000Accrued  interest


1,578



706Total convertible notes and interest payable to related parties

$
51,078


$
50,206





The lender may, in its sole discretion, provide the Borrower with written instructions to convert any payment of principal sum or interest into restricted shares of common stock in the capital of the borrower.  Payments will be converted into fully paid, nonassessable and restricted  shares of common stock in the capital of the Borrower (“the conversion shares”) at a conversion price of the lower of $0.50 per share or the Company's market price on the date of conversion.





NOTE 6 – ROYALTY AGREEMENT





On November 1, 2004 the Company agreed, pursuant to a termination and transfer agreement, to discontinue marketing, distributing and installing global wireless tracking and telematics equipment in Europe, which was carried on through its wholly-owned subsidiary, GlobeTrac Limited, in exchange for certain assets and liabilities and a six percent royalty to be paid to GlobeTrac Inc. on gross sales of all existing and qualified potential customers that the Company had in Europe.This royalty agreement expires on October 31, 2015.





NOTE 7  – COMMITMENTS





The Company had no contingencies or long-term commitments at March 31, 2011.





NOTE 8 –  FAIR VALUE





Effective January 1, 2009, the Company adopted ASC 820-10, Fair Value Measurements and Disclosures – Overall. ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted prices in active markets for identical assets or liabilities that the reporting entity has  the  ability  to  access  at  the  measurement  date.  Level 2 inputs are those other than quoted prices included within Level 1 that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The Company did not have any financial assets or liabilities at December 31, 2011 for which fair value measurements are applicable.





NOTE 9 – SUBSEQUENT EVENTS





The Company has evaluated subsequent events for recognition or disclosure in the financial statements filed on Form 10-Q with the SEC and no other events, other than those described in these notes, have occurred that require disclosure.









Item 2.                      Management’s Discussion and Analysis of Financial Condition and Results of Operations.





Forward Looking Statements





The information in this annual report on Form 10-Q contains forward-looking statements.  These forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business strategy and expectations.  Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements.  In some cases, you can identify forward-looking statements by terminology such as may, will, should, expect, plan, intend, anticipate, believe, estimate, predict, potential or continue, the negative of such terms or other comparable terminology.  Actual events or results may differ materially from those events or results included in the forward-looking statements.  In evaluating these statements, you should consider various factors, including the risks outlined from time to time in the reports we file with the Securities and Exchange Commission.  Some, but not all, of these risks include, among other things:





*
our inability to obtain the financing we need to continue our operations;





*
changes in regulatory requirements that adversely affect our business;





*
a decline in our royalty revenue; and





*
risks over which we have no control, such as a general downturn in the economy which may adversely affect our royalty revenue and ability to obtain working capital.





We do not intend to update forward-looking statements.  You should refer to and carefully review the information in future documents we file with the Securities and Exchange Commission.





General





This discussion and analysis should be read in conjunction with our interim unaudited financial statements and related notes included in this Form 10-Q and the audited financial statements and related notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010. The inclusion of supplementary analytical and related information herein may require us to make estimates and assumptions to enable us to fairly present, in all material respects, our analysis of trends and expectations with respect to our results of operations and financial position taken as a whole.  Actual results may vary from the estimates and assumptions we make.





When we use the words “we”, “us” or “our” in this report, we are referring to GlobeTrac Inc. which we sometimes refer to in this report as “GlobeTrac”.





Overview





We were incorporated in the state of Delaware on March 2, 2000 as 411 Place.com Inc.  On February 28, 2001, we changed our name to Artescope, Inc. and on July 29, 2002 changed the name to GlobeTrac Inc.  Our principal executive offices are headquartered in Canada.  On August 27, 2002, we acquired 100% of the shares of Global Axxess Corporation Limited (Global Axxess), a company incorporated in Ireland.  On June 12, 2008 we sold our shares of Global Axxess, our only subsidiary.  Global Axxess owned 100% of the issued and outstanding shares of Globetrac Limited (Limited), a company incorporated in the United Kingdom, until March 20, 2007 when Limited was officially dissolved and all of Limited’s assets and liabilities were assumed by GlobeTrac. As a result of terminating our operations in Europe, we are seeking new business opportunities.





