Poly Shield Technologies Inc (SHPR) SEC Annual Report (10-K) for 2011

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.   20549

FORM 10-K

For the fiscal year ended December 31, 2011

For the transition period from   to  

Commission file number 000-33309

Registrant's telephone number, including area code:   1-800-648-4287

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

[   ] Yes         [ T ]  No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

[   ] Yes         [ T ]  No

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 last 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      [ T ] Yes         [   ]  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

[    ] Yes         [   ]  No

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [ ]

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

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

[   ] Yes         [ X ]  No

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter: $18,876,072 as of June 30, 2011 ($0.45 X 41,946,826)

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

Forward Looking Statements

The information in this annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  These forward-looking statements involve risks and uncertainties, including statements regarding GlobeTrac's capital needs, business strategy and expectations.  Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements.  In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. Actual events or results may differ materially.  In evaluating these statements, you should consider various factors, including the risks outlined from time to time, in other reports GlobeTrac's files with the Securities and Exchange Commission.

The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  The forward-looking statements in this Form 10-K for the fiscal year ended December 31, 2011, are subject to risks and uncertainties that could cause actual results to differ materially from the results expressed in or implied by the statements contained in this report.  As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives requires the exercise of judgment.  To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and accordingly, no opinion is expressed on the achievability of those forward-looking statements.  No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate.

All forward-looking statements are made as of the date of filing of this Form 10-K and GlobeTrac disclaims any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements.  GlobeTrac may, from time to time, make oral forward-looking statements.  GlobeTrac strongly advises that the above paragraphs and the risk factors described in this Annual Report and in GlobeTrac's other documents filed with the United States Securities and Exchange Commission should be read for a description of certain factors that could cause the actual results of GlobeTrac to materially differ from those in the oral forward-looking statements. GlobeTrac disclaims any intention or obligation to update or revise any oral or written forward-looking statements whether as a result of new information, future events or otherwise.

PART I

Item 1. Business.

GlobeTrac was incorporated under the laws of the State of Delaware on March 2, 2000 under the original name "411 Place.com Inc".  On February 28, 2001, the Company changed its name to "Artescope, Inc."

On July 29, 2002, the Company changed its name to "GlobeTrac Inc."  GlobeTrac has an authorized capital of 205,000,000 shares with a par value of $0.001, consisting of 200,000,000 shares of Common Stock and 5,000,000 shares of Preferred Stock with 95,183,198 shares of Common Stock currently issued and outstanding.

GlobeTrac, Inc. provided digital graphics design and production services for commercial and corporate enterprises until August 27, 2002 when GlobeTrac changed its business direction and began selling, marketing, distributing, and installing global wireless tracking and telematics equipment in Europe.  See Exhibit 10.1 – Master Distributorship Agreement for more information.

On June 12, 2008 we sold all of the shares of our subsidiary, Global Axxess Corporation Limited, to an unrelated party.

Effective November 1, 2004, GlobeTrac decided to wind down its operations due to cash flow limitations.  Additionally, GlobeTrac reached an agreement with WebTech Wireless to cancel the master distributorship agreement and to restructure its ongoing business relationship with WebTech Wireless.  See Exhibit 10.1 – Master Distributorship Agreement and Exhibit 10.5 – Letter Agreement and Exhibit 10.6 - Termination and Transfer Agreement for more information.  Pursuant to the terms of the Letter Agreement and the Termination and Transfer Agreement WebTech acquired specific assets and liabilities of GlobeTrac.  WebTech has agreed to pay a 6% commission/royalty on gross sales from qualified potential customers and resellers, which will be included for commission purposes if such business commences within 12 months of the signed agreement.  There is no cap on the royalty payable to GlobeTrac and royalties are to be paid by WebTech for 11 years beginning November 1, 2004.

From November 1, 2004, to present GlobeTrac has been seeking viable business opportunities through acquisition, merger or other suitable business combination method.

On March 12, 2012, GlobeTrac entered into a license agreement with an option to purchase with Teak Shield Corp. ("Teak Shield") and its owners Robert and Marion Diefendorf (jointly the "Licensors"). See exhibit 10.10 Technology License Agreement with Option to Purchase (hereinafter the "Agreement").

Pursuant to the terms and conditions of the Agreement, GlobeTrac has acquired a license to market and sell the Licensed Products as listed in Exhibit B of the Agreement, and in exchange GlobeTrac provides consideration to Licensors of a 5% royalty on all sales of the Licensed Products with a minimum $100,000 yearly royalty payment, and agreement to issue to Licensors five million shares of GlobeTrac common stock.

