GlobeTel Communications GTE - is no longer valid. It has changed to GTEM.PK

[brandyjoco]

Hey, I walked away from the computer when GTE was 3.68 and just found out that there is a nasty Motley Fool article accusing the company of making up the story about the $600 million contract with Russia.  Then GTE provided a SEC article showing that they have a contract. Meanwhile, the stock traded over 400,000 shares after hours as low as $2.68 or so.  OUCH... not another bad one! Is anyone else holding this?

[fous]

Hey, I walked away from the computer when GTE was 3.68 and just found out that there is a nasty Motley Fool article accusing the company of making up the story about the $600 million contract with Russia.  Then GTE provided a SEC article showing that they have a contract.Meanwhile, the stock traded over 400,000 shares after hours as low as $2.68 or so.  OUCH... not another bad one! Is anyone else holding this?

Ouch! wow im glad i got out today lol. Thanks for the update brandy. PPS is currently back up to 3.30 at the moment. It certainly isnt a very positive article concerning GTE's practices.

Though GTE certainly did file the agreement with the SEC:http://www.pinksheets.com/quote/filings.jsp?symbol=GTE

Snippet from the article:
Details were pretty slim on this Russian pact, including only a couple of names: Maxim Chernizov, "founding principle" of "Internafta," the company on the Russian end of this deal. "Internafta," by the way, translates to something more like "International Oil." Maybe I'm looking in the wrong places, but it doesn't appear in any Moscow directory I can find, and just about every entry with the word "nafta" is a gas station or oil services outfit.


- Maybe because Internafta is a Moscow-based oil and natural gas trading company Mr. motleyfool expert.
http://www.redherring.com/Article.aspx?a=15107&hed=GlobeTel+Gets+%24600M+Russia+Job&sector=Industries&subsector=Communications


More Hot Air From GlobeTel

By Seth Jayson (TMF Bent)
January 6, 2006

The big promise
If there's one thing hotter than solar and/or fuel-cell-powered, blimp-borne Internet communications, it's gotta be Russian WiMAX. At least that's what the folks at GlobeTel (AMEX: GTE) would like you to believe. And speculators have been buying it.

GlobeTel stock shot up 75% in a single day last month after the firm, which describes itself as a "diversified, global telecommunications and financial services company" announced a $600 million "WiMAX wireless network" deal for the "30 largest Russian cities."

If that excites you, then simmer down. Last summer, GlobeTel announced a deal to put Internet blimps over Colombia. (The GlobeTel faithful want us to call these "Stratellites," but hey, ol' Doc Magillicutty wanted us to call his castor oil "revitalizing tonic." Some things just are what they are.)

And GlobeTel also deals in other hot technologies. The firm has announced "turnkey VoIP products," deals for wireless networks in China, Japan, and Germany, and many other projects that so far seem to have produced nothing more than penny-stock froth.

The reality
Details were pretty slim on this Russian pact, including only a couple of names: Maxim Chernizov, "founding principle" of "Internafta," the company on the Russian end of this deal. "Internafta," by the way, translates to something more like "International Oil." Maybe I'm looking in the wrong places, but it doesn't appear in any Moscow directory I can find, and just about every entry with the word "nafta" is a gas station or oil services outfit.

Sounds like a natural partner for Russia's next big WiMAX network, right? No? Then you're already onto the usual tack that real investors need to take with GlobeTel: Hide that wallet.

Let's get something straight. GlobeTel is not the next Qualcomm (Nasdaq: QCOM), Cisco (Nasdaq: CSCO), Nokia (NYSE: NOK), Motorola (NYSE: MOT), or Skype -- now owned by eBay (Nasdaq: EBAY). It's pretty tough to be a WiMAX or VoIP powerhouse given the measly $1 million it spent for the year for research and development as of the latest reports for 2005 -- with much of that going to the blimps, it appears.

It's not even the next Qwest (NYSE: Q), though, in fact, it's closer to that company than any of the high-tech network folks that speculators might confuse it for.

That's because GlobeTel gets 100% of its revenue from the dirty old phone biz, something it's so good at -- and by good I mean bad -- that its margins are zero (when they're not negative) right after the cost of goods sold. And it only loses more money as you move down the income statement.

And this is how things go with GlobeTel. According to the information I've got from Capital IQ, GlobeTel has lost a grand total of $43.9 million since 2000, and it's also running cash-flow negative. It survives on loans and stock sales.

The challenge
GlobeTel has so far declined to provide me with the most basic contact information about the Russian partner (its PR contact explained to me that it would be highly unusual for a company to provide such information. I find that highly unusual.) She did promise to send my request further up the food chain. I'm not asking them to show me the money. Just show me the phone number.

I'd love to talk with these folks about their past accomplishments in the WiMAX world, hear about their expertise with these systems, their plans for the future, and why they chose a company like GlobeTel for this impressive-sounding deal. Finally, I'd like to know why, on the strength of the single, limited, in-building wireless network demo described in the press release, someone would decide to spend $600 million on an otherwise unproven wireless infrastructure. (Especially when the blimps that GlobeTel has been touting can supposedly spread broadband to an area the size of Texas for a cost of about $30 million each.)

Foolish bottom line
If I hear anything, I'll report it in this space. Until there's some real information that makes this announcement look the least bit likely, investors should assume that this deal, like the blimp announcements, is nothing but hot air.

[Stocksquire]

At 5:31pm, after the Fools article, the company put out the 8k outlining the terms of the $600mil contract.  Those who shorted late in the day and after hours may have gotten caught with their pants down.


