<PAGE>

                          SECURITIES AND EXCHANGE COMMISSION
                                           
                                           
                               WASHINGTON, D.C.  20549
                                           
                                           
                                      Form 10-Q
                                           
                                           
                [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                        OF THE SECURITIES EXCHANGE ACT OF 1934
                                           
                    For the quarterly period ended July 31, 1997 
                                           
                                          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 0-17430
                                           
                                           
                              GLOBAL ENVIRONMENTAL CORP.
                                           
                (Exact name of registrant as specified in its charter)
                                           
         New York                                     13-3431486
(State of other jurisdiction of                     (IRS Employer
 incorporation or organization)                   Identification No.)

  17500 York Road                                        21740
Hagerstown, Maryland                                  (Zip Code)
(Address of principal executive offices)


                                    (301) 582-2000
                 (Registrant's telephone number, including area code)

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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                                       Outstanding at
         Common Stock                  July 31, 1996
         ------------                  --------------

         $.0001 par value              15,214,693 shares

<PAGE>

                      GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY
                                           
                                        INDEX 



                                                                         PAGE(S)
                                                                         ------ 
PART I - CONSOLIDATED FINANCIAL STATEMENTS:

         Consolidated Balance Sheets - July31, 1997 and 
              October 31, 1996.                                            3 -4

         Consolidated Statements of Operations -
              Three Months and Nine Months Ended July 31, 
              1997 and 1996                                                   5
         Consolidated Statements of Cash 
              Flows - Nine Months Ended July 31, 1997 and 1996              6-7

         Notes to Consolidated Financial Statements                        8-16

         Management's Discussion and Analysis of Financial 
              Condition and Results of Operations                         17-18


PART II - OTHER INFORMATION:                                                 N/A



<PAGE>

    GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

    CONSOLIDATED BALANCE SHEETS

<TABLE> 
<CAPTION>

                                       ASSETS
                                                                  JULY 31,     OCTOBER 31,
                                                                    1997          1996
                                                                -----------    -----------
<S>                                                             <C>            <C>
CURRENT ASSETS
    Cash and cash equivalents                                   $   455,262    $    50,008
    Accounts receivable, less allowance for doubtful  
         accounts of $76,188 and $52,188 respectively             1,486,627      1,436,339
    Inventories                                                     825,000        791,758
    Prepaid expenses and other                                       12,000         75,717
                                                                -----------    -----------

                   Total current assets                           2,778,889      2,353,822
                                                                -----------    -----------

PROPERTY, PLANT AND EQUIPMENT 
    Land                                                             25,797         25,797 
    Building and improvements                                     1,440,527      1,385,502 
    Equipment                                                     2,276,376      2,273,920
                                                                -----------    -----------
                                                                  3,742,700      3,685,219 
    Less - accumulated depreciation and amortization             (2,242,433)    (2,076,765)
                                                                -----------    -----------

              Total property, plant and equipment, net            1,500,267      1,608,454 
                                                                -----------    -----------

OTHER ASSETS                                                        390,811        344,220
                                                                -----------    -----------


                                                                $ 4,669,967    $ 4,306,496
                                                                ===========    ===========

</TABLE>

    SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>


    GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

    CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                        LIABILITIES AND STOCKHOLDERS' EQUITY 
                                                                  JULY 31,     OCTOBER 31,
                                                                    1997          1996
                                                                -----------    -----------
<S>                                                             <C>            <C>
CURRENT LIABILITIES
    Current portion of long-term debt                           $   599,682    $   544,725
    Mortgage Payable                                                344,127        344,127
    Accounts payable                                              1,350,721      1,337,117
    Accrued salaries and wages                                      135,000        147,807
    Accrued expenses, other                                         603,392        381,482
                                                                -----------    -----------

         Total current liabilities                                3,032,922      2,755,258 
                                                                -----------    -----------