In addition, pursuant to the terms and conditions of the Agreement, for a onetime payment of $250,000 GlobeTrac will acquire the option to purchase, for a two year period, 100% of the Licensor's ownership and interest in its proprietary rights and assets including all Licensed Products, manufacturing, patents, intellectual property, technology, contracts, trademarks, and goodwill, all as listed in Exhibit A of the Agreement (collectively the "Assets").

The option to purchase is conditional upon GlobeTrac satisfying the following conditions:

On November 26, 2004, GlobeTrac entered into an agreement with WebTech Wireless whereby GlobeTrac decided to wind down its operations effective November 1, 2004 and WebTech Wireless agreed to acquire all of GlobeTrac's existing customers and resellers and portals in exchange for the 6% commission/royalty.  See Exhibit 10.5 – Letter Agreement and Exhibit 10.6 - Termination and Transfer Agreement for more information.

Since November 1, 2004, GlobeTrac's only source of income is the royalty income they receive from WebTech.  GlobeTrac's present business objective is to locate and consummate a merger or acquisition of a viable business.

GlobeTrac will attempt to locate and negotiate with a target business for the merger of a target business into GlobeTrac.  In certain instances, a target business may want to become a subsidiary of GlobeTrac or may want to contribute assets to GlobeTrac rather than merge.  It is anticipated that management will contact broker-dealers and other persons with whom they are acquainted who are involved with corporate finance matters to advise them of GlobeTrac's existence and to determine if any companies or businesses that they represent have a general interest in considering a merger or acquisition with GlobeTrac.  No assurance can be given that GlobeTrac will be successful in finding or acquiring a viable target business.  Furthermore, no assurance can be given that any business opportunity, which does occur, will be on terms that are favorable to GlobeTrac or its current stockholders.

A target business, if any, which may be interested in a business combination with GlobeTrac may include (1) a company for which a primary purpose of becoming public is the use of its securities for the acquisition of assets or businesses; (2) a company that is unable to find an underwriter of its securities or is unable to find an underwriter of securities on terms acceptable to it; (3) a company that wants to become public with less dilution of its common stock than would occur normally upon an underwriting; (4) a company that believes that it will be able to obtain investment capital on more favorable terms after it has become public; (5) a foreign company that wants to gain an initial entry into the United States securities market; (6) a special situation company, such as a company seeking a public market to satisfy redemption requirements under a qualified Employee Stock Option Plan; or (7) a company seeking one or more of the other perceived benefits of becoming a public company.

Management believes that there are perceived benefits to being a reporting company with a class of publicly-registered securities.  These are commonly thought to include (1) the ability to use registered securities to make acquisition of assets or businesses; (2) increased visibility in the financial community; (3) the facilitation of borrowing from financial institutions; (4) improved trading efficiency; (5) stockholder liquidity; (6) greater ease in subsequently raising capital; (7) compensation of key employees through stock options; (8) enhanced corporate image; and (9) a presence in the United States capital market.

GlobeTrac anticipates that the target businesses or business opportunities presented to it will (1) either be in the  process of formation, or be recently organized with limited operating history or a history of losses attributable to under-capitalization or other factors; (2) experiencing financial or operating difficulties; (3) be in need of funds to develop new products or services or to expand into a new market, or have plans for rapid expansion through acquisition of competing businesses; (4) or other similar characteristics.  GlobeTrac intends to concentrate its acquisition efforts on properties or businesses that management believes to be undervalued or that management believes may realize a substantial benefit from being publicly owned.  Given the above factors, investors should expect that any target business or business opportunity may have little or no operating history, or a history of losses or low profitability.

GlobeTrac does not propose to restrict its search for business opportunities to any particular geographical area or industry, and may, therefore, engage in essentially any business, to the extent of its limited resources.  This includes industries such as service, finance, natural resources, manufacturing, high technology, product development, medical, communications and others.  GlobeTrac's discretion in the selection of business opportunities is unrestricted, subject to the availability of such opportunities, economic conditions, and other factors.  However, management believes that any potential business opportunity must provide audited financial statements for review, for the protection of all parties to the business combination.  One or more attractive business opportunities may choose to forego the possibility of a business combination with us, rather than incur the expenses associated with preparing audited financial statements.

Management, which in all likelihood will not be experienced in matters relating to the business of a target business, will rely upon its own efforts in accomplishing GlobeTrac's business purposes.  Outside consultants or advisors may be utilized by GlobeTrac to assist in the search for qualified target companies.  If GlobeTrac does retain such an outside consultant or advisor, any cash fee earned by such person will need to be assumed by the target business, as GlobeTrac has no cash assets with which to pay such obligation.