FORM 8-K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

     Date of Report (date of earliest event reported): December 29, 2005

                     GLOBETEL COMMUNICATIONS CORP.
              (Exact Name of Registrant as Specified in Its Charter)

          Delaware                      0-23532                88-0292161
- ----------------------------    ------------------------    ----------------
(State or Other Jurisdiction    (Commission File Number)    (I.R.S. Employer
      of Incorporation)                                    Identification  No.)

        9050 Pines Blvd., Suite 110, Pembroke Pines, FL            33024
        -----------------------------------------------            -----
          (Address of Principal Executive Offices)               (Zip Code)

      Registrant's telephone number, including area code: 954-241-0590


            Former Name or Former Address, if Changed Since Last Report)

      Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (See General Instruction A.2 below):

|_|   Written communications pursuant to Rule 425 under the Securities Act (17
      CFR 230.425)

|_|   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)

|_|   Pre-commencement communications pursuant to Rule 14d- 2(b) under the
      Exchange Act (17 CFR 240.14d-2(b))

|_|   Pre-commencement communications pursuant to Rule 13e- 4(c) under the
      Exchange Act (17 CFR 240.13e-4(c))


ITEM 1.01  ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

Globetel Wireless Corp. a wholly-owned subsidiary of GlobeTel Communications
Corp. has entered into an agreement with LLC Internafta, a Russian corporation,
whereby Internafta will pay Globetel $600 million to construct and install a
communications network in the 30 largest Russian cities. This communications
network will utilize Globetel's HotZone 4010 WiMax (802.16e) capable radio. It
is intended that this network will provide wireless broadband access, Voice over
IP capabilities, DECT functionality, and IPTV capabilities.

The networks will be installed in the cities over a 27-month period. Payments to
Globetel are pursuant to a schedule that includes certain milestones. Payments
will be made via a Letter of Credit confirmed by a US money center bank.
Globetel will not commence construction until the first payment has been made by
Internafta. Additionally, Globetel will help operate the Russian networks once
constructed and will be a 50/50 joint venture partner with Internafta in the
networks' operations.

Item. 7.01

On December 30, 2005 the Globetel issued a press release announcing its entering
into an agreement with LLC Internafta for the construction of a wireless
broadband network in Russia's 30 largest cities.
<PAGE>

Exhibits.

      Exhibits included are set forth in the Exhibit Index pursuant to Item 601
of Regulation S-K.


                                    SIGNATURE

      Pursuant to the requirements of Section 13 or 15(d) 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.

                                       Globetel Communications Corp.



Dated: January 6, 2006              By: /s/ Timothy M. Huff
                                       ------------------------
                                       Timothy M. Huff,
                                       Chief Executive Officer


                                   EXHIBIT INDEX

Number                    Description
- ------                    -----------

10.1        Agreement between GlobeTel Wireless Corp. and LLC Internafta

99.1        Press Release issued December 30, 2005
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>v032913_ex10-1.txt
<TEXT>
                            JOINT VENTURE AGREEMENT

*** denotes information for which the issuer is requesting confidential
treatment

This JOINT VENTURE AGREEMENT (the "Agreement") is made and entered into as of
this 29th day of December 2005 by and between GLOBETEL WIRELESS CORP., a
Florida corporation, with offices located at 9050 Pines Blvd., Suite 110,
Pembroke Pines, Florida, United States of America ("GlobeTel"), and LLC
INTERNAFTA, a Russian limited liability company, with offices located at ***,
Nahabino, Moscow region, Russia ("RP").

                                   RECITALS:

A.     GlobeTel is in the business of providing systems and network wireless
telecommunications and broadband and has rights to certain intellectual
property in such regard.

B.     RP has capital to provide for the construction of wireless networks
utilizing GlobeTel products and intellectual property.

C.     The parties wish to enter into this Agreement to realize their mutual
goals and objectives.

NOW, THEREFORE, in consideration of the mutual promises contained herein, the
parties agree as follows:

1.     DEFINITIONS.

Capitalized terms used in this Agreement are defined throughout the
Agreement.  Terms not defined herein shall be given their plain English
meaning; provided, however, that those terms, acronyms and phrases known in
the computer software industry which are not defined shall be interpreted in
accordance with their generally accepted industry meaning.


<PAGE>

2.     THE PROJECT.

2.1    NETWORK DEPLOYMENT.  GlobeTel shall use all commercially reasonably
endeavors to deploy and build wireless networks using its know-how in 30
cities located in the Russian Federation (as further described herein, the
"Project").  The wireless network is expected to be generally in keeping with
the description contained in Schedule 2.1.1, with appropriate adjustments.
The 30 cities are tentatively identified on Schedule 2.1.2 (the "Project
Cities") along with the publicly reported population of each city.  The cities
shall be divided into 3 groups (each, a "City Group").  ***  The list of
Project Cities on Schedule 2.1.2 is tentative and preliminary, and the parties
shall in good faith consider deployment in other Russian cities.

2.2      AGREED BUDGET AND RP'S FUNDING.  (a) The agreed budget to deploy and
build wireless networks for each City Group is US$200,000,000 (TWO HUNDRED
MILLION US DOLLARS) for a total aggregate agreed budget for the Project of
US$600,000,000 (SIX HUNDRED MILLION US DOLLARS), which RP shall pay and fund
as provided below.

(b)    RP agrees to make and fund payment to GlobeTel of the US$600,000,000
(SIX HUNDRED MILLION US DOLLARS) in accordance with the following schedule:

         (i)      US$150,000,000 (ONE HUNDRED FIFTY MILLION US DOLLARS) to be
paid on or before *** 2006 (the "Initial Payment").  The Initial Payment shall
be paid into the following account by wire transfer:

***

or to such other bank account as GlobeTel may notify to RP for such purpose.
The Initial Payment can be made under a letter of credit naming GlobeTel as
beneficiary drawn upon a bank approved in advance by GlobeTel.  For the
avoidance of doubt, the Initial Payment can be used by Globetel immediately
for the purpose of the Project in its discretion (subject to Clause 3.3); and


                                       2
<PAGE>

         (ii)     for each of the three City Groups:

                  (A)     US$75,000,000 (SEVENTY FIVE MILLION US DOLLARS) to
be paid upon installation of 50% of the total radio transmitters planned for
such City Group whether or not any network for any particular city is
completed; and

         (B)      US$75,000,000 (SEVENTY FIVE MILLION US DOLLARS) to be paid
upon installation of at least 95% of the total radio transmitters planned for
such City Group.

