UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-QSB

(Mark One)

 

| x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
|---|---------------------------------------------------------------------------------------|

 

|   | For the quarterly period ended June 30, 2007 |
|--------|----------------------------------------------|

 

OR

 

| [   ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|-------|------------------------------------------------------------------------------------------|

 

For the transition period from ___________ to ______________.

 

Commission File Number 0-27737

 

GLOBETECH ENVIRONMENTAL, INC.

(Exact name of small business issuer as specified in its charter)

 

|   | Nevada | 77-0454856 |
|--------|--------|------------|

|   | (State or other jurisdiction of | (IRS Employer |
|--------|---------------------------------|---------------|

|   | incorporation or organization) | Identification No.) |
|--------|--------------------------------|---------------------|

 

#700-300 South Fourth Street, Las Vegas, Nevada 89101

(Address of principal executive offices)(Zip Code)

 

(403) 261-2929

(Registrant's telephone number, including area code)

 

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

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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.    Yes x  No [   ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.    Yes o    No  x

 

As of December 31, 2007, we had 67,354,007 shares of Common Stock outstanding.

 

|   | Transitional Small Business Disclosure Format (check one) | Yes [ | ] | No x |
|--------|-----------------------------------------------------------|-------|---|------|

 

 

1

 

 

GLOBETECH ENVIRONMENTAL, INC.

 

FORM 10-QSB

 

INDEX

 

|   | Page No. |
|--------|----------|

| PART I. | FINANCIAL INFORMATION |
|---------|-----------------------|

 

|   | Item 1. | Financial Statements (Unaudited) |
|--------|---------|----------------------------------|

 

|   | Balance Sheets as of June 30, 2007 and December 31, 2006 | 3 |
|--------|----------------------------------------------------------|---|

 

|   | Statements of Operations for the three months ended |
|--------|-----------------------------------------------------|

|   | June 30, 2007 and June 30, 2006 ....................................................... | 4 |
|--------|-----------------------------------------------------------------------------------------|---|

 

 

|   | Statements of Operations for the six months ended |
|--------|---------------------------------------------------|

|   | June 30, 2007 and June 30, 2006 | .............................. | 5 |
|--------|---------------------------------|--------------------------------|---|

 

 

|   | Statements of Cash Flows for the six months |
|--------|---------------------------------------------|

|   | ended June 30, 2007 and June 30, 2006 | 6 |
|--------|---------------------------------------|---|

 

|   | Notes to Financial Statements | 7 |
|--------|-------------------------------|---|

 

|   | Item 2. | Management's Discussion and Analysis or |
|--------|---------|-----------------------------------------|

|   | Plan of Operations | 10 |
|--------|--------------------|----|

|   | Item 3. Controls and Procedures | 13 |
|--------|---------------------------------|----|

 

| PART II | OTHER INFORMATION |
|---------|-------------------|

 

 

|   | Item 6. Exhibits | 13 |
|--------|------------------|----|

 

2

**PART I – FINANCIAL INFORMATION**

**Item 1.  Financial Statements**

 

GLOBETECH ENVIRONMENTAL, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

|                                             |   | **June 30,**                | **December 31,**       |
|--------------------------------------------------|--------|-----------------------------|------------------------|
|                                             |   | **2007**                    | **2006**               |
|                                             |   | **(unaudited)**             | **Audited**            |
| **ASSETS**                                       |   |                        |                   |
| **Current assets:**                              |   |                        |                   |
| Cash and cash equivalents                        |   | $                   187,871 | $               71,628 |
| Prepaid and advances                             |   | 153,213                     | 11,546                 |
| Other                                            |   | 55,560                      | 49,256                 |
| Inventory                                        |   | 362,159                     | -                      |
| Accounts receivable                              |   | 24,778                      | 10,316                 |
|                                             |   | 783,581                     | 142,746                |
|                                             |   |                        |                   |
| Tangible assets                                  |   | 846,265                     | 113,129                |
|                                             |   |                        |                   |
| Intangible property - patents and licenses       |   | 1,290,238                   | 1,286,840              |
|                                             |   |                        |                   |
| Total Assets                                     |   | $                2,920,084  | $         1,542,715    |
|                                             |   |                        |                   |
| **Liabilities and Stockholders' Deficit**        |   |                        |                   |
|                                             |   |                        |                   |
| **Current liabilities:**                         |   |                        |                   |
| Accounts payable and accrued liabilities         |   | $            775,717        | $            502,531   |
| Due to Goldner et al - current portion           |   | 836,820                     | 607,000                |
| Due to related party                             |   | -                           | 72,862                 |
| Demand Notes Payable                             |   | -                           | 171,233                |
| Bank line of credit                              |   | 89,697                      | 134,035                |
| Capital lease payable                            |   | 686,559                     | -                      |
| Due to Shareholders                              |   | 244,955                     | 107,481                |
|                                             |   | 2,633,748                   | 1,595,142              |
|                                             |   |                        |                   |
| Due to Goldner et al                             |   | 494,792                     | 971,200                |
| Deferred revenue                                 |   | 800,000                     | -                      |
| Deferred gain                                    |   | 380,135                     | -                      |
|                                             |   |                        |                   |
| **Stockholders' deficit**                        |   |                        |                   |
| Common stock, par value $.001, (1)               |   | 67,354                      | 59,061                 |
| Paid-in capital                                  |   | 4,115,850                   | 3,639,074              |
| Retained deficit                                 |   | (1,185,777)                 | (273,432)              |
| Deficit accumulated during the development stage |   | (4,472,953)                 | (4,472,953)            |
| Other comprehensive income                       |   | 86,935                      | 24,623                 |
|                                             |   |                        |                   |
| Total Stockholders' deficit                      |   | (1,388,591)                 | (1,023,627)            |
|                                             |   |                        |                   |
| Total Liabilities and Stockholders' deficit      |   | $          2,920,084        | $           1,542,715  |