Management does not have the capacity to conduct as extensive an investigation of a target business as might be undertaken by a venture capital fund or similar institution.  The analysis of new business opportunities will be undertaken by, or under the supervision of GlobeTrac's officers and directors, who are not professional business analysts.  In analyzing prospective business opportunities, management may consider such matters as:

• the available technical, financial and managerial resources;

• working capital and other financial requirements; history of operations, if any;

• prospects for the future;

• nature of present and expected competition;

• the quality and experience of management services which may be available and the depth of that management

• the potential for further research, development, or exploration

• specific risk factors not now foreseeable but which then may be anticipated to impact our proposed activities;

• the potential for growth or expansion;

• the potential for profit; and

• the perceived public recognition or acceptance of products, services, or trades; name identification.

A target business may have an agreement with a consultant or advisor, providing that services of the consultant or advisor be continued after any business combination.  Additionally, a target business may be presented to GlobeTrac only on the condition that the services of a consultant or advisor be continued after a merger or acquisition.  Such preexisting agreements of target businesses for the continuation of the services of attorneys, accountants, advisors or consultants could be a factor in the selection of a target business.

In implementing a structure for a particular target business acquisition, GlobeTrac may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity.  GlobeTrac may also acquire stock or assets of an existing business.  Depending upon the nature of the transaction, the current officers and directors of GlobeTrac may resign their management and board positions with GlobeTrac in connection with a change of control or acquisition of a business opportunity and be replaced by one or more new officers and directors.

It is anticipated that any securities issued in any reorganization would be issued in reliance upon exemption from registration under applicable federal and state securities laws.  In some circumstances however, as a negotiated element of its transaction, GlobeTrac may agree to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter.  If such registration occurs, of which there can be no assurance, it will be undertaken by the surviving entity after GlobeTrac has entered into an agreement for a business combination or has consummated a business combination.  The issuance of additional securities and their potential sale into GlobeTrac's trading market may depress the market value of GlobeTrac's securities in the future.

With respect to any merger or acquisition negotiations with a target business, management expects to focus on the percentage of GlobeTrac that the target business stockholder would acquire in exchange for their shareholdings in the target business.  Depending upon, among other things, the target business's assets and liabilities, GlobeTrac's shareholders will in all likelihood hold a substantially lesser percentage ownership interest in GlobeTrac following any merger or acquisition.  Any merger or acquisition effected by GlobeTrac can be expected to have a significant dilutive effect on the percentage of shares held by GlobeTrac's shareholders at that time.

GlobeTrac has not yet reached an agreement or definitive understanding with any person concerning an acquisition or a business combination.  When any such agreement is reached or other material fact occurs, GlobeTrac will file notice of such agreement or fact with the Securities and Exchange Commission on Form 8-K.  Persons reading this Form 10-K are advised to determine if GlobeTrac has subsequently filed a Form 8-K.

Management anticipates that the selection of a business opportunity in which to participate will be complex and without certainty of success.  Management believes (but has not conducted any research to confirm) that there are numerous firms seeking the perceived benefits of a publicly registered corporation.  Such perceived benefits may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key employees, increasing the opportunity to use securities for acquisitions, and providing liquidity for stockholder's investments.  Business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

Competition

GlobeTrac will remain an insignificant participant among the firms that engage in the acquisition of business opportunities. There are many established venture capital and financial concerns which have significantly greater financial and personnel resources and technical expertise than GlobeTrac. In view of GlobeTrac's combined extremely limited financial resources and limited management availability, GlobeTrac will continue to be at a significant competitive disadvantage compared to its competitors.

GlobeTrac expects to encounter substantial competition in its efforts to locate attractive business combination opportunities.  The competition may in part come from business development companies, venture capital partnerships and corporations, small investment companies, and brokerage firms.  Some of these types of organizations are likely to be in a better position than GlobeTrac to obtain access to attractive business acquisition candidates either because they have greater experience, resources and managerial capabilities than GlobeTrac, because they are able to offer immediate access to limited amounts of cash, or for a variety of other reasons.  GlobeTrac also will experience competition from other public companies with similar business purposes, some of which may also have funds available for use by an acquisition candidate.

Patents/Trade Marks/Licenses/Franchises/Concessions/Royalty Agreements or Labor Contracts

GlobeTrac does not currently own any patents or trade marks, and is not party to any franchise agreements, concessions or labor contracts.  GlobeTrac is party to a royalty agreement, the terms set out in the Letter Agreement among Global Axxess, WebTech Wireless International and WebTech Wireless Inc.  See Exhibit 10.5 – Letter Agreement and Exhibit 10.6 - Termination and Transfer Agreement for more information. Globetrac also has one license agreement to sell the products of Teak Shield Corp. per the Technology License Agreement  with Option to Purchase (See Exhibit 10.10 filed on March 16, 2012).