LONG-TERM DEBT, net of current portion                            1,254,263      1,344,182
                                                                -----------    -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY 
    Common stock, par value $.0001 per share;
    20,000,000 shares authorized; 15,214,693 and 
      13,815,603 shares issued in 1997 and 1996, 
      respectively                                                    1,522          1,382
    Preferred stock, $.001 par value; 5,000,000 shares 
      authorized;
    Class of 10% Cumulative Convertible Senior Preferred Stock, 
         10,500 shares authorized, 0 and 4,550 shares issued 
         and outstanding in 1997 and 1996, respectively (total 
         of $0, 1997 and $399,044, 1996.);
         Series B Cumulative Convertible Senior Preferred Stock,
         16,000 shares authorized, no shares issued and 
         outstanding 1997 or 1996 );                                      0        399,044
    Additional paid-in capital                                    4,953,006      4,554,102
    Deficit                                                      (4,478,686)    (4,654,412)
    Less: Treasury stock, 612,579 shares, at cost                   (93,060)       (93,060)
                                                                -----------    -----------
         Total stockholders' equity                                 382,782        207,056
                                                                -----------    -----------

                                                                $ 4,669,967    $ 4,306,496
                                                                ===========    ===========
</TABLE>

    SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                       4
<PAGE>

    GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

    CONSOLIDATED STATEMENT OF OPERATIONS


<TABLE>
<CAPTION>
                                      THREE MONTHS ENDED                  NINE MONTHS ENDED
                                      ------------------                  -----------------
                                            JULY 31,                           JULY 31,
                                            --------                           --------
                                      1997           1996                 1997           1996   
                                  -----------    -----------         ------------    -----------
<S>                               <C>            <C>                 <C>            <C>
NET SALES                         $ 2,255,522    $ 2,307,276         $  6,561,229   $  6,006,940
    
COST OF GOODS SOLD                  1,803,000      1,863,549            5,251,884      5,061,362
                                  -----------    -----------         ------------    -----------

    GROSS PROFIT                      452,522        443,727            1,309,345        945,578

SELLING, GENERAL AND
    ADMINISTRATIVE EXPENSES           335,000        369,524            1,049,624        909,814
                                  -----------    -----------         ------------    -----------

INCOME FROM OPERATIONS                117,522         74,203              259,721         35,764

INTEREST EXPENSE, NET                 (53,000)       (58,915)            (159,053)      (165,646)
OTHER INCOME                           27,000         14,704               75,058
OTHER EXPENSE                                                                             (6,631)
                                  -----------    -----------         ------------    -----------

INCOME (LOSS) FROM CONTINUING
    OPERATIONS                         91,522         29,992              175,726       (136,513)


INCOME (LOSS) FROM DISCONTINUED
    OPERATIONS                                        20,595                            (238,915)
                                  -----------    -----------         ------------    -----------

NET INCOME (LOSS)                 $    91,522    $    50,587         $    175,726   ($   375,428)
                                  ===========    ===========         ============    ===========

PER COMMON SHARE DATA:

    CONTINUING OPERATIONS         $       .01   ($       .01)        $        .01   ($       .12)
                                  ===========    ===========         ============    ===========

    DISCONTINUED OPERATIONS       $       .00    $       .01         $        .00   ($       .10)
                                  ===========    ===========         ============    ===========

    NET INCOME (LOSS)             $       .01    $       .00         $        .01   ($       .22)
                                  ===========    ===========         ============    ===========

WEIGHTED AVERAGE
 SHARES OUTSTANDING                15,214,693      2,465,144           15,214,693      2,465,144
                                  ===========    ===========         ============    ===========
</TABLE>

    SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                       5
<PAGE>

                   GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                         NINE MONTHS ENDED JULY 31,, 
                                                                     --------------------------------
                                                                          1997                1996   
                                                                     ------------        ------------
<S>                                                                  <C>                 <C>
OPERATING ACTIVITIES:
    Net Income (Loss)                                                $    175,726        ($   375,428)
    Adjustments to reconcile net income loss to net cash 
         provided by (used in) operating activities:
         Depreciation and amortization                                    165,668             135,286
         Net (increase) decrease in non-cash current assets:
              Accounts receivable                                         (50,288)           (606,137)
              Inventories                                                 (33,242)           (200,594)
              Prepaid expenses and other                                   63,717            (125,686)
         Net increase (decrease) in non-debt current liabilities:
              Accounts payable                                             13,604             589,848
              Accrued salaries and wages                                  (12,807)              8,089
              Accrued expenses, other                                     221,910              (3,172)
         (Increase) decrease in other assets, net                         (46,591)             (6,582)
         Discontinued operations, liabilities net of assets                                   (52,677)
                                                                     ------------        ------------