 

|   | (1) | Authorized 100,000,000, issued 67,354,007 and 59,061,192 at June 30, 2007 and December 31, 2006 respectively. |
|--------|-----|---------------------------------------------------------------------------------------------------------------|

 

The accompanying notes are an integral part of these financial statements.

 

3

GLOBETECH ENVIRONMENTAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

|                                |   |   |   |                                    |                       |
|-------------------------------------|--------|--------|--------|-----------------------------------------|----------------------------|
|                                |   |   |   | **For the three months ended June 30,** |
|                                |   |   |   | **2007**                                | **2006**                   |
|                                |   |   |   |                                    |                       |
| Revenue                             |   |   |   | $            42,782                     | $                    3,419 |
| Cost of sales                       |   |   |   | 7,409                                   | -                          |
| Gross profit                        |   |   |   | 35,373                                  | 3,419                      |
|                                |   |   |   |                                    |                       |
| Expenses:                           |   |   |   |                                    |                       |
| Consulting                          |   |   |   | 28,938                                  | 79,312                     |
| Stock option benefit                |   |   |   | -                                       | 344,825                    |
| General and administrative          |   |   |   | 469,100                                 | 117,575                    |
| Depreciation and amortization       |   |   |   | 19,895                                  | -                          |
|                                |   |   |   | 517,933                                 | 541,712                    |
|                                |   |   |   |                                    |                       |
| Operating loss                      |   |   |   | (482,560)                               | (538,293)                  |
|                                |   |   |   |                                    |                       |
| **Other Income (expense):**         |   |   |   |                                    |                       |
| Interest expense                    |   |   |   | (173,797)                               | (11,285)                   |
| Other income                        |   |   |   | 2,184                                   | -                          |
|                                |   |   |   |                                    |                       |
| Total other income (expense)        |   |   |   | (171,613)                               | (11,285)                   |
|                                |   |   |   |                                    |                       |
|                                |   |   |   |                                    |                       |
| Net earnings (loss)                 |   |   |   | (654,173)                               | (549,578)                  |
|                                |   |   |   |                                    |                       |
| Foreign currency adjustment         |   |   |   | 223,666                                 | 27,392                     |
|                                |   |   |   |                                    |                       |
| Comprehensive loss                  |   |   |   | (430,507)                               | (522,186)                  |
|                                |   |   |   |                                    |                       |
| Loss per share, basic and diluted   |   |   |   | (0.01)                                  | (0.01)                     |
|                                |   |   |   |                                    |                       |
| Weighted average shares outstanding |   |   |   | 67,279,007                              | 51,283,617                 |

 

 

The accompanying notes are an integral part of these financial statements

 