At March 31, 2011, our only source of income was a six percent commission/royalty that we receive from WebTech Wireless Inc. (“WebTech”), based on all qualified sales of any product or service offered by WebTech. A qualified sale means all of WebTech’s invoiced sales of products or services to a customer that has ordered at least one product or service before November 26, 2005, whether sold by WebTech or by a licensee, affiliate or agent of WebTech. A list of customers was provided to WebTech by GlobeTrac. There is no cap on the royalty receivable and royalties are to be paid by WebTech for eleven years, beginning November 1, 2004 and ending October 31, 2015.





Results of Operation





Our operating results for the three months ended March 31, 2011 and 2010 and the changes between those periods, are summarized as follows:









Three Months Ended March 31,


Increase (Decrease) Between the three months ended March 31, 2011 and 20102011


2010Royalty income

$
16,233


$
11,005


$
5,228Operating expenses:General and administrative


22,835



19,298



3,537Net loss before interest expense


6,602



8,293



1,691Interest expense


872



-



872Net loss

$
7,474


$
8,293


$
(819
)





Revenues





Our royalty revenue increased by $5,228 or 48% from $11,005 for the three months ended March 31, 2010 to $16,233 for the three months ended March 31, 2011.





All of our revenue was the result of a 6% royalty which relates to the Termination and Transfer Agreement signed on October 18, 2005. The revenue we receive from WebTech is in British Pounds.   The 48% increase in revenue during the three months ended March 31, 2011 was due primarily to an increase in the revenue earned in British Pounds of 45%. Changes in the exchange rates contributed a further 3% of the increase.  We do not expect our revenue to increase unless we locate a new revenue generating business opportunity.





Operating Expenses





Our operating expenses increased by $3,537 or 18% from $19,298 for the three months ended March 31, 2010 to $22,835 for the three months ended March 31, 2011.  This increase was primarily caused by increases in professional fees of $1,279, in filing fees of $1,616 and Franchise taxes of $4,594, all due to overaccruals in 2009 that were reversed in the three months ended March 31, 2010.  For the three months ended March 31, 2010 we had a gain on foreign exchange of $1,195 and for the three months ended March 31, 2011 we had a foreign exchange loss of $982 for a net increase in cash of  $2,177. These increases were offset primarily by a decrease in administration fees of $6,137 that was charged by the company doing our administration.


Over the next year our plan is to continue to control our operating costs.  We expect our operating costs to remain approximately the same over the next year, unless we locate a new viable business.





Franchise Tax





Our franchise tax recovery decreased by $4,594 from a recovery of $4,655 for the three months ended March 31, 2010 to a recovery of $61 for the three months ended March 31, 2011. The recovery for the three months ended March 31, 2010 was caused by an overaccrual of franchise tax in 2008 that had been based on 2007’s franchise tax expense.  The recovery for the three months ended March 31, 2011 was due to a refund from the State of California for overpayment of franchise taxes.





Liquidity and Capital Resources





Going Concern





The notes to our financial statements at March 31, 2011 disclose our uncertain ability to continue as a going concern.  We were in the business of selling, marketing, distributing and installing global wireless tracking and telematics equipment in Europe until November 1, 2004 when we exchanged our rights to sell, market, distribute and install global wireless tracking and telematics equipment in Europe as well as specific assets and liabilities, for a royalty of 6% on future gross sales to current customers and qualified potential customers in Europe. There is no cap on the royalties and royalties are to be paid for the duration of 11 years, ending October 31, 2015.  We have accumulated a deficit of $1,459,687 since inception and additional financing will be required to fund and support our operations. We plan to mitigate our losses in future years by controlling our operating expenses and seeking out new business opportunities.  However, there is no assurance that we will be able to obtain additional financing, control our 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 these uncertainties.