With respect to the payments contemplated by this sub-clause (b)(ii)(A) and
(B), no later than the start of work to build the wireless network in each
City Group, RP shall either place in escrow US$150,000,000 in cash under
escrow arrangements approved in advance by GlobeTel or open a letter of credit
in a form approved in advance by GlobeTel naming GlobeTel as beneficiary in
the amount of US$150,000,000 drawn upon a bank approved in advance by GlobeTel
(or use a combination of such arrangements so as to provide in aggregate such
US$150,000,000 financing).  The parties may agree to make payments under this
sub-clause (b)(ii) to GlobeTel via the JVCo.

(c)      Should RP fail to timely make or fund payment as contemplated by
sub-clause (b) above, GlobeTel may elect to terminate this Agreement.  Should
GlobeTel elect not to so terminate this Agreement, RP shall remain obligated
to perform hereunder but shall have no rights hereunder until it fully
performs its obligations under sub-clause (b) above (and upon such
performance, RP shall have rights hereunder as at and from the date of such
performance but, for the avoidance of doubt, RP shall have no rights hereunder
relating to or as otherwise may have arised with reference to the period prior
to such performance).


                                       3
<PAGE>

(d)      All payments due under this Agreement by RP are to be made in U.S.
dollars, free and clear of any set-off, claim or applicable taxes (with
appropriate gross-up for any taxes deducted or withheld so that GlobeTel
receives the full amount to be paid hereunder).

(e)      GlobeTel may apply such financing as it sees fit in connection with
the Project.  GlobeTel shall not be required to account to RP with respect to
the application of such funding.  Such funding represents both financing for
the purchase of the networks contemplated hereby and consideration and
inducement for GlobeTel's entry into and performance under this Agreement,
including its making available GlobeTel's Intellectual Property hereunder.
For the avoidance of doubt, such payments do not constitute the purchase of
the networks (or any Intellectual Property of GlobeTel (or of its affiliates))
by RP.

(f)      (i)      If the Project fails solely due to the malfunction of the
equipment and Software provided by GlobeTel, then GlobeTel shall return to RP
an amount equal to the Initial Payment by SWIFT wire transfer to such bank
account as RP may notify to GlobeTel for such purpose.  Upon working operation
of the wireless network in any Project City (in full or in part), RP shall
have no right to make any claim under this sub-clause (f)(i).

         (ii)     If the Project fails solely due to the inability of RP to
obtain the requisite Governmental Approvals for a material number of Project
Cities in connection with the initial deployment hereunder, having used all
best efforts to do so, then at any time after June 30, 2006 and before
December 1, 2006, RP may request GlobeTel to pay RP an amount equal to the
Initial Payment less an amount of all losses, liabilities, costs and expenses
incurred, or which may be incurred, by GlobeTel (or any of its affiliates),
including internal management time, in connection with the Project, as
GlobeTel shall calculate.


                                       4
<PAGE>

2.3      GOVERNMENTAL APPROVALS.  RP shall be solely responsible for the
receipt of all Governmental Approvals needed from time to time in connection
with the deployment, operation and maintenance of the Project.  GlobeTel shall
render all reasonable assistance to RP so that such Governmental Approvals can
be obtained.  For purposes hereof, "Governmental Approval" means any
authorization, consent, approval, license, ruling, permit, certification,
exemption or registration by or with any Governmental Authority, and
"Governmental Authority" means any executive, judicial, legislative,
administrative or other federal, national, state, municipal or local
governmental authority, ministry, department, agency, office, organization or
authority.

2.4      NON-COMPETE.  During the term of this Agreement and for two years
following its termination, RP shall not, and shall ensure that none of its
affiliates, directly or indirectly, offers any product or services or engages
in any activity that competes in whole or part with the products offered or
the activities engaged in by the JV Entities currently or in the future.

2.5      SCOPE OF PROJECT.  GlobeTel may deploy networks in other parts of the
world, and this Agreement only applies to the deployment of the networks in
the Project Cities.  Nothing herein shall be construed to be giving RP rights
to deploy any products of GlobeTel or its affiliates.

3.       JOINT VENTURE ARRANGEMENTS.

3.1      JOINT VENTURE COMPANY.  (a)  The parties expect to structure the
Joint Venture as follows.  GlobeTel shall establish a company (the "JVCo") in
a jurisdiction outside Russia currently expected to be Luxembourg.  The
jurisdiction and corporate form of JVCo is subject to further review by the
parties (including review by their tax and legal advisors).  Upon both the
Initial Payment being made and the initial funding being made under Clause
2.2(b)(ii) (the "Funding Date"), GlobeTel shall promptly procure that RP
receive 50% of the share capital of JVCo entitling it to 50% of any dividends
declared by JVCo from time to time, which may take the form of non-voting
preferred shares of JVCo.  RP shall pay as the purchase price or subscription
price of such shares the par value of such shares.