Expenditures on Research and Development During the Last Two Fiscal Years

GlobeTrac has not spent any funds on research and development activities in the last two fiscal years.

GlobeTrac is not currently conducting any research and development activities.

Number of Total Employees and Number of Full Time Employees

GlobeTrac currently has no employees.  Management expects to use consultants, attorneys and accountants as necessary, and does not anticipate a need to engage any full-time employees so long as it is seeking and evaluating business opportunities.  The need for employees and their availability will be addressed in connection with the decision whether or not to acquire or participate in specific business opportunities.

Item 1A.  Risk Factors.

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

Item 1B.  Unresolved Staff Comments.

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

Item 2.  Properties.

GlobeTrac's principal executive office is 1100 Melville Street, Suite 610, Vancouver, British Columbia, V6E 4A6, Canada.  Other than this office, GlobeTrac does not currently maintain any other facilities, and does not anticipate the need for maintaining other facilities at any time in the foreseeable future. GlobeTrac pays no rent or other fees for the use of the office as these offices are used virtually full-time by other businesses of GlobeTrac's CEO.

Item 3.  Legal Proceedings.

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

Item 4.  (Removed and Reserved) .

PART II

Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

(a)           Market Information

GlobeTrac's Common Stock has been quoted on the NASD OTC Bulletin Board since March 2002 under the symbol "GBTR" (formerly "ARTE").  However, from March 2002 to June 2002, GlobeTrac's Common Stock did not trade.  The first trade occurred on June 28, 2002.  The table below gives the high and low bid information for each fiscal quarter for the last two fiscal years and for the interim period ended March 27, 2012.  The bid information was obtained from Pink OTC Markets LLC and reflects inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

(b)           Holders of Record

GlobeTrac had approximately 47 holders of record of GlobeTrac's Common Stock as of December 31, 2011 according to a shareholders' list provided by GlobeTrac's transfer agent as of that date.  The number of registered shareholders does not include any estimate by GlobeTrac of the number of beneficial owners of common stock held in street name.  The transfer agent for GlobeTrac's common stock is Pacific Stock Transfer Company, 4045 South Spencer Street, Suite 403 Las Vegas, NV 89119 and their telephone number is 702-361-3033.

(c)           Dividends

GlobeTrac has declared no dividends on its Common Stock, with the exception of the following, and is not subject to any restrictions that limit its ability to pay dividends on its shares of Common Stock.  Dividends are declared at the sole discretion of GlobeTrac's Board of Directors.

On May 17, 2002, the Board of Directors declared a stock dividend of three shares for every one share of Common Stock issued.  The stock dividend was paid out on May 28, 2002.

(d)           Recent Sales of Unregistered Securities

On June 29, 2011, in a non cash transaction, the Company issued 5,300,000 shares of our common stock at $0.01 per share in settlement of $53,000 in debt owed.

The issuance of the Shares to the creditor was not registered under the Securities Act of 1933, as amended (the " Securities Act "), but was made in reliance upon the exemptions from registration requirements of the Securities Act set forth in Section 4(2) based on the creditor's level of sophistication and its access to information about GlobeTrac.

Other than the sale mentioned above there have been no other sales of unregistered securities within the last three years that would be required to be disclosed pursuant to Item 701 of Regulation S-K.

There are no outstanding options or warrants to purchase, or securities convertible into, shares of GlobeTrac's Common Stock except as follows:

On September 23, 2010 GlobeTrac received a loan of $12,500 payable on demand. Interest is to be paid at 7% per year, compounded monthly. The lender may, in its sole discretion, convert any payments of principal sum or interest into restricted shares of common stock in the capital of the Borrower at a conversion price of the lesser of US$0.50 per share and the Borrower's closing market price on the day the Borrower receives the written instructions from the lender.

On September 30, 2010 GlobeTrac received a loan of $12,000 payable on demand. Interest is to be paid at 7% per year, compounded monthly. The lender may, in its sole discretion, convert any payments of principal sum or interest into restricted shares of common stock in the capital of the Borrower at a conversion price of the lesser of US$0.50 per share and the Borrower's closing market price on the day the Borrower receives the written instructions from the lender.

On October 26, 2010 GlobeTrac received a loan of $10,000 payable on demand. Interest is to be paid at 7% per year, compounded monthly. The lender may, in its sole discretion, convert any payments of principal sum or interest into restricted shares of common stock in the capital of the Borrower at a conversion price of the lesser of US$0.50 per share and the Borrower's closing market price on the day the Borrower receives the written instructions from the lender.