4

GLOBETECH ENVIRONMENTAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

|                              |   |      |      |                                  |     |
|-----------------------------------|--------|-----------|-----------|---------------------------------------|----------|
|                              |   |      |      | **For the six months ended June 30,** |
|                              |   |      |      | **2007**                              | **2006** |
|                              |   |      |      |                                  |     |
| Revenue                           |   |      | 46,742    | 3,419                                 |
| Cost of sales                     |   |      | 7,409     |                                  |
| Gross profit                      |   |      | 39,333    | 3,419                                 |
|                              |   |      |      |                                  |     |
| Expenses:                         |   |      |      |                                  |
| Consulting                        |   |      | 57,240    | 157,770                               |
| Stock option benefit              |   |      | 344,825   |
| General and administrative        |   | 693,395   | 166,062   |
| Depreciation and amortization     | 26,185 |      |
|                              |   |      |      | 776,820                               | 668,657  |
|                              |   |      |      |                                  |     |
| Operating loss                    |   | (737,487) | (665,238) |
|                              |   |      |      |                                  |     |
| **Other Income (expense):**       |   |      |      |
| Interest expense                  |   |      | (190,467) | (12,621)                              |
| Other income                      |   |      | 15,609    |                                  |
| Write-down of goodwill/assets     | -      | (474,821) |
|                              |   |      |
|                              |   |      |      |                                  |     |
| Total other income (expense)      |   | (174,858) | (487,442) |
|                              |   |      |      |                                  |     |
|                              |   |      |      |                                  |     |
| Net earnings (loss)               |   |      | (912,345) | (1,152,680)                           |
|                              |   |      |      |                                  |     |
| Foreign currency adjustment       |   | 62,312    | 27,392    |
|                              |   |      |      |                                  |     |
| Comprehensive loss                |   |      | (850,033) | (1,125,288)                           |
|                              |   |      |      |                                  |     |
| Loss per share, basic and diluted | (0.01) | (0.02)    |
|                              |   |      |      |                                  |     |  
Weighted average shares outstanding

 

 

 

64,348,735

51,283,617

 
 

The accompanying notes are an integral part of these financial statements

 

5

GLOBETECH ENVIRONMENTAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

**For the six months ended June 30,**

 

 

 

 

**2007**

**2006**

Cash flow from operating activities:

 

 

 

 

 

Net loss

 

 

 

(912,345)

(1,152,680)

 

 

 

 

 

 

Adjustments to reconcile net loss to net cash

 

 

 

 

 

Used by operating activities:

 

 

 

 

 

Depreciation and amortization

 

 

 

26,185 

4,272 

Common stock issued for interest/services

 

 

 

44,974

157,770 

Stock based compensation 

 

 

 

-   

344,825 

Write down of assets

 

 

 

 

474,821

**Deferred gain**

 

 

 

380,135 

-

 

 

 

 

(461,051)

(170,992)

 

 

 

 

 

 

Change in operating assets and liabilities:

 

 

 

Accounts Receivable

 

 

 

(14,462)

8,682 

Prepaid expenses

 

 

 

(141,667)

9,225 

Other receivable

 

 

 

(6,304)

-

Inventory

 

 

 

(362,159)

-

Accounts payable and accrued liabilities

 

 

 

273,186 

80,718

Net Cash Used in Operating Activities

 

 

 

(712,457)

(72,367)

 

 

 

 

 

 

Cash flow from financing activities:

 

 

 

 

 

Proceeds from Shareholder loan

 

 

 

137,474 

-   

Stock option exercise

 

 

 

-   

29,625 

Sale of demand promissory note

 

 

 

-   

156,928

Payment to Goldner

 

 

 

(416,208)

-

Deferred revenue

 

 

 

800,000 

-

Payment of capital lease obligation

 

 

 

(38,711)

-

Term loan

 

 

 

(44,338)

87,167

Shares issued on debenture conversion

 

 

 

-

45,000

Proceeds from private placement

 

 

 

196,000 

-   

Net Cash Provided by Financing Activities

 

 

 

634,217 

318,720 

 

 

 

 

 

 

Cash flow from (used in) investing activities:

 

 

 

 

 

Logmed Investment

 

 

 

-

(242,201)

Patents/licenses/assets

 

 

 

(37,450)

492

Net Cash Used in Investing Activities

 

 

 

(37,450)

(241,709)

 

 

 

 

 

 

Effect of exchange rate on cash 

 

 

 

231,933 

(1,390)

 

 

 

 

 

 

Increase (decrease) in cash

 

 

 

116,243 

3,254

 

 

 

 

 

 

Cash, beginning of period

 

 

 

71,628 

1,219 

 

 

 

 

 

 

Cash, end of period

 

 

 

$                    187,871

$                            4,473

During the six months ended June 30, 2007, 3,199,069 shares of common stock were issued to retire debt and accrued interest in the amount of $191,944. A further 1,368,746 common shares were issued to a related party to retire debt and accrued interest of $82,125.