                                       5
<PAGE>

(b)      If following full payment to GlobeTel of the US$600,000,000 financing
contemplated by Clause 2.2 it proves to be the case that such financing is
insufficient for GlobeTel to provide the equipment and Software necessary to
complete the deployment of the wireless network in all the Project Cities
(where such deployment is otherwise reasonably practicable), then:  (i)
GlobeTel (or its affiliate) shall provide or procure such further necessary
equipment and transfer such to OpCo (for the avoidance of doubt, without
GlobeTel receiving any equity of a JVCo Entity in return and not involving
significant expenditure by OpCo) or (ii) if GlobeTel is unable to comply with
its obligation under the preceding sub-clause (i), then RP shall fund the
purchase of such necessary equipment and Software by purchasing GlobeTel's
shares in the JVCo at the price of US$25,000,000 (TWENTY FIVE MILLION US
DOLLARS) for each 5% of total Shares transferred, subject to maximum aggregate
purchases under this sub-clause (B)(ii) of US$125,000,000 (ONE HUNDRED TWENTY
FIVE MILLION US DOLLARS) and 25% of total Shares, provided further that the
purpose of such share transfer shall only be to re-allocate dividends to RP
and arrangements shall be made so that GlobeTel retains all voting and other
rights associated with such transferred Shares other than the right to the
dividends declared thereon following transfer.


                                       6
<PAGE>

3.2      OPERATING COMPANY.  JVCo shall hold 100% of the share capital of a
Russian limited liability company ("OpCo", and together with JVCo, the "JV
Entities").  GlobeTel shall nominate (and may remove and replace) the general
director of OpCo from time to time.  Following the Funding Date, RP may
nominate (and may remove and replace) the second principal officer of OpCo.
OpCo shall have no board of directors and the responsibilities otherwise to be
carried by the board shall be carried out by JVCo as the sole participant.

3.3      INITIAL FUNDING, EQUIPMENT, SOFTWARE.  Following its receipt of the
Initial Payment, GlobeTel (or its affiliate) shall make a capital contribution
of US$50,000,000 (FIFTY MILLION US DOLLARS) either to JVCo or OpCo (in the
case of OpCo either directly or via JVCo), such funds to be applied to the
operating costs.  Provided that RP timely complies with all its obligations
hereunder, GlobeTel (or its affiliate) shall transfer or procure the transfer
(by way of in-kind capital contribution or in other arrangements (not
involving significant expenditure by the JV Entities)) the equipment necessary
for the Project to OpCo (either directly or via the JVCo), the deemed value of
which equipment together with associated know-how and Intellectual Property,
the parties agree (and in no circumstances dispute), is at least US$***),
which equipment shall be transferred in connection with the deployment of the
network in particular Project Cities.  Provided that RP timely complies with
all its obligations hereunder, GlobeTel (or an affiliate thereof) shall
transfer or procure the transfer (by way of in-kind capital contribution or in
other arrangements (not involving significant expenditure by the JV Entities))
the Software necessary for the Project to JVCo, which Software shall then be
made available for use by OpCo (in an arrangement not involving significant
expenditure by OpCo), the deemed value of which Software together with
associated know-how and Intellectual Property, the parties agree (and in no
circumstances dispute), is at least US$***).  OpCo will enter into customer
contracts for use of the network. Costs associated with the operation of the
deployed networks will be the responsibility of OpCo as funded by its
operations.


                                       7
<PAGE>

3.4      FINANCIAL STATEMENTS.  The parties shall agree on the appointment of
an internationally recognised firm of accountants (being one of the "Big 4"
accounting firms (the "Independent Accountant")), which shall audit the
results of operations of the JV Entities in accordance with US GAAP and/or
IFRS starting with the fiscal year ending December 31, 2006 and, starting in
2007, shall review the quarterly accounts of the JV Entities in accordance
with US GAAP and/or IFRS.

3.5      PROFIT SHARING.  Profits of the joint venture, in the form of
dividends declared by JVCo, shall be shared equally between GlobeTel and RP
provided that RP shall be entitled to no share of profit (and no such
dividends) if it has not fully complied with its obligations under Article 2.
Unless otherwise agreed by the parties, no dividends shall be declared prior
to the substantial completion of the deployment of the Project in all the
Project Cities.  Distribution of profit shall be subject to maintenance of
cash appropriate for the ongoing operations of the Project and the use of
profit for capital expenditure (including upgrades and upkeep of the network)
in connection with the Project.  Such profits may be distributed quarterly on
the basis and upon the preparation of the quarterly accounts of JVCo reviewed
by the Independent Accountant (or, in the case of the fourth quarter and full
financial year, on the basis and upon the preparation of the annual accounts
audited by the Independent Accountant).


    the rest of the report can be found at Edgar, at                                    8

http://www.sec.gov/Archives/edgar/data/919742/000114420406000841/0001144204-06-000841.txt

[brandyjoco]

GTE looks like a great prospect.  Guess I will have to be patient on this one!  Anyone else in GTE?

[JKN]

Yup, been in/out with core holdings for nearly 3 years now and have done well.   I expect 2006 to be a great year for GTE (and maybe my last).  I'm really overweight in this stock but I'm up big so I feel the risk is pretty low at this point.

2006 is a crunch year for GTE, if the Strat flies...zoom.  If more wireless deals come in...zoom.  My opinion on the strat is that ALOT more R&D will be necessary than what is being reported.  Strat news will be a golden selling and trading opportunity.  I do not believe that the strat will go into commercial operations for at least 2 years.  I don't think all the hazards of flying around in the stratosphere will be known until one gets there and there will be some major technical hurdles to overcome.   There is military potential but the bureacracy and politics of aviation will favor the big players.  Also, IMHO GTE has to put up or shut up and generate some profits soon.  Alot of potential here, though.

This stock is thriving on potential, stumbles and delays cause major SP havoc.  Traders have field day with this stock.