On November 9, 2010 GlobeTrac received a loan of $15,000 payable on demand. Interest is to be paid at 7% per year, compounded monthly. The lender may, in its sole discretion, convert any payments of principal sum or interest into restricted shares of common stock in the capital of the Borrower at a conversion price of the lesser of US$0.50 per share and the Borrower's closing market price on the day the Borrower receives the written instructions from the lender.

(e)           Penny Stock Rules

Trading in GlobeTrac's Common Stock is subject to the "penny stock" rules.  The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions.  These rules require that any broker-dealer who recommends GlobeTrac's Common Stock to persons other than prior customers and accredited investors, must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser's written agreement to execute the transaction.  Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market.  In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer.  The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in GlobeTrac's securities, which could severely limit their market price and liquidity of GlobeTrac's securities.  The application of the "penny stock" rules may affect your ability to resell GlobeTrac's securities.

Item 6.  Selected Financial Data.

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

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations.

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

Item 8.  Financial Statements and Supplementary Data.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Globetrac Inc.

We have audited the accompanying balance sheet of Globetrac Inc. (the "Company") as at December 31, 2011 and the related statements of operations, stockholders' deficit and cash flows for the year then ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, based on our audit and the report of other auditors, these financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2011 and December 31, 2010 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, the Company has incurred losses in developing its business, and further losses are anticipated.  The Company requires additional funds to meet its obligations and the costs of its operations.  These factors raise substantial doubt about the Company's ability to continue as a going concern.  Management's plans in this regard are described in Note 1.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ DMCL

Dale Matheson Carr-Hilton Labonte LLP

CHARTERED ACCOUNTANTS

Vancouver, Canada

March 28, 2012

The accompanying notes are an integral part of these financial statements

GLOBETRAC INC.

NOTES TO FINANCIAL STATEMENTS

December 31, 2011

NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS

GlobeTrac Inc. (the "Company") was incorporated in the state of Delaware on March 2, 2000.  

The Company was in the global wireless tracking business in Europe until November 1, 2004 when it exchanged this business for a royalty of 6% on future gross sales (Note 4).  Royalties are to be paid until October 31, 2015.  

Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  As of December 31, 2011, the Company has not achieved profitable operations and has accumulated a deficit of $1,517,213.  Continuation as a going concern is dependent upon the ability of the Company to obtain the necessary financing to meet obligations and pay its liabilities arising from normal business operations when they come due and ultimately upon its ability to achieve profitable operations.  The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that the Company will be able to continue as a going concern.  These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.  Management intends to obtain additional funding by borrowing funds from its directors and officers, issuing promissory notes and/or a private placement of common stock.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles ("GAAP") in the United States of America and are presented in US dollars.

Accounting estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Revenue recognition

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

Accounts receivable consists of royalty income from one customer and is not collateralized.  Management continually monitors the financial condition of its customer to reduce the risk of loss.  The Company routinely assesses the financial strength of its source of revenue income and as a consequence, concentration of credit risk is limited.

Income taxes

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

Loss per share

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

Foreign Currency Translations

Foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date.  Revenue and expenses are translated at average rates of exchange during the period.  Related translation adjustments are reported as a separate component of stockholders' equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations.

Financial Instruments

The Company's financial instruments include cash, accounts receivable, accounts payable, notes payable, convertible notes, derivative liability and amounts due to related parties. The fair value of these financial instruments approximate their carrying values due to their short maturities.

Recent Accounting Pronouncements

Recent accounting pronouncements issued by the Financial Accounting Standards Board or other authoritative standards groups with future effective dates are either not applicable or are not expected to be significant to the financial statements of the Company.

NOTE 3 – DUE TO RELATED PARTIES

(a) The convertible notes are convertible at the lower of $0.50 or the market price of the shares at the time of conversion.

During the years ended December 31, 2011 and 2010, the Company paid or accrued $67,200 and $66,300 in administrative fees to a company controlled by a director.

NOTE 4 – ROYALTY AGREEMENT

On November 1, 2004, the Company entered into an agreement to discontinue marketing, distributing and installing global wireless tracking and telematics equipment in Europe, which was carried on through its wholly-owned subsidiary, GlobeTrac Limited, in exchange for certain assets and liabilities and a 6% royalty to be paid on gross sales of all existing and qualified potential customers that the Company had . This royalty agreement expires on October 31, 2015.

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

NOTE 5 – COMMON STOCK

On June 29, 2011, the Company issued 5,300,000 shares of common stock with a fair value of $66,780 in settlement of $53,000 in debt and recognized a loss on settlement of debt of $13,780.