              Net cash provided by (used in) operating activities         497,697            (637,053)
                                                                     ------------        ------------

INVESTING ACTIVITIES:
    Purchase of property, plant and equipment                             (57,481)            (58,289)
         Net cash used in investing activities                            (57,481)            (58,289)
                                                                     ------------        ------------

FINANCING ACTIVITIES:
    Net borrowings (repayments) under revolving loan agreement           (374,885)            751,563 
    Proceeds from long - term debt financing                              650,000
    Payments of long-term debt                                           (310,077)           (136,800)
    Payment of dividends on preferred stock                                                   (93,060)
                                                                     ------------        ------------

         Net cash provided by (used in) financing activities              (34,962)            521,703 
                                                                     ------------        ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                      405,254            (173,639)

CASH AND CASH EQUIVALENTS BEGINNING                                        50,008             335,979
                                                                     ------------        ------------

CASH AND CASH EQUIVALENTS ENDING                                     $    455,262        $    162,340
                                                                     ============        ============
</TABLE>

    SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                       6
<PAGE>
 

                   GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY 

                     CONSOLIDATED STATEMENTS OF CASH FLOWS





                                               NINE MONTHS ENDED JULY 31,
                                            -------------------------------
                                                1997               1996
                                            -----------         -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
    
    Cash paid for -

         Interest                           $   159,053         $   106,053
                                            ===========         ===========

         Income taxes                       $         -         $         -
                                            ===========         ===========








                   SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                          7
<PAGE>

                      GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       FOR THE NINE MONTHS ENDED JULY 31, 1997

NOTE 1.  BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY
         OF SIGNIFICANT ACCOUNTING POLICIES

    BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS 

    Global Environmental Corp. (the "Company") was incorporated on October 6,
1987. Effective August 1, 1988, Global Environmental Corp. acquired all of the
issued and outstanding common shares of Global Environmental Holdings, Inc.
("Global Holdings").  

    Danzer Industries, Inc.("Danzer"), a wholly-owned subsidiary of Global
Holdings, is principally engaged in the design, manufacture and installation of
fabricated metal products. Products produced are normally based upon
specifications received from customers. Danzer's revenues (subsequent to the
sale of the Company's Rage subsidiary in 1996 as described below) represent
approximately 100% of the Company's revenues and are generated throughout the
United States.

    Rage Inc. ("Rage") was a wholly-owned subsidiary of Global Holdings through
April 30, 1996 and was engaged in the business of engineering and supplying
pneumatic material handling systems throughout the United States. Effective
April 30, 1996, Rage was sold to a third party. Accordingly, the results of
Rage's operations for the nine months ended July 31, 1997 are presented as
"discontinued operations" in the consolidated statement of operations.


    The accompanying consolidated financial statements present the accounts of
Global Environmental Corp. and its wholly-owned subsidiary. The entities are
collectively referred to herein as the "Company".  All significant intercompany
transactions and balances have been eliminated in consolidation.  

    The Company uses the equity method of accounting for a 49% owned interest
in a joint venture. The original investment is recorded at cost, adjusted for
the Company's share of undistributed earnings or losses.  The operations of the
joint venture are presently immaterial.
  
    REVENUE RECOGNITION
  
    Revenues from the manufacture of sheet metal products and fabrications  are
generally recognized when products are shipped to the customer.


                                          8
<PAGE>

                      GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       FOR THE NINE MONTHS ENDED JULY 31, 1997

    NOTE 1.   BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF 
              SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    INVENTORIES

    Inventories are stated at the lower of cost (first-in, first-out) or market
and are comprised of the following components:

                                       July 31,       October 31,
                                       1997              1996   
                                    ----------        ----------
    Raw materials and supplies      $  425,000        $  420,469
    Work-in-process                    351,000           286,122
    Finished goods                      49,000            85,167
                                    ----------        ----------
                                    $  825,00O        $  791,758
                                    ==========        ==========

    Work-in-process and finished goods include purchased materials, direct
labor and allocated overhead.

    PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment are stated at cost and are depreciated on the
straight-line method over the following estimated useful lives:

    Building and improvements     10 to 30 years
    Equipment                      5 to 20 years


    CONCENTRATION OF CREDIT RISK

    The Company maintains cash balances at a bank, which at various times
throughout the year, exceeded the Federal Deposit Insurance Corporation (FDIC)
limit.



                                          9
<PAGE>
                      GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       FOR THE NINE MONTHS ENDED JULY 31, 1997


    NOTE 1.   BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF
              SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    MAJOR CUSTOMERS

    The following is a list of the Company's customers which represent 10% or
more of consolidated net sales (from continuing operations):

                                    TOTAL PERCENTAGE OF NET SALES
                                        YEAR ENDED OCTOBER 31,     
                                        ----------------------
                                       1996      1995      1994
                                       ----      ----      ----

    Elevator Manufacturer               10%       11%       10%
    Truck Body Manufacturer             29%       32%       32%

         USE OF ESTIMATES
    The preparation of financial statements in conformity with generally
accepted accounting principles 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.

         RECLASSIFICATIONS
    Certain amounts in the 1996 financial statements have been reclassified to
conform to the 1997 presentation.

         RECENTLY ISSUED ACCOUNTING STANDARDS
    In March 1995, FASB issued Statement No. 121, "ACCOUNTING FOR THE
IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF" 
("Statement"). The Statement established accounting standards for the impairment
of long-lived assets, certain identifiable intangibles, and goodwill related to
those assets to be held and used, and for long-lived assets and certain
identifiable intangibles to be disposed of. The Statement requires that
long-lived assets and certain identifiable intangibles to be held and used by an
entity be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Measurement of an impairment loss for long-lived assets and identifiable
intangibles that an entity expects to hold and use should be based on the fair
value of the asset. The standard is effective for the Company's fiscal year
beginning November 1, 1996.  The Company has determined there is no effect on
its financial position or results of operations.


                                          10
<PAGE>

                      GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       FOR THE NINE MONTHS ENDED JULY 31, 1997


    NOTE 1.   BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND SUMMARY OF
              SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    RECENTLY ISSUED ACCOUNTING STANDARDS (CONTINUED)


In October 1995, FASB issued SFAS No 123, "ACCOUNTING FOR STOCK-BASED
COMPENSATION," ("Statement") which provides an alternative method of accounting
for stock-based compensation arrangements, based on fair value of the
stock-based compensation utilizing various assumptions regarding the underlying
attributes of the options and  the Company's stock, rather than the existing
method of accounting for stock-based compensation which is provided in
Accounting Principles Board Opinion No 25, "ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES" (APB No 25). FASB encourages entities to adopt the fair value-based
method but does not require adoption of this method.  The Standard will be
effective for the Company's fiscal year beginning November 1, 1996. The Company
anticipates that it will continue its current accounting policy; SFAS No 123 is
not expected to have a material impact on its financial position or its results
of operations.

In February 1997, the FASB issued SFAS No 128 "EARNINGS PER SHARE" and SFAS No
129, "DISCLOSURE OF INFORMATION ABOUT CAPITAL STRUCTURES" (the "Statements")
which specify new computation, presentation and disclosure requirements for
earnings per share for entities with publicly held common stock or potential
common stock and require additional information to be disclosed for capital
structures of certain companies. The Statements are effective for financial
statements issued for periods ending after December 15, 1997, including interim
periods. The Company has determined there is no effect on its financial
condition or results of operations.

NOTE 2.FINANCING ARRANGEMENTS, OPERATIONS AND MANAGEMENT'S PLANS

Global's sales revenues in the third quarter of fiscal 1997 were $2,255,522
compared to $2,307,276 for the same period last year, a slight decrease.  This
decrease was primarily due to the truck market place and is expected to continue
into the fourth quarter.

The Company's gross profit margin for the third quarter of fiscal 1997 increased
from 19.2% to 20.1%.  The increase in margin was attributable to reduced
material cost and stable activity levels..

Selling, general and administrative expenses decrease $34,524 over the same
period last year.  The Company's ratio of selling , general and administrative
costs expressed as a percentage of net sales was 14.9% for the third quarter vs.
16% for the same period last year.  The Company continues to monitor its costs
in an effort to improve this ratio.