[metro]

12:36     GTE GlobeTel divests C.G.I assets (3.50 +0.10)

   Co announces it has sold its holdings of Consolidated Global Investments, an Australian co, back to C.G.I. As part of the transaction the co will return all its shares and options in C.G.I and retain a $1.4 mln deposit that was held for C.G.I.  Given the co's movement to the American Stock Exchange, the co has decided to not proceed with its goals to list a co on the Australian Stock Exchange. "...We are now in the strongest financial position that GlobeTel has ever been in. With the recent exercise of over $7 mln worth of warrants, GlobeTel's debt free status, and the recent contracts gained by GlobeTel, we are in a position to realize the opportunities before us..."

[brandyjoco]

I have 3000 shares of GTE for long term.  This company has some exciting future prospects.  It is going up today hopefully will continue to go up especially when it starts showing some profits.

[GatewayStocks]

GlobeTel's Australian Odyssey
By Seth Jayson (TMF Bent)
January 23, 2006

Let's open on a high note
You have to hand one thing to the folks running GlobeTel (AMEX: GTE): They've got hustle.

Following my recent article questioning the reality of the impressive-sounding Russian WiMax deal that catapulted this penny stock onto the hot list at the beginning of the month, GlobeTel has been busy releasing reams of PR, as well as catching up on its regulatory filings.

An absolute pip was a multi-page Q&A, which seemed to address some of the important open questions out there. But in the end, it provided little more detail than the original PR. Of the 30 cities claimed for the rollout, only two are named. The real identity of GlobeTel's Russian investors remains a mystery, and there are those nagging questions about competition and feasibility.

How is it possible for this unheard-of Florida company, with little track record, to suddenly vault past established equipment makers like Qualcomm (Nasdaq: QCOM), Cisco (Nasdaq: CSCO), Nokia (NYSE: NOK), and Motorola (NYSE: MOT), not to mention powerful multinational telecoms? Especially since GlobeTel seems to have no technological advantage, as evidenced in its regulatory filings, where it explains that the equipment and software it uses are readily available from major suppliers on the open markets?

Step back
If you need a quick catch-up, GlobeTel is primarily a VoiP telephony provider that, until recently, was most notable for its years of heavy losses. Earlier this year, the stock made a splash with a pile of press releases (dozens, really) touting -- get this -- high-altitude blimps broadcasting wireless WiMax Internet. Never mind that these blimps have never been shown to operate in a manner that would make the service feasible. Never mind that the Internet-broadcast blimp is already a decade-old bad dream. (In the late '90s, the same scheme was being touted by a company called Skystation, whose public face was former Secretary of State Alexander Haig.) And finally, never mind that the first deal GlobeTel announced for these blimps involved anonymous Colombian investors operating via recently minted Florida companies.

Speculators responded by sending this stock through the roof anyway. But that was back then. The stock trickled from $5 a share back to well under $2 by the time the next big thing hit the PR wires and the Internet message boards.

The new new thing
The latest hubbub is a $600 million-plus Russian WiMax deal that claims to be able to offer wireless telephony, wireless Internet, and television, all over the same network. Investors have piled in again, despite the open skepticism displayed from Russian communications analysts in stories in the Russian media. (This is quite unlike the American press, which remains content to parrot GlobeTel's press releases under the guise of "news.") To take only one recent example, a Jan. 13 article in the St. Petersburg Times (the one in Russia) cited a minimal audience, maximum competition -- with 280 wireless access providers already in Russia, and more expected -- and the threat of major telecoms entering the fray.

Does anyone really think that established wireless giants like Mobil Telesys or VimpelCom (NYSE: VIP) -- which together account for some 90 million subscribers in the former Soviet states -- are simply going to let some upstart come in and eat their lunch?

For another point of reference, consider that Europe's largest broadband provider, France Telecom (NYSE: FTE), has only 10 million Internet customers -- the number GlobeTel says it aims to get in just three years in Russia. Yet France Telecom operates in the affluent regions of Spain, the U.K., the Netherlands, and France, where, according to World Bank figures, people have at least two or three times the purchasing power of Russians.

A cautionary tale
Folks out there who wonder why I'm critical of these announcements need look no further than another press release that GlobeTel released last week. It illustrates the problem precisely. GlobeTel's much-hyped foreign operating units, which are always trumpeted with promising PR, not only come under strange circumstances, but they also often do very strange things and meet with very strange ends.

In this latest press release, GlobeTel announced that it had shed a 70ish%-owned subsidiary called Consolidated Global Investments (CGI). GlobeTel's press release states that it "divests" itself of CGI assets. That piqued my interest, because according to GlobeTel filings over the past few quarters, CGI's only asset of note has been shares of GlobeTel stock. A subsidiary whose biggest asset is stock in its parent company? How does that work? It takes a bit of digging to get at the back story here, but it's well worth it. So let's begin.

The wayback machine
This Australian unit first appears in the GlobeTel saga under the name Advantage Telecommunications (ATC). In the most recent 10-Q, that subsidiary's latest iteration -- it's called Consolidated Global Investments (CGI) -- was described as being 73.15% owned by the parent. (I'll generally refer to the entity as ATC/CGI.) Although Globetel claimed as recently as that fall 2005 10-Q that it intended to make ATC/CGI into an operating company, ATC/CGI had little chance of becoming so, as the public record clearly shows.

The first reference to ATC/CGI comes in a 2003 10-Q, and curiously, it doesn't mention operations of any kind. In that filing, GlobeTel describes a "strategic investment," a $1.2 million convertible, 12% note transaction -- though the parties agreed that no interest would be paid, according to later filings. These non-interest-bearing 12% notes were convertible into "one share of $0.01 (Australian $0.01) of stock and one free attaching option exercisable at $0.01 (Australian $0.01)." The deal would let GlobeTel have up to 50% of ATC/CGI, as well as control of its board.