As of March 31, 2011, we had a cash balance of $$2,108, a working capital deficit of $189,307 and negative cash flows from operations of $3,292 for the year then ended. During the three months ended March 31, 2011, we primarily funded our operations with $49,500 in convertible loans from related parties that were received in the prior quarter and the royalty revenue we received from WebTech.





The following table summarizes our sources and uses of cash for the three months ended March 31, 2011 and 2011:





March 31,2011


2010Net cash used in operating activities

$
(3,292
)

$
(8,311)Net cash used in investment activities


-



-Net cash provided by financing activities






-Effect of foreign currency exchange


-



-Net decrease in cash

$
(3,292
)

$
(8,311)





Net Cash Used in Operating Activities





Net cash used in operating activities during the three months ended March 31, 2011 was $3,292. This cash was primarily used to cover our net loss of $7,474 and decreases in accrued professional fees of $4,000. These uses were primarily offset by increases in accounts payable of $6,942, due to related parties of $872 and accrued liabilities of $570.





Net cash used in operating activities during the three months ended March 31, 2010 was $8,311. This cash was primarily used to cover our net loss of $8,293 an increase in accounts receivable of $1,198 and decreases in accounts payable of $2,971, accrued liabilities of $4,735 and accrued professional fees of $6,000.  These uses of cash were offset primarily by an increase in due to related parties of $14,886.








Net Cash Used In Investing Activities





We did not have any investing activities during the three months ended March 31, 2011 and 2010.





Net Cash Provided By Financing Activities





During the three months ended March 31, 2011 and 2010 we did not have any financing activities.





Challenges and Risks





We have accumulated a deficit of approximately $1.4 million to date and will require additional debt or equity financing to continue operations and to seek out new business opportunities. We plan to mitigate our losses in future years through the receipt of the royalty payments from Webtech and locating a viable business.





There is no assurance that we will be able to obtain additional financing, be successful in seeking new business opportunities, receive any royalties from WebTech or that we will be able to reduce operating expenses.





Other Trends, Events or Uncertainties that may Impact Results of Operations or Liquidity


Trends, Events, and Uncertainties





The economic downturn may make it harder for us to raise capital if we need it.  Therefore, in the future, the economic downturn may have a material adverse effect on our ability to raise operating capital.  Other than as discussed in this 10-K, we know of no other trends, events or uncertainties that have or are reasonably likely to have a material impact on our short-term or long-term liquidity.





Off-balance Sheet Arrangements





We have no off-balance sheet arrangements and no non-consolidated, special-purpose entities.





Contingencies and Commitments





We had no contingencies or long-term commitments at March 31, 2011 and December 31, 2010.









Contractual Obligations





We had no contractual obligations at March 31, 2011 and December 31, 2010.





Critical Accounting Judgments





An appreciation of our critical accounting policies is necessary to understand our financial results. These policies may require management to make difficult and subjective judgments regarding uncertainties, and as a result, such estimates may significantly impact our financial results. The precision of these estimates and the likelihood of future changes depend on a number of underlying variables and a range of possible outcomes. Other than our accounting for our royalty revenue, our critical accounting policies do not involve the choice between alternative methods of accounting. We have applied our critical accounting policies and estimation methods consistently.





Revenue Recognition





Royalty revenue is recognized when pervasive evidence of an agreement exists, when it is received or when the royalty income is determinable and collectibility is reasonably assured.





Accounts Receivable





Receivables represent valid claims against debtors for royalties arising on or before the balance sheet date and are reduced to their estimated net realizable value.  An allowance for doubtful accounts is based on an assessment of the collectibility of all past due accounts. At March 31, 2011 and December 31, 2010, our allowance for doubtful accounts was $0.





