<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 January 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, MD                                (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                                        JANUARY 31, 1997
------------------                                  -----------------

$  .0001 par value                                  13,815,603 shares



<PAGE>
                   GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY
 
                                     INDEX
 
                                                                      PAGE(S)
                                                                      -------

PART I--CONSOLIDATED FINANCIAL STATEMENTS:
 
     Consolidated Balance Sheets--January 31, 1997 and
       October 31, 1996.............................................       3
 
     Consolidated Statements of Operations -Three Months Ended
       January 31, 1997 and  1996...................................       5
 
     Consolidated Statements of Cash Flows -Three Months Ended
       January 31, 1997 and 1996....................................       6
 
     Notes to Consolidated Financial Statements.....................       8
 
     Management's Discussion and Analysis of Financial Condition
       and Results of Operations....................................      17

                                      2


<PAGE>

                   GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY
 
                          CONSOLIDATED BALANCE SHEETS
 
                                     ASSETS
 
                                                    JANUARY 31,    OCTOBER 31,
                                                       1997           1996
                                                   -------------  --------------

CURRENT ASSETS
 
     Cash and cash equivalents................     $    17,025    $     50,008
 
     Accounts receivable, less allowance for
       doubtful accounts of $64,188 and
       $52,188 respectively...................       1,224,482       1,436,339
 
     Inventories..............................         840,200         791,758
 
     Prepaid expenses and other...............          11,828          75,717
                                                   -------------  --------------
 
          Total current assets................       2,093,535       2,353,822
                                                   -------------  --------------
 
PROPERTY, PLANT AND EQUIPMENT
 
     Land.....................................          25,797          25,797
 
     Building and improvements................       1,408,351       1,385,502
 
     Equipment................................       2,273,307       2,273,920
                                                   -------------  --------------
 
                                                     3,707,455       3,685,219
 
     Less--accumulated depreciation and
       amortization...........................      (2,131,410)     (2,076,765)
                                                   -------------  --------------
 
          Total property, plant and equipment,
            net...............................       1,576,045       1,608,454
                                                   -------------  --------------
 
OTHER ASSETS
 
      Property under agreement of sale........         344,127         344,127
 
     Other, net...............................                              93
                                                   -------------  --------------
 
                                                       344,127         344,220
                                                   -------------  --------------
 
                                                   $ 4,013,707    $  4,306,496
                                                   -------------  --------------
                                                   -------------  --------------

    See Notes to Consolidated Financial Statements.
 
                                       3

<PAGE>
                   GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY
 
                          CONSOLIDATED BALANCE SHEETS
 
LIABILITIES AND STOCKHOLDERS' EQUITY

                                                    JANUARY 31,     OCTOBER 31,
                                                       1997            1996
                                                  --------------   -------------
 
CURRENT LIABILITIES
 
     Current portion of long-term debt...........   $  544,725     $   544,725
 
     Mortgage payable............................      344,127         344,127
 
     Accounts payable............................    1,134,651       1,337,117
 
     Accrued salaries and wages..................       77,494         147,807
 
     Accrued expenses, other.....................      535,419         381,482
                                                  ---------------  -------------
 
          Total current liabilities..............    2,636,416       2,755,258
                                                  ---------------  -------------
 
LONG-TERM DEBT, net of current portion...........    1,198,582       1,344,182
                                                  ---------------  -------------
 
COMMITMENTS AND CONTINGENCIES
 
STOCKHOLDERS' EQUITY (DEFICIENCY)
 
     Common stock, par value $.0001 per share;
       20,000,000 shares authorized, 13,815,603
       shares issued in 1997 and 1996,
       respectively..............................        1,382          1,382
      Preferred stock, $.001 par value;   ,
       5,000,000 shares authorized; Class of
       10% Cumulative Convertible Senior
       Preferred Stock, 10,500 shares
       authorized, 4,550 shares
       issued and outstanding in 1997 and
       1996 (total of $399,044);
     Series B Cumulative Convertible Senior
       Preferred Stock, 16,000 shares
       authorized, no shares issued and
       outstanding in 1997 and 1996.............       399,044        399,044

    Additional paid-in capital..................     4,554,102      4,554,102
 
    Deficit....................................     (4,682,759)    (4,654,412)
      Less: Treasury stock, 612,579 shares, at   
      cost..................................           (93,060)       (93,060)
                                                  -------------   -------------
 
          Total stockholders' equity...........        178,709        207,056
                                                  -------------   -------------
 
                                                    $4,013,707    $ 4,306,496
                                                  -------------   -------------
                                                  -------------   -------------

    See Notes to Consolidated Financial Statements.
 