The PR blitz
In typical GlobeTel fashion, the press release heralding this venture was a bit more bold. The Sept. 22, 2003 press release claimed that this combination would create "a new force in global telecommunications." It also said that ATC had operations in the U.K., Hong Kong, China, Germany, Macau, Vietnam, Sri Lanka, Bangladesh, Mauritius, Cambodia, Indonesia, Pakistan, and Taiwan. It estimated the "replacement value" of ATC's network at $30 million and claimed that ATC had revenues of $10 million from 2001 to 2003, ramping at a 500% clip.

Sounds pretty impressive, eh? A million three for a half share of a $30 million network, and a partner growing revenues toward the sky? Keep in mind the context. Back in 2002 and 2003, GlobeTel's annual revenues were just more than $11 million. A claim on half of the reported revenues at ATC/GCI would have represented a nearly 50% increase for GlobeTel's top line. Unfortunately, the good folks at GlobeTel, including current CEO Tim Huff, neglected to mention a few facts.

For instance, they didn't disclose that until 2002, ATC was, according to the Australian Securities and Investments Commission's (ASIC) records, a publicly traded firm called "Nugold Hill Mining." (FYI, the new, Russian-Globetel WiMax joint venture is to be called "NuTel." Strange coincidence, eh?) GlobeTel also neglected to mention that this up-and-coming gold mine-cum-telecommunications powerhouse was actually burning through cash like crazy, selling its services for less than it cost to provide them -- as GlobeTel does, by the way. This major cash burn caused the Australian securities regulators to question, as early as 2002, whether ATC would continue as a going concern.

But if you think that would have been enough to keep GlobeTel from playing with this particular fire, you haven't seen anything yet.

The quiet scandal
Nugold/ATC/CGI was the key character in what some in the Australian press called one of the biggest embezzlements and securities frauds in Australian history. According to ASIC, from March 2001 until September, 2002, the company was the subject of a very complex stock manipulation by an Australian securities dealer named Upul Samantha Anthony, who worked for Cogent Securities. During that time, Anthony stole more than $16 million from his employers and funneled $10 million directly into ATC/CGI and affiliates. Additional details reported from police records by writers for the Australian Financial Review (FR) shed even more light on the scheme.

Anthony sent $7 million of the pilfered money in "loans" to ATC/CGI in order to shore up the cash-hemorrhaging company, and he sent another $3 million to Nugold -- via another telecom, Futurstel -- where it was used to finance the purchase the remainder of ATC/CGI. (The rest of the money went toward trying to manipulate the penny stock's share price on the Australian market via Nugold/ATC/CGI stock purchases through various fronts.)

When Anthony finally came clean in September of 2002, ATC/GCI claimed it knew nothing about the scam. That's pretty tough to swallow, given that, according to FR, Anthony actually lived with two of ATC's founders, Andrew Boyd and Hastings Singh, and it doesn't appear that the company would have survived long without the money Anthony stole.

Anthony, who cooperated extensively with Australian securities investors, said he was promised a job at ATC/CGI, as well as a large slug of shares, if he could secure capital injections needed for ever-increasing amounts of network equipment for ATC's Hong Kong wing. According to the FR article of September 2004, the stolen $7 million that was paid directly to ATC/CGI simply disappeared without a trace.

The other shoe drops, slowly and quietly
As far as I can see, Globetel didn't bother to inform investors about this particularly strange and serious sequence of concerning its new Australian partner, even though it would have been well aware. Remember, GlobeTel got into the ATC venture in September of 2003. Anthony, the embezzler, went to the Australian cops to confess back in September of 2002.

But GlobeTel did, in its own, quiet way, slowly make the real value of ATC/CGI known. Only six months after that promising press release, in GlobeTel's 2003 10-K, a bit more truth about ATC/CGI came out. It was subtle, but it wasn't pretty. Shareholders who bothered to read it would have been informed that ATC "had operations in England and Hong Kong and had points of presence in over 15 countries. [Note the use of the past tense. Emphasis is mine.] The agreement was subsequently modified to where our investment of $1.2 million would be for purchase of the ATC's [sic] telecommunication equipment and network operations in Hong Kong and England."

Had operations? Restructuring the deal to become a purchase of equipment? Sounds to me like those promising ATC/CGI operations had already ground to a halt.

By Dec. 31, 2003, only a few months after the press releases, GlobeTel had paid ATC/GCI $302,000 in cash and sent the remainder via shares valued at $897,000.

By June of 2004, another $50,000 in cash had arrived, and ATC/CGI agreed to value the 16.5 million shares (figures quoted before the more recent 15-to-1 reverse split) of GlobeTel stock at $1.37 million, although the shares during the acquisition period were very volatile and traded for as little as $0.02 a stub.

By August 2004, a bit more truth came out in GlobeTel's Q2 statement. At this point, GlobeTel finally admitted that ATC/CGI had no operating activities -- quite a change from the 500% grower of the press release only 11 months prior. GlobeTel also effectively admitted that ATC/CGI's assets weren't so amazing, certainly nothing like the $30 million network touted in the original press release. ATC/GCI's main asset was, according to that 2004 Q2 filing, nothing more than those shares of GlobeTel stock.

Who's on first?
You think it's strange that one of GlobeTel's big strategic investments would turn out to be in a non-operating, once-manipulated, formerly gold-mining, suspended, phone-flop stock? Find it odd that this strategic partner's once-flaunted assets actually amounted to little more than a pile of its parent company's shares? Just wait; it comes full circle.

More recent filings have made clear that, through July of fiscal year 2005, this non-operating subsidiary -- the one that had nothing to do with that stock manipulation back in Australia -- hasn't been completely stagnant. It has, in fact, been trading in the stock of its parent company, GlobeTel.