                                          11
<PAGE>

                      GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       FOR THE NINE MONTHS ENDED JULY 31, 1997


NOTE 2.  FINANCING ARRANGEMENTS, OPERATIONS AND MANAGEMENT'S PLANS   
(CONTINUED)

During the first quarter of fiscal 1994, the Company entered into a joint
venture agreement (the "Agreement") with Cadema Corporation ("Cadema").  The
joint venture was capitalized by Cadema with $350,000 in cash and by Global with
$1,000 in cash.  The joint venture's principal objective is to provide the
partners with current income by contracting for the design and installation of
air pollution control equipment in its name in all areas of the world outside
the United States and its territories. The term of the Agreement expires
December 31, 1998, unless otherwise extended. Income or loss from the joint
venture will be allocated 51% to Cadema and 49% to the Company. The Agreement
allows Global, subject to  certain conditions, to acquire Cadema's interest in
the joint venture for 875,000 shares of Global common stock or $350,000 in cash
or an amount equal to Cadema's capital account, whichever is greater, subject to
certain antidilution provisions.  The Agreement also allows for quarterly
distributions of income and capital to the joint venture partners.  The Company
had borrowed approximately $364,000 from the joint venture as of October 31,
1996.  Because of the sale of the Company's Rage Subsidiary (Note 3), it is not
anticipated that the Joint Venture will provide significant revenue or earnings
for the Company in the future.  In addition, Management is presently negotiating
with the other party to the Joint Venture with respect to payment by the Company
of the loan due to the Joint Venture.

In September 1994, the Company completed a 10% Cumulative Convertible Senior
Preferred Stock offering whereby 7,550 shares were issued. The Company realized
$662,150 of net proceeds, after placement fees and expenses of approximately
$93,000. The funds were used to expand the Company's new Morrison product line
and provide working capital for overall business activity.  During 1996, 3,000
of such shares were converted to common stock and subsequent to October 31,
1996, shareholders representing the remaining 4,550 shares agreed to convert
their preferred shares and related accrued dividends to common stock .

Effective December 31, 1994, Renaissance exchanged the $1,600,000 aggregate
amount of 1991 and 1992 convertible debentures for an aggregate of 16,000 shares
of the Company's Series B Cumulative Convertible Senior Preferred Stock. At
October 31, 1996, such preferred shares, related accrued dividends, a related
term note and accrued interest were converted to common stock (see Note 7).

As of October 31, 1996, the Company was in violation of certain loan covenants
with Fremont Financial Corporation and has received waivers of such
noncompliance through November 1, 1997. In addition, the terms of the Loan and
Security Agreement with Fremont were modified in 1996 and extend payment of
principal until January 1998. 



                                          12
<PAGE>

                      GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       FOR THE NINE MONTHS ENDED JULY 31, 1997


NOTE 2.  FINANCING ARRANGEMENTS, OPERATIONS AND MANAGEMENT'S PLANS (CONTINUED)

In February 1996, the Company's revolving loan payable to Fremont Financial
Corporation was increased by $200,000. The increase enabled the Company to
borrow $200,000 in excess of their previously allowed borrowings under the
revolving loan agreement and provided additional working capital for overall
business activity.  During fiscal 1996, this increase in the revolving loan was
reclassified as a term loan (Note 5).

         In March 1997, the Company received $150,000 from Renaissance Capital
Group, Inc.  in the form of convertible debt. The debt bears interest at 10% per
annum.  Principal and any accrued and unpaid interest is due and payable in
March 1999. The loan is convertible to common shares upon the Company obtaining
a loan secured by certain land and building owned by the Company.  In addition,
between November 1, 1996 and March 25, 1997, shareholders of the Company's
remaining 4,550 shares of preferred stock agreed to convert such preferred stock
to common stock.  The Company also completed a $650,000 mortgage on its
Hagerstown, Maryland facility, which funds are to repay certain term debt and to
provide working capital.