                                       4

<PAGE>
                   GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY
 
                      CONSOLIDATED STATEMENT OF OPERATIONS
 
                                                  THREE MONTHS ENDED JANUARY 31,
                                                  ------------------------------
                                                        1997           1996
                                                  ------------     -------------
 
NET SALES..................................       $  1,813,397     $  1,557,601
 
COST OF GOODS SOLD.........................          1,479,778        1,462,298
                                                  ------------     -------------
                                                                                
     GROSS PROFIT..........................            333,619           95,303
 
SELLING, GENERAL AND ADMINISTRATIVE
   EXPENSES................................            340,281          293,452
                                                  ------------    --------------
                                                                                
     LOSS FROM OPERATIONS..................             (6,662)        (198,149)
                                                  ------------    --------------
 
INTEREST EXPENSE, NET......................            (57,869)         (30,913)
 
OTHER INCOME...............................             36,184           11,009
 
OTHER EXPENSE..............................                 --                 
                                                  ------------    --------------
 
LOSS FROM CONTINUING OPERATIONS............            (28,347)        (218,053)
                                                  ------------    --------------
 
LOSS FROM DISCONTINUED OPERATIONS..........                --           (77,822)
                                                  ------------    --------------
 
NET LOSS...................................       ($    28,347)    ($   295,875)
                                                  ------------    --------------
                                                  ------------    --------------
 
PER COMMON SHARE DATA:
 
     CONTINUING OPERATIONS.................       ($       .00)    ($       .11)
                                                  ------------    --------------
                                                  ------------    --------------
 
     DISCONTINUED OPERATIONS...............            $    --     ($       .03)
                                                  ------------    --------------
                                                  ------------    --------------
 
     NET LOSS PER SHARE....................       ($       .00)    ($       .14)
                                                  ------------    --------------
                                                  ------------    --------------
 
WEIGHTED AVERAGE SHARES OUTSTANDING........         13,815,603        2,465,144
                                                  ------------    --------------
                                                  ------------    --------------

    See Notes to Consolidated Financial Statements.
 
                                       5

<PAGE>
                   GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                                             THREE MONTHS ENDED
                                                                                                 JANUARY 31,
                                                                                           -----------------------
                                                                                              1997        1996
                                                                                           ----------  -----------
 <S>                                                                                       <C>         <C>       
OPERATING ACTIVITIES:
 
     Net loss...........................................................................  ($  28,347) ($  295,875)
 
     Adjustments to reconcile net loss to net cash
        provided by (used in) operating activities:
        Depreciation and amortization...................................................      54,645       59,212
        Net (increase) decrease in non-cash current assets:
          Accounts receivable...........................................................     211,857       45,854
          Inventories...................................................................     (48,442)     (84,232)
          Costs and estimated earnings in excess of billings on uncompleted contracts...          --       (3,965)
          Prepaid expenses and other....................................................      75,307       12,984
 
        Net increase (decrease) in non-debt current liabilities:
          Accounts payable..............................................................    (202,466)     174,212
          Billings in excess of costs and estimated earnings on uncompleted contracts...          --     (111,056)
          Accrued commissions, salaries and wages.......................................     (70,313)       1,839
          Accrued expenses, other.......................................................     153,937       19,211
19,211
        (Increase) decrease in other assets, net........................................     (11,323)      (5,772)
                                                                                           ----------  -----------
          Net cash provided by (used in) operating activities...........................     134,855     (187,588)
                                                                                           ----------  -----------
 
INVESTING ACTIVITIES:

     Purchase of property, plant and equipment..........................................     (22,236)     (17,307)
                                                                                           ----------  -----------
          Net cash used in investing activities.........................................     (22,236)     (17,307)
 
FINANCING ACTIVITIES:
 
     Net borrowings (repayments) under revolving loan agreement.........................    (124,755)      71,234
     Payments of long-term debt.........................................................     (20,825)      (7,181)
     Payment of dividends on preferred stock............................................         --       (58,874)
                                                                                           ----------  -----------
 
          Net cash provided by (used in) financing activities...........................    (145,600)       5,179
                                                                                           ----------  -----------
 
NET (DECREASE) IN CASH AND CASH EQUIVALENTS.............................................     (32,981)    (199,716)
 
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR............................................      50,008      329,213
                                                                                           ----------  -----------
 
CASH AND CASH EQUIVALENTS, END OF PERIOD................................................  $   17,027  $   129,497
                                                                                           ----------  -----------
                                                                                           ----------  -----------
</TABLE>
 
    See Notes to Consolidated Financial Statements.

                                      6


<PAGE>
 
                   GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                                               THREE MONTHS ENDED
                                                                                                  JANUARY 31,
                                                                                              --------------------
                                                                                                1997       1996.
                                                                                              ---------  ---------
 <S>                                                                                          <C>        <C> 
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
 
     Cash paid for -
 
          Interest..................................................................          $  57,869  $  39,011
                                                                                              ---------  ---------
                                                                                              ---------  ---------
          Income taxes..............................................................          $      --  $      --
                                                                                              ---------  ---------
                                                                                              ---------  ---------
</TABLE>
 
    See Notes to Consolidated Financial Statements.
 
                                      7


<PAGE>
                   GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                      THREE MONTHS ENDED JANUARY 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 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 fiscal year ended October 31, 1996 are presented as
"discontinued operations" in the consolidated statement of operations (Note 3).
The results of Rage's operations for the fiscal years ended October 31, 1995 and
1994 have been reclassified to conform with the 1996 method of presentation.
 