It's a pure coincidence -- I suppose we should assume -- that this trading came precisely during the period that saw the huge ramp-up in GlobeTel press releases touting its WiMax blimps and the coinciding rise in GlobeTel's share price. By selling 7.3 million of its own (pre-split) shares via the ATC/CGI subsidiary during this period, GlobeTel netted proceeds of $1.6 million, $1.46 million of which came back to GlobeTel by a nifty method.

GlobeTel engineered a $1.46 million prepayment from ATC/CGI to GlobeTel's own wholly owned subsidiary, Sanswire, ostensibly toward rights to the WiMax blimp business down under. Let's restate that, just for clarity: GlobeTel had one majority-owned subsidiary arrange to prepay its other, wholly owned, subsidiary for a license for technology that's still months, if not years, from being proved feasible, using money it obtained by trading in the parent company's stock, which was inflated following heavy PR regarding that same blimp technology. And now, GlobeTel is waving goodbye to that subsidiary and keeping the cash.

If this sounds to you like a pretty complex way to create funny money by selling your own shares and shuffling money from one pocket to the other, join the club. Maybe I'm missing something, but it sounds that way to me, too.

Foolish bottom line
I'm not surprised that the press release detailing the wrap-up of ATC/CGI didn't bother to tell the entire ATC/GCI tale. GlobeTel's PR machine is very good at, shall we say, accentuating the positive. As for the negative, well, that takes a bit of looking in the nooks and crannies. And who has time for that when there's all of those happy press releases to read?

The real problem is that this particular deal is only one of many strange and spooky delights in GlobeTel's convoluted partnership and financing schemes. There are so many foreign joint ventures, convertible offerings, private placements, semi-anonymous "government-connected" financiers, stock payments for services rendered, and asset writeoffs that it is difficult to imagine that anyone who's high on this stock -- and there are plenty; just ask my email inbox -- has looked past the technological hype at the financial machinery beneath. Companies this small don't need to be this complex. When they are, smart investors wonder why.

And this, in a nutshell, is why I have grave doubts about the reality of this big Russian announcement. The devil is always in the details, and they will be lot tougher to come by with a Russo-Luxembourgian joint venture. Absent hard facts, like the target cities, competitive price plans, costs of purchasing this network equipment, realistic subscriber goals, or, more generally, the identity and motive of these anonymous Russian investors, there's no way of guessing whether this latest venture will become a success, another ATC, or something even worse.

[turfman]

This looks like a nice shake to buy into.  Anybody familiar with this stock care to comment.

[brandyjoco]

I've got some GTE - OUCH at 3.90 from a month ago.  It looks like it has great future possibilities.  Too bad it is getting smashed from that Motley fool article. What do they have against the company?

[turfman]

IN THE MONEY:Forget Dan Brown;Try 'The GlobeTel Code'>GTE



Here is a more fair and balanced artical on gte reported by a dow jones columnist
[ 2006-01-26 ]





By Maxwell Murphy, A Dow Jones Newswires Column

NEW YORK (Dow Jones)--At first glance, the world of GlobeTel Communications Corp. (GTE) appears akin to Dan Brown's blockbuster thriller "The DaVinci Code".

GlobeTel's a Florida-based company that, until now, has largely gleaned revenue from selling bundled telephone minutes. Dig a little deeper into GlobeTel's world, however, and you'll find a cast of global characters including a former astronaut, diplomats, Colombian President Alvaro Uribe, a firm founded by Henry Kissinger and a former CIA employee. There's even a member of the Knights of Malta, a millennia-old charitable Roman Catholic order some claim is as shadowy as Brown's puppeteering Priory of Sion.

But putting all this intrigue aside, GlobeTel's worth a look from the far less conspiratorial aspect of pure fundamentals.

GlobeTel, a former Bulletin Board shell company, has racked up more than $55 million in losses over the past several years. But it has aspirations to usher in a global wireless revolution, using a technology called WiMax it bought last year for nextto nothing, that it someday soon hopes to combine with its high- tech, blimp-like Stratellites (GlobeTel says "rigid dirigible" is more accurate than blimp).

The company says it just inked a deal with a group of Russian investors it says will land it a $150 million payment this month. There's another $450 million on top of that when it completes its wireless rollout in 30 major Russian cities over the next nine quarters, but GlobeTel says it's even more excited about the recurring revenue streams the deal promises than it is about the initial payment.

Though details are scant, $600 million would help convince its investors that GlobeTel's for real and prove wrong a growing throng of short sellers betting the hope is no more than hype. Short interest rose more than 32% from mid- December through mid-January, to more than 5.3 million shares sold short.

Neither shorts nor true believers have to wait long; GlobeTel Chief Executive Tim Huff says the $150 million is due in the next five days. A press conference in Russia with LLC Internafta, the foreign investors, will in February set the stage for network building in Moscow and Saint Petersburg beginning in April, he said.

GlobeTel's stock traded up slightly at $3.02 on the American Stock Exchange in Thursday midmorning trading, following a sharp drop Wednesday on heavy volume with no apparent news. Though it's off 33% from an all-time high earlier this month, it's still prodigiously above the roughly 15 cents it fetched just over a year ago. With more than 121 million fully diluted shares outstanding, GlobeTel has a market value above $360 million.

A successful Russian deployment - along with revenue from deals it says are in place in countries like Mexico, Colombia, Japan, China and Brazil - would justify that and then some.

If successful, tiny, unheralded GlobeTel will go down as one of the shrewdest acquirers in recent memory. GlobeTel paid only $2 million in stock just seven months ago when it bought HotZone Wireless. That deal gave it WiMax and other wireless technologies which GlobeTel hopes will deliver wireless telephony and broadband to Russia and other nations.

Put another way, the Russian deal is worth 300 times what the core technology cost GlobeTel.