NOTE 3.  DISCONTINUED OPERATIONS

On April 30, 1996, the Company adopted a formal plan to sell its Rage subsidiary
to the past President and Chief Executive Officer of the Company ("Buyer"). On
May 22, 1996, the Company completed the sale of all of the outstanding stock of
Rage. The net assets of Rage consisted primarily of accounts receivable,
inventories, and property, plant and equipment less accounts payable and accrued
expenses. The transaction required the Company to pay $104,600 in cash, and
transfer certain real property and improvements with a net book value of
approximately $464,000 in exchange for 517,000 shares of the common stock of the
Company owned by the Buyer, cancellation of an employment agreement with the
Buyer and assumption by the Buyer of the Company's mortgage amounting to
approximately $349,000 related to the real property transferred. The common
stock previously owned by the Buyer was recorded as treasury stock in the amount
of $93,060 based upon the fair value of the Company's common stock at the date
of the transaction.




                                          13
<PAGE>

                      GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       FOR THE NINE MONTHS ENDED JULY 31, 1997

NOTE 3.  DISCONTINUED OPERATIONS (CONTINUED)

Operating results of Rage, Inc. for the year ended October 31, 1996 are shown
separately in the accompanying statement of operations as discontinued
operations for the period November 1, 1995 through April 30, 1996. 

In accordance with the terms of the Common Stock Purchase Agreement (the
"Agreement"), the Buyer assumed certain mortgage debt on real property and
improvements sold by Global to the Buyer and has been making the required
monthly payments. As of October 31, 1996, the Company has not been released by
the mortgagor from this obligation and, accordingly, has recorded "property
under agreement of sale" and "mortgage payable" in the amount of $344,127 in the
accompanying October 31, 1996 balance sheet. The terms of the mortgage require
monthly principal and interest payments, with a final payment due April 30,
1997.  Interest is at 91/2% and the loan is collateralized by certain land and
building.

NOTE 4.  NOTE PAYABLE

Effective May 28, 1993, Danzer entered into a loan and security agreement (the
"Agreement") with Fremont Financial Corporation comprised of a revolving credit
facility (the "Facility") and an equipment term loan (the "Term Loan"). The
amount available under the Facility is based on a defined percentage of eligible
accounts receivable and inventory. The maximum amounts available under the
Facility and the term loan are $1,400,000 and $350,000, respectively. Borrowings
under the Agreement accrue interest at prime plus 3.5% (12.25%). The Agreement
was amended on August 1, 1997, extending the term of the Agreement to January
31, 1999 .

    Under the terms of the Agreement, borrowings are collateralized by real
estate and Danzer's accounts receivable, inventory and equipment. The Agreement
provides for certain restrictions including, but not limited to, the Company's
ability to: a) sell, lease, transfer, exchange or otherwise dispose of any
assets except in the ordinary course of business; b) enter into any merger,
consolidation, or acquisition of any other business organization; c) guaranty or
otherwise become in any way liable with respect to the obligations of any third
party; or d) change its ownership by greater than 10%.  The Agreement also
restricts: payment of compensation and loans and advances to executives,
officers, directors and certain others; capital expenditures to a specified
level; and distributions to Danzer's Parent. For the year ended October 31,
1996, the Company was in violation of certain covenants and received a waiver
for such noncompliance.

NOTE 5.  LONG-TERM DEBT


         Maturities on long-term debt as of October 31, 1996 are as follows:

         YEARS ENDING
          OCTOBER 31,                               AMOUNT
          -----------                            -----------

             1997                                $   544,725
             1998                                  1,148,652
             1999                                    159,018
             2000                                     36,512
                                                 -----------
                                                 $ 1,888,907
                                                 ===========


                                          14
<PAGE>

                      GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       FOR THE NINE MONTHS ENDED JULY 31, 1997

NOTE 6.  INCOME TAXES 

The Company files a consolidated income tax return for Federal tax purposes. 
Global Environmental Corp., Global and each of Global's subsidiaries file
separate state income tax returns.  Effective November 1, 1993, the Company
changed its method of accounting for income taxes to comply with Statement of
Financial Accounting Standards (SFAS) No. 109, "ACCOUNTING FOR INCOME TAXES."  A
requirement of SFAS No. 109 is that deferred tax assets and liabilities be
recorded for any temporary differences between the financial statement and tax
bases of assets and liabilities, using the currently enacted tax rate expected
to be in effect when the taxes are actually paid or recovered. In accordance
with SFAS No.109, the Company elected to adopt this statement prospectively in
fiscal year 1994 by determining an adjustment for the cumulative effect on prior
years of the change in method of accounting for income taxes.  At November 1,
1993, the cumulative effect on prior years of adopting SFAS No. 109 was $ - 0 -.