    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
 
                      THREE MONTHS ENDED JANUARY 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, at October 31, 1996 and 1995 are comprised of the following components:
 
                                                 JANUARY 31,  OCTOBER 31,
                                                    1996         1996
                                                 -----------  -----------

     Raw materials and supplies.............      $ 412,476    $ 420,469
     Work-in-process........................        377,964      286,122
     Finished goods.........................         49,760       85,167
                                                 -----------  -----------
                                                  $ 840,200    $ 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
 
                      THREE MONTHS ENDED JANUARY 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 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 not 
determined the effect, if any, that this Statement will have on its financial 
position or results of operations.
 
                                        10

<PAGE>

                   GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                      THREE MONTHS ENDED JANUARY 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-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-25, "Accounting for Stock Issued To 
Employees" (APB-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-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-128 "Earnings per Share" and 
SFAS-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 not yet determined the 
effect the Statements will have on its financial condition or results of 
operations.
 
NOTE 2. FINANCING ARRANGEMENTS, OPERATIONS AND MANAGEMENT'S
        PLANS
 
    The Company had net sales of $8,153,689 for the year ended October 31, 1996
(an 8% increase over the prior year) and a loss from continuing operations of
$502,294. Working capital decreased from 1995 to 1996 to a deficiency of
$401,436 at October 31, 1996. This was due primarily to the reclassification
from long-term debt of the note payable to joint venture of $345,000 and
mortgage payable of $344,127 to current liabilities. Stockholders' equity
decreased by $353,431 to $207,056 at October 31, 1996 due to dividends accrued
and a net loss incurred, offset by the issuance of common stock and the
conversion of certain debt, and accrued interest and dividends on common stock.
 
                                     11

<PAGE>

                   GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
                      THREE MONTHS ENDED JANUARY 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 (see Note 7).
 
    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
 
                      THREE MONTHS ENDED JANUARY 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).
 
    The Company's ability to meet certain interest and principal payments and
its working capital needs in order 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, the profitability of new business generated
and the ability to secure additional financing.
 
    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 (Note 7). The Company is also in negotiations for the closing of a
$650,000 mortgage on its Hagerstown, Maryland facility, which funds are expected
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 (CONTINUED)
 
                      THREE MONTHS ENDED JANUARY 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 9% 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 Company had drawn $942,165 at
October 31, 1996. The maximum amounts available under the Facility and the term
loan are $1,150,000 and $350,000, respectively. Borrowings under the Agreement
accrue interest at prime plus 4.5% (13.25% at October 31, 1996). The Agreement
was amended on May 21, 1996, extending the term of the Agreement to January 31,
1998 (Note 5).
 
    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
through November 1, 1997 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 (CONTINUED)
 
                      THREE MONTHS ENDED JANUARY 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)-109, "Accounting for 
Income Taxes." A requirement of SFAS-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-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-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.
 
                                       15

<PAGE>
                   GLOBAL ENVIRONMENTAL CORP. AND SUBSIDIARY
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                      THREE MONTHS ENDED JANUARY 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 12 1/2% 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 (see Note 5), 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
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
                      THREE MONTHS ENDED JANUARY 31, 1997

NOTE 8. NET LOSS PER SHARE AMOUNTS AND QUARTERLY DATA
 
    Net loss per share is calculated after deducting dividends earned on
preferred stock of $235,504 in 1996. The conversions of the 10% and Series B
Cumulative Convertible Senior Preferred Stock at October 31, 1995 and exercise
of stock options and warrants for 1996 and 1995 have not been considered in the
calculations of loss per share, since the effect of such conversions/exercises
would be antidilutive.

                                     17

<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 first quarter of fiscal 1997 were $1,813,397
compared to $1,557,601 for the same period last year, a increase of 16.4%. This
increase was primaryily due to a firm truck market place.
 
The Company's gross profit margin for the first quarter of fiscal 1997
increased from 6.1% to 18.4%. The increase in margin was attributable to reduced
material cost and increase in activity levels..
 
Selling, general and administrative expenses increase $46,829 over the same
period last year. The increase was planned in expectation of expanding Danzer's
markets and revenue with additional attention to marketing and sales. The
Company's ratio of selling , general and administrative costs expressed as a
percentage of net sales was 18.8% for the first quarter vs. 18.8% for the same
period last year. The Company continues to monitor its costs in an effort to
improve this ratio.
 
Interest expense during the first quarter of fiscal 1996 increased by
$26,956 due to the increase in activity.
 
LIQUIDITY AND CAPITAL RESOURCES
 
Cash and cash equivalents during the first quarter ended January 31, 1996
decreased by $32,981. This was caused by the net loss $28,347. The decrease in
the same period of prior year was $199,716 or $177,369 higher.
 
The Company has a working capital deficit of $542,881 at January 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.
 
It is anticipated that additional working capital may be required in order
to efficiently execute the Company's work in progress and backlog. The Company's
weakened financial condition has, in turn, led to tighter credit terms with
certain vendors and has therefore further strained the Company's working
capital.
 
In light of the Company's backlog at January 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,

                                     18


<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.
 
                                      19


<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: June 23, 1997                By: -----------------------
                                        Chief Financial Officer




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