NOTE 6 – GAIN ON EXTINGUISHMENT OF DEBT

During the year, the Company wrote off $49,463 of old outstanding debt that have passed the statute of limitations and recognized a gain of the same amount.

NOTE 7 – INCOME TAXES

The reported income taxes differ from the amounts obtained by applying statutory rates to the loss before income taxes as follows:

At December 31, 2011 and 2010 the Company had a deferred tax asset that related to net operating losses.  A 100% valuation allowance has been established; as management believes it is more likely than not that the deferred tax asset will not be realized.

As at December 31, 2011, the Company has net operating loss carry forwards of approximately $217,762 (2010 – $117,079) to reduce future federal and state taxable income. These losses expire by 2031.

Net operating losses incurred prior to May 6, 2002 are subject to an annual limitation due to the ownership change (as defined under Section 382 of the Internal Revenue Code of 1986) which resulted in a change in business direction.  Unused annual limitations may be carried over to future years until the net operating losses expire.  Utilization of net operating losses may also be limited in any one year by alternative minimum tax rules.

The Company is not currently subject to any income tax examinations by any tax authority.  Should a tax examination be opened, management does not anticipate any tax adjustments, if accepted, that would result in a material change to its financial position.  

NOTE 8 – SUBSEQUENT EVENT

On March 12, 2012, the Company entered into a license agreement with Teak Shield Corp. and its owners Robert and Marion Diefendorf (jointly the "Licensors") whereby the Company has acquired a license to market and sell Teak Shield Corp.'s licensed products, and in exchange, the Company provides consideration to Licensors of a 5% royalty on all sales with a minimum $100,000 annual royalty payment, and agree to issue to the Licensors 5 million shares of the Company's common stock.

In addition, for a onetime payment of $250,000, the Company will acquire the option to purchase, for a two year period, 100% of the Licensor's ownership and interest in its proprietary rights and assets including all licensed products, manufacturing, patents, intellectual property, technology, contracts, trademarks, and goodwill. To complete the purchase the Company must pay to Licensors and additional $2,750,000.

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

There were no disagreements with GlobeTrac's previous accountants Mendoza Berger & Company, L.L.P., 9838 Research Drive, Irvine California, 92618 on accounting and financial disclosure.  GlobeTrac's current principal independent registered public accounting firm since February 8, 2012 to the current date is Dale Matheson Carr-Hilton Labonte L.L.P. Chartered Accountants.

Effective February 8, 2012, GlobeTrac's board of directors approved a change in GlobeTrac's independent auditors.  None of the reports of Mendoza Berger & Company, L.L.P., Certified Public Accountants Inc. on the financial statements of GlobeTrac's for the fiscal years ended December 31, 2009 and 2010 contained any adverse opinion or disclaimer of opinion, but did contain an uncertainty as to the Company's ability to continue as a going concern.  Although audited statements prepared by Mendoza Berger & Company, L.L.P, Certified Public Accountants Inc. contained a going concern qualification, such financial statements did not contain any adjustments for uncertainties stated therein, nor have there been at any time, disagreements between GlobeTrac and Mendoza Berger & Company, L.L.P, Certified Public Accountants Inc. on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.

GlobeTrac retained the accounting firm of Dale Matheson Carr-Hilton Labonte L.L.P. Chartered Accountants, to serve as its independent registered public accounting firm to audit its financial statements beginning with the year ended December 31, 2011.  This engagement became effective February 8, 2012.  Prior to its engagement as GlobeTrac's independent auditors, Dale Matheson Carr-Hilton Labonte L.L.P. Chartered Accountants, had not been consulted by GlobeTrac either with respect to the application of accounting principles to a specific transaction or the type of audit opinion that might be rendered on GlobeTrac's financial statements or on any other matter that was the subject of any prior disagreement between GlobeTrac and its previous certifying accountants.

Item 9A. Controls and Procedures.

Disclosure Controls and Procedures

In connection with the preparation of this annual report on Form 10-K, an evaluation was carried out by GlobeTrac's management, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of GlobeTrac's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act")) as of December 31, 2011.  Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, GlobeTrac's management concluded, as of the end of the period covered by this report, that GlobeTrac's disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Securities and Exchange Commission's rules and forms.

Management's Report on Internal Controls over Financial Reporting

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms.  Management is responsible for establishing and maintaining adequate internal control over financial reporting, as required by Sarbanes-Oxley (SOX) Section 404 A.  GlobeTrac's internal control over financial reporting is a process designed under the supervision of GlobeTrac's Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of GlobeTrac's financial statements for external purposes in accordance with U.S. generally accepted accounting principles.  Internal control over financial reporting includes those policies and procedures that:

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control –Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").  As a result of this assessment, it was found that the internal controls can be relied upon.