 

Supplemental Information – cash paid for interest

$  190,467

-

 

The accompanying notes are an integral part of these financial statements

 

 

6

 

GLOBETECH ENVIRONMENTAL, INC.

NOTES TO FINANCIAL STATEMENTS

THE PERIODS ENDED JUNE 30, 2007 AND 2006

 

NOTE 1 – INTERIM FINANCIAL PRESENTATION

 

The interim consolidated financial statements of Globetech Environmental, Inc. (the “Company”) are prepared pursuant to the requirements for reporting on Form 10-QSB.  These financial statements have not been audited by our independent registered public accounting firm.  The December 31, 2006 balance sheet data was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles.  The interim financial statements and notes thereto should be read in conjunction with the financial statements and notes included in the Company's Form 10-KSB for the year ended December 31, 2006.  In the opinion of management, these interim financial statements reflect all adjustments of a normal recurring nature necessary for a fair presentation of the results for the interim periods presented. The current period results of operations are notnecessarily indicative of results, which ultimately will be reported for the full year ending December 31, 2007.

 

NOTE 2 – GOING CONCERN

 

The accompanying financial statements have been prepared on the basis of accounting principles applicable to a “going concern”, which assume that the Company will continue in operation for at least one year and will be able to realize its assets and discharge its liabilities in the normal course of operations.

 

Several conditions and events cast doubt about the Company’s ability to continue as a “going concern”.  The Company has incurred net losses of approximately $5,658,730 for the period from April 7, 1997 (inception) to June 30, 2007, has a liquidity problem, and requires additional financing and or sales in order to finance its business activities on an ongoing basis.  The Company is actively pursuing alternative financing and has had discussions with various third parties, although no firm commitments have been obtained.

 

The Company’s ability to survive will depend on numerous factors including, but not limited to, the Company’s receiving continued financial support, completing public equity financing, or generating profitable operations in the future. 

 

These financial statements do not reflect adjustments that would be necessary if the Company were unable to continue as a “going concern”.  While management believes that the actions already taken or planned, will mitigate the adverse conditions and events which raise doubt about the validity of the “going concern” assumption used in preparing these financial statements, there can be no assurance that these actions will be successful.

 

If the Company were unable to continue as a “going concern”, then substantial adjustments would be necessary to the carrying values of assets, the reported amounts of its liabilities, the reported revenues and expenses, and the balance sheet classifications used.

 

NOTE 3 - RECLASSIFICATIONS

 

Certain reclassifications have been made in the 2006 financial statements to conform with the 2007 presentation.

 

NOTE 4 – COMMITMENTS

 

As of June 30, 2007, the Company maintained no formal offices in North America, but conducted its operations in space provided free of charge by the Company’s principal officers. Currently, there are no outstanding debts owed by the company for the use of these facilities and there are no commitments for future use of the facilities. European operations are conducted from offices in Landsberg, Germany that are used pursuant to the terms of a month to month lease arrangement.

 

The Company entered into an employment agreement with Donald Sampson, effective as of March 1, 2005 for a period ending February 28, 2007, pursuant to which Mr. Sampson is employed as the Company’s President and Chief Executive Officer. Effective March 1, 2007, the Company entered into a new two year employment agreement with Mr. Sampson.  Under his new employment agreement, Mr. Sampson is entitled to a base salary of $180,000 

 

7

and a bonus equal to 2% of the EBITDA when it becomes positive, which will be paid quarterly.  As of June 30, 2007 and 2006, $0 and $0 in salary has been paid and $180,000 and $40,000 has been accrued.

 

The Company entered into a consulting agreement with Theodor Hennig’s professional corporation, effective as of September 27, 2005 for two years ending September 27, 2007, pursuant to which Mr. Hennig serves as the Company’s Chief Financial Officer.  Effective October 1, 2007, the Company entered into a new 15 month consulting agreement with Mr. Hennig’s professional corporation.  Under the new consulting agreement, Mr. Hennig is entitled to a monthly fee of CDN$10,000 plus expenses and an annual bonus should certain EBITDA thresholds be met.  As of June 30, 2007 and 2006, $57,969.94 and $0 in fees and expenses have been paid and $ 167,220 and $33,332 have been accrued.

 

Except for Mr. Sampson’s employment agreement and Mr. Hennig’s consulting agreement, the Company does not presently have employment agreements, or agreements relating to changes in control of the company, with any of its officers or employees.

 

The Company expects to enter into employment agreements with key employees, to implement comprehensive compensation arrangements with its officers and to adopt benefit plans in the future at the discretion of the Board of Directors to attract and retain officers and key employees.