At March 31, 2011, accounts receivable consists of estimated royalty revenue for the months of February and March 2011.  Our estimate was based on the amounts we received from WebTech for the months from July 2010 to January 2011.  As of the date of filing we had not received payment of the accrued royalty revenue and thus our estimated accrual could vary materially from the amount we accrued at March 31, 2011.





Financial Instruments





Foreign Exchange Risk





We are subject to foreign exchange risk on our royalty revenue which is denominated in UK pounds and some purchases which are denominated in Canadian dollars. Foreign currency risk arises from the fluctuation of foreign exchange rates and the degree of volatility of these rates relative to the United States dollar.  Foreign exchange rate fluctuations may adversely impact our results of operations as exchange rate fluctuations on transactions denominated in currencies other than our functional currency result in gains and losses that are reflected in our Statement of Operations. To the extent the U.S. dollar weakens against foreign currencies, the translation of these foreign currency-denominated transactions will result in increased net revenue. Conversely, our net revenue will decrease when the U.S. dollar strengthens against foreign currencies. We do not believe that we have any material risk due to foreign currency exchange.





Fair Value of Financial Instruments





Our financial instruments include cash, accounts receivable, accounts payable, accrued liabilities and accrued professional fees. We believe the fair value of these financial instruments approximate their carrying values due to their short maturities.





Concentration of Credit Risk





Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and trade accounts receivable.





At March 31, 2011, we had approximately $2,108 in cash on deposit with a large chartered Canadian bank.  At March 31, 2011, $1,582 of this cash was insured.  As part of our cash management process, we perform periodic evaluations of the relative credit standing of this financial institution.  We have not experienced any losses in cash balances and do not believe we are exposed to any significant credit risk on our cash.





Accounts receivable consists of royalty income from one source and is not collateralized.  We continually monitor the financial condition of our customer to reduce the risk of loss.  We routinely assess the financial strength of our source of revenue income and as a consequence, concentration of credit risk is limited. At March 31, 2010, we had $5,813 in royalties’ receivable from this source.









Recent Accounting Standards and Pronouncements





In June 2009, the FASB issued Statement No. 168, Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (ASC 105,Generally Accepted Accounting Principles) “ASC 105”.. ASC 105 has become the single source of authoritative nongovernmental U.S. generally accepted accounting principles ("GAAP"), superseding existing FASB, American Institute of Certified Public Accountants ("AICPA"), Emerging Issues Task Force ("EITF"), and related accounting literature. ASC 105 reorganizes the thousands of GAAP pronouncements into roughly 90 accounting topics and displays them using a consistent structure. Also included is relevant Securities and Exchange Commission guidance organized using the same topical structure in separate sections. ASC 105 was effective for financial statements issued for reporting periods that end after September 15, 2009, which means July 1, 2009 for us. The adoption of the Codification did not have an impact on our financial position or results of operations.





Item 3.  Quantitative and Qualitative Disclosures About Market Risk.





GlobeTrac is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.





Item 4.  Controls and Procedures.





Disclosure Controls and Procedures





Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including John daCosta, GlobeTrac’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.





Mr. daCosta has evaluated the effectiveness of the design and operation of GlobeTrac’s disclosure controls and procedures (as such term is defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this quarterly report (the “Evaluation Date”).  Based on such evaluation, Mr. daCosta has concluded that, as of the Evaluation Date, GlobeTrac’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports GlobeTrac files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required.





Changes in Internal Control Over Financial Reporting





During the quarter of the fiscal year covered by this report, there were no changes in GlobeTrac’s internal control over financial reporting or, to GlobeTrac’s knowledge, in other factors that have materially affected, or are reasonably likely to materially affect, GlobeTrac’s internal control over financial reporting.





PART II – OTHER INFORMATION





Item 1.  Legal Proceedings.





GlobeTrac is not a party to any pending legal proceedings and, to the best of GlobeTrac’s knowledge, none of GlobeTrac’s property or assets are the subject of any pending legal proceedings.