Huff says HotZone, formerly a GlobeTel partner, sold the technology because it ran out of money, and he sees its acquisition as no more unusual or improbable than Microsoft paying $50,000 for an early version of the MS-DOS computer operating system.

Cynics have plenty of ammunition on GlobeTel: a history of losses, related party deals and lofty aspirations touted by a raft of press releases.

In 2002, Paul Taboada, an analyst with Hornblower & Weeks, was suspended and fined by National Association of Securities Dealers for "issuing a research report containing material misrepresentations and omissions" about GlobeTel back when it was called American Diversified Group. (His firm and two principals were also penalized). According to GlobeTel filings, Taboada consulted with the company for many years and is now an investor in a class of its preferred stock.

If GlobeTel's as full of hot air as the fleets of dirigibles the company sees as a cheaper alternative to satellites, some pretty big reputations are going to take a bath. Officers, directors and partners of the company include a former astronaut, Rick Searfoss, and a couple other well-respected employees of National Aeronautics and Space Administration that a NASA spokesman concedes GlobeTel was able to poach.

In September, it named former U.K. ambassador to the U.S., Sir Christopher Meyer, as its chairman. The distinguished statesman is currently chairman of the U.K. Press Complaints Commission and serves on the boards of several U.K. companies.

Then there's J. Randolph Dumas, a successful global businessman, Wharton graduate and, several biographical notes on him say, former national briefing officer for the CIA. The CIA doesn't confirm or deny employment or discuss companies, a spokeswoman said. Dumas was until recently employed by Rubikon Partners, a private equity firm he co-founded with Henry Kissinger, Leo A. Daly III, a third-generation architectural success and self-proclaimed Knight of Malta, and GlobeTel's most recent director, Dorian Klein.

The Uribe connection stems from a meeting with the Colombian leader and his cabinet last year over a potential $50 million deal, made with another company organized in Florida early last year, to float five Stratellites and set up a wireless network in the South American country. GlobeTel in July said it " received strong support for the project from several high ranking government officials including Colombian President, Alvaro Uribe," who GlobeTel officials said they met at his palace in Bogota and who was "very gracious and told ( GlobeTel) that he would help (it) in any way that he could to bring this technology to his country." A call to the Colombian embassy to the U.S. went unreturned.

GlobeTel's Sanswire unit wants to put fleets of these so-called Stratellites in the stratosphere, 65,000 feet over the Earth's surface. The Stratellites look like blimps, but GlobeTel is quick to remind they're a different breed of dirigible that hovers above the weather and can eliminate some of the signal delays and other problems experienced when transmitting to and from satellites in outer space. Since acquiring Sanswire in early 2004, GlobeTel has been developing and showcasing prototypes, and CEO Huff says a demo model will have a test run at Edwards Air Force Base next month with a working product ready in six to 12 months.

It also says deals with an Indian company, Financial Software & Systems, will be a huge success when GlobeTel's stored-value cards - a MasterCard that can also be used as a calling card and secure money-wiring-and-receiving device - hit the market in the coming months. With its new initiatives and a focus on the margins of its current business, Huff says debt-free GlobeTel sees break-even results for the current quarter.

Today's sales, growing rapidly as they may be, are designed more to boost GlobeTel's top line than its bottom. Right now, GlobeTel gets the vast majority of its revenue from selling wholesale international telephone minutes on its networks to a select few major telecommunications providers, and that business has the slimmest of gross margins. Huff says GlobeTel hopes to double that business, to about $200 million a year, and make it profitable, but the focus in coming quarters will be its other ventures.

Even Dan Brown's fictional protagonist, Harvard symbology professor Robert Langdon, might not be able to figure out whether GlobeTel's Russian wireless network will succeed. Until the story climaxes, expect GlobeTel investors on both sides of the fence to feel like they're reading a frenetically paced novel full of excruciatingly short chapters that each end with a cliffhanger.

(Maxwell Murphy is one of four "In the Money" columnists who take a sophisticated look at the value of companies, and their securities, and explore unique trading strategies.)

By Maxwell Murphy; Dow Jones Newswires; 201-938-5173; maxwell.murphy@ dowjones.com

[brandyjoco]

GTE responds to the MOTLEY FOOL ARTICLE as being 'misleading':

http://biz.yahoo.com/bw/060127/20060127005563.html?.v=1

I have never seen so much bashing against a stock! What gives?

[turfman]

Sounds like he is just following protocol in responding to the artical by MF. Monday will be a huge day for this stock whether it be up or down. They are suppose to have their first payment the 600mil deal with russia by feb 1.   

[ScottishTrader]

GTE may be worth another look right now -

after consolidating in the 3.70-3.20 zone, it broke to the downside heading below 3.00.  This looked pretty bearish, but pushed back into the flag Thursday, and held within the flag Friday.  May signal a possible bear trap reversal in the making.

As we all know there is huge speculation about this Russian deal and the first payment of $150m is expected any day now - this could fuel some big things next week.  I would look for a break of 3.70 for confirmation of the reversal.  A measured move from the first major advance would put 5.20 in play.

GTE closed at 3.20 on Fri, and is sitting at 3.35AH, up almost 5%.  Monday could be breakout day.  I will certainly be watching....

[Melf Elf]

Scotsman,

You wanna talk nervy? 

Parabolic rally...Parabolic return...Parabolic rally...Ride 'Em Cowboy!!!

This looked pretty bearish, but pushed back into the flag Thursday, and held within the flag Friday. May signal a possible bear trap reversal in the making.

It looks like your flag morphed into a falling wedge.  The low of 2.87 wasn't far off the 2.95 .618 retracement, so this could get some more pop if 3.48 gets printed, a technical breakout of the wedge.

Good luck if you play it!