 

Pursuant to the Tech-Rock LLC sales –leaseback transaction discussed in Note 10 below, the Company has monthly lease payments of $36,000 commencing in December 2007. These payments are intended to be offset by the leasing income generated by the units as they are placed in service.

 

NOTE 5 - STOCKHOLDER ADVANCES

 

Stockholders of the Company have advanced the Company money in order to pay general and administrative expenses.  As of June 30, 2007 and December 31 2006, the Company owed $244,955 and $107,481, respectively, relating to these advances.  The stockholder loans have no specific repayment terms.

 

NOTE 6 – DEMAND NOTES PAYABLE

 

The Company financed the 150,000 Euro Logmed down payment through a demand Promissory Note with Creative Financial Solutions, LLC of Arizona. The Note was for $200,000 CDN with interest at 12% per annum. This note plus accrued interest of $20,711.25 was converted to 3,199,069 shares at a deemed value of $.06 per share effective January 31, 2007.

 

NOTE 7 – RELATED PARTY PAYABLES

 

The Company financed the 50,000 Euro Logmed down payment and some working capital advances through a demand Promissory Note with the spouse of a Company officer. The Note was for $90,000 CDN and bears interest at 12% per annum. This Note plus accrued interest of $9,262.85 was converted to 1,368,746 shares at a deemed value of $.06 per share effective January 31, 2007.

 

NOTE 8 – MODIFICATION OF LOGMED PAYMENT TERMS

 

On March 17, 2006, Globetech Environmental, Inc. ("Globetech") entered into an agreement with Hans-Eberhardt Frenzel ("Frenzel"), Helmut Goldner ("Goldner"), Goldner Umwelt & Hygienetechnik GmbH ("GUH"), and Logmed Technologie GmbH ("Logmed Technologie") pursuant to which Globetech agreed to purchase certain rights, operations and technologies of Logmed Technologie and related persons. 

 

On January 11, 2007, Globetech entered into an agreement with Goldner et al to modify the payment terms under their March 17, 2006 Purchase Agreement for the Logmed technologies. Pursuant to the terms of the original Purchase Agreement, a total of 500,002 Euro was due and payable to the Goldner Parties by December 31, 2006.  Pursuant to the January 11, 2007 Amendment, the scheduled payment dates for the amounts originally due to the Goldner Parties on December 31, 2006 have been revised to provide for a series of instalment payments as follows:

 

 

**•**

50,000 Euro due January 17, 2007;

 

**•**

50,000 Euro due January 31, 2007 to Goldner; 

 

8

 

**•**

15,000 Euro due January 31, 2007 to Frenzel;

 

**•**

18,332 Euro due August 31, 2007 to Frenzel payable in shares;

 

**•**

100,000 Euro due February 28, 2007;

 

**•**

100,000 Euro due March 31, 2007;

 

**•**

66,668 Euro due August 31, 2007 (paid August 31, 2007); and

 

**•**

100,000 Euro due September 30, 2007.

 

All deferred payments bear interest at 8% per annum. All contracted payments up to and including August 31, 2007 have been paid.  The September 30, 2007 payment has not been made. The 100,000 Euro instalment was deposited with Globetech’s counsel in Germany and was to be released to Mr. Goldner provided certain requested conditions were satisfied. Management feels that Mr. Goldner has not been satisfactorily performing his obligations under the terms of our Purchase and Sale agreement and therefore some adjustments were required. To date, the requested conditions have not been satisfied and the funds have not been transferred to Mr. Goldner. Management is in good faith attempting to negotiate a satisfactory resolution with Mr. Goldner but the eventual outcome is uncertain.

 

NOTE 9 - COMMON STOCK TRANSACTIONS

 

Effective January 31, 2007, the Company issued 1,368,746 shares to extinguish related party debt plus accrued interest due to a related party (see Note 7 above).

 

Effective January 31, 2007, the Company issued 3,199,069 shares to extinguish a demand note plus accrued interest (see Note 6 above).

 

In February 2007, the Company received $150,000 pursuant to a private placement and issued 2,500,000 shares and 2,500,000 warrants to purchase shares at $.12 for a period of two years.

 

In March 2007, the Company received $11,000 pursuant to a private placement and issued 275,000 shares and 275,000 warrants to purchase shares at $.08 for a period of two years.

 

In March 2007, the Company received $20,000 pursuant to a private placement and issued 500,000 shares and 500,000 warrants to purchase shares at $.08 for a period of two years.