Item 1A.  Risk Factors.





GlobeTrac is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.





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





During the quarter of the fiscal year covered by this report, (i) GlobeTrac did not modify the instruments defining the rights of its shareholders, (ii) no rights of any shareholders were limited or qualified by any other class of securities, and (iii) GlobeTrac did not sell any unregistered equity securities that have not previously been disclosed in a Form 8-K filed with the SEC.









Item 3.  Defaults Upon Senior Securities.





During the quarter of the fiscal year covered by this report, no material default has occurred with respect to any indebtedness of GlobeTrac.  Also, during this quarter, no material arrearage in the payment of dividends has occurred.





Item 4.  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 quarter of the fiscal year covered by this report.





Item 5.  Other Information.





During the quarter of the fiscal year covered by this report, GlobeTrac reported all information that was required to be disclosed in a report on Form 8-K.





Item 6.  Exhibits





(a)
Index to and Description of Exhibits





All Exhibits required to be filed with the Form 10-Q are included in this quarterly report or incorporated by reference to GlobeTrac’s previous filings with the SEC, which can be found in their entirety at the SEC website at www.sec.gov under SEC File Number 000-33309 and SEC File Number 333-66590.





Exhibit
Description
Status3.1
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.
Filed3.2
Bylaws filed as an Exhibit to GlobeTrac’s registration statement on Form SB-2 filed on August 2, 2001, and incorporated herein by reference.
Filed3.3
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.
Filed3.4
Notification of Dissolution for Globetrac Limited dated March 14, 2007, filed as an exhibit to GlobeTrac’s Form 10-KSB filed on April 16, 2007, and incorporated herein by reference.
Filed10.1
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.
Filed10.2
Loan Agreement dated November 27, 2002 between GlobeTrac Inc. and David Patriquin with attached promissory note dated November 27, 2002 filed as an exhibit to GlobeTrac’s Form 10-KSB (Annual Report) filed on April 15, 2003, and incorporated herein by reference.
Filed10.3
Amendment Letter Agreement dated June 4, 2003, between WebTech Wireless International Inc. and Globetrac Limited for the purpose of amending terms of the Master Distributorship Agreement filed as an exhibit to GlobeTrac’s Form 10-KSB (Annual Report) filed on April 7, 2004, and incorporated herein by reference.
Filed10.4
Amendment Letter Agreement dated March 8, 2004 between WebTech Wireless International Inc. and Globetrac Limited for the purpose of amending terms of the Master Distributorship Agreement filed as an exhibit to GlobeTrac’s Form 10-KSB (Annual Report) filed on April 7, 2004, and incorporated herein by reference.
Filed10.5
Letter Agreement dated November 26, 2004 among Global Axxess Corporation Limited, WebTech Wireless International and WebTech Wireless Inc., filed as an exhibit to GlobeTrac’s Form 8-K (Current Report) filed on December 22, 2004, and incorporated herein by reference.
Filed10.6
Termination and Transfer Agreement dated November 1, 2004 among GlobeTrac Inc., Global Axxess Corporation Limited, Globetrac Limited, WebTech Wireless Inc., and WebTech Wireless International, filed as an exhibit to GlobeTrac’s Form 8-K (Current Report) filed on November 14, 2005, and incorporated herein by reference.
Filed14
Code of Ethics filed as an exhibit to GlobeTrac’s Form 10-KSB filed on April 15, 2003, and incorporated herein by reference.
Filed31
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Included32
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Included









SIGNATURES





In accordance with the requirements of the Securities Exchange Act of 1934, GlobeTrac Inc. has caused this report to be signed on its behalf by the undersigned duly authorized person.





GLOBETRAC INC.Dated:   May 17, 2011
By:
/s/ John daCostaName
John daCostaTitle
CEO, President and CFO(Principal Executive Officer andPrincipal Financial Officer)