GlobeTrac's independent auditors have not issued an attestation report on management's assessment of GlobeTrac's internal control over financial reporting.  As a result, this annual report does not include an attestation report of GlobeTrac's independent registered public accounting firm regarding internal control over financial reporting.  GlobeTrac was not required to have, nor has GlobeTrac, engaged its independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Securities and Exchange Commission that permit GlobeTrac to provide only management's report in this annual report.

Changes in Internal Controls

As of the end of the period covered by this report, there have been no changes in GlobeTrac's internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the year ended December 31, 2011, that materially affected, or are reasonably likely to materially affect, GlobeTrac's internal control over financial reporting.

Item 9B.  Other Information

During the fourth quarter of the fiscal year covered by this Form 10-K, GlobeTrac reported all information that was required to be disclosed in a report on Form 8-K.

PART III

Item 10.  Directors, Executive Officers, and Corporate Governance.

(a)           Identify Directors and Executive Officers

Each director of GlobeTrac holds office until (i) the next annual meeting of the stockholders, (ii) his successor has been elected and qualified, or (iii) the director resigns.

GlobeTrac's management team is listed below.

John daCosta ●  Mr. daCosta (47) has been the CFO and Corporate Secretary of GlobeTrac since May 2002 and the CEO and President of GlobeTrac since February 2006.  Mr. daCosta was a director of Globetrac's subsidiary Global Axxess from August 2002 until it was sold in June of 2008.  In the past five years, Mr. daCosta has worked with numerous public and private companies in providing accounting and management services.

(b)           Identify Significant Employees

GlobeTrac does not have any significant employees.

(c)           Family Relationships

There are no family relationships among the directors, executive officers or persons nominated or chosen by GlobeTrac to become directors or executive officers.

(d)           Involvement in Certain Legal Proceedings

During the past ten years, none of Globetrac's directors or officers has been:

(e)           Compliance with Section 16(a) of the Exchange Act.

All reports were filed with the SEC on a timely basis and GlobeTrac is not aware of any failures to file a required report during the period covered by this annual report except for the following:

● David Patriquin did not file a Form 4, Schedule 13D and a Form 5 and

● Otter Crique Ventures Limitee did not file a Form 13D

(f)            Nomination Procedure for Directors

GlobeTrac does not have a standing nominating committee; recommendations for candidates to stand for election as directors are made by the board of directors.  GlobeTrac has not adopted a policy that permits shareholders to recommend nominees for election as directors or a process for shareholders to send communications to the board of directors.  However, pursuant to Section 3 of Article III of GlobeTrac's By-laws, shareholders are able to provide GlobeTrac with information for nominees for directors subject to the conditions provided in Section 3 of Article III of GlobeTrac's By-laws.

(g)           Audit Committee Financial Expert

Our sole board member and chief financial officer has the attributes of an audit committee financial expert.  We believe that Mr. daCosta's experience in preparing, analyzing and evaluating financial statements, as well as his knowledge of public company reporting, will provide us with the guidance we need until we are able to expand our board to include independent directors who have the knowledge and experience to serve on an audit committee.

(h)           Identification of Audit Committee

GlobeTrac does not have a separately-designated standing audit committee.  Rather, GlobeTrac's entire board of directors perform the required functions of an audit committee.  Currently John daCosta is the only member of GlobeTrac's audit committee.   Mr. daCosta does not meet GlobeTrac's independent requirements for an audit committee member.  See Item 13. (c)  Director Independence below for more information on independence.

GlobeTrac's audit committee is responsible for: (1) selection and oversight of GlobeTrac's independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by GlobeTrac's employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee.

As of December 31, 2011, GlobeTrac did not have a written audit committee charter or similar document.

(i)           Code of Ethics

GlobeTrac has adopted a code of ethics that applies to all its executive officers and employees, including its CEO and CFO.   See Exhibit 14 – Code of Ethics for more information.  GlobeTrac undertakes to provide any person with a copy of its code of ethics free of charge.  Please contact John daCosta at 604-648-0528 to request a copy of GlobeTrac's code of ethics.  Management believes GlobeTrac's code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code.

Item 11.  Executive Compensation.

GlobeTrac has paid or accrued $67,200 in fees to a company controlled by its named executive officer during its 2011 fiscal year.

SUMMARY COMPENSATION TABLE

Since GlobeTrac's inception, no stock options, stock appreciation rights, or long-term incentive plans have been granted, exercised or repriced.