 

In April 2007, the Company received $15,000 pursuant to a private placement and issued 300,000 shares and 300,000 warrants to purchase shares at $.10 for a period of two years.

 

In April, 2007, the Company issued 150,000 shares to extinguish a debt of $15,000 owed to an arms-length party.

 

In accordance with EITF 00-19, the issuance of the warrants described above is considered permanent equity and thus no value has been assigned to the warrants.

 

NOTE 10 – SALE-LEASEBACK TRANSACTION

 

In May 2007, three Logmed units were sold to an American customer, Tech-Rock LLC, for $1,500,000 cash pursuant to a sales/leaseback agreement.  Two of these units are presently in operation under existing leases in Europe.  The third unit is a new Logmed machine that will be operated under lease in Abu Dhabi, United Arab Emirates.  The UAE unit is to be manufactured, installed and operating by January 1, 2008 

The sales/leaseback agreement calls for monthly lease payments of $12,000 per machine for a period of seven years.

 

NOTE 11 – MEDIVAC JOINT VENTURE

 

In May 2007, the Company entered a joint venture with MediVac Limited of Australia. The joint venture agreement calls for the incorporation of Logmed International Pty Ltd. which will own worldwide marketing rights for Globetech’s Logmed machines and MediVac’s Metamizer machines. The joint venture will have offices in Sydney Australia, Spokane and Landsberg, Germany and will be resourced to exploit sales opportunities around the globe.

 

 

 

9

NOTE 12 – SUBSEQUENT EVENTS

 

On August 30, 2007, Globetech Environmental, Inc. (the “Company”) entered into a Master Equipment Lease Agreement with MedRock LLC pursuant to which the Company sold to MedRock, for $1,375,000, two Logmed II 500 machines that are currently being manufactured and expected to placed in service by December 1, 2007 and agreed to lease those machines with the intent of sub-leasing the machines to third-party end users.  Pursuant to the Master Equipment Lease Agreement, the Company agreed to lease both of the Logmed machines for lease payments of $13,000 per machine per month for a period of 120 months commencing on the earlier of (i) installation of each machine at the site of a third-party end user or (ii) December 1, 2007.

 

In October 2007, the Company and MediVac conducted negotiations to address modifications to the joint venture agreement due to a change in control of MediVac as well as several failures to perform. The parties verbally agreed that the termination of the joint venture would be in the best interest of all and that reciprocal marketing agreements would better serve the desired objectives. A formal agreement is being drafted to reflect these changes.

 

In September 2007, the Company settled an outstanding debt with a Director in the amount of $24,931.50 (18,332 Euro) by issuing 498,630 shares at a deemed price of $.05 per share.

 

Tech-Rock/BBR, Inc Master Equipment Lease

 

On November 1, 2007, Globetech Environmental, Inc. (the "Company") entered into a Master Equipment Lease Agreement with Tech-Rock LLC and BBR, Inc pursuant to which the Company sold  for $875,000, one Globetech GT500 machine that is expected to be placed in service by March 2008 and agreed to lease that machine with the intent of sub-leasing the machines to third-party end users. Pursuant to the Master Equipment Lease Agreement, the Company agreed to lease the machine for lease payments of $14,600 per month for a period of 120 months commencing on the earlier of (i) installation of each machine at the site of a third-party end user or (ii) March 1, 2008.

 

MediVac Manufacturing and License Agreement

 

On December 1, 2007, the Company and MediVac Limited agreed to terminate their March 28, 2007 Joint Venture Agreement and to enter into Licensing Agreements. The agreements will permit each company to market the other’s product line in stipulated geographic areas for a designated period of time. The Company will also assume the manufacturing of all of MediVac’s Metamizer units sold by the Company and MediVac on a cost plus 20% basis.

 

Logmed / Goldner Agreement

 

Effective October 31, 2007, Helmut Goldner unilaterally terminated the Purchase and Sale Agreement pursuant to which the Company had previously acquired the rights to the intellectual property and patents pertaining to Logmed. Goldner’s termination of the agreement was triggered by the Company withholding the € 100,000 (Euro) payment that was due September 30, 2007. The Company withheld this payment in an effort to address the ongoing failure of Mr. Goldner to perform certain obligations under the agreement. The Company had attempted to renegotiate the terms of the agreement to reflect the defaults by Mr. Golder but was unable to arrive at a satisfactory resolution. As a result of the termination, all Logmed intellectual property and patents reverted to Mr. Goldner, $1,325,000 (€ 900,000 Euro) in remaining payments to Goldner are eliminated and the Company will retain ownership andcontinue to operate Logmed Technologie GmbH as its European subsidiary and base of operations.