As of October 31, 1996, the Company has available Federal net operating loss
carryforwards of approximately $3,709,000 that may be applied against future
taxable income. These carryforwards expire at various dates through fiscal 2011.

NOTE 7.  STOCKHOLDERS' EQUITY 

On May 7, 1990, the Company's stockholders approved a stock option plan to issue
both "qualified" and "non-qualified" stock options. Under the Plan, 800,000
options to purchase shares of the Company's common stock may be issued at the
discretion of the Company's Board of Directors. The option price per share will
be determined by the Company's Board of Directors, but in no case will the price
be less than 85% of the fair value of the common stock on the date of grant.
Options under the Plan will have a term of not more than ten years with
accelerated termination upon the occurrence of certain events. As of October 31,
1996 there were 25,000 options outstanding with an exercise price of $.48 per
share.  During the year ended October 31, 1995, 350,000 options were granted and
280,000 operations were terminated. During the year ended October 31, 1995,
there were 375,000 options outstanding. Exercise prices at October 31, 1995
ranged from $.30 to $.48 per share with 200,000 options, 150,000 options and
25,000 options exercisable at $.30, $.35, and $.48 per share, respectively.  No
options were exercised during the years ended October 31, 1996 or 1995.  During
the year ended October 31, 1996, no options were granted and 350,000 options
were terminated. 

In connection with a legal settlement during 1994, the Company issued 30,770
shares of common stock, par value $.0001 per share, and warrants to purchase
75,000 shares of common stock through February 9, 1997 at $1.00 per share,
subject to adjustment as defined. No warrants have been exercised through
October 31,1996.  Subsequent to October 31, 1996, such warrants expired without
being exercised.

In connection with a consulting agreement effective November 2, 1994, the
Company issued warrants to purchase 100,000 shares of common stock through
November 1, 1999 at $.50 per share, subject to adjustment as defined. No
compensation was recorded in connection with the issuance of such warrants. No
warrants were exercised through October 31, 1996.

In connection with the resignation of the Company's President and Chief
Executive Officer in 1996, the Company issued warrants to purchase 200,000
shares of common stock through August 1999 at $.50 per share, subject to
adjustment as defined. No compensation was recorded in connection with the
issuance of such warrants. No warrants were exercised through October 31, 1996.



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<PAGE>

                      GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                       FOR THE NINE MONTHS ENDED JULY 31, 1997

NOTE 7.  STOCKHOLDERS' EQUITY (CONTINUED)

During 1994, Global Environmental Corp. completed a private placement offering
by selling 7,550 shares of its 10,500 authorized shares of  10% Cumulative
Convertible Senior Preferred Stock (the "10% Senior Preferred Stock") at a
stated value of $100 per share.  The Company raised $662,150, net of placement
fees of $92,850 as a result of the offering. Commencing September 30, 1994,
dividends are cumulative, payable quarterly in arrears at an annual rate of $10
per share.  Total dividends declared and/or accrued were $75,504 in each of 1996
and 1995.  The 10% Senior Preferred Stock is voting and convertible into the
Company's Common Stock.  Effective April 30, 1995, the Company registered the
shares of common stock issuable upon conversion of the Senior Preferred Stock
under the Securities Act of 1933.  At October 31, 1996, 3,000 shares and related
accrued dividends were converted at a rate of $.25 per share to common stock. 
Between November 1, 1996 and March 25, 1997, the shareholders of the remaining
4,550 shares agreed to convert such shares plus accrued dividends to common
stock at the same conversion rate of $.25.