Currently, there are no arrangements between GlobeTrac and its director whereby such director is compensated for any services provided as directors.

There are no other employment agreements between GlobeTrac and any named executive officer, and there are no employment agreements or other compensating plans or arrangements with regard to any named executive officer which provide for specific compensation in the event of resignation, retirement, other termination of employment or from a change of control of GlobeTrac or from a change in a named executive officer's responsibilities following a change in control.

Item 12.  Security Ownership of Certain Beneficial Holders and Management.

(a)            Security Ownership of Certain Beneficial Owners (more than 5%)

(b)           Security Ownership of Management

(c)           Changes in Control

Management is not aware of any arrangement that may result in a change in control of GlobeTrac.

Item 13.  Certain Relationships and Related Transactions, and Director Independence.

(a)           Transactions with Related Persons

Since the beginning of GlobeTrac's last fiscal year, no director, executive officer, security holder, or any immediate family of such director, executive officer, or security holder has had any direct or indirect material interest in any transaction or currently proposed transaction, which GlobeTrac was or is to be a participant, that exceeded the lesser of (1) $120,000 or (2) one percent of the average of GlobeTrac's total assets at year-end for the last three completed fiscal years, except for the following:

(b)           Promoters and control persons

During the past five fiscal years, John daCosta and Jim Pratt have been promoters of GlobeTrac's business, but neither of these promoters have received anything of value from GlobeTrac or its subsidiaries nor is any person entitled to receive anything of value from GlobeTrac or its subsidiaries for services provided as a promoter of the business of GlobeTrac and its subsidiaries.

(c)           Director independence

GlobeTrac's board of directors currently consists of John daCosta.  Pursuant to Item 407(a)(1)(ii) of Regulation S-K of the Securities Act, GlobeTrac's board of directors has adopted the definition of "independent director" as set forth in Rule 4200(a)(15) of the NASDAQ Manual.  In summary, an "independent director" means a person other than an executive officer or employee of GlobeTrac or any other individual having a relationship which, in the opinion of GlobeTrac's board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, and includes any director who accepted any compensation from GlobeTrac in excess of $200,000 during any period of 12 consecutive months with the three past fiscal years.  Also, the ownership of GlobeTrac's stock will not preclude a director from being independent.

In applying this definition, GlobeTrac's board of directors has determined that Mr. daCosta does not qualify as an "independent director" pursuant to Rule 4200(a)(15) of the NASDAQ Manual.

As of the date of the report, GlobeTrac did not maintain a separately designated compensation or nominating committee.

GlobeTrac has also adopted this definition for the independence of the members of its audit committee.   John daCosta serves on GlobeTrac's audit committee.  GlobeTrac's board of directors has determined that Mr. daCosta is not "independent".

Item 14.  Principal Accounting Fees and Services

(1)  Audit Fees

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for GlobeTrac's audit of annual financial statements and for review of financial statements included in GlobeTrac's Form 10-Q's or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:

2011 - $8,000 – Dale Matheson Carr-Hilton Labonte, L.L. P. Chartered Accountants

2011 - $8,730 – Mendoza Berger & Company, L.L.P.

2010 - $16,500 – Mendoza Berger & Company, L.L.P.

(2)  Audit-Related Fees

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of GlobeTrac's financial statements and are not reported in the preceding paragraph:

2011 - $0 – Dale Matheson Carr-Hilton Labonte, L.L. P. Chartered Accountants

2011 - $0 – Mendoza Berger & Company, L.L.P.

2010 - $0 – Mendoza Berger & Company, L.L.P.

(3)  Tax Fees

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:

2011 - $0 – Dale Matheson Carr-Hilton Labonte, L.L. P. Chartered Accountants

2011 - $793 – Mendoza Berger & Company, L.L.P.

2010 - $2,240 – Mendoza Berger & Company, L.L.P.

(4)  All Other Fees

The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) was:

2011 - $0 – Dale Matheson Carr-Hilton Labonte, L.L. P. Chartered Accountants

2011 - $0 – Mendoza Berger & Company, L.L.P

2010 - $0 – Mendoza Berger & Company, L.L.P.

(6)   The percentage of hours expended on the principal accountant's engagement to audit GlobeTrac's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full time, permanent employees was nil %.

Item 15.  Exhibits, Financial Statements Schedules.

1.             Financial Statements

Financial statements of GlobeTrac Inc. have been included in Item 8 above.

2.             Financial Statement Schedules

3.             Exhibits

SIGNATURES

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

Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of GlobeTrac Inc. and in the capacities and on the dates indicated have signed this report below.

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