 

10

**Item 2.  Management’s Discussion and Analysis or Plan of Operations**

 

*The following information should be read in conjunction with the Form 10-KSB filed for the year ended December 31, 2006, and other information regarding our financial~~s~~ performance for the period covered by this report, including, but not limited to, the financial statements included elsewhere in this report.*

 

**Forward-Looking Statements**

 

This Management's Discussion and Analysis or Plan of Operations includes a number of forward-looking statements that reflect Management's current views with respect to future events and financial performance. Those statements include statements regarding the intent, belief or current expectations of the Company and members of its management team as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risk and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Readers are urged to carefully review and consider the various disclosures made by the Company in this report and in the Company’s other reports filed with the Securities and Exchange Commission.  Important factors currently unknown toManagement could cause actual results to differ materially from those in forward-looking statements.  The Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in the future operating results over time. The Company believes that its assumptions are based upon reasonable data derived from and known about its business and operations and the business and operations of the Company.  No assurances are made that actual results of operations or the results of the Company's future activities will not differ materially from its assumptions.

 

**Overview and Developments During, and Following, the 2007 2nd Quarter**

 

The Company’s principal services and operations are comprised of the marketing, sales and leasing of its proprietary Logmed medical waste disinfection/sterilization units and the operation of several waste treatment facilities under contract. 

 

Marketing efforts have identified numerous sales opportunities in Turkey, Greece, Australia, Romania, France, Canada and the US. The Company is also working on a substantial business opportunity in the People’s Republic of China.

 

Globetech, and all its sales agents, attended the World Medica Fair Exposition in Dusseldorf, Germany in November for the third straight year.

 

The Company is also continuing with its efforts to have its technology certified for the destruction of Prions. A Logmed II is currently under construction which is to be placed in service in early 2008 and be utilized in the Prion testing and certification process. Prions are proteins linked with mad-cow disease and other chronic wasting illnesses and the successful certification could lead to substantial opportunities in the handling of slaughterhouse wastes. The Company has applied for grants from the Alberta Government that are available to Companies that can provide solutions to this expanding waste stream.

 

In May 2007, the Company entered a joint venture with MediVac Limited of Australia. The joint venture agreement calls for the incorporation of Logmed International Pty Ltd. which will own worldwide marketing rights for Globetech's Logmed machines and MediVac's Metamizer machines. The joint venture will have offices in Sydney Australia, Spokane and Landsberg, Germany and will be resourced to exploit sales opportunities around the globe.

 

In May 2007 and August 2007, the Company sold Logmed machines and leased back those machines for sublease to third party users. Pursuant to the May 2007 sale/leaseback transaction (the “TechRock Transaction”), the Company sold two operating Logmed machines and the rights with respect to a third Logmed machine that is expected to be put in service during 2007 for $1,500,000 and agreed to lease each of the Logmed machines for monthly lease payments of $12,000 per machine for a period of 84 months. Pursuant to the August 2007 sale/leaseback transaction, the Company sold two Logmed machines that are expected to be put in service during 2007 for $1,375,000 and agreed to lease each of the Logmed machines for monthly lease payments of $13,000 per machine for a period of 120 months beginning on the earlier of installation of the machines for use by a third party or December 1, 2007.

 

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**Critical Accounting Policies**

 

The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The Company believes certain critical accounting policies affect its more significant judgments and estimates used in the preparation of its financial statements.  A description of the Company’s critical accounting policies is set forth in the Company’s Form 10-KSB for the year ended December 31, 2006.  As of, and for the quarter ended, June 30, 2007, there have been no material changes or updates to the Company’s critical accounting policies.

 

**Results of Operations**

 

*Revenues.*The Company recorded operating revenues of $39,333 and $3,419 during the six months ended June 30, 2007 and 2006 respectively.  Revenues during the first six months of 2007 were attributable to the operation conducted at the Halle medical facility and the reporting of the portion of the deferred gain on the Tech-Rock  transaction.  

 

*Operating Expenses*.  Operating expenses totaled $776,820 during the six months ended June 30, 2007 as compared to $668,657 during the same period ended June 30, 2006.  Operating expenses consisted principally of salary and consulting fees and general corporate overhead.  The increase in operating expenses during the 2007 period related principally to the increased operations relating to the marketing of the Company’s Logmed technologies, including the costs of the Landsberg, Germany office, travel related to the establishment of the MediVac joint venture and development costs pertaining to the Logmed upgrading and redesign.