Effective December 31, 1994, Renaissance exchanged the $1,600,000 aggregate
amount 121/2% convertible debentures for an aggregate of 16,000 shares of the
Company's Series B Cumulative Convertible Senior Preferred Stock (the "Series B
Stock"), par value $.001 per share, stated value $100 per share. The Company
raised $1,511,319, net of legal and other costs of $88,681 incurred in
connection with the offering. Commencing December 31, 1994, dividends were
cumulative, payable quarterly in arrears at an annual rate of $10 per share.
Total dividends declared and/or accrued during 1996 and 1995 were $160,000 and
$133,333, respectively. On October 31, 1996, Renaissance converted the 16,000
shares of Series B Stock, a $211,635 term note, accrued interest and accrued
dividends to common stock at the conversion rate of $.25 per share.

The 10% Cumulative Convertible Preferred Stock and the Series B Stock required
the Company to comply with certain affirmative and negative covenants including,
but not limited to, the timely filing of financial statements. In addition, the
covenants limited the Company's ability to issue new indebtedness, issue other
classes of preferred stock, pay dividends on the Company's common stock,
purchase equity securities, increase executive compensation, enter into liens
and acquire new businesses, among other items. The Company was also subject to
registration requirements under certain circumstances. As of October 31, 1996
and 1995, the Company was in violation of certain of the above covenants.  

In August 1996, the Company issued 1,200,000 common shares for $300,000, through
a private placement. 1,000,000 shares were issued to a private investor and
200,000 shares were issued to Renaissance Capital Group, Inc.


                                          16
<PAGE>

                      GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY
                                           
Global is made up of one wholly-owned subsidiary.  Danzer Industries, Inc.
(Danzer) is principally engaged in the design, manufacture and installation of
fabricated metal products.  

RESULTS OF OPERATIONS

Global's sales revenues in the third quarter of fiscal 1997 were $2,255,522
compared to $2,307,276 for the same period last year, a slight decrease.  This
decrease was primarily due to a stable truck market place and is expected to
continue into the fourth quarter

The Company's gross profit margin for the third quarter of fiscal 1997 increased
from 19.2% to 20.1%.  The increase in margin was attributable to reduced
material cost and stable activity levels..

Selling, general and administrative expenses decrease $34,524 over the same
period last year.  The Company's ratio of selling , general and administrative
costs expressed as a percentage of net sales was 14.9% for the third quarter vs.
16% for the same period last year.  The Company continues to monitor its costs
in an effort to improve this ratio.  


LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents during the second quarter ended July 31, 1997
increased by $405,254.  This was caused by the closing of a $650,000 mortgage on
the last day of the third quarter, net income $175,726, and increase in current
liabilities $222,707 offset by an increases in fixed assets $57481.  The
decrease in the same period of prior year was $173,639. 

The Company has a working capital deficit of $254,033 at July 31, 1997 from a
deficit of $401,436 at October 31, 1996.  The Company's current cash position
has led to tighter credit terms with some of its vendors.  The mortgage
financing completed in the third quarter is expected to relieve this situation
provided working capital requirements continue with the present trend and
operations are positive. 


In light of the Company's backlog at July 31, 1997, its projected cash flow from
operations and the market for capital equipment, it is anticipated that the
Company will be dependent on increased sales, 





                                          17
<PAGE>

                      GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY


higher profit margins and/or further infusions of capital in order to sustain
its operations.  The Company's ability to meet certain interest and principal
payments, as well as its working capital needs to execute its backlog and
generate sales volume during fiscal 1997, will be dependent upon the success of
the Company's efforts to increase sales volume, as well as the profitability of
new business.  If it becomes likely that the Company is unable to meet its
scheduled interest and principal payments on its debt securities, the Company
may need to examine the restructuring of these instruments or the sale of
certain assets to satisfy all or a portion of these outstanding liabilities.

If such efforts to increase the level of business and profitability and/or
obtain an infusion of capital are unsuccessful, the Company may need to consider
additional steps to reduce costs, generate working capital and improve operating
efficiencies to sustain its operations.  Such steps may involve the sale of
certain assets, the consolidation of operating activities, the sale or
discontinuance of a line of business, reductions in staff or other measures, the
effect of which is the reduction of expenses, conservation of cash, and/or
generation of working capital. 








                                          18
<PAGE>


GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY







Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                       Global Environmental Corp.

                                       /s/  William F Clarke

Dated:  September 18, 1997             By:-------------------------------
                                       Chief Financial Officer












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