 

*Other Income (Expense).*  The Company reported other expense, net of other income, of $174,858 during the six months ended June 30, 2007 as compared to expenses of $487,442 during the 2006 period.  Net other expense during the 2007 period consisted of interest, financing and miscellaneous charges. The Company had written off $474,821 in goodwill in 2006 pertaining to the amount by which the Logmed Technologie GmbH share purchase price exceeded the net underlying net asset value.

 

**Liquidity and Capital Resources**

 

*Cash and Working Capital Position*

 

The Company had a cash balance of $187,871 at June 30, 2007 and $71,628 at December 31, 2006 and a deficit in working capital of $1,850,167 at June 30, 2007 and $1,452,396 at December 31, 2006.

 

The Company has been dependent upon financing provided in the form of private placements or loans from its principal officers, directors and stockholders to support its ongoing operations.  The Company expects, in the near term, to continue to be dependent upon financing provided by its principal officers, directors and stockholders and from the sale of securities to, or financing provided by, third parties.  Except as noted herein, the Company has no commitments from its principal officers, directors and stockholders or third parties to provided financing. The current business plan and budget reflect sufficient sales by year-end to obviate the need for additional external financing.

 

Included in the Company’s working capital deficit at June 30, 2007 were stockholder loans totaling $244,955 and the current amount due to H. Goldner of $836,820.  Subsequent to June 30, 2007, $132,000 (Euro100,000) was paid to Goldner pursuant to the Logmed purchase and sale agreement.

 

*Cash Flows*

 

The Company utilized $712,457 in cash for operations during the first six months of 2007 as compared to $72,367 used in operations during the 2006 period.  The increase in cash used in operations in the 2007 period was principally attributable to the ability to pay more expenses in cash.

 

Investing activities used $37,450 of cash during the first six months of 2007 as compared to $241,709 used in investing activities during the 2006 period.  Cash used in investing activities during the 2006 quarter related principally to the Logmed technology acquisition.

 

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Financing activities provided $634,217 of cash to the Company during the first six months of 2007 as compared to $318,720 provided in the 2006 period.  In 2007, cash provided by financing activities was largely attributable to $800,000 sale proceeds that have been deferred, $196,000 raised in private placements less $416,208 paid on the Logmed obligation. In 2006, cash provided by financing activities was attributable to the sale of demand promissory notes in the amount of $156,928, exercise of stock options in the amount of $29,625 and loans of $87,167.

 

*Long-Term Debt*

 

Long-term debt totaled $1,674,927 at June 30, 2007 as compared to $971,200 at December 31, 2006.  Long-term debt at June 30, 2007 consisted of 365,998 Euro due December 31, 2008 with respect to the Logmed Technologie acquisition, 800,000 of deferred revenue from the Tech-Rock LLC sale and $380,000 deferred gain related to the sale of two Logmed units.

 

*Financial Commitments and Requirements*

 

The Company’s principal financial commitments and requirements relate to funding operational deficits, overhead and purchase and operational payments relating to the March 2006 acquisition of Logmed Technologie GmbH.

The Company has monthly lease payments of $36,000 due to Tech-Rock LLC pursuant to the sale leaseback agreement.

 

**Inflation**

 

Inflation has historically not had a material effect on the Company’s operations.

 

**Off-Balance Sheet Arrangements**

 

The Company does not have any off-balance sheet arrangements.

 

**Item 3. Controls and Procedures**

 

The Company's Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) are responsible for establishing and maintaining disclosure controls and procedures for the Company. 

 

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's CEO and CFO, of the effectiveness of the design and operation of the Company's disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based upon the evaluation, the Company's CEO and CFO concluded that, as of the end of the period, the Company's disclosure controls and procedures were effective in timely alerting management to material information relating to the Company required to be included in the reports that the Company files and submits pursuant to the Exchange Act. 

 

During the quarter ended June 30, 2007, there were no significant changes in our internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, internal controls over financial reporting. 

 

**PART II – OTHER INFORMATION**

 

**Item 6.  Exhibits**

 

Exhibit  

Number

Title of Document                  

31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

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**SIGNATURES**

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereto duly authorized.

 

                **Globetech Environmental, Inc.**

 

 

Date: December 31, 2007

By: /s/ Donald Sampson  

 

Donald Sampson

 

President and Director

 

(Principal Executive Officer)

 

 

Date: December 31, 2007

By: /s/ Theodor Hennig  

 

Theodor Hennig

Chief Financial Officer, Secretary and Director

 

(Principal Financial Officer)

 

 

 

 

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